Infosys-Oracle Blog

Typically in the automobile industry, there is more wear and tear given the fact that mechanical parts are involved. So whenever we have a faulty engine, what do we do? We either send it back to the manufacturer (if it is within warranty) or go to a service mechanic. And when it is beyond repair, we scrap it (normally we buy it from a dealer who then takes custody of the old engine).

 

As companies struggle to cut costs in a dwindling economy, many of the automobile manufacturers have resorted to what we call as ‘Remanufacturing’.

 

Typically these companies receive the engine from the customer in lieu of a new engine (if it is within warranty). And when there is shortage of ‘Cores’ as it is normally known , it is bought from the open market. Once the Core is received, it is disassembled and an assessment is made of what all can be salvaged. There are certain parts which are beyond repair and are scraped. For the salvageable parts, they go through a typical cleaning process and further processing is done to deem them fit for further assembly.

 

 

In context of this, we have something called a ‘Replacement factor’. For example, suppose 30% of the total bearing bushes can be used and rest has to be procured new, the Replacement Factor in this case will be 0.7. Typically, the Bill of Material is designed in a way to accommodate this replacement factor which is typically changed once a month. This ensures that the Planning recommendations are in sync with the shop floor operations.

 

 

Typically, there are plants dedicated for these kind of operations and they normally operate as Cost Centres. The Bill of Material is designed in such a way that the salvaged part will have a zero cost while any new part will have a cost associated with it. There are common routings which are apportioned and hence there is no labor component as such per job. Also, some of the core is sent for outside processing which typically goes out as a Purchase Order.

 

 

Companies resorting to this business model have been able to save a lot of money and it has been equally good for the environment.

Posted by Sandeep Chatterjee at 03:38 AM | Permalink | Comments (1) | TrackBacks (0)

Peoplesoft like any other ERP implementation involves huge and concerted effort and intricate planning from Project initiation to Go Live. Implementation in Less time translates to Less Cost for the customer. This assumes more significance in these times of recession where customers are seeking for more value for money and quick returns on investment.

At Infosys, best practices in Package implementation methodologies have been sanctified in 'InTrak' which lays guidelines for all activities distinctly identified under Strategic and Project Tracks.

The strategic track is divided into the following phases

• Planning
• Package Evaluation
• Organizing

The Project track divided into the following phases

• Project Scoping
• Requirement Gathering
• To-Be-Design
• Configuration and Development
• Testing and Deployment
• Cut-over and Support

A few of the foundations that can be built to ensure minimal delays and gaps–
 - Orientation of the Implementation Team and Team Building with System Integration/ IT team (customer or external vendor), End users, Project Sponsors, Change Management and Communication teams is essential for common understanding of project scope, objectives and goals.
 - Establishment of protocols for communication during the project, phase completion criteria and documentation and signoff through the Project Charter.
 - Regular tracking of the project plan and plan for additional resources and skill sets required and also considering the business complexity and the team capabilities. 
 - Clear definition of scope of activities and identification of deliverables.
 - Defining Hardware and Software requirements for the Project including Server Capacity Planning
 - Deciding on the PeopleSoft instances available during the implementation

Implementation time depends upon the number of modules, extent of industry specific or customer specific customisations, functionalities required to be implemented, number of reports, interfaces and conversions. Estimation can be made using Function Points or Package points as spoken about in another blog titled "Are you still using function points for estimating the size of Package Implementation?".

Extensive preparations need to be made prior to beginning of the project to ensure time can be crashed in each of the implementation phases. Reusable Tools/accelarators and techniques, templates, standard configuration documents, knowledge articles and standard process documents are some of the resources that help in reducing overall timelines of implementation.

In the coming weeks, lets discuss the accelerators which reduce overall implementation times in each of these phases. Also lets think of ideal timelines for plain vanilla implementations of different module mixes and increased implementation times required to implement add-ons.

Posted by Madhusudan Panpalia at 11:55 AM | Permalink | Comments (0) | TrackBacks (0)

Historically it has been observed that lots of projects experience cost, effort and schedule overrun or poor quality. In most of cases, the project end up taking alternate paths to fulfil the budget constraint and ends up delivering an inadequate product/application/service. Further changing market Scenario does create estimation overruns. In such cases is it ever possible to get a Perfect Estimation.

To analyze this let us start with understanding what are the possible factors affecting estimations of any project:

Lack of information necessary for estimation

Lack of knowledge on how to estimate and estimation techniques

Inexperience in doing estimation for similar kind of work

Inappropriate estimation methodologies

Historical information availability, Historic Conditions and their Understanding and comparison with current conditions.

Inadequate timeframe to perform estimates

How does one overcome the above shortcomings.

Have an in-depth knowledge on the estimation Tools and Techniques through proper Training Session.

Apply the Estimation Tools and Techniques on smaller projects and then over Bigger Sized projects.

Use different Techniques of estimation over the different phases of the project based on the phase type and the expectation from the phase.

Estimation is an ongoing process and not a onetime process throughout the project life cycle. So re-estimate in case of any change in the assumptions to estimations.

Baseline Estimations by following proper guidelines.

Document Change Request and re-estimate accordingly.

Provide for Known and unknown contingencies in the Estimation.

Document project inputs and Outputs clearly for  better estimation.  

Leverage historical information about project's effort, schedule, cost, risk, and resources which can be referred as lessons learned / best practices from engagements executed in the past. Statistical baselines should be created for each factor affecting project effort for e.g. user training effort baseline or project management effort baseline. These statistical baselines should be revised periodically.

Understand the Scope of the project very well.

Break down the entire work into work Packages and estimation should be at the lower level and then summed up to the higher level.

