Infosys-Oracle Blog

A tough business climate as today's challenges corporations to introspect and reinvent themselves. This also provides businesses with an opportunity to improve their odds of success during a recession by striving to achieve operational excellence in all functional processes including manufacturing. One of the keys to improving operational effeciency in the shop floor is to identify and reduce non- value adding activities and waste as much as possible. Managing rework and scrap is one such area to focus on. Rework and scrap often constitute a significant proportion of work content and material handling in the shop floor, yet organizations rarely expend the necessary effort to systematically reduce scrap and rework in the plant and floor areas.

Rework and scrap inject additional processing time to a production line and can also result in additional needs for material handling throughout the plant. In a machining plant for a world leader in industrial equipments, nonconformances resulting in rework and scrap accounted for about 21% of total transactions on an average per day. Yet, they were handling rework and scrap as they came every day, without any focused approach to analyzing these and formulating a process driven system to identify the prime causes and focus on their elimination. That is why historically they have had rework amounting to roughly one- fifth of their regular work.

Rework impacts the daily output of a production line because of the additional time and material required for the rework. It is necessary to develop metrics to measure the rework in quantifiable terms. Once the metric has been determined, it is necessary to collect the data related to rework as per the metric identified. Proper analysis of the collected data (statistical and emperical), would lead to identification of the main causes of rework. These analyses identify the process, or machines or resources that mostly induce the rework.

Scrap causes additional material handling in the plant in moving the scrapped material from the point of detection, to the point of inspection, and then upon disposition, out of the factory. As with rework, the data regarding scrap also needs to be captured and analyzed. This would help in identifying the major causes of scrap. Scrap can be caused in the shop floor due to various reasons such as a faulty machine, operator skill levels, or problem with the raw material provided by a supplier etc.. Preventive actions, such as automated quality checks for incoming raw material, quality checks built into each production process, automated measurement of process capabilities across the relevant dimensions etc. can help in reduction of scrapped quantities.

Effectively managing rework and scrap would lead to a lower cost of quality and less interruption to the regular flow of work. They present two areas of cost savings and operational improvements for plants that strive towards excellence in manufacturing. The current economic climate challanges businesses to squeeze costs and ineffeciencies in order to generate profits for their shareholders. This could be the key to surviving the economic downturn. The plant mentioned in the above example, has a lot to gain by focusing on systematically managing rework and scrap.         Questions to fellow bloggers:

• What initiatives of managing and reducing rework and scrap have you come across?
• Can you share any metric developed to measure and manage rework and scrap?

Posted by Rupam Das at 08:56 PM | Permalink | Comments (3) | TrackBacks (0)

To remain competitive in today's environment, manufacturing companies are looking at boosting their supply chain performance. One of the key levers for improving supply chain is 'cost reduction' at various stages of the entire chain.

One such stage is the manufacturing plant which, it can be said is the center of the supply chain. Optimal handling of plant operations can have a hugely positive impact on the upstream and downstream supply chain. Some of the plant level strategies that can help manufacturers improve the performance of their supply chain are -

• Cycle Time Reduction: Organizations must optimize the various manufacturing operations (e.g., reduction in queue times at work center) to reduce cycle time. This leads to increase in throughput and lower inventory cost. Reduction in cycle time leads to improved time-to-market, thereby helping organizations to react to market changes quickly
• Small Batch Size: This strategy can be useful to plants that produce a high product-mix. For such manufacturers, batch size reduction reduces the inventory cost. In order for small batch sizes to work, the changeovers must be quick 
• Reducing Downtime: Unplanned downtime is a 'waste' and plant staff should minimize downtime.

The above strategies, if adopted will lead to reduced inventory in the entire supply chain.

ERP systems along with Manufacturing Execution System (MES) help organizations track performance of a production line, the overall plant level performance and also the performance on various customer and supplier related parameters. The extensive data that get captured in the ERP and MES systems, can be used to implement an improvement plan to achieve manufacturing excellence

Posted by Samiksha Hariharan at 06:20 AM | Permalink | Comments (1) | TrackBacks (0)

With the economic meltdown of the financial world and a severe downturn and meltdown in the Automobile and Retail sectors we are possibly headed for tough times ahead.

With the global economy being so intertwined there is no sector or industry vertical that is immune to this crisis.

