Part 1: PLM Directly Integrated With ERP – Automated Efficiency.
Purpose? Improve efficiency, productivity and profitability.
Interesting read for? Director / VP of IT, Engineering or CIO, CFO and CEO.
Not all decision makers in the Engineering & IT space fully value connected Enterprise Resource Planning (ERP) and Product Life-cycle Management (PLM). Due to that observation, we at CIDEON decided to explain the value in our own unique way. Without further ado, meet John.
John is the Chief Information Officer (CIO) of a leading discrete manufacturing company. John’s company designs, engineers, manufactures, and sells products in North America, Europe, and Asia.
As CIO, John is responsible for managing the information technology systems, processes, and people across the global landscape, including SAP® for enterprise data management. SAP® is the largest and often most widely used IT asset within the organization as it already covers business process outside of engineering from procurement, to manufacturing and sales, HR and finance.
John’s decisions have a direct impact on supporting the overall enterprise goals which can consist of objectives such as speeding up time to market, increasing overall profitability, or perhaps gaining additional market share to hold or obtain a world market leading position.
John’s company is currently facing major challenges with the purchasing department procuring incorrect materials needed for production. In addition, response time from engineering to queries from purchasing are taking on average 3 days. These challenges are seen primarily at two key sites and is directly influencing the manufacturing process oversees in China.
In China, manufacturing is halted. Incorrect materials are in stock and manufacturing engineers are unable to translate the EBOMs manually updated in SAP® after the materials were received.
These inconsistencies have been brought to the attention of top management, including the CEO and CFO. The CEO is faced with penalties for unmet key customer deliverables while sales is unable to meet additional new customer requirements due to backlogged manufacturing deliverable time-frames. The CFO is furious because thousands to millions of dollars are wasted daily on penalties, and scrap and rework due to the disconnect between procurement and engineering.
After calling John into an executive meeting, his mission is to find an answer within the existing system, SAP®, to support the cross departmental communication and support the business of engineering. Engineering, procurement, and manufacturing need to assign delegates to define and review gaps to ensure the organization can clean up this process, and ultimately profitably sell their products.
John came out of the meeting with an actionable plan to meet with the VP of Engineering, Head of Manufacturing, and Procurement. Bringing these deficiencies to light in their status meeting, John has already arranged a high priority meeting with the VP of Engineering, Head of Manufacturing and his key IT Manager, in charge of day to day SAP® ERP operations.
Interesting in reading more about the outcome of John’s meeting with his core team members from engineering, manufacturing and IT…?
Follow CIDEON’s blog for an update by Tuesday morning, October 18th.
Part 2: PLM Directly Integrated With ERP – Automated Efficiency.
After receiving orders from the executive management, John the CIO must resolve the disconnection of systems and processes, which is causing major procurement and manufacturing issues. These procurement and manufacturing issues are leading to a lack of overall profitability for this leading discrete manufacturer.
As CIO, John is responsible for managing the information technology systems, processes and people across the global landscape. The largest single IT system in place at John’s company is SAP®, which manages the enterprise data including procurement and manufacturing.
After setting aside his frustrations, John arranged the meeting with his three business process stakeholders to investigate the issues. The meeting included the VP of Engineering, Head of Manufacturing and his key IT Manager, in charge of day to day SAP® ERP operations.
During the meeting, John had three main questions, one for each stakeholder.
To his Head of Manufacturing, John asked – how is the engineering data handled and translated to fit the manufacturing needs?
Last but not least, to his IT Manager, John asked whether he has investigated the SAP® system functionality for handling engineering and manufacturing data.
To John’s first question on where engineering data is stored and managed, the VP of Engineering explained there is a PLM system in place, which is a database developed by the CAD vendor. The VP stressed its critical functionality, since the database is able to read the original CAD data and enable the CAD data management accordingly.
To John’s second question, how engineering data was handled by manufacturing, the Head of Manufacturing explained that a design engineering team of 6 full time employees, 2 in US, 1 in Germany and 3 in China, manually print PDF’s based of the engineering drawings, mass export data from the PLM system and enter this data into the SAP system, accompanied by a manual upload of the PDF’s. In SAP, a team of 9 manufacturing engineers translate the engineering data into “business” data, used for manufacturing.
To John’s third question, whether SAP®’s functionality had been fully investigated, the IT Manager explained that inside of SAP®, each department has specialists that manage the various processes. This includes various purchasing specialists that utilize the data which was manually pushed into the system. The manufacturing engineers translate the engineering data and match up the procured items. And of course, the other SAP® business users such as Sales, communicate with the design engineers as well as manufacturing, to ensure the products are as requested and expected by the customers.
