Workshop 6

Manufacturing Operations Management

Manufacturing Operations Management (MOM is a methodology for
controlling & viewing an end-to-end manufacturing process with a view to
optimize efficiency and profitability.
We are witnessing a trend towards a profound rethinking of production
models and operational processes, under the guiding principle of customer
order fulfillment.
Companies need to optimize manufacturing operations, focusing on
capabilities to meet these fulfillment needs rather than merely making sure
production capacities are fulfilled.
People will be at the center of this factory of the future, as they provide the
degree of flexibility and decision-making capabilities that are required to deal
with increasing market complexity and demand variability.

Steffen Klein

Positioning MOM

Distribution Center (SOP)

Plant (Component, SA, FA, )
Sales Office
Warehouse

Information flow
Goods flow

Corporate Finance & Optimizing MOM

The financial impact of optimizing Manufacturing Operations Management.

A firm can grow net income significantly by issuing new equity to fund new
projects.
How much equity a firm is reinvesting back into its business is dependent of the
amount of net capital expenditures and investments in working capital.
Equity reinvested in business = Capital Expenditures Depreciation + Change in
working capital (New debt issued Depth repaid)
Optimizing a firms supply chain and MOM in particular can reduce its working
capital substantially.
If however fundamental changes are overlooked and wrong architectural decisions
are made the amount of Capex can be too high due to complex technical issues in
combination with organizational resistance.

Equity reinvestment rate = Equity reinvested/Net Income

Expected growth in net income = Equity reinvestment rate * Return on Equity.

MOM inside ERP domain:

Business Impacts
ERP: Manage resources, order fulfillment and finance

CRM:
Care for customer
satisfaction

Federated
Enterprise data

Cost reduction opportunities

Revenue growth opportunities

SCM:
Engage suppliers

- Greatest Impact
- Significant Impact

PLM: Manage product portfolio definition and innovation

Source: Gartner

- Minimal or no Impact

MOMs biggest impact is in cost reduction opportunities; optimize internal value streams
Optimizing MOM is essential in order to optimize the supply-chain.
Flexibility within MOM is important in order to adapt to local needs.
Flexible capacity change needed in order to fulfill a changing demand
New market penetration must be able to realize swift and flexible

ERP Domain

ERP

APO

SCM Domain

MES inside SCM/ERP domain

MES

Edge

Equipment

Equipment

Device

Device

Strategic planning is a key element in a companys long term success.

Fast changing market demands forces enterprises to continually evaluate and optimize their
supply chains.
MES systems must be interactive instead of transactional in order to be able to deliver as
promised.
Only modern architectures are able to fulfill this demand

MOM: KPIs

Different industries have different KPIs

Some examples are:

Continuous/Batch:
1 Labour costs per kg.
2 On-time delivery
3 Line/Equipment availability
4 ..

Discrete:
1 Order fulfillment lead time
2 Inventory turnover
3 On-time delivery
4 ..

MOM KPIs are often also the most important clustered supply-chain KPIs.
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Architectural challenges

Challenges today: How to move from present legacy towards an adaptive I/T architecture
within acceptable time and budget?
Challenges of tomorrow: How to create and maintain an adaptive I/T environment which is
able to adapt flexible in a changing business environment?

Business Integration

High

Low

Low

Business Process Standardization

High

Standardization can result in significant organizational changes which often results in long
implementation times.
Challenges of tomorrow: How to create and maintain an adaptive I/T environment which is
able to adapt flexible in a changing business environment?

Source: P. Heinckiens

Legacy environments are still present

CRM
VTW-gegevens

Char ge-t o
adr essen

O f f er t egegevens

St ur ingsgegevens
t ekenkam er

FS-N
wi jz.

V TW -E

P AM M I

B ET-W OH

P S-i n fo
(ad re sse n & opl age s)

P o stb o ek

Taskfi l e

UP S

P HP Y

Dispat ch
r eliabilit y
ut ilzat ion

C o mp ass

M IAC

G egevens
r eser vedelen
Klant inf or m at ie

Klant inf o

Klant inf o
Klant inf o

C o mme rci al Syste m

Klant inf or m at ie
VTW-nr .
Ut ilzat ion dat a:
A/c-ser ienr .
O per at or
Flight hr s/-cycles

RMS
P ri n s

R AW

Do cu m en ts
VASS
(P L7 0 )

M AF
EDC

G egevens
r eser vedelen,
Pr ijsinf o

SP AR E

Vliegt uigser ienr s.

CCS

Docum ent st at us

Voor F27/F28
AM M en WDM :
LEP
TO C

Conf igur at ie
f ase

SAP R /2

DETSO

Tekening issue

TR S

Klant code
Di sco ve r
(P F8 0 )

TEDIS)

Docum ent gegevens

CMMI

CM M I

Ap p l e LAN

ERP

Tr ainingsm anuals

Technische
gegevens

SP EC

AO M
AFM
M M EL
Q RH
Gl o b al -vi e w

Voor t gangsdocum ent

M AP P S

Par nr s
G eldigheden

Vliegt uigr angnr .

