Pelion Systems Champions Manufacturing Process Optimization

Globalization and outsourcing are proliferating within the manufacturing industry, and most successful companies are implementing demand-driven business models as they seek ways to capture, shape, and respond to the demands of the dynamic global marketplace. This is because as demand visibility improves, manufacturers are called upon to respond to that demand more quickly and with more predictable results. Thus, increasingly, organizational visibility into the capacity and performance of production assets, whether wholly owned or outsourced, is needed to support decisions about where and how to meet production demands in a profitable and predictable fashion. In sum, manufacturing operations today are characterized by a significant need for factory transformation management.

Evolution of Tiered Manufacturing Operations

A top-down approach to manufacturing coordination and visibility is clearly in order. Consequently, manufacturers are looking beyond the realm of local execution capabilities to architectures and systems that support interdependent supply networks (ISN), synchronizing the execution of compliant manufacturing and logistics processes across a dynamic supply network (see Supply Chain Management is Evolving toward Interdependent Supply Networks).

In addition, the lines between familiar production applications have blurred. Modern production execution management applications combining traditional manufacturing execution systems (MES), quality, asset, and performance management functionality are beginning to emerge. These will offer manufacturers a more cost effective and integrated approach to contemporary manufacturing challenges, while providing an integrated view of site-level performance.
ISNs require the orchestration of manufacturing operations on a global scale. Progressive enterprises view manufacturing as a strategic node in their ISNs. Brand owners are embracing the growing role of contract manufacturing and logistics to supply product in increasingly volatile supply networks. This is fueling the rapid evolution of a market for applications that provide brand owners with visibility into the performance of distributed arrays of manufacturing assets. ISN involves leveraging current investments, as well as making long overdue investments in the dynamic closed-loop scheduling of distributed assets, such as plants and distribution centers.

Local Manufacturing Operations Require Manufacturing Performance Optimization

First and foremost, production operations must focus on local execution excellence. Manufacturing capabilities vary dramatically across industries, geographies, individual manufacturing sites, and even production lines within those sites. Mergers and acquisitions have compounded the problem of highly heterogeneous plant software, instrumentation, and control landscapes, resulting in poor replication of manufacturing best practices. Moreover, for the past five to ten years, upgrading plant systems has taken a back seat to preferential investments in enterprise transactional systems, including enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM), and supplier relationship management (SRM).

Global manufacturers are now finding that in-house and contract manufacturing requires local investments in plant automation and control to ensure agile, compliant, first-time responses, as well as the associated visibility into the status and performance of all manufacturing assets. Enterprises are changing how they source, manufacture, and distribute products. They are gaining a greater appreciation for speed, timeliness, reach, execution, and integration with manufacturing operations strategies, including demand management, supplier management, product, and transportation and logistics strategies.

What Are Manufacturing Execution Systems?

Plant execution software systems have many different scopes, forms, and formats, and they mean different things to different folks. Although plant execution software is used widely in a number of industries, it is rarely described similarly, and its functions are hardly ever identical.

An execution system used at an electronics discrete manufacturing facility is similar only in concept to one used at a food processing plant, and these differ substantially from that used by a pharmaceutical or chemical manufacturer. Time and experience have led the most successful vendors to pursue a “narrow-and-deep” strategy, and to devote their software development to the industries they know best. Even still, the names given to the various components of the execution systems vary greatly among industries and even among companies within an industry—if not between plants within a company.

To add further confusion, official definitions of a manufacturing execution system (MES) differ as well. APICS Dictionary (11th edition) defines it as

[p]rograms and systems that participate in shop floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a very short history into the past. Quality control information is also gathered and a laboratory information management system [LIMS—applications used to manage the collection of samples, collection and formatting of test results, and the reporting of results by sample or product category, whereas these applications may be environmental-, medical- or research-focused] may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications either dynamically or off line. [italics added]

Gartner’s IT Glossary defines MES as a

computerized system that formalizes production methods and procedures within the manufacturing environment, providing online tools to execute work orders. The term is generally used to encompass any manufacturing system not already classified in the enterprise resource planning (ERP) or open control system [OCS—a manufacturing system that is based on a set of commercially available, standards-based technologies, and that permits the open exchange of process data with plant systems and business systems throughout a manufacturing enterprise, whereas "control" refers to process control for discrete, batch, and continuous-process manufacturing, as well as computer numerical control and other motion controls] categories. In the broadest definition, MESs include computerized maintenance management systems (CMMSs), LIMSs, shop floor controls (SFC—a system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings), statistical process control [SPC] systems, quality control systems, and specialized applications such as batch reporting and control. [italics added]

What these lengthy definitions illustrate is that it can be difficult to easily identify or define the full range of applications used on the plant floor, let alone determine what falls exclusively under MES. Moreover, vendors never hesitate to add to the confusion by using creative labeling to suggest difference.