The key questions running in every CEO/CFO/CIOs mind is ‘survival’. The words doing the rounds are ‘savings’, ‘cuts’, ’minimize investments’, ’reduce spend’ etc. etc. etc. And of the key enterprise functions that usually receive these ‘cuts’ is IT. The CIO is typically the first person who is handed a budget cut, asked to trim his unit and reduce spent. The CIO frantically looks at his portfolio to see what could get that cut and more often than not the Business Intelligence is the unit which gets the axe, although mistakenly. BI is often perceived as a ‘nice to have’, ‘can do without’, ‘my business can run without those reports’. Well, organizations and enterprises who still harbor such a feeling have probably still not been able to attain a maturity in terms of its BI capabilities. Or may be they are not being able to get the real benefits out of its BI investment.

In my opinion it is just the time to turn all your attention and energy to ensuring that we capitalize Business  Intelligence  to ensure maximum benefits in trying to ensure ‘savings’, ‘provide value to your customers’, ‘understand your customer better’.

To understand this a bit better let us see if we can some answers to some of the key questions that are possibly running in the mind of most of the CEOs

o       How do I know where I am losing revenue or how do I stop revenue leakages or improve operational efficiencies? à The answer could simply be use your BI platform

o       How do I know  how many of the customers  across my units are unhappy and what are the top reasons for remaining unhappy? à The answer is your BI application should be able to easily be able to give you that answer

o       What offers have the highest uptake, so that I could use them to hold on to my current customer base? à The answer could again be use of advanced BI technologies like Predictive Analytics or   Data Mining.

So as we can see from the questions above, Business Intelligence is something which deserves possibly the most attention and energy to ensure that organizations are in business, especially in these difficult times. Leave alone reducing spent on BI , a lot of attention is needed to ensure that BI is delivering the business benefits that it should be providing.

A few key aspects that should be looked into by every organization, with regards to BI are:

1.      Rationalize your BI system to ensure that the KPIs and Reports relevant to business are coming out

2.      If possible run a data quality check to ensure that the reports are accurate and business can depend on them for decision making

3.      Ensure that the data is relatively current, old data is as good as no data – improve your data refresh performance and if possible use real time data wherever possible

4.      If  you have a data mining capability in house , try to use it to aid in better business predictability

All these can be done without any ‘big’ IT investments or going for a new OLAP or ETL tool.

In my view by tidying up your BI space and few good housekeeping activities coupled with a result oriented approach should help in bringing better business capabilities in these gloomy times. Is that not what BI was anyway supposed to do, in good and bad times?

 

Posted by Somnath Mukherjee at 04:51 PM | Permalink | Comments (4) | TrackBacks (0)

Standardization helps businesses develop the ability to "consistently" deliver high quality products and services its customers. It drives manufacturing excellence by raising the efficiencies of operations by reducing process variability, adopting optimal procedures to complete work and then adapting those procedures as effective practice within the organization.
While most organizations understand the importance of process standardizations, there could be confusion with respect to the approach that should be followed. Businesses looking at standardizing its operations can look at the following approaches -

• Top-Down: This approach is ‘benchmark’ driven standardization approach and is at a business functional level (e.g., manufacturing). It is typically driven by senior management and has strategic focus
• Bottom-up: this is a process standardization driven approach (as in Lean, JIT etc) where processes within a business function (such as production control within manufacturing) are standardized. This is typically handled by operational folks with execution focus.

In practice, there is no one single approach bottom-up or top-down that helps achieve standardization. Organizations that are successful use a two-pronged strategy. While the senior management drives standardization at business function level, they are usually broken down to specific process level standardization initiatives (e.g., while the senior management may want to standardize manufacturing processes the operations manager will convert that into specific initiatives as JIT for material control, Lean for Production control and Kanban for material planning)
When planned and executed in such a manner, standardization initiatives in an organization usually have long range goals and detailed execution plans to achieve success.