G egevens vendor delen

Pr oduct gegevens:
Par t nr .,
Par t class
Ser ienr . indicat ie
Pr oduct st r uct ur en:
Par ent par t
Q uant it y per
S& E code

P C /P L

O RC
EM I
ATA-br

Tekeninggegevens:
Tek.nr
Tek.bladnr .
I ssue

C ATIA

BOM

Au to C AD

ERC

AM M

Amto ss

eakdown

JCM

M RB
M PD
CM P

G eldigh.O RC/EM I
Par t nr s

CAEapplicaties

TSSM

Docum ent gegevens

I lust r at ies

PDM

Au to tro l

CM P
voor
F27/F28

Cust om ised I PC-gegevens

Digit ale dat a

CADAM /CATI A

SSNL

Pr oduct dat a:
I nbouwaf d
ATA-code
Zone/posit ie
Vendor code
Aant al

Tek.( blad) gegevens

Change t r igger
gegevens

Digit ale dat a CV

G egevens wijzigingsdocum ent it em

Pr oduct gegevens

Au to cad fi l es (mai n frame )

Famo u s

Ap p le LAN MSG

Keywor d
ATA-br eakdown
Zone

Techn.
publ.
M SG

I lust r at ies

Klant gegevens:
Regist r at ienr . ac
Naam oper at or

M i cro -C ADAM

IP C
(b o e k-p rod ucti e)

I PC
Aanst ur ing
I PC par t sst r uct uur

DOC

Supplier

Offi ce syste me n

Tekeninggegevens:
Tek.nr
Tek.bladnr .
I ssue

Ser ienr .
indicat ie
Shelf lif e t im e
koopdelen

Technische
gegevens

E-BOM

CAD

SRM

SR M
(Fo 5 0 e n 100 )

WM par t nr s
Supplier
FS-N
p ro d .
Stru ct.

P SI

ATA-om schr ijving

FSCM
Supplier
Keywor d

VSD

Rest m anuals

W i ri n g M an ual

E-f ile: Par t nr s.

OR C AD

VSD
(Ve n d o rSu pp. Do c.)

Cont r ole
wijzigingsdoc.

CV

Flighttest
applicaties

Geldigh.
stap-1 delen
Tekeninggegevens

Par t nr .
Keywor d/Descr ipt ion
Spar e par t s classif icat ion
Supplier
Uit wisselbaar heden

Toep./
geldigh.
ORC-en

M ai n -frame -C ADAM

WM

Basisvulling

Architectural challenges

Decide on the optimal level of standardization

Offer the organization sufficient flexibility to adapt its future business model

Business Integration

High

Low

Orchestration of
Business Services

Low

Business Process Standardization

High

Are MOM business partners involved in the supply chain?

Use a common business language between all MOM partners in the supply chain.

Source: P. Heinckiens

MOM Value Stream Example

Customer
Demand

Create
Parts

Configure
Solution

Create
Final Assy

Create
Sub-Assy

Quality
Control

Delivery

High level business processes

BPMN

Assembly

BPEL & WSFL

Create
Assy

Create
Assy

Local
System

Central
MES

WSDL
SOAP

Typical Assembly Value Streams

Receipt.
Stock/
Prod.
Stock/
Prod.
Stock/
Prod.
Inbound
Picking
Inbound
Picking
Inbound
Picking
InboundInspecionPicking PackingShipping
Control
Location
operation
Location
operation
Location
operation
control
control
control
control
control
control
control (testing) control control control
(Purchase)
control
control
control
control
control
control

Receiving

In

Raw
Mat

Out

Comp.
Manuf.

Comp.

In

Out

Customer Order

Decoupling Point (CODP)

Sub
Assem.
Manuf.

In

Semi
Fin.

Out

Final
Assem.

In

Fin.
Gds

Out

Packing

Shipping

ERP

Order Specification

Decoupling Point (OSDP)

CRM

Data

SCM

PLM

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ISA 95 Control:
Hierarchy Levels & Standards

Level 4

Level 3

Business Logistics
Plant Production Scheduling, Shipping,
Receiving, Inventory, etc

Manufacturing
Operations Management
Dispatching, Detailed Production
Scheduling, Production Tracking, ...

Level 2
Level 1

Level 0
Source: ISA

Batch
Production
Control

Continuous
Production
Control

Discrete
Production
Control

Manufacturing processes

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Business Application Architecture Overview

Standard Microsoft Layering

Edge Servers

External Systems

UI
Components

Business Layer
Business
Components

Business
Workflow

Business
Entities

Communications

Service Interfaces

Operational Management

Services Layer
Message Types

Security

Service
Components

Presentation Logic
Components

CROSS-CUTING

Presentation
Layer

Users
Fixed, Wireless
Windows
iOS
Android

Application Faade
Data Layer
Data Access Components

Data Helpers/Utilities

Service Agents

Data
Sources

Other Data
Services

Source Microsoft

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Business Application Architecture

Edge Server positioning

Monitoring & Control

Data Layer
Data Access Components

Data Helpers/Utilities

Service Agents

Data
Sources

Business Layer
Business
Components

Business
Entities

Business
Workflow

Other Data
Services

Application Faade
Services Layer
Message Types

Service Interfaces

Operations Network
Edge (Electronic Data Gathering & Evaluation) Server

Asynchronous Messaging
REST or SOAP

Data Historian

Event Processing
Filter

Aggregate Transform

Alert
SSDs

Fine grained, filtered event data;

Embedded high performance db

Device Management
Device Abstraction

Production Data Collection & Control

Devices at the Edge
Device 1

Device n

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Suggested discussion items

How do we better balance reducing complexity reduction and staying flexible?

How IP-driven should operations be (open vs. closed)?
Where are the biggest gains to be achieved?
How to bring Lean back from pure cost focus to Agility/Reliability/Cost focus
Best Practices sharing on shop floor level / improvement & service mentality on shop floor
What are the most important KPIs for you to measure your objectives?
How important is MES in combination with intelligent equipment and other devices like
scanners, label printers and RFID for your organization?
How effective is paperless shop floor management?
How can we be protected from plant floor cyber-security threats?

Lets start the interactive workshop

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