PRODUCTIONANDPERFORMANCEMANAGEMENT

YIELDS, LEAN, AND PRODUCTIVITY— IMPROVING CONSUMER PACKAGEDGOODS KPIS THROUGH EFFECTIVE REAL-TIME HISTORICAL ANALYSIS

TURNING DATA INTO ACTIONABLE INFORMATION

Industry-wide thirst for performance visibility, not just within the four walls of oneplant, but across increasingly complex fleets of plants, is at an all-time high; improvedend-to-end productivity while improving overall product quality is THE focal point.Manufacturing companies are investing significant time and effort developingcorrelated key performance indicators (KPIs) for all stakeholders ranging from plantmanagement and product research and development (R&D) to sales and operationsplanning (S&OP) groups. These knowledge workers rely on the KPIs to operate andimprove the agility, responsiveness, reliability, and profitability of their manufacturingassets. When it comes to consumer packaged goods (CPG) manufacturing, this thirstis all about expansion of brands with calculated control of the costs.

The top issues for today’s CPG manufacturers are:

• Globalization• Abbreviated new product development and launch (NPDL) cycles• Large stock-keeping unit (SKU) proliferation• Shrinking margins and the need to protect brand equity amidst spiraling costs

Plant managers need real-time decision support tools to make intelligent productiontrade-off decisions, to identify production losses and improvement targets, and toavoid costly waste and re-work. The next generation real-time data historians aretaking a proven technology designed for process environments where real-timedecision support was either a make or break decision of profitability. The needs ofhigh-speed, high-volume worlds of oil and gas, petrochemical refining, and energygeneration are increasingly finding a home in today’s CPG manufacturingenvironments as these industries become more time-sensitive to accurate information.

Unlike the data historians of the past, today’s historians bring a host of capabilitiesbeyond high-speed streaming data acquisition and retrieval. This new generation ofreal-time data historians aggregate information from control and operationsmanagement systems across all areas of the facility, including:

• Distributed control systems (DCS)• Programmable logic controllers (PLCs)• Scales• Ovens• Batch execution systems• Bar code readers• Manual data entry systems

Borrowing from the relational world, modern historians also accommodate a blend ofdata structures and types – including those defined by a user’s business process role toaccommodate the special needs of the processing environment.

Increasingly, real-time data historians are employed as the aggregator of informationfrom multiple sites; in essence, fulfilling the role of a real-time or “operations” datawarehouse to support high-level KPI generation and multi-site performance dataroll-up capabilities. In short, real-time data historians are positioned to play a keyarchitectural role in today’s CPG production environment, both at the plant and atthe enterprise level.

IMPROVING CONSUMER PACKAGED GOODS KPIS

Yields, Lean, andProductivity — ImprovingConsumer PackagedGoods KPIs throughEffective Real-TimeHistorical Analysis

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Consumer Packaged Goods Manufacturing Realities

CPG companies face a multitude of unique challenges in the 21st century globalmarketplace. Like their counterparts in the high-tech consumer electronics arena,they must constantly innovate to differentiate themselves simply to maintain, orhopefully increase, market share on razor-thin margins. At the same time, like theirlife science counterparts, they are bound by government and industry regulations tohelp ensure consumer health and safety – without the luxury of life science operatingmargins! SKU proliferation and global localization are a fact of life, as is the need toprotect brand equity and limit corporate liability. Every year, an increasing number ofproduct variants hit the shelves; new label claim regulations are enacted; andformulations and designs are modified to account for country-specific legislation andlanguage around ingredients, materials, and attributes. Most of this is accomplishedwithout additional capital expenditures and marginal market growth. In other words,today’s CPG manufacturers are challenged to squeeze a lot more productivity fromexisting assets – assets that, in many cases, were designed and commissioned decadesago to accommodate make-to-stock business models of the 20th century.Simultaneously, they are faced with a host of complex influences:

• New global competition from private-label brands• Increasing supply network complexity• Supplier management risk due to rising cost for rawmaterial and energy• Corporate sustainability initiatives

The CPG markets are becoming globally distributed while their retail customerscontractually demand pull lean supply chains, RFID, PDM and even vendor-ownedinventory. The result is a CPG plant that must become more adaptive, responsive andagile. CPG companies need ways to work faster, better, and at lower cost, but mostimportantly, smarter. These are no longer 20th century marketing buzzwords, but21st century realities. How are companies planning to meet these challenges? Basedon 2006 research by the Aberdeen Group, Figure 1 shows how companies areplanning to respond.