To the third question, John followed up, whether the IT Manager has investigated the SAP® system functionality for handling engineering and manufacturing data. John added, that the IT Manager should answer his question instead of explaining the existing process, which was not John’s original question. The IT Manager admitted, he had not investigated this functionality within SAP®, but would do so ASAP.
After the three hour meeting, John demanded that the three business process stakeholders investigate on how to improve the overall process, because the skilled resources such as engineers required to support manual data entry and data management is unacceptable. The process is time consuming, manual, inefficient, expensive and most importantly, it is broken!
John already set a follow up meeting with the investigative results by beginning of next week. In the follow up meeting, John does not want to hear explanations, excuses or any information on the current process. John is demanding the stakeholders come prepared with the investigative results and options available to improve.
Interesting in reading more about the investigative results from the three business process stakeholders…? Follow CIDEON’s blog for an update by Tuesday, October 25th.
After experiencing major issues across purchasing, manufacturing and sales, this leading discrete manufacturing company must identify the systems and processes causing the issues and fix these accordingly.
John, the CIO, arranged for high priority meetings last week with his VP of Engineering, Head of Manufacturing and key IT Manager, responsible for managing SAP ERP.
Today, Tuesday, October 25th, John scheduled the follow up meeting to discuss the investigative results. John was clear that he is expecting feedback on how to improve, not excuses on why the system is broken. The VP of Engineering volunteered to speak on his department. After identifying several inefficient areas within the engineering system & processes, the VP stated he has opened up an evaluation with all the major PLM companies, since the core inefficiencies identified are related to the management of the data, especially when engineering changes are involved. Bottom line, this leading discrete manufacturer does not have an efficient product lifecycle management process in place.
The Head of Manufacturing took John’s demands to identify the issues very serious and traveled to China the day after the initial meeting. He traveled to both manufacturing locations, Shanghai and Liyang, meeting with the local manufacturing leaders, including team leads on the shop floor.
Returning from China late on Sunday, the Head of Manufacturing used Monday to recover and prepare for today’s meeting with John, the CIO. In today’s meeting, the Head of Manufacturing’s presented his findings. Having the local team leads walk him through the exact process from the time the engineering data is pushed into ERP, to the time manufacturing is able to use it, on the shop floor, the Head of Manufacturing noticed that the key issue was related to the Bill of Materials – BOMs.
It turns out, engineering creates the Engineering Bill of Materials – EBOM, driven from the CAD tool and centric to the final assemblies list of parts and components that make up the design. A major pain point identified ironically by the Head of Manufacturing, not the VP of Engineering, was the EBOM is manually re-entered into SAP. Along with the manual entry, there is a manual import process pushing a PDF of the engineering drawing into SAP®. Once the data is entered into the SAP® system, one can only hope that no errors were made during the data entry. The next steps involves creating the Manufacturing Bill of Materials – MBOM, which in this case is a painful disjointed process.
Months pass from the time the EBOM is finalized, in CAD, until the data & information can be used in SAP for Manufacturing – by utilizing the MBOM. The biggest complaint from the local team leads was manufacturing was spending their time in transforming data, instead of manufacturing products.
John, the CIO was blown away. “How the heck can this happen..?”, he asked. The VP of Engineering answered, due to the increasing amount of Engineering data created, the systems & processes were no longer appropriate to manage and transform the data. Last but not least, the IT Manager with responsibilities over SAP® presented his findings. He identified several key areas within SAP®, for which the largest business software provider in the world creates specialized modules to address these specific areas. John asked the IT Manager to elaborate further
The IT Manager elaborated, stating he has meetings & demos already set up with his team leads and SAP to evaluate several of these modules. These modules are within the Manufacturing space, including the SAP Smart Business for Material Requirements Planning (MRP), as well as a several modules within the Extended Supply Chain, including Product Lifecycle Management space, SAP Product Lifecycle Costing.
John asked to be forwarded the website link to the SAP® landing site so he can review the information on his own time. He also asked his IT Manager to include the VP of Engineering and Head of Manufacturing in the meetings with SAP.
In conclusion, John stated that he was very satisfied with the feedback and investigative results, and reiterated that change is the only way the company can fix its issues and get back to growth. He thanked his VP of Engineering, Head of Manufacturing and IT Manager for the hard work, and will plan for a follow up meeting in the next weeks, giving his team members time to meet with the partner.