Dr. Wolfgang Rybczynski SAP Deutschland AG & Co. KG ...

SAP Perfect Plant Initiative

Dr. Wolfgang RybczynskiSAP Deutschland AG & Co. KG

September 10, 2008

© SAP 2008 /

1. Actual Situation

2. Increasing Pressure on the Plant

3. Vision of the Perfect Plant

4. Ways towards the Perfect Plant

Agenda

Products

Byproducts

Waste

Waste Air

Waste Water

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The Manufacturing Plant is for other Functionsvery often a Black Box

View from OutsideThe manufacturing plant is a part of the Supply Chain,

which absorbs enourmous resources and generates high costs..

View from InsideThe manufacturing plant is the core function of the company

with the central task to produce all required products with the right qualityand to ensure timely delivery to the customer.

Raw Materials

Auxiliaries

Energy / Utilities

Operator Hours

Laboratory Hours

External Costs

Equipment Hours Plant

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Manufacturing ExecutionEnergy ManagementAsset Management

The Plant is in many Companies the by far biggest and most complex Function

Safety, Health & Environment

Filling, Drumming, Packaging, Labelling, Loading, Unloading

Storage (Tanks, Silos, Buffer Vessels, Intermediates Storage, etc)

Plant Logistics and Transport

Production Detail Planning

Quality Management

Inprocess Analytic

Engineering

Compliance (BImSchG, cGMP, DIN ISO 9001/14001, techncal Regulations, Labour Legislation, etc)

Production

Key Words:

Quality Management

Planning

ReportingComplianceRiskVisibility

Parts of the Manufacturing Plant:

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Communication to the Manufacturing Plant facesmany Obstacles in both Directions

„They are always on the safe side / They are sandbaging“

„They always know everything better!“

„We are the by far most important function!“„I do not understand it!“

„How have they calculated these KPIs?“

„The surely hide something!“

„Why don‘t they escalate problems immediately?“

„Can we trust these numbers?“

„Do they really tell us everything?“

„They do not inform us in time!“

Top Management,Marketing, Sales,

Finance

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Every Person in the Company has his/her ownview – and needs specific Informations

CEOSupply Chain ManagerCIO

Research & Development Purchasing Manufacturing

Plant Sales Service Recycling

Logistics, Transport and Storage

VP Operations/COOQuality ManagerProduct Manager

Site ManagerIT-Manager

Plant Manager 1Plant Engineer 1Lab ManagerForemanOperator

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IT Landscape and Data in the Plant

Systems DataMany different systems and interfaces

Many home-grown systems

Poit-to-point integration within the plant

Low level of ERP system integration

In some cases, integration within the plant or the department

Functionally oriented (instead of processoriented)

Know-how often owned by individuals

Rigid adherence to existing systems

Home-grown databases

Different data formats

Media mix (electronic and paperdocumentation)

Data inconsistencies

Data redundancies

Transcription errors

Giant, unused data volumes

Data entry sheets and reporting very oftenin MS Excel

Realtime integration < 30%

The Plant IT is a lonesome Island … … and lies in an Side Optimum (at best Case)

© SAP 2008 /

MES

Correlation Correlation

Confusing Structure of the Plant ITThe Plant needs more Integration

Analysis

Storage

ERP

MaintenanceHistorian IIHistorian I LIMS ‘Home-Grown‘

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1. Actual Situation




Agenda

© SAP 2008 /

Increasing Pressure on the Plant –Globalization is the Key Driver

Increasing number of business transformation projects(M&A, outsourcing, change of business models, large IT projects, restructuring, etc)More manufacturing sites have to be planned and coordinatedglobally.Fixed cost reduction programs often have a focus on manufacturing.Process optimization / efficiency increase / cost optimizationIncrease of overall equipment effectiveness (OEE) / reduction of lead time (Flexibilität)Shortening of time to market for new productsQuality management (SPC, Six Sigma, TQM, DIN ISO 9001, etc)Compliance (cGMP, BImSchG, REACh, techical regulations, etc)Increasing customer requirements regarding quality and servicelevelCooperation with and integration of external service providersIncreasing speed and accurency of reportingDecreasing understanding of manufacturing by the top management

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1. Actual Situation




Agenda

© SAP 2008 /

Vision of the Perfect Plant

The Perfect Plant is the ultimate goal to optimize utilizationof your assets. In the Perfect Plant you have visibility intoall operations including production performance and yourassets, providing relevant key performance indicators(KPIs), trends and alerts at realtime.