Posted by Nilanjan Chatterjee at 07:03 AM | Permalink | Comments (4) | TrackBacks (0)

In continuation with the entry here

Standardised project management process
Utilities have a trend of growing through acquiring other companies and hence the project management processes are likely to vary within their business.  For e.g., an organisation that took over a contracting company that specialises in executing rechargeable jobs is likely to have its processes and systems for managing rechargeable jobs different form the rest of the business - unless there is a conscious effort to homogenize the processes.  The project centric solution design addresses this by mapping the processes to the job classification available out of the box in Oracle ie., direct and indirect jobs  Also project management templates can be defined to ensure that the projects are defined in a specific way that is aligned with other projects in the organisation. This substantially reduces the time required by the engineers and/or planners to create projects in Oracle.  In some cases (Large capital projects), the project are likely to be created in best of breed project management software like Primavera or MS Projects etc.,.  The out of the box interface available in Oracle eBusiness suite can be used to reduce the need to duplicate effort in entering project data into Oracle.  With this, the process, the resource assignment and budgeting are the only processes that need to be done in Oracle eBusiness suite, whilst the other core project management processes are managed in the actual Project management suite.

Cash flow and view of investments for Capital projects.
Based on our experience with utilities, we observed that the data required in analyzing financial performance of capital jobs come from multiple systems. The procurement systems, Fixed Asset system, Inventory system and the financial systems are disparate and interface on a batch mode.  The biggest challenge for Capital projects in such cases is to manage budgets for capital projects and manage the cash flow and investments.  The financial data available for analysis at period end to evaluate project progress is mostly flawed or inaccurate due to different timings in which the information is integrated form the source systems.  More so, the information pertaining to the asset during construction (CIP Projects) and transition of those assets as Fixed Assets of the organisation after completion determines the accuracy of the information.  This timing challenge introduces vulnerability and inaccurate data available to the project accountants who spend considerable time to validate and fine tune the data before it is reported to the management.  The project centric solution addresses this issue by leveraging the capability of CIP Projects that is available out of the box in Oracle eBusiness Suite.  This in combination with the out of the box interface between FA, PO, INV and GL systems can provide project status information accurately for management review.  The information can be presented to the business through the out of the box OAF project screens that can be extended and personalised to the organisations specific use.

Posted by Ismail Syed Mohammad at 09:24 PM | Permalink | Comments (0) | TrackBacks (0)

Are you having to deal with low percentage of on-time completions, high throughput times, frequent line down situations or high WIP? Obviously something is very wrong, particularly if you said "Yes" to more than one of the above. Having consulted for several discrete manufacturing clients has made one thing very apparent to me - a lean and agile manufacturing environment is not an option but an imperative for manufacturing industries to achieve operational excellence. All of the above were contra-indicators of operational excellence. A manufacturing execution system (MES) can support a manufacturing firm in achieving this very objective. An MES system works in tandem with a mainstream ERP system to execute, monitor and manage the production processes on a shop floor. Together with an ERP system, an MES system can nudge (or push, if required!) an enterprise into adopting standardized processes and at the same time creating key data elements for performance measurements.

Consider the ways in which an MES system can assist you:

• Detailed scheduling: An MES system can take input from capacities defined for work centers and hourly usage of machines and labor (in routings) to perform detail scheduling. Sophisticated MES systems can take setup times into cognizance to minimize setups and maximize utilization
• Dispatching: A MES system can use a dispatch list format to feed work to work centers. It can be used to perform real time prioritization of work orders to reflect reality on the floor - component shortages, current work center availability, downstream work center availability, premium customers and even executive diktats (a late evening call from the plant manager overrides everything else!!)
• Operational Reporting: An MES system, complemented by the use of the mobile devices using radio frequency, can be used to perform move transactions from one operation to another. This is important in a job shop environment which may have long lead times, to track work orders, correctly reflect work in process costs and perform dispatching of jobs
• Nonconformance tracking: An MES system will provide ways of tracking and managing non-conformances. While eliminating waste such as non-conformances remains a top priority for organizations, managing them on occurrence remains a grim reality. Ways to quickly identify, segregate and disposition non-conformances will aid in minimizing impact upon customer orders
  
  An MES system is now frequently offered by ERP vendors as an add-on or they provide integration with best-of-breed MES vendors. So its time for companies who have not yet invested in MES systems to see how they can make it work for them!

Posted by Gaurav Yadav at 04:46 AM | Permalink | Comments (2) | TrackBacks (0)

Well, probably when every one is cutting cost, investing in a fresh ERP implementation may make the customer think twice. This is primarily because of the size of the initial investment required for such engagements on account of hardware, software and implementation cost.