 

Every organization has influence on overall project effort which should be considered while estimating the project timelines as each organization has their own tried and tested way of executing project based on their available skill set and capability with the client.

Estimation should not only be based for Cost and Time but also for Size. Size estimation would help in calculating the Budgeted Organizational productivity.

Proper Risk Management will help in reducing the uncertainties and will help to provide better estimates.

Project Health and Decision making should be validated regularly through proper tools and techniques.

What does one Estimate?

Some of the parameters that one needs to estimate for a successful execution of a project are

Project Duration

Finish Time

Cost

Resource

Success rate

Quality

Why estimations deviate from the real.

At the Start of every project Objective or business requirement is just a thought and our understanding of the Business of the Customer. Once requirements are converted to core Designs things get clearer and development is nearing completion uncertainties start reducing. 

Does that mean that we cannot give estimates?

Estimates can always be provided as they represent costs and other values based on certain assumptions.  Distance between Pune and Mumbai approximately  94 Miles and the averge speed of a vechile @ 60KM’s Per hour reaches in 2.5 Hrs. Does that mean that we can commit to reach Mumbai from Pune in 2.5 Hrs. The answer is No. But surely one can commit that we can reach Mumbai to Pune in a minimum of 2.5 Hrs and maximum of 3.2 Hrs based on the speed of the Vehicle, Traffic on the Road, Stoppage time in between etc.

Conclusion

The above recommended solutions will help in improved estimation effectiveness will enhance business to:

Make better investment decisions

Generate more return on investment (ROI)

Gain advantage over competitors by taking appropriate and timely decisions

More control over project execution

Finally improve organizational productivity.

Essentially estimation effectiveness is nothing more than how close your estimates are to actual.

 

Posted by Ramakrishnan Subramanian at 06:04 AM | Permalink | Comments (2) | TrackBacks (0)

Standardization helps large ERP implementations to streamline their business processes and data which helps achieve operations efficiency by reducing the solution variability and achieving data consistency. On the long run this will help reduce the implementation / maintenance time and cost, especially in large organizations where the solution is rolled out to multiple locations and Companies.

Organizations acknowledge to the fact that Standardization helps the ERP implementations and lately have started including a Standards Board in the Project / Program structure to define, implement, retrofit and make sure there is adherence to standards by periodic reviews.
Following are some of the key questions that need to be answered before setting up a standards board:

What need to be defined as a Standard?
Only the process or data which is global in nature need to be standardized and there should be a benefit identified for each standard proposed. Standardization can be driven by Industry standards, Package process / upgrades, Organization level initiatives, Compliance requirements, etc. There should be a thorough review of the Standard proposed for the Objective (long term and short term), impact to business because of its implementation, benefits identified, score card to measure these benefits and plan to implement.
What should be the composition of Standards board team?
Ideally Standards board needs to comprise of a good mix of Subject Matter Experts, Package Consultants, Change Management Champions and Program Management Office.
For what duration Standards board need to be planned?
Standards can evolve throughout the length of the project this varies by Organization to Organization on how much Standardization is required and how they want to implement Standards (all at once or in phases). Typically they start heavy (Full time) during pre implementation and go light (Part time) in post go live phase.
How the Standards are are defined / revised and communicated?
Typically Standards are published in word, ppt or PDF formats, posted in a SharePoint or intranet website. Audience will be the implementation teams, core and extended team members and in some case even the key users. All these documents are revision controlled for any changes. Communication of standards happens with as simple as sending a mail, having a conference call, or as complex as having a workshop on any new standard or any revision for existing standard.
How is a new Standard implemented?
Impact of implementing any Standard need to be document and approved by all parties concerned to go ahead and implement the Standard. There can be some Standards evolved after an implementation and a retrofit project need to be planned for bringing the exiting process / data in compliance with new standards. In both scenarios a dedicated team or a project is setup to implement the Standard.
How to track compliance to Standards?
Typically review of Standards is conducted by Standards board at different phases of the implementation like CRP (Conference Room Pilot) or SIT (System Integration Testing). After review a report will be published and the implementation team notified on any deviation and an action plan is discussed to make the changes to comply with Standards.

As I mentioned earlier Standardization is a continuous process, it is not to be treated like a project with a fixed start and end date. As implementation partner Infosys is helping many clients in Standardization process, bloggers can share their view point on Standardization and what is required to implement Standards? 

 

Posted by Srikanth Sripathi at 03:16 AM | Permalink | Comments (0) | TrackBacks (0)

Tough times call for tough measures and that is what companies today are doing as a reaction to the recessionary conditions that have hit economies the world over. Every other day, newspapers and newscasters greet us with layoffs, impending bankruptcies, bailouts and other such grim news. Manufacturing companies, naturally, are not immune to the crisis afflicting financial companies. They are being indirectly hit by shrinking consumer demand and non-availability of easy sources of funding.

Should manufacturing companies in such times focus on operational excellence? In the best times, when meeting increased customer demand is the priority, operational excellence measures such as reducing waste, tend to take a backseat. The focus is simply on shipping out as many goods as possible. People get rewarded for shipments and not for increasing inventory turns. Is a downturn then the right time to focus on operational excellence?

 

In my opinion it is! While drastic measures such as reducing work shifts and laying off workers tends to produce the easiest and the most obvious cost reduction, it has repercussions on the companies relations with unions, future workforce and governments, among others. Also, one needs to keep in mind the cost of re-hiring when the demand picks up. While some of such measures can be unavoidable, this might also be the most opportune time to implement philosophies such as lean that one might have been dithering on or completely ignoring under the pressure of meeting on time shipments. Fortunately or unfortunately, a downturn allows time for some introspection. If successful, a company can gain competitive advantage even in a downturn and emerge as a more agile player when the upturn comes. Needless to say, these measures will also produce the cost reduction that companies are seeking in these uncertain times.

