Manufacturing Enterprise 3.

0
The New Information Management Paradigm Built on Processes
Manufacturing Enterprise 3.0:
The New Information Management Paradigm
Built On Processes
Executive Overview It is time to reevaluate how we look at our information manage-
ment toolset and examine our business from a process perspective. Information silos cannot be
accepted and information can no longer be departmentally owned.We need to orchestrate infor-
mation into strategic and sustainable competitive advantage processes that support the extended
enterprise and include a wide range of stakeholders across the value chain.

This paper will describe how Business Process Management (BPM) can benefit companies, particu-
larly manufacturing companies, by focusing on their processes. Information management from a
process perspective makes better use of available data sources, bridges application silos and links
departments more directly to business results.Trying to accomplish application interoperability
through systems integration is difficult, expensive, too time consuming and is not agile.

In Manufacturing 3.0 each information application across the extended enterprise is considered a
potential source and/or a user of information. Historically, the ERP system has been the focal point
of the information system infrastructure but that is no longer the most effective approach. It is
company processes that build a sustainable competitive advantage and the Business Operations
Platform is the premier method to orchestrate information into the most effective business
processes.This paper will provide a broad set of ideas to help your company begin a new and more
effective journey in manufacturing enterprise information management.

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Biographical Information For Michael McClellan
Michael McClellan has over 30 years of experience serving and managing
manufacturing enterprises. He has held a number of positions in general management, mar-
keting, and engineering, including President and CEO for companies supplying capital
equipment and material management systems. In addition to numerous articles and
whitepapers on manufacturing systems, he has written two books, Applying
Manufacturing Execution Systems, which defines and explains manufacturing execution
systems and Collaborative Manufacturing: Using Real-time Information to Support the
Supply Chain, the first definitive examination of collaborative manufacturing concepts. He
is also a major contributor to a new book on business process management titled, In Search
of BPM Excellence. Mr. McClellan has served over six years on the Manufacturing Enterprise
Solutions Association (MESA) Board of Directors.

He currently lives in Vancouver, Washington and is President of Collaboration

Synergies Incorporated, an advisory company providing consulting services in the area
of business process management, real-time manufacturing information systems, manufac-
turing execution systems, and collaborative manufacturing system development and imple-
mentation. He can be reached at mm@cosyninc.com or www.cosyninc.com.

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Rethinking Manufacturing Information
Technology Management
Manufacturing 3.0 describes the true holistic convergence of information systems and ubiq-
uitous information usage across the extended enterprise, obliterating the line between the
administrative view and the operations view. It is time to rethink our perspective of informa-
tion application silos. Instead, we must consider the inclusive view of our company process-
es (how things get done) and view information and its use in a business process sense.
Enterprise level systems including Enterprise Resource Planning (ERP) and manufacturing
plant systems should be seen as elements of the same unit, not two different worlds.

The information technology management within manufacturing companies is unique from

most other businesses. Foremost is the large number of disparate applications in use. A
single plant can easily reach 100 stand-alone applications, in addition to ERP and other
administrative systems. Major companies can number their applications well over 3000,
each one justified at the time of acquisition and continuously requiring management
attention and maintenance. Added to this base are the wide-ranging applications within
our value chain, our customers and suppliers. The good part is there is a wide quantity of
data available as we evolve to a more strategic use of information across the enterprise, in
the form of initiatives like Lean Manufacturing, Collaborative Value Chain management,
or regulatory compliance.

Manufacturing enterprises are also unique in their ever-ongoing effort to improve and com-
pete, and it is unlikely this will change anytime soon. Certain aspects of business and our
information systems will continue:

Collaborative – Sharing information is the norm – ranging from current demand to

product design to quality assurance and production schedules and much more. The informa-
tion must be real-time, specific, and shared to give all stakeholders the same facts.

Global – The fact that business is a global set of processes is not new. The ideas
behind the flat world of manufacturing will continue. As our world shrinks, there are many
conditions that will affect where value is added. This will be met with interconnected global
best practices regarding every aspect of the product lifecycle, from inception to end-of-life
considerations.