Hence for an IT service provider, the challenge lies in guiding the customer to make the right amount of investment in a timely manner, so as to minimize the initial CAPEX requirements at these times of turbulence.

Here are some of the ways to my mind, which can be put in practice for proposing new engagements:

1. Partnering with stakeholders
Let us partner with the customer and create a close collaboration between customer, IT service provider and the OEMs to provide the customer the best price

2. Using out-of-box features
Customers should be encouraged to use the standard built in features of the ERP product to the greatest extent possible. Enhancements should be entertained for addressing only the business critical needs.

3. Customer driven design
The need of the hour is more emphasis on incorporating customer’s requirements and his wishlist at the very early stage and designing the solution along-with the customer. This will reduce the number of iterations and rework in the project life cycle. Extensive workshops with the customer on the product and design will help on this aspect.

To add to the above, another aspect which can be explored more can be to bring in more modularity in the solution. We need to work with the customer in identifying the core business needs that need attention on a priority basis and provide a solution on those areas only; however care should be taken to ensure for the future enhancements to be added to the core solution with ease later.

In summary, the impending recession has made customers more cost-conscious than never before; this is probably the right time to sell a limited functionality ERP in a big way. This concept may sell when corporates are trying to just sail through rather than expecting to make huge profits. Customers with basic business processes in place in an ERP framework will be equipped better to scale up in boom times through adding more functionalities.

Posted by Debashis Dey at 10:45 AM | Permalink | Comments (4) | TrackBacks (0)

‘What is the project budget?’, ‘Who approved this capital investment?’, ‘who is monitoring the budget overruns?’, ‘who is tracking the project performance in terms of cost, quality, time and effort?’ and finally ‘Where are we in terms of planned Vs Actuals?’ – These are common questions one will come across, if they have spent some time in utility industries.  Utility industry is one of the very few industries that manage their operations as projects.  Everything they do is managed in their systems as an outcome of a project or a group of projects. Given this challenge, what does one need to manage these projects? Will there be the organization’s ace project manager available to manage all your projects efficiently? – Probably not. !

Consider this – Your organization deals with approximately 20,000 active projects at any time in electricity business and 50,000 active projects in gas business.  Of this at least 20% of the projects are classified as high value and 2-3% projects are very high value.  This is a typical scenario that exists in today’s leaders in utility industry; the scale of operations being the only difference.  You are more likely to have capital projects that are the outcome of your strategic investment decisions and add to your assets, maintenance projects that keep your existing assets running and re-chargeable projects that you do on contracting basis to your end customers. Your organization’s key strength is to manage such projects effectively and deliver what you promise to your stake holders.

In such cases, you  are up against the challenge to support your operations that include business processes of project creation based on field service or customer service requirement, emergency project creation based on outage, capital project creation based on investment decisions, Regulatory obligations to manage and maintain existing assets, Budget creation, approval and tracking for the projects, procurement process to support projects, logistics and inventory processes to support projects, HR and payroll processes to support projects and end to end financial reconciliation and reporting of those projects.  All these point to a single direction – The need for an integrated system to support your project-centric operations.  Based on our experience over years in dealing with Utilities, the most common business imperatives that we came across are as follows.

• Streamlined Budget creation, Authorization and control process
  
• Need for standardized project management and accounting process.
  
• Visibility of Cash flow and view of investments for Capital projects
  
• Seamless Integration of procurement, Warehouse and logistics processes with Projects
  
• Ease of Financial consolidation and reporting
  
• Stringent Data security & Access control.
  
• Need to Manage of Asset Hierarchies
  
• Need to Management of project groups (Programs)  
  

Over a series of blogs, I’m planning to highlight our point of view to such a need and how a solution can be deployed in Utilities using out of the box Oracle eBusiness Suite.
 

Before we get onto the actual business imperatives and how Oracle eBusiness Suite can be used to deploy a solution, let us look at the KPIs one such organization had and achieved with such a solution.  This will give a fair idea of the size of operations, the business imperatives and the efficiencies one such integrated solution can bring in.

