The document discusses how adaptation is key to business performance with manufacturing IT. It notes that long-living companies are good at adaptation, adapting strategies to business performance and capabilities, and vice versa. A successful company adapts its manufacturing to the enterprise, clients, and markets, and adapts products to manufacturing and market demands, while also adapting markets by creating new demands. All levels of the company aim to fulfill goals through two-way adaptation.

1. Adaptation: The Key to
Business Performance with
Manufacturing IT
Dr. Valentijn de Leeuw
Director of Consulting
Advisory Group
European Manufacturing
Automation Forum

2. Observations: Automation
Automation and maintenance is viewed as a cost and not as a value
generator
Cost reduction programs resulted in work force reductions, increasing
the workload
Solid market growth even in commodity products, but.. (West-)
European operating companies struggle to replace, add and maintain
systems
• Patchwork of systems of all types and ages
• So-called commodities have functionality and performance potential
Standards are not fully adopted, slow to emerge
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3. Observations: Operations Management
OM Solutions have become more mature in particular as enterprise
solutions
• Platforms, modular, SOA-based
• Corporate roll-outs of Best Practice templates
The wave of business system implementations is over
• There is a larger role for IT in OM than before.
The cultural gap between IT and Automation/Engineering/Maintenance
remains
Standards exist and deliver value
• Potential for further improvement: merging ISA and OAGI
Despite proven benefit potential, resistance to investment
Manufacturing IT = Operations Management + Automation
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4. Observations: Innovation
Siemens’ UGS acquisition focuses attention on
• Downstream integration
• Time-to-market
• Brand value
• Data ownership
The market is not ready to ‘close the loop’
• Still ‘working’ on downstream business process integration
• Potential for systems integration to support product and production
improvement is high
The cultural gap between R&D, Manufacturing and Business functions
inhibits distributed Master Data Management
• Every function thinks they own the data in their system
Innovation supports market responsiveness:
• shorter product life cycles: importance of TTM increases
• Brand value: increasing functionality and manufacturability
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5. Challenges
Transforming attitudes, skills and goals while motivating people
Investing in value-adding project without overloading people
Creating transparency and ownership by creating non threatening
environment and preserving self-confidence
Dealing with uncertainty and risk by balancing risk and reward while
staying in budget and cash limits
Creating relationships of trust, cross-boundary team work
Making cultural and habit changes, developing capability, and creating
sustainable value
Creating value from a portfolio of technology projects at enterprise level
while serving local needs
Continuous improvement and responsiveness
Step change improvement
Growth, profit, market leadership
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6. Observations: Strategy
Striving for market leadership
• (un)conscious belief: better chances for survival
• Based on Darwin’s “survival of the fittest”
• Interpreted as ‘competition’ and ‘responsiveness’
Strategy must be ‘executed’, implemented in operations
• Feedback triggers adaptation
Strategy
Strategy /
Adaptation
Adaptation Directives
Results /
Operations
Feedback
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7. What did Darwin actually say?
The ‘fittest’ species adapt well to their environment
• And some are capable of adapting the environment to them
Options for adaptation
• Fight
• Flight
• Peaceful cooperation
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8. The life span of companies
The short-living company’s life span is far below it’s potential
• Similar to the medieval man living 40 years
• Creates a lot of waste: know-how, energy, social well-being, etc.
Long-living companies live in the range of 100-700 years
• Long living companies are good at Adaptation
So Darwin’s theory applies to companies!
The next question: which strategies for adaptation, solve at the same
time our challenges?
Reference: Arie de Geus: ‘The Living Company’ (Harvard Business
Review, March-April 1997, p. 51)
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9. Adaptation as key company strategies
Two-way adaptation,
• Responsiveness to the market
• Creating new markets (Blue Ocean strategies)
• Don’t’ only follow but express original strengths
• Etc.
Fight
• Compete, improve, innovate
Flight
• Quit non profitable business
Peaceful cooperation
• Take care of people, support them to be excellent
• Respect the environment and society
• Create partnerships
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10. Learning: Operational Excellence (that works)
Framework for strategy implementation
• Performance management guarantees business results
• Management system supports organizational and individual change
• Supports best practice sharing and centers of excellence
• Synergy through coordination of ‘components’
• Coordinated goal setting and execution
• Multifunctional team work
Six Sigma
• IT and manufacturing Customer DMAIC
Needs
• R&D and manufacturing
• CRM and R&D, etc.