Unrelenting – As this is written, the world is dealing with a major economic down-
turn, and we are watching the agonizing throes of General Motors, as this once mighty com-
pany deals with the realities of the times. Life will not be easier in the future. All businesses,
but especially manufacturing entities, will be more agile and responsive to intensified condi-
tional events.

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 User role-based information – Looking at reports is so yesterday, and so is
interpreting information to make an informed decision. Information must support decisions,
be specific to the user, and be built on trust. Again, this is not about data or behind-the-
scenes, monolithic computer systems, but a focus on content, workflow and the process that
suits the user at any position within the extended value chain.

Coherence – How many sources of the facts do you have to deal with in your
manufacturing enterprise? ERP, PLM, MES, Data Library, CRM, various databases,
Maintenance, Logistics, Warehouse Management, APS, SPC, Quality Assurance, and so on.
This world of data chaos ends when companies focus on their processes, instead of their
applications. Managing the cross-departmental, horizontal nature of processes, and support-
ing those processes with exact information at the right place and time, will replace the din
of data with usable and actionable information.

Predictable – The use of best practices and their support through evaluated, devel-
oped, and supported business processes will take personalities and their vagaries out of the
business environment.

Agile – Agility is the capacity to react to changes in your business and business
environment. Some changes require immediate responses, and others require strategic reac-
tions. Information systems must, and will be, the leading response mechanism, but they will
operate within well-defined and supported processes.

Competitive advantage – Building competitive advantage through better infor-

mation use is quicker and likely less expensive than nearly any other initiative.

In Manufacturing 3.0, companies will apply holistic, proactive management across the
extended enterprise/value chain using precisely defined and supported business processes.
Easily coupled and decoupled information resources will provide real-time information
between any and all sources and the focus is on the processes, with people addressing
exceptions and improvements.

This new vision is forward-looking, yet makes best use of the assets in which we have
invested over the years and is robust enough to take us where we want to go, over the next
20 plus years. Historically, we have implemented applications with a heavy tilt toward ven-
dor standard products, whereas the new vision is easiest to implement when based on a
business process platform and self-reliance, using in-house knowledge resources to make
the changes you need.

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What is a process?
It may take a minute to wrap your arms and mind around this, but it is time to think in terms of
Process – not system applications. Process management, long advocated by business leaders such
as Michael Hammer, Peter Fingar, and others, has been around for some time, and is the basis for
most activities within businesses today. A process is a series of steps or tasks aimed at accomplish-
ing a defined, business objective.To issue a payroll check, there is a process. Issuing a purchase order
is a process. Scheduling work at a work station is a process. Entering data at a time clock is a
process. Product development is a process. In major companies, the number of business processes
can run into the thousands. Some are well developed and documented. Some are performed on an
ad hoc basis, as necessary. And some are locked up in software applications, irrevocably fixed and
stationary.The current situation in every company is that most processes can be lumped into two
stacks: the processes within the hundreds of software applications (often hidden and difficult to
change); and those people-driven processes that are required to fill the gaps between the existing
applications.

Ideally, processes within a company are related, and all aimed, directly or indirectly, at serving cus-
tomers most effectively. In many industries, it is not the product that differentiates one company
from another, but the processes within those companies that are used to meet customer require-
ments. It is this process-centric view that many successful companies are using to meet modern
competitive achievement objectives.

Horizontal and chronological process steps versus array of applications

A single plant can have over 50 silo applications.
Think process steps and data use to support the process.

Illustration 1,Typical plant disparate application array

A first step is to consider the enterprise in a holistic sense. Our objective is to build the most effec-
tive organization, not tribal warfare, and that view is likely to cross departmental boundaries.

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Some fundamental process rule ideals:
• Core business processes are usually customer- or supplier-facing processes that cross
departmental boundaries.
• Support processes are smaller, frequently departmental, and they support core processes.
• All business processes are aligned to best serve the customer.
• All business processes are best practices, consistently executed.
• All business processes have been identified, mapped, and face regular review.