 

So what are some measures that a company can adopt? The answer is no different from what I would have given in any other time. Identify the inefficiencies whose elimination can make the most impact, be it inventory, overproduction, rework, product proliferation, lack of real time information, duplication or inaccuracy of data in ERP system…. Have your best people tackle them; they have some time on hand and their time is going to be well spent.

 

While focusing on the tactical is the response of most in such times, forward looking measures will help a “best in class” organization emerge when the times do get better.

Posted by Gaurav Yadav at 10:34 AM | Permalink | Comments (0) | TrackBacks (0)

The recent macroeconomic changes and the speed at which they impacted end-consumer demand have significantly affected organizations. Some of the immediate effects on businesses include:

• Production Shutdown: Excess inventory piled up at different stages of the supply chain have caused manufacturing facilities to shutdown production to reduce inventory
  
• Workforce layoff: To react to reduced market demand and to cut costs, manufacturing facilities are reducing work force to continue to be competitive

During such times of economic uncertainty, most organizations face challenges in forecasting demand. While companies do not want to lose sales opportunities, they also do not want to hold excess inventory, particularly when liquidity is low and credit is hard to obtain. Economists are predicting even more turbulent times in 2009; macroeconomic trends indicate growing prospects of a global slowdown.

Bullwhip effect is an important aspect of demand forecasting that could play a critical role in managing demand during the current depressed economic situation. Bullwhip effect in a supply chain refers to the phenomenon where a change in forecasted end-customer demand gets amplified as one moves up the supply chain.

Given the current economic environment what strategies should organizations adopt to manage demand and reduce the bullwhip effect on their supply chains?

Organizations have traditionally used one of the following methods for demand forecasting –Time Series (using historical data to extrapolate future sales) or Life Cycle (using sales curve of similar products for forecasting purposes)

Though these methods are popular they do not take into account the entire distribution channel. Let’s consider the example of an OEM component manufacturer. Even though the forecast for the component demand is dependent on the forecast of the reseller whose final product uses the component, there are others in the supply chain who also affect the forecast of the component demand. For example, in a typical supply chain, these include distributors and retailers. Each of these channel members will have their own forecasts for the same component demand. Each of these channel members creates their own forecast to reflect their view of adequate safety stock which in turn is a reflection of their view of the forecast errors. Moving up the value chain, this amplification of forecast demand has a multiplying effect when used by the OEM. To reduce this amplification of forecast error, it is imperative for manufacturers to have visibility into the demand at each stage of the supply chain.

This is where multi-tiered forecasting or collaborative forecasting techniques can be extremely useful. Both of these forecasting techniques refer to the concept of multi-tier inventory visibility and multi-tier demand visibility so that each channel partner can forecast demand optimally. Techniques such as Vendor Managed Inventory (VMI), use of Point-of-Sales (POS) or consumption data by upstream channel partners, sharing of promotion information etc. are some of examples of collaborative or multi-tiered forecasting approaches that can be used by entities within the supply chain to reduce the bullwhip effect.

I am curious to hear from readers of this blog their experiences/inputs on collaborative forecasting. Some of the key areas I am hoping to hear about include:
a. What are the challenges in adopting collaborative forecasting?
b. Do suppliers trust their customers well enough to share their internal forecasting data?
c. Does an ERP system such as Oracle help in collaborative forecasting?

I will try discussing my thoughts on these questions in my upcoming

Posted by Samiksha Hariharan at 04:22 AM | Permalink | Comments (0) | TrackBacks (0)

Package Points is the buzzword in Oracle Practice now at Infosys Technologies Ltd for sizing an implementation project for the reasons which I am putting forward based on my experience in involving in sizing many development and package implementation projects.

Function Point Methodology is a universally accepted size measure for any software project which takes into consideration a user view of requirements while sizing. However, package implementation projects have certain characteristics which hinder the effective usage of FP methodology for sizing. Implementing an ERP mostly involves configuring certain parameters in the package and custom development is only a part of the project. Also, implementation projects can be done in partial life cycles. For example, scoping or discovery can be done a vendor A and downstream implementation by vendor B. Or Discovery can happen once for the entire client organization and implementation can happen in multiple phases. In view of the above characteristics, Package Points is a better fit for sizing implementations as it differentiates size of configuration work and custom development work; it addresses partial implementation life cycles also. Often Size is used as an input to decide the cost of implementation due to which the above parameters if not addressed properly can shake the confidence of the estimates on either side.

Package Points Methodology also scores high in terms of usability when compared to Function Point Methodology. A Project Manager or an Implementation Consultant needs to be enabled enough on either methodology to derive accurate estimates for a project. Function Point methodology seems to be more complicated in terms of understanding and arriving at the five components -- External Inputs, External Outputs, External Inquiries, Internal Logical Files and External Interface Files. Understanding Record Element Types still remains a difficult job for many project managers. Without thoroughly understanding these concepts, it’s highly improbable that an accurate estimate of FP size can be arrived at. To use FP methodology, every Project Manager has to be trained thoroughly before put into the task of estimation. On the other hand, Package Points methodology is designed in such a way that the underlying framework and the calculations need not be understood by every user of the methodology. A user just needs to know what are the functionalities along with setups to be done on the package, life cycle tasks the project involves and client complexity parameters. With these inputs, he/she can derive the size of the implementation. So, a user of the methodology doesn’t require being an expert nor formal training on the methodology to use it for sizing.