To put MES into perspective, it can be defined both broadly and specifically. Broadly speaking, MES can be regarded as a collection of business processes that provide event-by-event, real-time execution of planned production requirements. For example, it can calculate what and how much to produce, based on information from the enterprise planning level. From electronic production management systems to shop floor data capture, MES functions manage operations from point of order release to manufacturing, to point of product delivery to finished goods.

A narrow definition of MES is that it serves as a work order–driven, work-in-process (WIP) tracking system that manages and monitors production events and reporting activities. It captures “live” information about setups, run times, throughput, yields, etc., allowing managers to better measure constraints, identify bottlenecks, and get a better understanding of capacity. It closes the loop for production management and helps ensure production is followed as planned.

MES Today

Seen as a bridge from the plant floor to the rest of the enterprise, MES has become the principal means of delivering real-time order status to the supply chain, for available-to-promise (ATP) processing, and for “closing the loop” with sophisticated enterprise and supply chain planning systems.

PPM Software Vendors

With many PPM vendors focusing their attention on IT governance, here are some vendors to consider when searching for a solution to model an organization's governance framework (a future article will provide more in-depth coverage of these vendors).

Computer Associate's (formerly Niku) Clarity product incorporates strong resource planning and financial management functionality with top-down portfolio analysis capabilities. Sophisticated real time capture and control of financials make Niku a strong candidate for regulatory compliance (e.g., SOX). Also, its robust resource planning module provides extensive resource management capabilities to support sophisticated IT governance policies. As one of the originators of PPM, Niku is a serious contender for organizations looking for extensive functionality to support their IT governance framework.

ProSight's portfolio management software's real strength lies in PPM and compliance for the government sector. ProSight's focus on government agencies help IT departments comply with a number of government-specific compliance regulations, such as Section 508 of the US Rehabilitation Act, the Federal Information Security Management Act (FISMA), privacy compliance, the Clinger-Cohen Act (CCA), and the Government Performance and Results Act (GPRA), to name a few. A good number of their clients are US federal government agencies.

Pacific Edge offers a different approach to IT governance by providing its maturity-based Accelerators solution, which allows organizations to incorporate their governance framework in a staged manner. Pacific Edge offers three stages of accelerators with the initiation and visibility of IT governance, the maturity of the execution of a governance framework, and the investment focus of project portfolios. These IT governance stages are priced and packaged to grow with an organization.

Augeo Software offers a PPM solution that is strong in tracking a high number of short term projects that need to comply with an organization's IT governance framework. Augeo 5 is strong in supporting many projects in multiple locations by using project templates and accurately tracking financials and resource utilization. Known for its strong resource planning capabilities, Augeo has attracted large multinational organizations in pharmaceutical, automotive, media, government, high technology, and financial services, especially in Europe.

PlanView's IT governance solution, PRISMS, offers its own best practices process maturity model based on PlanView's functionality. PRISMS provides the ability to measure performance and actuals, analyze and document decisions, execute changes efficiently, and monitor service deliveries with key performance indicators. In addition, PRISMS offers continuous improvement processes, allowing an organization to adapt to new best practices for IT governance. Supporting many of the top companies in the financial and insurance industries has made PlanView a strong vendor to consider for IT governance in those sectors.

Mercury Interactive provides IT Governance Center, where dashboard technology integrates all major components of demands, portfolios, programs, projects, resources, financials, and application changes for real time visibility of project portfolios. Mercury's IT Governance Center tracks all demands made from IT and allows an organization to adapt to the major processes and project control frameworks, such as Six Sigma, CobiT, and ITIL. Known for its testing toolls, service level management (SLM), and focus on application management, Mercury is an important vendor to consider for IT governance frameworks covering SLM and application development (e.g., Six Sigma and CMMI), as well as regulatory compliance (e.g., Health Insurance Portability and Accountability Act [HIPAA] and SOX).