Corporate Process Hierarchy

Enterprise Strategies
Management Initiatives (to support the strategies)
Business Processes (to support the initiatives)
Core Processes (to support the business process)
Support Processes (may be an application)
Process Application (MES, LIMS,WMS, etc.)
Data Elements
Illustration 2, Process Hierarchy

What is an application but a collection of processes? All applications take in data and manipulate it
according to the programmer’s instructions – a process. A group of processes make up the applica-
tion, and a group of applications make up the IT infrastructure.The problem is that the processes
within one application have no idea that processes in another application exist. It is our job in
Manufacturing 3.0 to link them to build new functionality (processes).

Envision a platform from which you can oversee and manage other software applications.That
would be a good start, but what if you also had a magic way to redraw and reallocate existing con-
ditions, getting rid of the negatives and enhancing the positives. In Manufacturing 3.0, we want
our platform to give us visibility of what is there, but also to provide the tools to rearrange or
realign according to what would best suit our new vision of the process requirement.

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Key Thought
The business process is where the IT department and operations meet.
What if you had the ability to connect to any application, retrieve any item of data, and reuse that
data in another way? Combine data from applications, perform software logic operations and dis-
play the answers. Sound complicated? It is not. If you can identify where the data is, then a BPMS or
Business Operations platform can retrieve it, use it in a process calculation, and provide an answer
that might be a dashboard metrics display, sent to the ERP or another application, or sent to a cus-
tomer or vendor. From your existing installed base, it is likely that well over 90 percent of the data
you need in any process already exists and is easily available for reuse.

The Business Operations Platform

Illustration 3, Business Operations Platform

The Business Operations Platform (BOP) will usually include a number of tools.The primary tool is a
Business Process Management Suite (BPMS) consisting of the following:

Business process designer – The new business process is modeled and developed
through the use of graphical tools that define steps and events in the process. By using drag-and-
drop modeling icons, available from an easy-to-use palette, the process can be collaboratively out-
lined and reviewed.

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 Process connectors – BPMS packages come with a library of software components that
form the links with the new processes and the various connection points of the processes, such as
ERP systems or MES systems. This could include existing processes, and procedures from existing
process sources.The connectors are frequently based on web access to various systems, but con-
nectors can be provided to legacy systems that do not have web access.

Process manager – One of the more significant impacts of a BPMS system is the ability
to manage processes and make changes easily and quickly. It is possible to simulate a process using
real data, prior to actual use, to identify potential problems and make changes. Measurement of
the performance of a process – to see frequency, cycle time, and process histories – is common.
Process Lifecycle Management provides the ability to trace the full development and history of the
process, much like reviewing the revision levels on a product design. It is possible to use instances
of the process with variations, to suit specific business needs. One example is a shipping process
that is tailored to fit individual customers.

Process system server – This is the core system component that provides the transac-
tual execution of the processes.

Composite Application and Mashups Toolset – A composite application consists

of functionality drawn from several different sources.The components may be individual, selected
functions from within other applications, or entire systems whose outputs have been packaged as
business functions, modules, or web services. Mashups are similar to composite applications and
usually rely on online resources.

Service Oriented Architecture – Service Oriented Architecture (SOA) is included in

many BPM suites. SOA describes an ability to build basic, small, reusable software modules called
services.These reusable services are maintained in a library and can be used to build larger applica-
tions. SOA is not necessary for successful BPM applications but can be a very capable supporting
tool in a company-wide view of process management.

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Using the Business Operations Platform
There is a major shift occurring in the use of plant information, from the historical use of managing
a plant floor department or function, to a much broader role of providing real-time information
necessary to support enterprise processes and collaborative initiatives across the value chain. In life
sciences industries, process applications provide confirmation of FDA regulatory compliance. In dis-
crete item industries, the primary source for product genealogy information – including component
sourcing, quality assurance confirmation, and product test data – resides in process applications.
Meaningful key performance indicators and business performance management initiatives are
likely to require the data items that are found in the production system and which are available in
near real-time.