Figure 1: How Companies Plan to Respond

Real-time data historians are part of the solution to these problems, so let’s determinewhen and how to apply data historians.

The Need for Speed

The need to capture large volumes of time-series data for literally thousands of datapoints and retrieve it at a fraction of the time into “data historians” has been welldocumented. The role has evolved to tie into a plant’s operations management (OM)middleware in order to aggregate a wider set of sources of data and then deliverinformation in many forms to operations and enterprise users. With this new andexpanded role based on more advanced capabilities, they are better termed “operationmanagement historians.”

A Manufacturing 2.0 historian today provides a data abstraction layer (sometimescalled metadata) between the real-time process realm and the more ponderous worldof the transaction-oriented business and financial systems…[and] offers variousanalytical mechanisms for aggregating, consolidating, and recalibrating data fromvarious systems in the production environment. Only recently have users begun tounderstand the value of process data integrated with other types of operations andproduct data sets to generate and help visualize a comprehensive view of the state ofthe production systems.

Historians are designed to store vast quantities of time-series data in easily accessedfile structures that introduce the possibility of data and file compression during datacollection at the source. Today most, if not all, “historians” use data compressionmodels in order to make the most efficient use of available storage. Therefore, theoperations management historian is the data storage paradigm that provides theefficient use of storage and provides the very high data access rates required inmodern CPG manufacturing operations.

Tuning Manufacturing Performance with Metrics

Today’s quality focus, which has matured for CPG manufacturing visibility into theperformance of the manufacturing process, is prerequisite to improvement. KPIs arethe quantifiable measurements that reflect the critical success factors of the businessand critical-to-quality (CTQs) characteristics of operations. Even more importantly,they provide the visibility necessary for management to recognize a developingproblem and take the appropriate corrective actions while those actions can still havea positive impact.

KPIs are composite values. By this, we mean that KPIs are typically a calculatedanalytic – they aren’t just simple trends. Although for an equipment operator or linesupervisor, monitoring and alarming a trend of a single process variable – liketemperature or flow – may be sufficient to monitor the health and performance of aparticular process segment or phase.

In contrast, KPIs generally combine data from disparate sources. Overall equipmentefficiency or effectiveness (OEE), for example, is calculated from three other KPIs:availability, performance and quality metrics. These primary KPIs are used by many

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Applying Data Historians

manufacturers as a level one root cause metric to identify the next set of analytics forinvestigation for a corrective action. They are calculated, alarmed, and updatedconstantly, in step with ongoing operations, as leading indicators of whether or notthe performance targets of interest (quality, order fill, schedule adherence, and thelike) will be achieved under current operating conditions.

Furthermore, because KPIs vary by role, the KPIs must be presented in theappropriate timeframe and terms to each group of stakeholders involved in theprocess. This transformation of real-time production data into role-appropriateactionable information is called enterprise manufacturing intelligence (EMI) –analogous to business intelligence, but for the real-time, manufacturing environment.

While many systems currently exist to collect and calculate KPIs, OM historians haveemerged as a next-generation information tool for CPG manufacturing that delivershigh-speed optimized data collection bolted to an analytical engine that can performthe calculations required to support EMI. Furthermore, real-time OM data historiansare configured not only to perform KPI calculations, but to detect out-of-thresholdevents and generate alarms to notify operators and supervisors that remedial actionsare needed – now! The end result is a more efficient architecture that blends nicelyinto the Manufacturing Convergence trend we see in today’s global market.

Developing Operations KPIs That Count

Manufacturing organizations cannot and should not attempt to measure everything.Metrics drive behavior and should be chosen carefully. Ideally, operational metricsshould be aligned with business strategies and goals. Metrics that translate operationalmeasures like feeds and speeds are most effective when they are linked to financialoutcomes. Metrics, then, should focus on measuring performance in the areas thatmatter most to the companies’ success.

Choosing a metric is a collaborative effort. Several groups of stakeholders may need tobe involved in the choice of manufacturing KPIs, including, but not limited to,manufacturing operations, plant management, information technology (IT), finance,engineering, accounting, and the lines of business (LOB).