Defining IT Governance

The differences between success and failure in today's high technology environment, for many organizations, are based on the IT governance framework they adopt. IT governance recognizes that information technology is what drives today's businesses. Implementing a framework of best practices to support and to efficiently run an organization's IT infrastructure facilitates an IT department's efforts to effectively carry out its objectives, while closely monitoring any bottlenecks along the way.

There are numerous vendor neutral governance frameworks that have been widely adopted by large IT departments. The most widely recognized and adopted for IT governance are Control Objectives for Information and Related Technology (CobiT) and ITIL:

CobiT is a best practices framework developed by the IT Governance Institute (ITGI). CobiT's best practices focus on the control and measurability of IT. Tools are provided to assess and measure all aspects of IT within the thirty-four identified CobiT processes. Increasingly, CobiT standards are adopted as best practices in the governance of information, IT, and risk. For CobiT, the purpose of IT governance is to ensure that IT's performance meets the following objectives.

* For IT to be aligned with the enterprise and to realize the promised benefits
* For IT to enable the enterprise by exploiting opportunities and maximizing benefits
* For IT resources to be used responsibly
* For IT-related risks to be managed appropriately



ITIL is a set of best practices documents and standards originally developed by the UK Government of Commerce, and directed at IT service management. ITIL is organized into a series of best practices referring to service support, service delivery, planning to implement service management, information and communications technology (ICT) infrastructure

PPM's Role in IT Governance

By nature, internal IT departments are project-centric. Consequently, the tools implemented to manage projects and their operational realities play a central role in the governance of all IT activities. PPM vendors have seized the opportunity to address this growing area of IT governance. PPM tools provide IT organizations with the ability to implement governance strategies while ensuring that the processes in place are adhered to by all relevant parties. PPM tools contribute to IT governance by providing the following core components.

1. Portfolio planning and selection allows vendors to align their IT processes with strict controls on the planning of projects within the context of the portfolio. Risk, cost, and benefit analysis, as well as what�if scenario reports, contribute to the IT governance adage of maximizing return on investment (ROI).

2. Executing best practices provides flexible resource utilization, project planning, time tracking, collaboration, and business intelligence functionality in line with best practice methodologies outlined by an IT department's governance framework.

3. Assessment of performance and cost allows IT organizations to evaluate the true cost and benefit that a portfolio of projects contributes to the future incorporation of best practices and standard processes put in place. Portfolio analysis, project accounting, and real time system tracking of works, projects, and cost facilitate IT organizations' ability to measure compliance with internal policies, as well as external compliance regulation (such as SOX).

These components ensure that from inception to planning, execution, and post-assessment of projects, an IT organization's governance framework is in line with its business objectives from a cost and benefit perspective.

IT Governance: Maximizing the Business Investment

Information technology (IT) management and chief information officers (CIO) share a common goal to maximize the value of their IT investments. Achieving this requires a strong foothold on the multiple projects taking place at any given time. Identifying risk, resource utilization, and earned value with a portfolio of IT projects necessitates the implementation and adoption of standards processes to track and respond to any "red flags" that may appear. This is accomplished by establishing IT governance, where a structure of relationships and processes will direct and control an organization in order to achieve its goals to add value and to balance risk. Moreover, the standards and processes put in place can assist organizations with compliance issues surrounding the Sarbanes-Oxley Act (SOX) and other governance standards (Organizational Project Management Maturity Model [OPM3], Capability Maturity Model Integration [CMMI], Information Technology Infrastructure Library [ITIL], etc.).

In light of the increasing interest in IT governance, numerous project portfolio management (PPM) vendors have directed their focus on addressing the pain points expressed by internal IT departments. With the inherent functionalities of portfolio analysis, budget/cost controls, risk analysis, and audit trails found in PPM software, many PPM vendors have recognized the value they provide to the challenge of putting in place an IT governance framework.

PPM's Place within IT Governance

A number of today's PPM vendors originally were established in response to the lack of available tools addressing the needs of internal IT departments. With the onset of professional services automation (PSA), these tools eventually extended their functionality to address professional services organizations. As the PSA industry matured, major enterprise resource planning (ERP) players entered the billable services space. In turn, a number of best-of-breed vendors, weaker in the area of financials, repositioned their offering by focusing their efforts on functionality for internal IT departments in resource planning and portfolio management. Thus, a number of vendors have adopted the IT governance mantra to differentiate their best-of breed functionality from the integrated PPM solutions offered by the ERP industry.