KPI	Current Metrics	Expected change
Purchase requisition for  project	3 days	-80% (should be automated)
Stock requests / Move order requests between Warehouses	1 day	-20% (Should be automated)
Financial consolidation and reporting from period closure	7 days	-5 days
Budget creation to approval	3 days	1 day
% of Capital projects running over budget	8%	0%
Number of vendor sites	20,000	16,000
Number of stock coded items	12,000	10,000

Standardising project budgeting and approval process

One of the biggest challenges in such a typical organization is to institutionalize the project management process for various jobs in the organization.  The challenge is to streamline and automate the budget creation and approval process for different kind of jobs, where the process and approval hierarchy is different for different types of jobs.  With Oracle eBusiness suite, the approval workflow process could be extended and used to suit this specific requirement. With this, the budget creation and approval hierarchy can be automated.  Along with the budget approval requests, the necessary documents can be attached to the budget, which gives visibility to the relevant documentation required by the approver.  This automated process envisages bringing in efficiencies in budgeting process. The same process can be used for budgets that come in for re-approval.

We will look at the rest of the imperatives in subsequent blogs.

 

Posted by Ismail Syed Mohammad at 10:27 PM | Permalink | Comments (1) | TrackBacks (0)

It was Oracle Open World time in September and CXOs from leading hi-tech companies came together again for this year’s High Tech Leader Circle (HTLC) at the Moscone Center. I had the privilege of delivering the keynote session and could not think of a more pertinent topic than “Innovation through Collaboration” for a thought-provoking discussion with business leaders in the room.

The global business scenario has changed dramatically in the last year. Rising costs continue to put pressure on margins; globalization and the power of emerging economies are increasing the complexity of the business environment, and customer expectations from vendors and service providers has multiplied exponentially. The economic slowdown, collapse of the housing market and unexpected exchange rate fluctuations have made the business environment even more difficult. C-Level executives can no longer rely on conventional approaches to create a competitive advantage and have to look at innovation through collaboration to steer their organizations through turbulent times.

Traditionally, hi-tech companies have had a linear approach to their supply chain. The model was characterized by limited collaboration and information sharing between partners leading to pain points such as limited supply chain visibility, inflexible distribution processes, excess inventory, running out of stock and delays. These pain points led to the emergence of the first wave of collaboration between suppliers, contractors and partners in areas like procurement and logistics. Collaborative practices like Collaborative Planning, Forecasting and Replenishment (CPFR) and Vendor Managed Inventory (VMI) were central to this model. For want of a more appropriate term, I would call this the emergence of the Collaboration 1.0 paradigm. Platforms like ERP, SCM and SRM are key enablers for the Collaboration 1.0 paradigm.

A flattening world is forcing organizations to shift their operational priorities and evolve the collaboration 1.0 paradigm further. Two shifts are of great importance to hi-tech companies-- loyalty through faster innovation and making money from information. Customer service has become a hygiene factor and customer loyalty is now being driven by faster innovation, rapid concept-to-market and product co-creation. This has led to the extension of the collaboration paradigm to customer facing functions in the supply chain, namely the product design and prototyping phase. It would be apt to call this new wave of collaboration as the Collaboration 2.0 paradigm.

Most organizations have access to structured information through their transactional systems and enterprise applications like ERP, SCM etc. There is also a huge mine of unstructured information available to organizations from external and internal sources. Collaboration 2.0 looks at utilizing this pool of unstructured information to innovatively co-create products with customers and offer a superior customer experience. Emergent Web 2.0 technologies like blogs, wikis, widgets, podcasts, and social networking are key drivers for this model. For example, emerging technologies like social networking or blogs can be used by companies to share expectations, knowledge and experiences with partners and come up with better product and service ideas.

Several hi-tech companies have been leaders in adopting the Collaboration 2.0 paradigm. Companies like Dell engage with communities on Facebook and use their websites (Ideastorm) to enable a collective design approach. Nokia had an interesting initiative called Concept Lounge where designers were invited to share their ideas and design for the next cool phone. The concept for the Wrist Band Style Nokia 888(not launched) phone was the winning entry here. The Graphic Communications division of Kodak has a Web2.0 community which provides a marketing supply chain to members and also helps load balance production during peak periods.
     
It is very important that business leaders draw inspiration from such instances and enhance their collaboration touchpoints.  The collaboration toolkit of companies has to be a combination of traditional and emergent technologies. I believe that companies that judiciously adopt the Collaboration 2.0 paradigm will be better positioned to create competitive advantage in a flattening world.