Please post your views on the Package Points methodology especially in comparison with other popular techniques available in the industry or from your experience.

 

Other blogs -

http://infosysblogs.com/oracle/2008/08/improving_package_implementati.html#trackback

http://infosysblogs.com/oracle/2008/12/how_quick_can_oracles_peopleso.html

http://infosysblogs.com/oracle/2008/12/is_perfect_estimation_achievab.html

http://infosysblogs.com/oracle/2009/01/operational_excellence_metrics_1.html#more

http://infosysblogs.com/oracle/2008/10/earned_value_management_for_er.html

 

 

 

 

Posted by RamPrasad Vadde at 03:18 AM | Permalink | Comments (0) | TrackBacks (0)

Today most businesses have formal processes for continuous improvements in manufacturing and supply chain. However, often these improvement initiatives stop short of attaining their maximum potential because of the way people and processes are measured within the organization. Traditional accounting and operational measures sometimes come in the way of achieving operational excellence because these measures often promote waste such as excess inventory.

As an example, let us consider idle capacity. Usually idle time is considered bad, and as such higher machine utilization is considered good. Higher machine utilization is desirable only if there is sufficient demand to back up the supply created by a highly utilized machine. A machine operating 90% of the time and producing goods filling up warehouses (without any immediate customer demand), would have high machine utilization, but it would lead to higher inventory levels as well. In a lean manufacturing environment, a machine should run only in response to pull from customer demand; targeting a high utilization alone is contrary to that. As such, a better measure of utilization would be schedule reliability- what percentage of the schedule was met on time so as to satisfy the demand created by customer pull. Also, operating the machine only in response to customer demand would mean that flexible capacity is being created and machine maintenance could also be planned better.

Another traditional measure often used is the purchase price variance- the lesser the variance from the standard price, the better. Often suppliers give discounts for large order quantities. In order to use those discounts to keep procurement costs down, buyers place orders for larger than required quantities, or place orders for items that might not have immediate demand. This does reduce the purchase price variance in general, but this also adds to the inventory levels in the warehouse. In addition to the working capital that gets tied up, the administrative costs related to maintaining the inventory also goes up. An alternative measure for the buyer could be their contribution in right- sizing the inventory.

Another example of traditional costing measurements not providing the best results is in the factory overhead allocation. Overheads rates are usually determined based on maximum theoretical capacity, and the actual overhead costs within a period are pro- rated to each unit that gets manufactured irrespective of how much each product consumes the overhead. When profitability analyses are done by product lines/ families, this could inflate or deflate costs incorrectly for different products. Rationalization of product lines to limit the product offering based on product profitability is a lean principle that leads to better capacity management, reduction of inventory and increased flexibility. However, because of the way high overhead costs are pro-rated, the product profitability analyses could lead to erroneous results thereby hiding the non-profitable products.

An important underlying concept directly attached to on-time delivery is lead time. This is a common measure I have seen customers use across industries. They often measure their on- time delivery against the date scheduled by their ERP systems. To ensure on- time delivery,  planners often build a buffer into the lead times so that ERP schedules it with some amount of safety built into the date. If a BOM consists of several levels, then a little bit of buffer in each components’ lead time would considerably inflate the parent lead time. Thus, components would be procured and made in advance of the actual time. This would also add to the inventory and might need rescheduling of the transportation activity. Having said that, on- time delivery is an important measurement and people are justifiably appraised on it, however, efforts should be made to ensure that lead times are not inflated just to get a good grade on on- time delivery.

Another way of looking at this is that traditional measures do not give due credit to those parameters that improve as an outcome of operational improvements. For example, a lean operation would lead to reduced inventory levels, reduced cycle times, increased working capital, reduction in bottlenecks etc.. However, even though these may be measured, they are not tied to any incentives. In my consulting experience, I have observed that employees are appraised on the traditional measures, and seldom on how much they have reduced inventory in a period while meeting customer demand, or what is the cycle time reduction a department has achieved, by what percentage has supplier reliability gone up, what is the schedule adherence for a line etc..

Operational excellence is a journey and the commitment to get leaner is an important part of that journey. However, backing this journey up should be appropriate accounting and operational measures that provide incentives for these initiatives. Traditional accounting measures usually serve the needs of the finance department, however, in modern day world, it should also serve the needs of a lean operational system.

The above are just some examples of measurements that need to be reexamined onb a case by case basis. Can you think of other such measurements that would create the incentives for operational excellence?

Posted by Rupam Das at 03:26 PM | Permalink | Comments (0) | TrackBacks (0)

Economy is still in the midst of a financial credit crisis, consumer spending is slowing and every stock market move up is followed by a corresponding move downwards. Are these tough times really the time to aggressive to go online with Sales? I think so, isnt that what the ERP packages were supposed to be ready to deliver?

Retailers over the last few decades have gained expertise in a variety of store formats, be it wal mart style mega stores or Tesco style express stores. Most of the store operations have been optimized to give the best customer service and in store experience. However, increasingly Retailers are looking to online to give them a boost in their sales.  With their existing ERP Package there are lot of benefits to be realized by going online, in fact hybrid models of buy online and pick up at store can also be developed low cost. I think some key aspects of servicing Online sales with a packaged backed operations are

 1. With a integrated Product/Item master, it is easier to setup an online item/category listing

 2. Multiple Order and pricing formats can be readily offered to the online customers.

 3. Most Package ERP products offer integrated Order Management functionality for online customers.

What do you think are some of the readily available features that can be exploited for online sales.