Vendors such as Computer Associate's Niku, ProSight, Pacific Edge, Augeo Software, PlanView, and Mercury Interactive, among others, recognize the value of positioning themselves as niche vendors in IT governance. In response to the strong billing and project accounting functionality offered by ERP and accounting vendors, these best-of-breed PPM vendors have focused their marketing efforts on IT governance to strengthen their offering.

PPM Vendors for NPD

As PPM becomes increasingly important in NPD projects, numerous PPM vendors have extended their offerings in this area. Organizations looking for a PPM solution for their NPD projects should consider the PPM vendors below.

Niku's Clarity solution provides the tools that are necessary from the decision stage to the development and delivery stages of NPD. Niku provides reporting tools (bubble diagrams and histograms), as well as collaboration and decision support applications to support PPM for NPD and R&D projects. Key to Niku's offering is its People Powered Innovation concept, which provides companies with tools to facilitate collaboration and to gain increased visibility into people-related processes such as idea development, resource capacity planning, and project staffing.

Planisware's OPX2 NPD solution targets NPD projects based on Stage-Gate� best practices. OPX2 NPD offers a single system with four strategic tools for product development. These include project management, NPD process management, collaboration, and project information management tools. Planisware plans to include its Project Intelligence application, which improves predictability, collaboration, and visibility of NPD projects, as a part of OPX2 NPD in the future.

Pacific Edge's NPD solution seeks to align NPD projects with corporate strategies. At the core of its solution lies the Pacific Edge Mariner product. Pacific Edge Mariner provides users with a Web-enabled solution built on portfolio management functionality. For NPD projects, Pacific Edge adopts a stage-gate approach, providing tools to monitor lifecycle, resource, financial, and project data in an integrated decision support framework where trade-offs are examined, impacts are analyzed, and performance is tracked and optimized.

Artemis Software's NPD solution focuses on the manufacturing, high technology, life sciences, and consumer goods markets. Artemis for NPD delivers PPM, lifecycle management, financial management, idea management, project management, and resource management components. Artemis also incorporates stage-gate processes, and has recently introduced an idea management module to capture, manage, and route multiple ideas for NPD projects.

Augeo Software handles the production side of R&D projects with Augeo 5, its NPD solution for the pharmaceutical, automotive, and high technology sectors. For NPD, Augeo's PPM solution focuses on resource allocation and project lifecycle functionality. However, Augeo lacks functionality in the areas of idea generation and product launching.

Sopheon is a best-of-breed vendor that offers a PPM solution uniquely for the NPD market. Sopheon Accolade integrates the stage-gate process (as well as other phase-based processes) into its offering to allow tracking of NPD projects from both a day-to-day activity and a business strategy point of view. Sopheon delivers dashboard technology, customizable portals, centralization of project phase data, and alignment monitoring functionality.

Realization offers a PPM solution that is specifically designed for NPD in the IT, defense, and manufacturing sectors. Realization's product, Concerto Engine>, adopts the "critical chain" concept, factoring in the uncertain elements that are prevalent when managing multiple projects. Concerto Engine facilitates management by level loading resources based on the pipeline of projects and providing buffer management to calculate unscheduled time and resources when uncertainties arise during project execution. This is all achieved in a single relational database.

PPM Phases for NPD

Traditionally, organizations have focused on capturing and organizing documents, content, bill of materials (BOM), and specifications for new products. In contrast, PPM emphasizes the human resources (HR) component of NPD, which can drive the success or failure of projects. PPM software uses the following phases to address NPD projects.

1. Planning. Planning enables an organization to share and prioritize ideas, ensure projects are aligned with business and financial goals, and determine resource capacity. PPM solutions facilitate planning by offering Web-based bubble diagrams, "what-if" scenario reports, and collaboration or repository applications to help rank and share ideas.

2. Development. This phase allows managers to build resource teams based on templates; provides quick access to information and collaboration capabilities for team members; and allows access to forecasting, scheduling, and costs reports. PPM solutions contribute to development by providing resource planning tools, dashboard capabilities for visibility and collaboration, and real time executive reporting.

3. Delivery. The delivery phase helps organizations to successfully launch a product by improving collaboration between production and marketing, optimizing marketing by providing a single repository for consistent information, and managing product engagements and installations. In aid of this, PPM solutions provide collaboration tools, workflows, and dashboard technology to view and control all aspects of the product delivery process.