The measures chosen must be actionable; the processes must be able to be changed inthe short term, characterized change management process. Too often financial KPIsactually constrain production, such as limiting the purchase of spare parts oroperations materials, while production is ramping existing products or introducingnew products. KPIs in all industries need be developed top-down and verifiedbottom-up. The key is to ensure the chosen metrics (KPIs) are linked to a businessmetric. MESA International states in Metrics That Matter, “While there is noalgorithmic link between operational and financial metrics, the relationship is clear;activities in manufacturing operations are a major driver of financial results.” MESA’sstudy demonstrates that companies having sound manufacturing metrics that supporttheir business processes improve their manufacturing and business performance at aratio of 2 to 1. The key is to understand which metrics drive the ongoing success ofthe business.

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OM historians haveemerged as a

next-generationinformation tool for CPG

manufacturing...

The CPG Solution Matrix, Table 1, shows common metrics that are monitoredwithin the CPG industry.

Table 1: CPG Solution Matrix

Automation World reports that measures of yield and productivity top the list of KPIsmonitored. However, metrics by themselves do not improve performance; they onlyidentify areas where changes need to be made. They are an indicator to drive theevent or process of root cause analysis and correction. The organizations that havebeen most successful in improving their competitive positions are the ones that haveas few KPIs as possible, link them to business goals and refresh them frequentlythrough periodic review.

The Myth of Standard KPIs

KPIs are not necessarily the same across different businesses or organizations. Also,the method of calculation for the same KPI may vary. The KPIs support theorganizations goals and the organization needs to set targets for the KPIs that movethem toward their goals. KPIs are current measures (less than 24 hours) while mostorganizational and financial measures are “past” measures. Past measures are never keyperformance indicators. The number of KPIs should be kept small (more is notalways better) so they can get the focus of attention within the organization and bethe metric for root cause analysis.

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CPG Solution Matrix

Justification Physical Assets Information Assets Key Metrics

Legal Requirement Improve compliance withmulti-governmentregulationsMinimize delays due tocustoms intervention withmulti-governmentregulations

Better control and accuracyof dataReduced license non-compliance

Compliance ratesAdvanced shipping notices &UCC128 Container labelingerrors

Revenue Enhancement Improve productionreliability:- Higher output- Better quality

Improved employeeproductivity

Reduced plant downtimeOverall EquipmentEffectiveness (OEE)Mean Time Between Failure(MTBF)Mean Time to Repair (MTTR)

Cost Reduction Reduce number of obsoleteor inactive capital assetsImprove spare partsoptimizationImprove completion rate onPM work orders

Improved supplier/sourcedataImproved asset visibility andallocationFewer faulty installations

Maintenance costs per unitCapacity utilizationPredictive maintenancemonitoring (Maintenanceevents per cycle)

Risk Mitigation Reduce risk of hazardousleaks and/or spillsReduce risk of non-compliance

Reduce risk of non-complianceIncrease employeesatisfaction

Reduction in penaltiesReduced Time to Productivity

Competitive Advantage Improve customersatisfactionImprove supply and demandImprove public record/image

Improved publicrecord/imageFewer defective products

Industry benchmarkperformanceQuality improvement (first-pass yield)

Speed Counts

Time is always of the essence. Timeliness is the critical factor in the ability to takecorrective actions that have an opportunity to change process outcomes. Factors suchas speed, frequency of data collection, frequency of operator feedback, and the latencybetween operation and measurement have an impact. The sooner corrective action isinitiated, the smaller the impact of the situation (often by orders of magnitude).Hence, “real-time” is the ideal, but as a minimum, KPIs need to be revised, updatedand reviewed daily based on the demand state of the plant and business. The “best inclass” CPG organizations that identify and correct production problems to improvethe businesses’ bottom line performance have several things in common:

• Well analyzed and chosen KPIs that are refreshed frequently• Key operations software such as integratedMES, LIMs and EAM• Role-based OMPortals mapped to business process and production workflows• Data historians as their data collection and aggregation paradigm

Role-based OM Portals and the Rockwell Automation Incuity ProductAccelerate Operations Performance

There is an additional requirement for OM historians to be integrated with theoperations and control systems in order to provide an additional level of capability for“drilling down” into the data in order to find root cause. Role-based OM Portals aresimply a way to present KPI, alarm and event, and other role-appropriate informationin an easily understood graphical presentation for manager, supervisor, or theoperator or mechanic addressing a directed event.