Posted by Venu Kotamraju at 01:08 AM | Permalink | Comments (0) | TrackBacks (0)

Most Product companies flourish by rolling out newer versions every now and then. Most versions are mere bug fixes, is there a difference then in the fusion enabled Oracle R12 version, especially for Retailers who have been long waiting to get an integrated suite of applications to run their business!

An upgrade is both a necessity and an opportunity for all companies. Typically upgrade is viewed as an IT driven exercise and there are dangers that lie in this kind of a view. Any investment made, be it IT driven, has to have business benefits attached to it. More so for Retailers who are already struggling with an economic recession and a decreased consumer spending. Evaluating the portfolio of IT projects and revaluating the business benefits is a key part of budgetary planning exercise.

R12 is an integration of best practices between Oracle Applications, Peoplesoft, Siebel and other Oracle Corp acquired products. This makes the upgrade an especially challenging one, from my point of view, following are the key themes that are different in this upgrade

1. Functionality - Fundamental changes like accounting ledgers, multi org acces control which make the entire user experience easier and nimble akin to the best of breed web based applications.

2. Technology Stack - Reporting and Integration are two key areas that offer improved functionality with features such as XML reporting, BPEL integration

and last not the least

3. Business Process Management - Why should an upgrade need business process redesign? IT tools have changed since the advent of ERP, especially Oracle which started its applications division in late 80s, with the advent of Y2K most companies implemented General Ledger/Oracle Financials the precursor to the current set of Oracle EBS. Since then, this is the first time that Oracle has made such fundamental changes in its GL, AP, AR structure and there is a good reason too. That is why i believe that financial divisions gain a lot be taking a closer look at their business processes, understanding the R12 fundamentals and redesigning to better suite the business needs.

Posted by Venu Kotamraju at 12:11 PM | Permalink | Comments (0) | TrackBacks (0)

The Directive on WEEE (Wastage of Electrical and Electronics Equipment) in EU notes that the content of hazardous components in electrical and electronic equipment (EEE) is a major concern during the waste management phase and recycling of WEEE is not undertaken to a sufficient extent. The WEEE directive places the responsibility of end of life (EOL) disposal responsibility of the products on the manufacturers either individually or by joining a collective scheme. This implies that the cost of disposal of the product and the harmful substances that it contains squarely lies on the manufacturer.  The EU Commission has set new targets for recovery and reuse/recycling by 31-Dec-2008 for all EU countries.

This force the Hi-Tech manufacturers to ensure good processes for reverse logistics and may need put in place processes for collection of products at end-of-life and disposal/recycling to ensure that they meet the WEEE criteria. This also places greater emphasis on ensuring presence of hazardous substances in compliance to RoHS (Reduction of Hazardous Substances) directive in components used for making their products.

Due to the emphasis globally on green environment, it is very likely that other countries like US, India, China, etc. may set in legislations and laws to enforce regulations on waste generation and reuse and put more pressure on the producers to be liable and responsible for the electronic wastes generated by their products. The producers of such products will also need to own responsibility of this wastage handling and the associated financial burden of this.

In this context, it is imperative on the Hi-Tech manufacturers to be aware of this since it affects the organization in many fronts:

Strategy on reuse/recycle: The Hi-Tech manufacturers will need to adopt long term, global strategies to handle this compliance instead of short- term local solutions which focus on countries which currently have legislations in place.

Financial considerations: There is a need to understand the cost implications of recycling and non-compliance related penalties. Hence there is a need to use "green components" which do not attract these provisions and also formulate processes for reuse of components thereby facilitating recovering some costs.

Process alignment: There is a need to create / strengthen reverse logistic processes to help in collection of end-of-life products and process for disposal / recycling. There could also be a need for new processes to facilitate the mandatory compliance reporting requirements.

Finally, it should be noted that compliance may no longer be an option for Hi-Tech manufacturers. They need to formulate a well defined long term strategy that is flexible enough to handle more stringent conditions, more countries added to the list, etc. It is imperative that the Hi-Tech manufacturer takes a proactive stand on compliance and prepare themselves well in advance with the required strategies and processes to ensure they stay ahead of competition in this race for compliance.

Read more :- 

http://www.infosysblogs.com/oracle/2008/12/regulatory_compliance_is_manda.html
http://www.infosysblogs.com/oracle/2008/08/hitech_trash_have_our_edumps_b.html

Posted by K N Harilal at 09:07 AM | Permalink | Comments (0) | TrackBacks (0)

EAM system has a broader impact apart from its core function of work scheduling and asset management, which includes financial, inventory and workforce management. Since these functions are also covered by ERP applications, there are inefficiencies when EAM and ERP are operated as standalone systems without the ability to share information.

1. How to overcome these efficiencies and what’s the best way to leverage niche functionalities offered by ERP package & EAM packages?

2. What are the options of integrating best of breed ERP application which manages supply chain, human resources, and financials with work asset management functions of EAM based on the merit of the package?

In my opinion to answer the above question we need to understand why EAM applications are of strategic importance to Power Generation utility companies even though they already have an ERP system to manage their back office functions.

Posted by Ashish Anand at 04:27 PM | Permalink | Comments (0) | TrackBacks (0)

Today’s global environment has placed increased pressure on Hi-Tech manufacturers to become more competitive and profitable. Global outsourcing activities have increased in importance and have increasingly emerged as a key strategic tool in achieving cost reduction, quality and delivery improvement, cycle time reduction, and improved responsiveness to customer, competitive, and financial market demands. It is estimated that a well planned and executed global outsourcing strategy can result in a cost savings differential of 15 to 25 percent when compared to manufacturing inhouse.