Supporting Stage-Gate with PPM

Though tools that gauge the aforementioned NPD and R&D project phases are important, implementing a best practices framework is also a critical factor in the success of a project. According to Robert G. Cooper's 2001 book, Winning at New Products: Accelerating the Process from Idea to Launch, Stage-Gate is one of the more popular NPD methodologies adopted by organizations seeking to closely monitor the progress of their projects.


(Source: http://www.prod-dev.com/stage-gate.shtml)

Stage-Gate is a best practices road map that divides NPD projects into distinct stages in order to formalize the careful evaluation of projects by management. As the above diagram shows, each stage is divided by decision gates where key decision makers can impose a go or kill command or determine the prioritization of the project at hand.

From the inception of an idea to the launching of a product, a gate acts as a decision point for key decision makers in an organization. Acting as a funnel to determine where resources are best allocated, the gate allows management to confirm if project deliverables are met based on predetermined qualitative and financial criteria. The output of the gate review will determine whether NPD or R&D projects will continue, be cancelled, be placed on hold, or be reprioritized (these outcomes are also known as go, kill, hold, and recycle, respectively). Furthermore, the gate review sets the plan for the next stage in the process.

During these various stages, tasks are executed by project managers and staff. Each stage costs more than the preceding stage, and project commitments are incremental. The following list catalogs the five stages of the Stage-Gate process.

* Stage one involves scoping. This is an assessment of the market adoption and technological merits of the projects.

* Stage two involves building the business case. Stage two is a critical decision point for moving forward with a project based on the product definition, justification, and plan.

* Stage three is development. Plans are translated into actual deliverables, where manufacturing or operations map out marketing, operating plans, and testing.

* Stage four involves testing and validation. This step requires total validation of the product, production process, customer acceptance, and financial viability.

* Stage five is the launch—the complete commercial launch and production of the product.

Stage-Gate imposes discipline on the rather chaotic processes typically found in NPD projects. Stage-Gate also clarifies requirements and manages business risk by breaking resource commitments into stages, thus greatly improving the success rate of NPD projects.

Project Portfolio Management for New Product Development: Tracking the Project Cycle from Idea to Launch

Besides being relevant to professional services organizations (PSO) and internal information technology (IT) departments, project portfolio management (PPM) software is applied in multiple vertical markets in the area of new product development (NPD). In industries ranging from manufacturing and high technology to consumer goods and biotechnology, PPM solutions help manage the corporate objectives associated with NPD projects.

PPM for NPD and research and development (R&D) projects addresses the needs of organizations seeking to maximize resource utilization for a portfolio of projects. PPM software empowers decision makers to select, evaluate, and prioritize their NPD and R&D projects. Furthermore, existing projects can be accelerated, terminated, or de-prioritized by the allocation or re-allocation of the resources that deliver project tasks. In the area of NPD, the primary objective of a PPM solution is to facilitate strategic and financial control throughout the project or product lifecycle.

The following article will examine the features and benefits of PPM in the NPD arena, as well as some of the vendors that provide specific functionality for this growing market segment.

Challenges in NPD

PPM is a key component of an organization's NPD strategy. The main challenge faced by managers and executives tracking NPD projects is the identification of bottlenecks within the NPD process that are relevant to their unique function within an organization. For instance, at any given time, project managers need to identify the short term availability of resources in relation to the requirements of a portfolio of projects. Vice presidents (VP) and "C" level executives, on the other hand, need to identify mid-term and long-term viability, return on investment (ROI), and strategic business decisions regarding their resource investments.

According to the Product Development Institute (http://www.prod-dev.com), organizations apply PPM methodology to address the following three critical issues in NPD and R&D projects.

1. Maximizing the value of portfolios by effectively managing and allocating resources to optimize profitability, maximize ROI, and reduce risk. This is achieved through the financial controls and scoring models offered by PPM solutions.

2. Achieving balance between business goals, risks, vertical markets, business strategies, and technologies. PPM solutions offer bubble diagrams, histograms, and other graphical reports to assist organizations in benchmarking their balance.

3. Aligning portfolio spending with the organization's business strategy. This can be achieved by implementing a PPM solution that provides strategic cross-referencing between projects, as well as a "gating" process, which enforces checkpoints to evaluate the viability of projects.

It is important to note that PPM solutions help provide the streamlined system that is necessary to address these critical issues by centralizing the information needed to track and evaluate NPD and R&D projects from idea to launch.