This visibility into your plants provides the agility and flexibility to respond faster to operational issues and to minimize impact to your business and bottom line.

The Perfect Plant significantly contributes to the success of the business. It bridges the gap between business strategyand manufacturing operations.

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Vision of the Perfect Plant in Detail

No data redundancies (everybody uses the same data)

Informations at realtime

Transparency across all processes (demystification of manufacturing plant operations)

Full integration of the plant into the business processes

Role-based visualization (from operator to top management)

Convergence / unity of IT systems

Support of the plant processes by suitable IT systems

Analysis, KPIs and reports are basis for well-groundeddecisions

Prompt support of business processes and business models

Cooperation between employees, departments and functions

Culture of permanent learning and continuous improvement

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1. Actual Situation




Agenda

© SAP 2008 /

SAP has a strong Focus on the Plant today

Starting from Finance, SAP extensively developed solutions for SupplyChain without complete integration of manufacturing plant details.

SAP offered solutions for all plant topics which were important from theSCM view (PP-PI, EH&S, QM, PM, EAM, WM, EWM, etc.)

Then, it became obvious, that the plant needs a higher level of integration (transparency, realtime, avoidance of data redundancies), analysis/reporting, automation und optimization via IT/SAP

SAP developed MII as general data interface for the plant

integrated detail solutions from special software providers andcompleted it‘s solution portfolio more and more

gave informations (presentations, workshops, publications, etc)

enforced the long lasting cooperation with SAP partners

acquired VISIPRISE

built up in-deep manufacturing operations expertise

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SAP MII enables full Integration of the Plant IT into the Business Processes

SAP ERP, SAP SCM

SAP MII

Planned OrdersBills of MaterialProduction & Process OrdersMaterial Inventory LevelsInspection Lots DataMaster RecipesMaterial DetailsBatch DetailsResources & Functional LocationsMaintenance Work Order & Notification detailsMaterial & Order Costs

Production ConfirmationsProcess MessagesMaterial ReceiptsMaterial ConsumptionsMaterial TransfersInspection results recordingQuality NotificationsBatch Characteristic recordingWork Orders & results recordingMaintenance Notifications

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Integration of the Plant Processes with SAP MIIPlant IT becomes lean

ERP

MaintenanceHistorian IIHistorian I LIMS MES

MII

‘Home-Grown‘

Extraction of dataRelation of dataAnalysis of data

1. Manufacturing PlanningForecasting/Collaborative ForecastingMake-to-Stock / Make-to-OrderFinite Capacity SchedulingMaterial Requirements PlanningRecipe ManagementLean & Repetitive

SAP Solutions for the Perfect Plant

2. Manufacturing ExecutionProduction Process ManagementBatch ManagementLabor & Resource ManagementOutbound ProcessingProduction DispatchKanban

3. Quality ManagementLIMS integration Quality EngineeringQuality / Tracking ControlQuality ImprovementAudit ManagementSixSigma/SPC

5. Plant MaintenanceTechnical Asset MgmtPredictive & Preventive MaintenanceMaintenance ExecutionIntegration to purchasing

4. EH&S Compliance Product Safety ManagementHazardous Substance & Dangerous Goods Emissions & Waste ManagementIndustrial Hygiene and SafetyOccupational Health

6. Visibility ATP/CTPSafety / Target StockManufacturing Costing & Performance Mgmt.Tracking & GenealogySubcontracting and CollaborationManufacturing Event Management

Manufacturing Visibility

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Manuf. Intelligence Dashboards

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Implementation of Perfect Plant Projects

Each enterprise is unique and therefore different!

Identification of the business processes which are mostimportant for the enterprise

Focus on the core process

Support by top management required (VP- / C-Level)

Definition of measurable goals and KPIs

Formation of cross-functional teams

Identification and involvement of persons who have practicalknow-how (operators, shift leaders, foremen, planners, etc)

Clarification of definitions between plant, top management and IT (common language)

Sufficient time requirement

No needless perfectionism (“No incent for ornament”)

Step by step

Eventually support by Change Management

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How can you see that a Perfect Plant Project has been successful?