Using external suppliers to design, manufacture, ship and service products or components  - has been a growing trend in recent years as Hi-Tech manufacturers have sought, among other things, to divest themselves of production capacity (and the inherent risks associated with owning capital equipment), lower their labor costs and maintain greater flexibility in the face of ever-shrinking product lifecycles.

 

Relationships between Hi-Tech manufacturers  and their outsourcing partners typically run deeper than the "arm's-length" relationships that companies traditionally have had with their suppliers. The Hi-Tech manufacturer-outsourcing partner relationship normally involves long-term relationships to manufacture a family of parts or products; close working relationships on design, production engineering and quality; [and] collaborative inventory planning at multiple tiers of the supply network, with visibility into and influence over the supplier's supply chain operations.

Following key points need to be considered before deciding on outsourcing:

Core Vs Non-Core

It is very critical for the Hi-Tech Manufacturer to determine which products, components or services are non-core and thereby should be outsourced. The decision on the outsourcing would be case-by case and generally depend on the performance of outsourcing, compared with the in-sourcing one. Outsourcing provides low-cost but flexibility services, but in-sourcing keep the core-competencies in-house and provides the sense of belonging and self-control. Hence these should be proper analysis and deliberation before finalising the product, component or service to be outsourced.

Focus on the Relationship

Of course, technical requirements, capabilities and skills sets are, ultimately, something that either your own company or your outsourcing partner can acquire. So while these attributes are not unimportant in selecting among potential partners, the synergy between an Hi-Tech manufacturer and its outsourced partner should be the top priority.

Importance of Communication

As with any good relationship, the key to a healthy Hi-Tech manufacturer-outsourcing partner alliance is communication. It is very important to have an open and honest dialog.Both have strengths and weaknesses, and everybody knows what they are.There is a need to leverage the strengths and work around the weaknesses.

Put in the Right Collaboration Tools in Place Early

With communication a top priority and a precondition for maintaining the kind of healthy relationship that is sought with the company's supply base, it is important to recognize early on that both parties would need to put in place the necessary tools that would enable the required level of interaction between the Hi-Tech manufactuer and its outsourcing partners. Both parties may also want to ensure that it had the technology in place to protect its intellectual property even as it worked collaboratively with its partners to develop and produce products, components or serivces.

Be Flexible

 The uncertainties in market conditions, the complex dynamics of relationships with outsourcing partners and the many other "unknowables" in an outsourcing exercise place a premium on an Hi-Tech manufacturer's ability to bend with the wind, when necessary, to keep the process moving forward rather than stopping to try to fix every glitch that comes up along the way.The bottom line is that, while a Hi-Tech manufacturer can outsource many separate functions, it cannot outsource management responsibility for a project, and the Hi-Tech manufacturer must be prepared to apply the same degree of executive-level involvement in an outsourced project - or an even greater degree of involvement - than would be the case for an internally manufactured product.

Posted by K N Harilal at 08:17 AM | Permalink | Comments (2) | TrackBacks (0)

No prize for guessing what is the talk of the town in the business world, the biggest economy slump so far in the past three decades. Where will it end up? Will it redefine the way IT runs? Certainly, the economic slowdown that has dwelled on the business and IT worlds both has imposed a deeper crisis of application integration. Business owners now look at IT to run the larger and complex business operations than just building specific processes bundled in thickly stacked applications. To address “the crisis”, organizations are moving away from monolithic applications to “composite applications” offering flexible solutions adaptable to rapid changes. Oracle with its AIA framework brings a lot of impetus to this new wave. Invariably, a majority of enterprise applications are monolithic within individual lines of business and this makes coordinating activity between them very difficult. A composite application based on common object model is the new direction where technologists need to head for. A composite application automates business processes across the boundaries of multiple applications and is future-proof.  The virtualization behind these composite applications enables complex heterogeneous systems to appear as one unified application at all levels of the organization - the processes, the systems, the databases and the hardware.

As businesses continue to face the never ending issues of integration, the concept of the virtual enterprise is becoming the choice for many. Traditionally, IT used to build applications first and then worry about integration later. Now, IT has to be more systematic and strategic.

Heterogeneity in IT is inherent and eternal. The solution is not getting rid of heterogeneity, but in creating an "insulation" layer comprising of composite applications to eliminate point-to-point communications. However, it is a laborious, complex and time-consuming task to build composite applications.

Oracle Application Integration Architecture (AIA), built on Oracle’s strong SOA foundation, simplifies building composite applications.  I have seen in many pursuits so far, Oracle customers today are indeed attracted to leverage AIA Process Integration Packs (PIPs) to deploy out-of-the-box integrated business processes (like Order-to-Bill, Revenue Accounting and others). Using these service packs, programmers can build application independent executive dashboards and UIs. This virtualization through composite application enables well managed and better controlled business process platforms. Using AIA Foundation Pack Services and Objects (EBOs), reliable and reusable composite business processes can be built across Oracle and non-Oracle applications.

I would like to hear views on any experiences in building composite applications. Read on at http://www.infosys.com/oracle/white-papers/SOA-worlds.pdf

Posted by Gaurav Sharma at 06:48 AM | Permalink | Comments (1) | TrackBacks (0)

Engineering and design occupies an important role in most Hi-Tech companies due to mounting business pressure on R&D and product development functions. This is due to increasing demand for innovative feature-rich products accompanied by shrinking product life cycles and decreasing prices for the improved products. Thus there is a need for the PLM software to collaborate and communicate with a wide range of users beyond the Engineering department within and outside the company.

Let us examine in detail the drivers for this new revolution.

