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Process understanding in manufacturing and service

Transforming process, product and service data into business intelligence.

Process understanding in manufacturing and service

Table of Contents
Executive summary.......................................................................... 1 New forces intensify long-standing challenges ................................... 1 The evolution from hindsight to insight to foresight ............................. 2 Five keys to process understanding ................................................... 4 Key #1. An up-to-the-minute, unified view of all relevant data ........... 5 Key #2. A rigorous framework for historical analysis ........................ 5 Key #3. Tools for proactive analysis and action ................................ 6 Key #4. A living archive of collective knowledge .............................. 6 Key #5. Availability of knowledge to all stakeholders ........................ 7 Process understanding in action ....................................................... 7 Summary .......................................................................................10 About SAS......................................................................................11

Process understanding in manufacturing and service

Executive Summary
For years, manufacturing and supply chain organizations have focused on developing products and services and streamlining processes to optimize resources and minimize waste. Those goals are still valid even vital but todays competitive global markets demand even more. Its no longer enough to have lean production processes and meet customer demands. Now you must also predict future growth and demand in dynamic global arenas where change is continuous, and adaptation is a way of life. In the quest for the required levels of agility and insight, manufacturing and service organizations are certainly not lacking for data. In fact, they are drowning in it. Its on shop floor PCs, workstations and PDAs. Its in transactional and operational systems throughout the organization. However, these event-handling and transactional systems, on their own, cannot merge this data into an integrated source of business intelligence. To bring all that data together from different areas and gather useful intelligence from it, companies need to have the right data management, forecasting, optimization and modeling techniques. They need key performance indicators and process metrics that span functional areas to provide detailed insight and broad context. With this perspective, managers and other stakeholders can see changes and trends as they occur and make business decisions based on those indicators.

The key to gaining true insight from transactional and operational systems is in using them not just as isolated data repositories, but in bringing them together as an integrated source of business knowledge by which decisions can be made.

New forces intensify long-standing challenges

For many years, manufacturing and service organizations have been on a wild ride that has both challenged and reaffirmed all notions about business as usual. Despite talk of a new economy and globalization, the old rules of business still apply. Money counts. Profitability matters. Customers are number one. Shareholders rule. Competitors are hungry. At the same time, the old rules of business have been reshaped by double-edged trends of opportunity and difficulty. Organizations have suffered the irony of new problems that came along with new promises: Globalization expanded market opportunities but also expanded process- and quality-control issues across continents and cultures. Diversification brought by mergers and acquisitions increased corporate reach and revenues, but also increased the difficulty of gaining corporate-level perspective. Contract manufacturing and outsourcing options increased choice and flexibility, but also raised the complexity of doing business.

Process understanding in manufacturing and service

Productivity advancements increased yields at tighter turnarounds, but also elevated all baseline expectations from management and customers. Information technology (IT) advancements generated gigabytes of data about every phase of the process, but also drowned the systems that were supposed to capture and digest it. So, old rules apply, but they arent quite the same old rules we might remember from the last century. Heightened challenges call for a more acute level of process understanding to decipher the added complexities.

The evolution from hindsight to insight to foresight

Back when process inputs, outputs and demands were fairly predictable, traditional data-gathering and dissemination methods were sufficient. You could collect data in multiple operational and transactional systems, manually re-enter data from one proprietary system into another, and tinker at length to make sense of it all. At Monday status meetings, spreadsheet renegades would assemble over coffee, each with their own version of The Truth, derived from complicated spreadsheets only they could comprehend. That was then. Todays organizations need a single, integrated version of the truth that spans the organizations processes from inputs to outputs, ideally from upstream suppliers to downstream customers. They need a way to not only assess what was, but predict what will be. And they need a way to share these insights across organizational and functional boundaries and among stakeholders at various levels, such as customers, suppliers, process and product specialists, managers and executives. However, organizations vary a great deal in how far they have progressed toward this ideal. The journey can be conceptualized in three stages: 1. In applying statistical methods to assure a more stable outcome from processes, organizations took the first step: process control. Process control tracks measurements from a multitude of input points and identifies historical trends. Weekly and monthly reporting helps organizations fine-tune processes and equipment to increase yield and reduce waste. Mind you, organizations at this level are still throwing out pallets of goods that passed through all production stages before early production defects were recognized and corrected. They are still unable to fine-tune production for productivity and quality gains until lost opportunity has passed down the line. They still rely on intuition and manual cross-checking of functional reports to identify trends across related functions.