Proven track-record CONTROL
• Manufacturing IT and Automation (and
any other initiative) should be implemented Optimum
Potential
as Operational Excellence component to
deliver business results
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11. Framework Elements
Component
Strategy and goals Operational and improvement strategy and adaptation
Overall goals and values
Business process management, strategy alignment
Management Governance and project portfolio management
system Organizational behavior and development
Performance management
Change management
Functional domains e.g. manufacturing, supply chain, R&D, IT
with for each the different key elements that implement
and/or support the strategy, e.g. IT performance and
efficiency, innovation management, quality management
Operational e.g business units, sites, research centers, distribution centers
domains with for each the key elements implementing the strategy
(e.g. schedule adherence, time-to-market, raw material and
European Manufacturing efficiency, capital efficiency/ROA
utility
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12. Performance Management is a key ingredient
Results are obtained when performance management is applied
Done well, it is two-way in nature Performance Mgt
• ‘Adapt’ directives Strategy /
2-Way Adaptation
2-Way Adaptation Directives
• Take feedback into account Results /
Activity
Performance Management is: Feedback
• The definition of responsibilities and goals
• The planning of performance, learning and resources
• Performance monitoring and evaluation
• Reinforcing or redirecting corrective action
At every level and time horizon:
• Strategy: ‘long’ term strategy, mid-term adaptation
• Operations: managed implementation, provide strategy feedback,
mid-term
• Automation and control: real-time adaptive control
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13. Adaptive at all levels
Regulators
Shareholders, .. Regulations /
Objectives
Results /
P&L Strategy
Strategy /
Directives
Result vs Operations
Strategy & Plan Excellence Priorities /
Directives
Results / Operations Mgt, Setpoints /
Feedback / Manufacturing IT Instructions
Clients
Quality Operations,
Quantity Automation
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14. Within this framework:
Practical implementation
recommendations
Supported by IT for
Manufacturing,
Automation and PLM
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15. Adapting systems to the organization and vice versa
Best Practice templates and their adaptation
• Operational Excellence distills best practices reuse knowledge,
adapted, accepted
• OM: implementation templates
• Automation: standardization, modular designs
• Standard solutions create synergy less costly
• But never fit all the local needs
• Requirements for templates
• Easily adaptable with local skills forward adaptation
• Easily maintainable and upward compatible
• New best practices flow back into the template backward adaptation
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16. Adapting systems to the organization and vice versa
Preparing the organization for change, taking input and adapt
• Operational Excellence requires habits to change
• Performance reporting
• Sharing experience
• Learning
• OpEx support: change management 2-way adaptation
acceptance
• Inform people ahead of time
• Involve them in designing the change, and giving feedback
• Take feedback into account
• Take time for transition and training
• OpEx support: management skills, motivation sustainable change
• Employee performance management 2-way adaptation
• Giving feedback and coaching
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17. Adapting production to markets and vice versa
Operations (performance) Management and Manufacturing Intelligence
Providing business information, linked to the process, instantaneously to
someone who can make a difference (MI, RTPM)
Control paradigm for
Directives
Work orders Production Control
Control Management production mgt
Management
A0.0
-MI, KPI dashboards
Asset
-Production and product
Why Raw
material
Energy
analysis
Production Products
People
Process - Re-optimize schedules
Analysis A1.0
Performance
regularly
measurement
A2.1
What you Quantities
Delays
For managers, engineers
Decision
ought to do
Costs
Qualities and operators
support,
Optimisation
A2.2
What
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18. Adapting production to markets and vice versa
Operations (performance) Management and MI results:
Implement Operations excellence goals, such as adapt mfg
• Internal goals: minimize energy, scrap, rework, WIP, etc.
• External goals: takt time, quality, etc.
Implement quicker, react quicker on deviations,
• with MI, and RTPM, the electronic versions of visual management
Operators and workers are autonomous motivation
• Also get external (client and supplier) feedback motivation
• When needed: get expert support adapt mfg
• When find a best practice: share adapt OpEx
Provide information to market
• Traceability, quality, materials, process adapt market
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19. Adapting products to manufacturing and vice versa
Integration of RD&E with Manufacturing
Products optimized for manufacturability adapt prod
• Proactive quality management
• Integration of methods in engineering phases
Manufacturing optimized for products adapt mfg
• Plant and cell lay-outs
• Adapted tooling and QA
• Trained personnel
Design and manufacturing continuous improvement 2-way adapt
Support by PLM integrated with MES and ERP 2-way adapt
• Product definitions automatically transferred
• Comparison of ‘as designed’ with ‘as-produced’
• Automated product definition updates to MES, PLM and ERP
• Workflow with publish, review, authorize, implement, change management
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20. Adapting products to markets and vice versa
Two-way adaptive strategy - long term 2-way adapt
• Adapt products to markets adapt prod
• Innovation to adapt markets to products adapt mkt
• Integration of methods in engineering phases
Two-way adaptive innovation – mid terms 2-way adapt
• Execute strategy and provide feedback, ideas
• Monitor market feedback on innovation
• Adapt for continuous improvement of client perception
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21. Summary
The long living enterprise is adaptive at all levels.
• It redefines itself and their markets by having a close eye on
their performance.
• It adapts strategies to business performance and enterprise
capabilities, and vice versa.
• Its manufacturing adapts to the enterprise, the client
requirements and market dynamics.
• Its product definitions are adapted to manufacturing and
market demands.
• They also adapt the market by creating new demands.
• Business, manufacturing and other systems fulfill business
goals and adapt to strategic and operational requirements.
They are deployed within a framework for strategy
implementation.
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22. Questions
Discussion
For more information contact:
VdeLeeuw@ARCWeb.com
+33 1 60 55 55 43
European Manufacturing
Automation Forum