Key Thought
Defining Collaboration – The simultaneous use of real-time informa-
tion across the value chain.
Business management is increasingly using a process focus, as companies drive toward greater par-
ticipation in information sharing and collaboration. Broader real-time business issues are being
addressed through initiatives, such as analytics, business activity monitoring, business process
intelligence, business performance management, digital dashboards, supply chain event manage-
ment, collaborative value chains, product lifecycle management, the real-time enterprise, and so on.
Nearly all of these initiatives center on the idea of real-time information sharing and use, preferably
from its originating source or master data repository. In the typical value chain, that originating
source is usually the manufacturing and/or supply chain information systems within the business
unit and/or the value chain partners.

The value of the information changes when used to support higher-level business processes.The
data has one value when generated for a department supervisor for management purposes, and
quite another value when used to meet Sarbanes/Oxley compliance needs. Another example is
how the value of quality assurance information increases substantially when used to support
enterprise-wide, warranty exposure issues. Inventory information takes on a different look when
viewed across a value chain, with synchronized schedules based on real demand.

The hard part about incorporating production data into wider use is the problem of retrieving the
specific, required data and arranging that data in a context that supports the business process.
Historically, this has been very difficult. Most information technology departments are not closely
connected to plant operations or to various manufacturing system components; they have very lit-
tle awareness of what data is available or how to retrieve it. Another negative aspect is that a
medium-sized plant could have dozens of disparate information sources within their manufactur-
ing infrastructure. Many of these applications were likely built to specifications long forgotten,
using technology that is no longer current. Documentation is frequently poor or nonexistent.
Further, when the desired information has been determined and located, the cost and time to inte-
grate the data sources on the plant floor have been prohibitive. BPM methods and tools are very
effective at addressing these problems, by making information access and process development
significantly easier.

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Strategic Initiatives
The demand for a broader use of data, formerly a department issue, requires a new set of tools and
a new way of thinking to support strategic initiatives, including and similar to Lean Manufacturing,
Product Lifecycle Management, Real-time Enterprise, Demand Driven Manufacturing or
Collaborative Supply Chain Management. Strategic initiatives are typically new uses of data that
rise above the capability of traditional IT infrastructure or application silos.

This model of the manufacturing company infrastructure describes how strategic initiatives require
the broadest use of information in a nonhierarchical sense. Lean Manufacturing is not an applica-
tion, but an assortment of business processes aimed at newer business objectives, that include a
wide range of information from inside and outside the usual corporate base.

Illustration 4, Used with permission from MESA International.

The model was developed to show how information from applications within the operational and
administrative information systems is used to address strategic initiatives, transcending the exist-
ing software application infrastructure.The fundamental idea behind the model is that informa-
tion – real-time and historical – should travel into and out of applications whenever necessary, to
support processes and events.

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A broader list of the potential uses of process ideas will include:
• Collaborative Supply Chain Management
• Lean Manufacturing
• Demand Driven Manufacturing
• Regulatory Compliance: FDA, SOX, and so on.
• Real-time Enterprise.
• Product Lifecycle Management.
• Enterprise Collaboration – simple info sharing within the company.
• Metrics/Analytics – KPIs, Dashboards, and so on.
• Business Activity Management (BAM).
• Business Intelligence (BI).
• Operational Intelligence.
• Enterprise Manufacturing Intelligence.
• Composite Applications.
• Application Rationalization.
• Manufacturing Operations Mgmt Systems (MOMS).

A few more suggestions for using BPM in a manufacturing enterprise include:

I Adding functionality to existing business systems, such as CRM, ERP, manufacturing

execution systems (WMS), and so on.

• It is probably less expensive and quicker to extend an older application using BPM
than to install new software or reprogram the existing software.
• Design and add new processes as requirements change.
I Link business systems to aggregate data and processes.

• Build new processes between acquired company systems to provide a full view
of inventory data.
• Connect the manufacturing systems within a value chain to support where to build
strategies with real-time information.
• Connect disparate sources of business intelligence within the company or across the
value chain to support Sarbanes/Oxley compliance.
I Link a number of systems to provide and support new processes.

• Build a process to provide demand-driven schedule data across a value chain.

• Connect the manufacturing execution systems to the planning and scheduling
system.
• Develop a process that allows certain CRM users to view and exchange data with the
warehouse management and the manufacturing scheduling systems.
I Design, build, simulate, and finalize new stand-alone business processes, using data from

any source.

