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CPM Identified as RPM Engine at ARC Forum
CPM Identified as RPM Engine at ARC Forum
CPM Identified as RPM Engine at ARC Forum
CPM Identified as RPM Engine at ARC Forum
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CPM Identified as RPM Engine at ARC Forum

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CPM Identified as RPM Engine at ARC Forum

CPM Identified as RPM Engine at ARC Forum

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  • 1. THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN ARC INSIGHTS By Tom Fiske & Sal Spada INSIGHT# 2003-28M JULY 16, 2003 CPM is the performance engine of RPM that extracts hidden value from existing assets. CPM enables an easy flow of events and information throughout the business to drive innovation, continuously improve manufacturing operations, and sustain value. CPM Identified as RPM Engine at ARC Forum Keywords Real-time Performance Management (RPM), Operational Excellence (OpX), Collaborative Manufacturing Management (CMM), Collaborative Produc- tion Management (CPM) Summary CPM plays a vital role in gathering, organizing, and providing context for manufacturing data used to generate KPIs. Effective KPIs require real-time collection of information on internal performance, mar- ket requirements, and competitor activities. This paradigm of performance-based operation embodies best practices to direct and drive production and opera- tions. Modern CPM systems extend throughout all of operations, but systems are not monolithic and no sin- gle supplier can provide the entire spectrum of RPM needs. An effective CPM solution, however, is capable of extracting additional value from existing manufacturing assets, thus making the “hidden plant” productive. This is the final installment of a series of insights that cover the highlights of the ARC Forum. Analysis CPM solutions are software systems that support and manage production activities. By coordinat- ing manufacturing data related to operations, CPM solutions provide manufacturers with the means to plan & schedule, track & analyze, and direct & optimize operations on a continual basis. While performing the production-centric functions, CPM systems integrate with production control systems, business systems, engineering systems, and main- tenance management systems to provide visibility into real-time production status and performance analysis of production operations. Currently Business Process Management Integrate Manufacturing & Business Processes Connect Factory Operations & Supply Chain Visibility and Analytics Manufacturing Intelligence Workflow Planning Production Process Simulation Process Optimization Regulatory Compliance Support CPM Incorporated Functions
  • 2. ARC Insights, Page 2 ©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com The benefits of the “Hidden Plant” produced a measurable financial impact of $6million by preventing an investment in new machinery to achieve the same production volumes. available CPM solutions are not monolithic and no one supplier provides the entire RPM needs of an organization. CPM Uncovers Hidden Capacity Identifying the correct KPIs and a committed partner enabled CNH to un- cover additional capacity, “The Hidden Plant”, in their metal working operations. CNH incorporated Overall Equipment Effectiveness (OEE) as a KPI over 5 years ago, but it wasn’t until OEE became a Dynamic KPI were they able to discover the additional capacity they really had. ABB’s Opti- mizeIT CPM infrastructure enabled the collection of dy- namic measurements directly from machinery without operator intervention. As a direct result of using dynamic measurements, OEE metrics were used to reveal the “Hidden Plant” by raising capacity as well as allowing CNH to set target performance when negotiating to pur- chase new machinery. The benefits of the “Hidden Plant” produced a measurable financial impact of $6 million by setting expected performance standards on new machinery purchases as well as reducing the investment in new machinery to achieve production volumes. Transcending Production Lifecycles A CPM system is a decision support system that relates product informa- tion to events throughout the production lifecycle. Business systems in the context of RPM are dynamic systems seeking to optimize profitability by managing capacity and product mix in real time. They are driven by mar- ket opportunities and empowered with a view from suppliers to customers. Real-time Performance Management Future TimePast Time Current Time Production Lifecycle Real-time Accounting System Operations Data Sources Current Costs CFO COO Performance Targets Leverage Production Time to Extract the Benefits of RPM
  • 3. ARC Insights, Page 3 ©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com In the last two years, Fonterra attributes over $9 million in cost savings from the used of Advanced Process Control (APC). The predictive control strategy utilized by Fonterra, a $6.8 billion milk co- operative based in New Zealand, incorporated the concept of “Production Lifecycle”. Illustrating the diversity in CPM solutions, Fonterra employed an Advanced Process Control (APC) component of CPM from Pavilion to reduce production variability and identify additional capacity in existing production assets. Displaying information in meaningful ways that are easily understood is essential to encourage employees to respond appropriately. In the last two years, Fonterra attributes over $9 million in cost savings from the use of APC. Fonterra stated that there were two piv- otal elements during the course of an implementation. Plant operators need to have a sense of ownership in the new technology and they must have confidence in the system’s ability to make decisions. In Fonterra’s view, it is the people that provide the value of the new technology. DuPont believes that chemical companies are at a point where cost and effi- ciency focused efforts provide little or no incremental value. The next wave of improvements will be driven by OpX and RPM for manufacturing and supply chain optimization. Currently, their major challenge is to improve the manufacturing process continuously and sustain excellence and value over time. To accomplish this, they have embarked on an enterprise inte- gration journey that provides increased visibility into performance enabling managers and operators to become micro CFOs. They are using Aspen- Tech’s Enterprise Platform, Performance Management, and Information Management tools to align individual daily operational decisions with fi- nancial business objectives and to lock-in gains made from improvements. The system also facilitates modeling technology to look beyond actuals and targets to predict and run at optimal conditions, which is an important as- pect of CPM systems. Standard Eases Flow of Information RPM requires an easy flow of events and information throughout the busi- ness to increase visibility and keep operations running as close as possible to optimum. In ARC’s view, ISA 95 takes a step to eliminate the persistent problem of integration and interoperability between business and produc- tion systems. The SP95 committee envisions the ISA 95 standard as a backbone behind leveraging the benefits of RPM. The ISA 95 standard has identified the common elements of enterprise integration with the produc- tion floor that are widely used throughout the industry. ARC believes that
  • 4. ARC Insights, Page 4 ©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com ISA 95 will provide the basis of model for a consistent set of business proc- esses and data structures to ease the integration with CPM functionality. Recommendations • The outgrowth of a well founded collaborative manufacturing infra- structure is RPM. Making information available from disparate organizations and systems creates knowledge workers, ensuring that every decision can make a difference. • Since RPM is not a monolithic solution, an organization must develop a strategy to determine the CPM components that provide the most value. • RPM is about looking ahead and anticipating issues, but this philoso- phy provides the best results when incorporated all the time. Please help us improve our deliverables to you – take our survey linked to this transmittal e-mail or at www.arcweb.com/myarc in the Client Area. For further information, contact your account manager or the author at tfiske@arcweb.com or sals@arcweb.com . Recommended circulation: All MAS clients. ARC Insights are published and copyrighted by ARC Advisory Group. The information is proprie- tary to ARC and no part of it may be reproduced without prior permission from ARC.

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