One of the main causes of this is need to reduction of prices for the products and the need to use components which are increasingly cost-effective and at the same provide better features. Thus there is a need to collaborate with global suppliers to address this need to enhance the competitiveness of the product in a globalizing world.

Another important reason for this new outlook is the need for reduction in time to release the new product to the market. This calls for reduction of all non-value adding time spent in the product development process. One of the main contributing factors in the product development time is the delays in communications and collaborations with other departments in the company and with suppliers.

Another important driver is the need to ensure that the products developed are really in tune with customer demands. Hence the need for interacting with customer and sales and marketing departments to ensure that the right product is developed.

There is also an increasing need for outsourcing to help in developing components which are beyond the capabilities of the company. This may also be explored to help in reducing the development lifecycles to ensure quicker time to market.

Now let us examine how good PLM software will help a Hi-Tech company achieve these key imperatives.

Collaboration with Suppliers: Good PLM software helps the engineering department engage with global suppliers for exchanging product designs and negotiate prices faster. This improved vigor in communication will help in identification of better and cheaper components and also help in substantial reductions in product development life cycles.

Collaboration with other departments: PLM software helps in quicker collaboration and communication between the engineering department and other departments. This ensures that the right product is developed which caters to the right customer demand.

 

Posted by K N Harilal at 05:35 AM | Permalink | Comments (6) | TrackBacks (0)

From 2001, the shadow of WEEE Directive (Waste Electrical and Electronics Equipment) and RoHS Directive (Restriction on Hazardous Substances) had begun looming over the world electronics manufacturing industry. By 2007, most EU Member States had implemented WEEE and the deadline for RoHS was achieved in July 2006. Other countries are now building their environment compliance approaches similar to the EU directives, e.g. some states in the USA, Korea, etc have put in place their own regulations. China, Chile, Brazil and Columbia also now have some environment management Directives in place. Japanese laws had been in place even earlier and many Japanese companies are well ahead in implementing cleaner technologies and in greening their supply chain. While the larger companies in most countries have started their compliance measures, most small and medium sized enterprises (SMEs) including those in Korea and Taiwan have fallen behind.

The factors which are driving compliance across the world are:

Developments in Europe:

1. There have been four major environmental legislative developments in Europe which impact the Electronics industry and all its stakeholders:

a. The Directive on the Restriction of Certain Hazardous Substances (RoHS) [March 2003]

b. The Directive on Waste from Electrical & Electronic Equipment (WEEE) Directive [March 2003]

c. The proposed Directive on Eco Design and Energy Using Products (EuP) [2005]

d. The proposed Directive on Registration, Evaluation and Authorization of Chemicals (REACH).

Developments in Japan:

a. Fundamental Law for Establishing a Sound Material-Cycle Society [2001]

b. Law for the Promotion of Effective Utilization of Resources (LPEUR) [2001]

c. Home Appliances Recycling Law (HARL) [2001]

d. Green Purchasing Law (GPL) was passed [2001]

e. Waste Management Law [2003]

f. Japanese RoHS [2006].

Developments in US:

As of January 1, 2007, California has implemented RoHS Law that bans sale of electronic items that contain certain hazardous substances modeled after the European Union's (EU) RoHS Directive 2002/95/EC.
Based on these regulations Hi-Tech companies and their suppliers are required to strictly comply with these regulations. The costs of non-compliance are high. Some of the non-compliance effects are:
Penalties :
EU Countries: Penalties for non-compliance with the WEEE Directive differ across European countries and come under two headings: failure to register and non-compliance. Those failing to register need to pay 100,000 in Italy and a staggering 1.5 million fine and two years in prison for Estonia. France imposes 7500 and Spain 1.2 million for non-compliance. Germany and Ireland ensure that non-compliant products are either blocked or taken off the market. EU authorities will conduct spot-checking of electronic imports for compliance and any RoHS failures will result in producers having to pay fines. Typically, non-compliant goods have to be shipped back to the country of origin. In such situations, the producer can divert the product to another country, which could possibly accept it. Or else, it has to dismantle the product to remove hazardous substances and rebuild it. Whatever the case may be, this could ultimately translate into higher costs.
Marginalization of smaller suppliers:
Suppliers failing to meet compliance requirements risk being marginalized. Smaller suppliers not closely associated with the OEMs are more vulnerable than others. The problem is further aggravated for smaller suppliers by the prevalence of a multitude of requirements, lack of transparency in communicating these requirements, and, short deadlines for meeting them.
Failure to comply by smaller suppliers will result in loss of international sales and possibly a portion of domestic sales. Besides, non-compliance would imply huge penalty costs and/or take back of product, leading to higher operational cost of higher inventory as well as redirecting the item to other acceptable destinations. All this would imply significant cost escalation with negative impacts on overall business operations.
Socio-economic impacts:
Under some circumstances of non-compliance, rising costs or loss of business, Hi-Tech units may close down or downsize operations. In either case, there will be loss of jobs and income generation opportunities.
What can be done by the Hi-Tech Industry?
1. Understanding and tracking all relevant legislations and their implications
2. Integrating eco-design and green procurement into organizational processes
3.Creating technical infrastructure and support systems (for eco-design, recycling,   e-waste collection, treatment and disposal, etc.)
4. Modifications in the existing ERPs and enterprise applications within organization and across its supply chain partners
5. Development of solutions to address the IT and business process requirements  for environmental regulatory compliance banned substances-free manufacturing

Posted by K N Harilal at 07:43 AM | Permalink | Comments (5) | TrackBacks (0)

Most Manufacturing organizations today capture tons of data during the day to day transactions that are carried out on the shop floor. Thanks to cheaper disk space and IT departments eagerness to digitize all the data to be collected on the floor - large volumes of data are being collected. State of the art MES packages today enable a lot of data to be collected which complements the data that is captured by the ERP package that has been deployed. But inspite of so much of data the general feedback from shop floor supervisors is that they don't get the correct data at the correct time to help them take those crucial decisions on the floor. There are primarily two kinds of issues: the speed at which the required data can be recovered and the flexibility to slice and dice the available data accross different dimensions to help the shop floor manager take those critical decisions.