It would be good to hear your thoughts and experiences on Collaboration 2.0 and how companies can innovate through collaboration

You can view the presentation that I made at Oracle Open World below

 

Posted by Chandra Shekar Kakal at 06:18 AM | Permalink | Comments (3) | TrackBacks (0)

In the first part of the blog, we looked at 7 key factors that an implementing organization should consider before deciding to go ahead with its ERP implementation project.

http://infosysblogs.com/oracle/2008/10/key_factors_for_success_of_erp.html#more

In this blog, we will analyze 3 additional factors that are also vital for success.

1. Test with real data volumes: Standard ERP packaged suites are generic and can be tailored to fit the requirements of different types of industries/business processes. Since every organization has its unique way of running its business, some customizations are invariably required in every implementation as part of this tailoring process.

To ensure that there are no peformance/volume testing issues during testing these customizations in UAT, the data-set available in the development & system test instances should be as close to production as possible. This will also help the development team capture boundary conditions and most of the business scenarios during unit testing.

2. Education and User Training: End-user training is one of the most important factors for success of the implementation.

Unfortunately though, this is left as one of the last steps in the implementation process and is often done in a hurry. User training should be a phased process and should cover the following:
-Operational and technical aspects including process mapping and setups
-Case studies on implementation best practices
-Comparison of how processes in the new system are handled differently from those in the old system
-Limitations of the system (if any)

3. Provide adequate resources: Integration of business processes across departments using an ERP system requires concerted  effort. The involvement of individuals with cross functional knowledge who can resolve integration issues is crucial. The top management should also provide the right mix of technical and project management resources for the entire duration of implementation.

Please share your opinions & experience on the factors listed above and on challenges that you would have faced with complex ERP implementations.

Posted by Samir Das at 05:50 PM | Permalink | Comments (6) | TrackBacks (0)

To put in simple terms, Reverse Logistics is the flow of Returned goods by the customer to a state where the product is disposed of, repaired, recycled or internally consumed. And because of the strict norms pertaining to disposition of goods in the high tech sector, this is a very strategic area.

Typically companies recycle most of the returned goods as part of the Value Recovery Model.  But there is a huge cost involved here as there has to be a proper disposition process for parts which can harm the environment. Also, there is a high risk of these products making it to the grey market eroding the parent company’s competitive advantage.

A potential solution to this problem is consuming the parts for internal use after the necessary repairs. This reduces the additional cost of recycling the product. Also this saves additional money in terms of deploying a brand new product for internal use.

Some of the prominent high tech companies have been able to exploit this opportunity in a big way and have gone ahead with internally using the returned products over an elongated period.

 

If you are spending a lot of money in recycling your returned goods, internal consumption is a thought worth thinking over.

Posted by Sandeep Chatterjee at 09:38 AM | Permalink | Comments (3) | TrackBacks (0)

Last week I was at Oracle partner briefing on technology stack. It was quite interesting and informative. The discussion was around BEA acquisition and integrating the existing Fusion product with BEA.

Oracle spoke about 100 day product release and 11g getting delayed. The 100 day release of SOA Suite from Oracle now includes the former AquaLogic Service Bus (ALSB), now known as the Oracle Service Bus (OSB).  The old Oracle Enterprise Service Bus (OESB) is still available but the preferred Service Bus in Oracle is now the OSB.  Currently OSB is only available on WebLogic platform whilst ESB is supported on all SOA Suite platforms. 11g has been postponed to integrate and bring in all the new functionality acquired.

The 100-day release is to brand BEA product as Oracle.

o    Certified interoperability (BPEL, BAM, security, etc.)

o    Native bindings to BPEL PM

o    Common JCA adapter framework

o    Certified on WLS 10.3

o    Features such as REST, MTOM, Streaming

The 11g is scheduled to be released by FY ’09. The features are to consolidate the platform.

o    JDeveloper tooling

o    BAM monitoring extended to other components

o    Enterprise Manager integration

o    Integrated SOA Governance

o    End-to-end security

o    J2EE portability

 

Posted by Malay Kumar at 11:15 AM | Permalink | Comments (2) | TrackBacks (0)