Accomplishment of the goals / KPIs

KPIs from the plant become the basis for important decisions

Also other departments are interested in these KPIs

Plant experience is rapidly spread also to other processes and departments

Communication, confidence and trust between departmentsand functions become stronger

Opportunity to start further business process reengineeringinitiatives

KPIs are basis for best practice projects or site goals

Learning organization (motivation, ideas, ambition, etc)

Measuring and communication of the results

Leaner IT landscape

Key Opportunities for Perfect Plant Measures

Increase asset uptime through improved maintenance planning and scheduling Improved design and life cycle management of the assetsIncreased effectiveness of preventive and predictive maintenance techniques

Reduced number of EH&S incidents and associated costsLower overall regulatory compliance costs with increased labor productivityEnhanced management of hazardous goods, disposal, waste & emissions

Enhanced process visibility supports early detection of potential issuesIncreased efficiency from optimal allocation and tracking of labor and resourcesDetect & resolve manufacturing exceptions minimizing rework & overtime

2. Energy

4. Mfg Planning

6. Asset Availability& Efficiency

1. Raw Materials

Reduce wasted energy in mechanical and electrical systemsReduce energy loss due to improper PM frequencies in air / steam systemsMaximize use of all available energy throughout plant

Manage raw material variability in line with customer expectationsIncreased visibility results in right material – right place – right time Reduce spend on expedited production, labor and freight costs

Key Value Drivers

Improve Cost Structure

8. Quality

Manage Asset Performance

Drive Compliance Decreased variability increases product quality and customer satisfaction

Proactive problem & variance detection and management of quality issuesEnhanced quality compliance supporting continuous quality improvement

Strategic GoalsAreas of

Opportunity

7. Compliance

Increase Operations Efficiency

3. MaintenanceMaterials & Labor

Reduced maintenance labor cost from improved scheduling and executionEnhanced knowledge management, skills sharing and training effectivenessReduced MRO inventory levels and increased turns, supplier performance

5. Mfg Execution

Increased customer satisfaction & retention due to accurate order delivery dates Decreased inventory and higher asset utilization due to optimal planningEnhanced ability to sense and respond to schedule and order changes

© SAP 2008 /

The Perfect Plant significantly contributes to the Success of the Company

Plant related processes become more efficient. Therefore, the perfect plant improves the profit & loss statement.

Key performance indicators (KPIs) and their visualization make different departments and functions speak one common language. Discussions, meetings and a lot of redundant work are not longer required. The plant manager gets a higher degree of trust and credibility.

Business strategies can easily be realized, because the plant nearly synchronously follows the changes of the business model. The entire enterprise becomes flexible/dynamic (instead of sclerotic/static).

At the competitive market, the Perfect Plant is a strategic weapon.

Cross-functional project teams drive further improvement of business processes.

The entire company is a learning organization; by that it continuously improves its performance to become brilliant.

© SAP 2008 /

Plant and Company as Cybernetic Model

Controller ProcessorSetpointBudget

System DeviationBudget Deviation Enterprise

Control ActionMeasure/Action Process

DisturbancesMarket, etc.

Current ValueActual

Frequency and Quality of Feedback define the Performance of the System

© SAP 2008 /

The learning Organization

Controller ProcessorSetpointBudget

System DeviationBudget Deviation Enterprise

Control ActionMeasure/Action Process

DisturbancesMarket, etc.

Current ValueActual

Frequency and Quality of Feedback define the Performance of the System

Business Leaders with good Products and Processes will be successfull on long Term, if they also maximize Frequency and Quality of their Feedback.

Therefore you need full Integration of Manufacturing via Perfect Plant!

© SAP 2008 /

Contact

Dr. Wolfgang RybczynskiBusiness Transformation ConsultingProcess, Consumer Industries & TradeSAP Consulting

SAP DEUTSCHLAND AG & CO.KGHasso-Plattner-Ring 769190 Walldorf

T +49 6227 7 74803M +49 160 90819767F +49 6227 78 51597

[email protected]

Dr. Wolfgang RybczynskiBusiness Transformation ConsultingProcess, Consumer Industries & TradeSAP Consulting

SAP DEUTSCHLAND AG & CO.KGHasso-Plattner-Ring 769190 Walldorf

T +49 6227 7 74803M +49 160 90819767F +49 6227 78 51597

[email protected]

© SAP 2008 /

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Dr. Wolfgang Rybczynski SAP Deutschland AG & Co. KG ...

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