The challenges here can be summarized into the following buckets:

1) Integrate and Analyse data accross multiple systems
2) Ability to quickly generate these reports accross multiple dimensions
3) Ability to quicky identify and isolate problems
4) Ability to predict problems based on past data

Just to get an idea of how complex this can become is described below based on sample data collected from one such shop floor of a very large manufacturing organization.

1) Machine/Equipment
2) Data/ Time/ Shift
3) Employee/ Supervisor
4) Lot/Batch
5) Customer/ Supplier
6) Product/Product Family
7) Quality Codes/ Failure Codes
8) Job/Sales Order

The interesting thing to note here is all the above could potenatially come of multiple systems. The challenge would be to normalize the above the data onto a common baseline and help in the analysis.

Today companies are struggling to make real use of all this data accross multiple systems. They have all the data but to cull out the information or the trend from all the above discrete pieces of information is the key.

Posted by Somnath Majumdar at 01:11 PM | Permalink | Comments (1) | TrackBacks (0)

Industry challenges

In my earlier blogs, I had briefly touched upon how a project centric approach will facilitate utilities achieving process efficiencies by integrating its various business functions.  We had also seen how Oracle out of the box capabilities can be leveraged.  Whilst the oracle based project centric solution enables utilities, there are some industry wide challenges that cannot be addressed through any system or solution.   Based on our experience the following are the few industry challenges that need to be considered while implementing any transformational solution to such project organisations.

Long front end planning phase for capital projects
 

Capital projects typically run for many years.  In one of the organisations we observed that the average lifecycle of capital projects were around 3.5 years.  This lifecycle is preceded by a front end engineering design (FEED) phase, which was about 7-15 months on average.  While structured project management and budget management processes can be put in place from the point when the projects start, the front end exercise typically goes unnoticed and is an overhead to the organisation.  The challenge is to track them and close them.  In addition to this, there are many uncertainties in this phase about the project itself.  Hence this needs to be planned by taking many factors into consideration.  E.g., Regulatory climate plays a very vital role in the planning process for utilities in their capital projects.  The regulatory implications need to be known upfront and they need to be taken into consideration during planning. Explicit front-end planning for regulatory risks and opportunities can drive important tasks, such as a proactive communication program specific to the regulators, building in the right controls to actively manage project cost, scope, time and quality. This in conjunction with innovative rate solutions should be conceptualized to minimise rate shock and reduce risk
 

Establishing a framework to manage capital investments
 

Capital investments in any organisation are likely to have a larger spread of stakeholders; like engineering, environment health and safety planning, customer and public relations, operations, taxation, regulation, procurement, logistics, inventory and finance.  In such projects there will be a need to have a framework that will address the needs to review and report status to respective stake holders.  Since the information comes from disparate sources and needs to be disseminated to disparate recipients, the effort required to do this is large and is key to the management of capital projects.  A lot of pains could be saved by institutionalising the project management, review and reporting processes.  While the governance is established for the project, this should be considered.
 

Need for Scenario based planning
 

Capital project lifecycles are long and likely to have embedded uncertainties and risks; the planning process has to be robust, with capabilities to handle those scenarios that could come up.  There have been many technology advances in engineering design, construction, and facility operations; however, project planning has remained a very intuitive process with little automation. Project planning is carried out by project engineers who may or may not have the experience needed to understand all of the project variables and their complex inter-relationships. Many a times, project requirements must be extracted from business teams by project team members who may not have the right questions to ask and are unable to analyse and identify project alternatives to meet the requirements. This enforces the need to have automated scenario modelling and simulation capability available to the project managers and sponsors, should the project be on schedule and within budget. Many projects follow a tight timeline forcing inexperienced team members to make spur of the moment decisions with insufficient data. Many senior project professionals have experience-based professional judgement that is not institutionalised. Some of the variables addressed in the decision-making process are unique to specific projects, may need to be weighted differently, and may have over-riding or dominating factors.
 

Performance management
 

Getting real time information from various systems towards cost, quality, resource and schedule is always a typical challenge in large projects as data tends to reside in multiple systems and in multiple worksheets. However, this data is very important, should the project is planning to have any scientific performance management tools – e.g., Earned Value Management.  EVM allows project managers to parallely track cost, schedule, resources and quality as a project progresses. This means managers gain early and detailed understanding of when and why projects are not performing according to the original plan. In turn, organizations can quickly target problem areas and make informed decisions about early cancellation or how and where to intervene.
 

Conclusion

The establishment of an integrated project centric model for the utility brings in the relevant business functions that are critical to project management under a single application.  This improves the efficiency of business operations and enables accurate data to be available to the key decision makers who can make critical decision for the project. Most of the functions can to be implemented out of the box with minimal customisation and / or integration.  This typically gives the organisation to be flexible and scalable, with minimal disruption to business.  The project centric approach ensures that near-to-real-time data is available to the decision makers which are critical for large projects.  Once these operational issues are addressed, that puts the organisation in a better position to focus on other issues that are key to managing such large capital projects.

Posted by Ismail Syed Mohammad at 10:06 PM | Permalink | Comments (0) | TrackBacks (0)