From the shop floor to the top floor: a new data exchange method provides real-time, accurate data from the factory floor to a company's top decisionmakers.

In the electronics industry, many tools, products and even business plans have been developed to help original equipment manufacturers (OEMs) and their manufacturing partners bring more products to market faster and with improved quality. Collaboration has been the mantra for several years now.

While much effort has been spent linking partners and their respective business and design systems across whole supply chains, many companies have failed to link their most valuable data, information from the factory floor. For example, if your biggest customer demands to know the status of one of its orders today, can you tell them about each lot, where it is in the process and when it will ship? Can you spot a bottleneck in time and then move the product to another line or plant?

To address these questions, companies must react quickly to fluctuations in customer requirements and demands. Today's software tools address the lack of visibility to the shop floor that inhibits accurate planning, forecasting and reporting, and results in inventory gluts and excess cost.

Real-Time Data Exchange

As trading networks have adapted to include hubs, exchanges and other intermediaries, OEMs and their outsource partners have moved toward complete, open collaborations. Accordingly, manufacturing software tools have been evolving to capture, report and analyze all information from nearly any business center, distribution center or back office throughout the supply chain.

This software provides companies with complete visibility throughout the order-to-cash process, including accurate demand data from a customer's customer and real-time work-in-process (WIP) status of suppliers and their suppliers. In some instances, OEMs are even sharing quality data with their vendors and demanding similar data in return. With today's products and integration tools, capturing real-time, seamless, trusted data from the shop floor is now possible.

Previously, supply chain members communicated with each other one-to-one through electronic data interchange (EDI). This practice was first recognized as being world-class when companies like Saturn used it to ensure that they did not pay for a single bolt until it was attached to an automobile. A bit later, Dell was able to further shorten this order-to-cash cycle. (1)

However, the Internet, trading exchanges and collaboration portals are quickly making these world-class practices obsolete. Today, the following new practices are enabled by the integration of supply chain software with shop floor systems.

Planning and logistical support

Relying on a weekly planning cycle in an environment where lot quality and production levels are changing every hour or minute is the wrong paradigm. By closing the loop between execution and planning systems and increasing the frequency of inter-enterprise communications, manufacturing tools can deliver a constantly updated plan for directing and refining execution. This approach will improve available-to-promise (ATP) dates for every unit/lot in production. Reducing planning cycles from weeks to hours enables a quick reaction to fluctuations in customer requirements and demands.

Theory of variable constraints

Instant visibility to bottlenecks and redirecting work orders to recover from bottlenecks can help keep the shop floor working at optimum efficiency. More importantly, it will allow managers to quickly accept and fulfill unexpected orders above what planners had thought the demand would be.

Design for postponement

Optimize the postponement strategy to meet customer demand while controlling costs. Recently, the postponement strategies of electronics companies have been fairly basic: hold as much total inventory in a raw state for as long as possible. While the flexibility of being able to turn an unfinished product into the right finished product for the customer did help reduce costs, it only allowed companies to ride out minimal degrees of unforeseen downturns in demand.

Holding inventory in its least-cost state provides some postponement savings, but this approach also leaves companies unprepared to respond to any upswings in demand. Unfortunately, the further inventory is from becoming a finished product, the more time is needed to get it to the customer.

Simplistic postponement techniques will leave companies unprepared to meet their customers' demands, causing customer service to suffer. Building delays into manufacturing cycle times actually encourages customers to go elsewhere.

Quality

Manufacturers now have the tools and practices to provide standard metrics that enable comparisons of product performance, quality and asset utilization across different facilities, even with significantly different products. When setting controls on processes or product parameters, any employee can be alerted through a simple Web page or email to ensure the fastest possible reaction by the most qualified persons. Escalating the more difficult or recurring problems is done automatically. Suppliers who are willing to link their customers into this shop floor data will be known as the most open collaborators.

Standards

Looking one link ahead into the supply chain to the nearest customer or supplier just is not good enough. However, that capability is all that e-manufacturing tools, such as EDI, have provided so far.

Many companies have recently adopted RosettaNet, the electronic commerce framework that holds great promise. However, RosettaNet is typically perceived as being EDI plus some trading partner process standards.

Partner interface processes (PIPs) replace existing EDI links that handle order management, forecasting and invoicing. (2) While PIPs are helpful, much more is required to collaborate effectively with shop floor data.

Current Solutions

Several products, exchanges and portals are providing some limited benefits. These solutions span various industries. The automotive industry was among the first to adopt these tools, believing that many efficiencies could be found in the typical automotive supply chain. Companies like Covisint are creating the first generation of tools to allow auto industry collaboration partners to compress planning cycles and enhance supply chain planning. Electronics manufacturers have several disparate choices, including product lifecycle management (PLM) tools and enterprise resource planning (ERP) hosting services.

Several years ago, the industry association, IPC, formed a consortium that includes electronics companies, the National Electronics Manufacturing Initiative (NEMI), Georgia Institute of Technology and others. The consortium's purpose was to test and validate different shop floor communications standards based on the latest technologies. The results of this work are now entering the real world. (3)

For example, one solution was implemented in one company's automotive electronics manufacturing plants. This solution employs the latest Internet and intranet technologies to capture information directly from shop floor test and measurement equipment and send it to analysis and decision-making software. These tools enable manufacturing engineers anywhere in the world to analyze product and process parameters from almost any factory equipment, regardless of vendor, simply by pointing and clicking.

Some software vendors have attempted this approach in the past. However, their software tools often failed when they attempted to network with non-standard equipment or five-year-old legacy machines. No vendor could successfully automate shop floor communications when the real value lies much farther up the supply chain. As a result, many vendors today are marketing products that provide collaboration features at the business to enterprise level, but these products ignore the valuable shop floor data.

A better solution depends on receiving pure data generated on the shop floor, with no human intervention needed or desired to capture the data as it comes directly from the equipment. Accordingly, no manual methods are required to generate, distribute or display asset utilization, cycle time or quality data.

The data are self-describing, a feature of XML, which means no additional interpretation is required. No data massaging occurs, so true apples-to-apples comparisons of data are possible across production lines, work shifts, product lines and even plants. Finally, because the data and its analysis and display are Web-based from the factory floor to the executive suites, the supply chain can be truly linked from beginning to end.

Conclusion

When a supplier is working on an essential component of your product, you must have the greatest possible visibility into that supplier's entire process. If you can know when the supplier is late from their data, then you will know which vital component will be late and that your product will be late.

If the supplier's quality levels are out of control, the more you know about the defects, failure rates and causes, the easier you can adjust your processes accordingly. Many small adjustments made by a highly organized supply chain are far more efficient than major adjustments made by partners who communicate poorly.

References

(1.) Dilts, D. 1999. "Impact of Business-to-Business e-commerce on Next Generation Manufacturing Systems." Presented at European NGMS meeting, November.

(2.) Kramer, D. "Realizing the Benefits of Implementing RosettaNet Implementation Framework (RNIF) Version 2.0." Published online at www.rosettanet.org.

(3.) Dugenske, A. 2001. "The Framework Implementation Project." Circuits Assembly. March.

Michael Motherway is a product manager with the Global Software Group of Motorola, Elk Grove Village, IL; e-mail: [e-mail].