Effective new product introductions (NPI) processes should include multiple roles, and integrate voices and processes from procurement, supply chain,...
Business leaders today face a variety of competitive and regulatory pressures that complicate the process of fulfilling their mission. How do they cope? One of the key ways is to pursue Operational Excellence. Recent LNS Research surveys indicate that over 50% of the respondents have operational improvement as their primary strategic object, and over 80% have it as a top three objective. At LNS Research we have adopted the model that process improvement, including the pursuit of Operational Excellence in manufacturing and asset intensive industries, is based on balancing the people, processes and technology in at least five key process areas: Asset Performance Management (APM), Enterprise Quality Management Software (EQMS), Environmental, Health & Safety Management (EHS), Industrial Energy Management (IEM) and Manufacturing Operations Management (MOM).
Other business processes, such as Supply Chain Management (SCM) or new product design and introduction (NPDI), may also be critical to achieving Operational Excellence in certain industries. The challenge many enterprises face is bringing the right combination of people, processes and technology together across all of their critical business areas. Too often each area tends to implement technology to solve specific process issues. The projects end up creating islands of information and processes that may be optimized internally, but negatively impact the pursuit of Operational Excellence across the larger enterprise.
The Role of Enterprise Architecture
The solution to this problem of having isolated systems, often incompatible technologies, and organizational counter productive environments is to view the entire Operational Excellence exercise systemically. Fortunately, a methodology to do this is readily available. Within IT circles a process known as Enterprise Architecture, and associated practitioners known as enterprise architects, has already evolved. Enterprise Architecture (EA) has its roots in the 1980’s, and one of the first EA models adopted was the U.S. National Institute of Standards and Technology (NIST) model from 1989.
In the mid 1990’s the Open Group, a 400 member consortium of vendor and user companies created The Open Group Architecture Framework (TOGAF) for defining IT architectures. It has emerged as the most popular framework in the industry for defining IT architectures. However, there are four domains to architecture that must be reconciled; business, data, applications and technology. For manufacturing organizations, where much of the operational technology falls outside the domain and control of the IT organization, traditional EA efforts often fall short. They usually fail to define the complexity of the people, processes, and technology that are really essential to achieving Operational Excellence. It relates to fulfilling the primary role of a manufacturing or asset intensive enterprise in creating and delivering products and services.
Manufacturing Enterprise Architecture
Hence the need for a Manufacturing (or mining or other industry specific) Enterprise Architecture to define the system of systems that make up the manufacturing enterprise. Manufacturers and asset intensive industries need to extend their EA efforts beyond the IT systems, and incorporate the production and other operational systems such as APM, EHS, EQMS, IEM, MOM and process control and automation systems. As the Industrial Internet of Things (IIoT) takes shape, Smart Connected Assets enable Smart Connected Operations and have Smart Connected Products. Following this, EA will become less about the classic business IT systems and more about the people, processes and technology that directly contribute to the bottom line of a manufacturing or asset intensive business. This presents a challenge in that EA skills are rare outside the IT organization while industry specific domain expertise, particularly about production and engineering systems, is rare inside the IT organization.
This creates the need to bring together the two halves of the business, the business IT, and the operational side in an exercise to create a more comprehensive architecture that reaches from the smart assets on the plant floor all the way to the business systems. Those are the systems of record used to maintain compliance with financial and other regulatory requirements. The best way to do this is to form a Manufacturing Enterprise Architecture team that is chartered to create and maintain the architectural plan and documents that support the plan.
The team is typically comprised of multiple layers with very large cross-functional representation, and with managerial participation to guide direction and strategy. Peeling away the managerial layer you have another smaller, but still large team that brings together all of the domain, process, and system experts across the business to provide guidance on what the as-is state is now and to help guide and establish what the desired state should be. At the center of the effort is a core team chartered to lead the EA effort as well as maintain all of the plans and documents. This core team is comprised of full time EA staff and select specialists representing the key functional elements of the business that have other full time roles and a dotted-line relationship to the EA group.
The Benefits of Extending EA to the Plant Floor
Since defining a Manufacturing Enterprise Architecture will take an investment of people and time many businesses, particularly larger ones where there are levels of complexity that may require substantial effort to understand, don’t want to make the investment, at least not to do the effort correctly. While the idea of Operational Excellence is appealing the first reaction of many businesses is that by optimizing all the little things the overall performance is bound to improve. They look at the cost in time and money of an EA effort and don’t see the short term ROI.
The reality is, without an overall architecture most businesses will overspend for functionality. The maintenance department will buy a solution to solve their maintenance problems, operations will buy a MOM package for the plant floor, the Quality group will buy a specific quality solution and the IT department buys the ERP. What happens is that they end up with four or sometimes more systems each with overlapping functionality, so they end up buying three or more times more functionality than they intended.
What makes matters worse is that when each group looks at a particular metric such as Overall Equipment Effectiveness (OEE) they usually have different numbers since each system uses slightly and independently collected data to calculate the metric. They then spend more time arguing about which number is correct than they do trying to improve the OEE. Add to this the costs of maintaining multiple systems and the interfaces and costs can skyrocket. A proper EA effort will help optimize the number of systems, eliminate excessive duplication of functionality, lower costs and improve overall information flow. It is not uncommon to see immediate savings from an EA effort as information bottlenecks are eliminated. Many businesses that have done a top-to-bottom EA exercise find that the path to Operational Excellence is not as difficult as they may have thought and the benefits more than pay for the effort.
All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.