The Rockwell Automation Enterprise Manufacturing Intelligence (EMI) solutionintegrates plant-floor production data and enterprise business information fromdisparate sources everywhere in a company and provides context for the data to enablebetter business decisions to be made at every level. Combining a manufacturing portalproduct like Incuity™ with the OM historian based on the OSIsoft® PI system, willprovide Rockwell Automation with a unique industry application for CPGmanufacturers. CPG companies are now under tremendous pressure to increase theirprofitability and competitiveness in a global economy. The key to improvingprofitability is not for companies to generate more data but to gain a betterunderstanding of the data they already have in multiple applications across theenterprise. The capability of Incuity leads to an ability to bring established legacy datastores together in what is referred to in industry as a “federated” data system. Thiscollection and aggregation of data from disparate sources without delay and thedelivery of actionable information in interactive reports and dashboards brings a newlevel of agility to the CPG industry.

EMI research has repeatedly demonstrated that a highly graphical portal utilizingtrending with A&E are the key to establishing the early warning and predictivecapabilities required by plant management. This interactive tool quickly aggregates,calculates, and coordinates the raw data to provide “drill down” for root causeanalysis. Business logic can be applied to formulate the actions required to correct thetrends. The ability to “drill down” and initiate alerts also has positive impacts onperformance. The OM infrastructure must also support the delivery of plant-level

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information to users throughout the enterprise via the Internet or wireless devices. AnOM portal should provide enterprise-wide visibility of manufacturing data. MESAInternational states, “It’s increasingly clear that those who have plant portals and MESare more likely to know what’s happening in plant operations and improve theirbusiness performance rapidly.”

KPIs Enable Performance Management Methods such as Lean, TOC, andSix Sigma

KPIs applied with continuous improvement (CI) methods give everyone in theorganization a clear and concise picture of what is important to the business.Everyone across the organization is focused on responding to meet or exceed the KPIsto enable performance management by creating Lean Visual Controls and postingthem where everyone can see them…show the target and show the progress. Thesedrive a CI culture for change toward adaptive manufacturing through operations.

In Figure 2, FactoryTalk® Historian SE architecture depicts the central role that OMhistorians play in the 21st century’s adaptive manufacturing IT architecture.

Figure 2: FactoryTalk Historian SE Architecture

Utilizing compressed data storage algorithms to manage and store vast quantities ofdata in a small storage format, multiple data sources over multiple OM and enterpriseservers are easily mapped and contextualized to produce sophisticated analytics.These trigger actionable intelligence in terms of KPIs for event-driven workflows.Utilizing FactoryTalk® ProductionCentre, with its ISA-95 plant/production modeland workflow engine, FactoryTalk Historian SE data is able to trigger the productionMES functional capabilities as well as to have the ability to tailor the executionprocesses to individual plant requirements. This capability is augmented andextended with the IBM® WebSphere® technology and sets the FactoryTalk platformapart from the competition. Designed to be easy to install, configure and manage,FactoryTalk Historian SE delivers a major advancement in the rapid time to value. Itprovides the capability to support CI methods with the ease of computation ofproduction KPIs.

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Conclusion

Consumer packaged goods companies are experiencing an unprecedented set ofcompetitive pressures as they move into the 21st century. Their key to competing is tounderstand their manufacturing systems critical to quality characteristics and monitorthem closely through the use of strategically selected key performance indicators inorder to avoid costly excursions from required quality. The development of KPIsfosters the use of the lean manufacturing and continuous improvement initiatives thatare critical to the 21st century adaptive manufacturing environments.

FactoryTalk Historian SE has the power and flexibility to be the CPG manufacturingmiddleware and meet the needs of the complex CPG manufacturing environmentsfor KPI calculation and presentation, product genealogy and traceability, andincreased productivity and profits. It enables CPG companies to work faster, workbetter, work more economically, and most importantly, work smarter.

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Publication FTALK-WP008C-EN-E – January 2010 Copyright ©2010 Rockwell Automation, Inc. All Rights Reserved.Supersedes Publication FTALK-WP008B-EN-E – June 2008

FactoryTalk, Incuity, and Rockwell Automation are trademarks of Rockwell Automation, Inc.All other trademarks are the property of their respective companies.