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Key Thought
Competitive Advantage – A firm posseses a sustainable competitive
advantage when its value-creating processes are superior to
competitors and they have not been able to be duplicated or imitated.

Building a Competitive Advantage

Your information systems should be a collection of best practices but it is a different set of informa-
tion and people connections that are required to build a competitive advantage.

Competitive advantage – A few years ago American auto producers required approximately 60
months to bring a new car to the market while Japanese companies could accomplish a full new
product launch in 30 months. That advantage (now overtaken) was once quite significant in terms
of market response and new product cost.

Competitive advantage – Dell Computer is legendary in their supply chain management efforts,
being able to build a personal computer to the buyer’s specification and shipping within a few
days. Internet marketing and receiving payment when the order was placed were other significant
benefits enjoyed by Dell long before other companies could do the same.

Competitive advantage – Within 24 hours Wal-Mart can tell each vendor in their supply chain
how much of their product was sold in each store every day.This goes a long way to support the
vendor’s responsibility in determining the replacement strategy.

These are not best practices.They are competitive advantages and not available in any equipment
or software catalogue.They can only be developed through an accumulation of innovative best
processes built on strategic and tactical use of your assets, most important of which are likely to be
your information technology base infrastructure.

In most companies, implementation of these ideas using typical integration methods would
require a significant investment in time and money, and, most likely, the finished project will not
fully satisfy the [company] requirements or objectives. A significant promise of BPM is to radically
improve the development and implementation of these ideas by, a) vastly shortening the develop-
ment process; b) putting this development partially or fully in the hands of operations; and c) build-
ing and implementing processes in a way that they can be easily and quickly designed, developed,
simulated, revised, and implemented – and then revised again and again as necessary to meet
changing business needs.

BPM is a far advancement from hard-programmed, workflow systems, but you are still NOT going
to turn process development over to the janitor.This is very serious work that requires not only
understanding the current state of existing processes within the company, but also being able to
visualize the new processes. A key perspective here is to see BPM as an enabler of business unit
processes, not as a technology.Whereas applications such as CRM, manufacturing execution sys-
tems or warehouse management systems are an assortment of available technology functions,
BPM is a tool that allows users to design, build, and implement functions and processes to suit
their needs. As Microsoft Word is a tool to create and manage documents, BPM is a tool to create
and manage processes.

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The intention of this paper is to make an argument for the Business Operations Platform and to
focus on company processes.We are past the time when the ERP system was the center point of
your information technology strategies.This new era must be more holistic, taking into considera-
tion the extended enterprise and competitive advantage requirements, instead of information sys-
tem applications.The Business Operations Platform is an assembly of tools that can provide a pre-
ferred perspective that will take you to Manufacturing 3.0. Begin by assessing where you are and
how this technology might affect your company over the next few years. Examine your ability to
make changes to processes or to even understand how the existing processes work or were devel-
oped. Think in terms of cross functional requirements that begin with the customer and conclude
as a satisfying financial return. If the vision is adequately holistic and seen from the highest level,
the lower level processes and their intersection with departments will be self-evident. After some
initial assessment it would be surprising if you could not see major opportunities for improvement
using these business operations platform tools. Initial demonstrations and proof of concept can fre-
quently be done within a few days.

The following are suggested for further reference:

The Agenda by Michael Hammer, Crown Business Publisher. 2001

Business Process Management, The Third Wave by Peter Fingar and Howard Smith,
Meghan-Kiffer Press. 2007
Extreme Competition, Peter Fingar, Meghan-Kiffer Press. 2006
Collaborative Manufacturing: Using Real-time Information to Support the
Supply Chain, Michael McClellan, St Lucie Press. 2003

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Acronyms

BOP Business Operations Platform

BPM Business Process Management

BPMS Business Process Management Suite

CRM Customer Requirements Management

ERP Enterprise Resource Planning System

MES Manufacturing Execution System

MESA Manufacturing Enterprise Solutions Association

SOA Service Oriented Architecture

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Collaboration Synergies Inc.
P.O.Box 871555
Vancouver, WA 98687

360.833.8400

www.cosyninc.com