Process understanding in manufacturing and service

2. Acknowledging the interdependence of variables that contribute to yield and quality objectives, many organizations took the next step in developing their information systems: process engineering. Process engineering recognizes relationships among multiple inputs and makes progress toward assembling and displaying data in cross-functional context. It disseminates information faster to those who will make corrective or optimization actions. 3. The most competitive manufacturing and service organizations will take that third step to process understanding. Process understanding delivers a holistic view across the entire organization. Its a high-level view distilled from lowest-level details a strategic vision based on one version of the truth, assembled from all relevant process, product, equipment and service data an information framework that recognizes the fundamental interdependence of functions and metrics that were once viewed in isolation.

Data
Historical: Post inspection

React Predict
Knowledge
Process Knowledge

Defects, Rework

Information
Process Control

Process Engineering

Operations Excellence Maturity

Figure 1: Immature organizations have higher defects and rework, and are most likely operating in a reactive mode. As an organization matures, it gains operations excellence maturity and increased process understanding predicting what is likely to happen. As a result, defects and rework decrease.

Historical The solution provides a logical and physical data model that integrates all relevant data from processes, products, equipment and services across the entire organization. This data is managed, modeled and presented in a way that enables Reaction Time Required stakeholders to intelligently monitor performance, surface key issues, navigate the data, perform analyses and collaborate within and among teams.

Information Value

Risk The last step sounds like a complete overhaul of the IT infrastructure, but it is not. It is a value-add that leverages existing systems. The organizations existing Process Engineering operational systems, applications and infrastructure continue to supply the granular operational and transactional data. An overlay solution transforms that operational data into business knowledge that can be infused into every facet of the organization. Process Control

Process Understanding

Def

Process Engineering

Knowledge
Process Knowledge

Process understanding in manufacturing and service

Operations Excellence Maturity

Process Understanding

Risk

Information Value

Process Engineering

Process Control Historical

Reaction Time Required

Figure 2: When an organization is in reactive mode looking only at history the value of information is low, risk of failure is very high, and reaction times are very long. Moving towards process understanding increases the value of information and lowers the risk for the organization. Subsequently, reaction times become shorter and the organization becomes more agile.

Five keys to process understanding

End-to-end process understanding relies on five key capabilities, all of which can be implemented with readily available information technology: 1. An up-to-the-minute, unified view of all relevant data. An integrated data warehouse stores and manages all relevant data. Intuitive data access provides one version of the truth and replaces disparate spreadsheets and proprietary tools, with their individual assumptions and criteria. 2. A rigorous framework for historical analysis. Far beyond simple trending and bar graphs, modeling tools encode any number of business rules and criteria for analysis and identify variations and exceptions from accepted thresholds across multiple dimensions. Users can analyze and drill into the data to reveal deeper process understanding that leads to correct monitoring, control or improvement actions. 3. Tools for proactive analysis and action. An automated monitoring and alert mechanism scans operational data, ferrets out potential problems by modeling against pre-established business and engineering rules, and automatically issues alerts for corrective action. 4. A living archive of collective knowledge. A knowledge repository stores the results of historical and proactive analysis, complete with cross-functional context, and thereby supports collaborative learning within and between teams.
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Process understanding in manufacturing and service

5. Availability of knowledge to all stakeholders. The intelligence and understanding derived from analysis and reporting must be available to all stakeholders, from line managers to engineers to technicians to executives and must be presented in a form that is meaningful to them. Lets take a closer look at the requirements in these five key areas.

Key #1. An up-to-the-minute, unified view of all relevant data

There is no shortage of data from multiple collection points, such as systems for enterprise resource planning (ERP), manufacturing execution systems (MES), statistical process control (SPC) and manufacturing resource planning (MRP). Within each highly specialized system lies a vast stockpile of valuable data waiting to be exploited. The trouble is accessing and transforming it in a timely fashion. Effective decision-making requires an analysis-oriented data structure rather than a transaction-oriented one. Here is where a data warehouse comes in. A data warehouse can extract data from diverse sources and systems, reconcile it, cleanse it and transform it into a format that supports meaningful analysis. Along with that data, it also stores the business rules and metadata about the collected data. Data warehousing creates one version of the truth a cross-functional view that all stakeholders can count on for direction and timely problem-solving. The key is the ability to assimilate data from independent yet interdependent systems and transform that data into valuable insight easily, quickly and effectively.

Key #2. A rigorous framework for historical analysis

When money and delivery schedules are at stake, you cant just hit the Pause button while you figure out the cause of a problem. You have to track the root cause immediately and take corrective action. In complex environments with hundreds of influencing parameters, it takes more than intuition and visual monitoring. A system for process understanding can analyze huge volumes of data, uncover significant patterns in the data, trace the source of the problems and quickly deliver business intelligence. Built on an integrated data warehouse, it also enables meaningful comparisons among facilities, production lines and products. Performance expectations, engineering and technical specifications, and business rules are quantified and stored in the system. Processes, products and other variables can be monitored against those rules. The system can quickly identify exceptions, automatically alert those responsible, publish the full context to a knowledge repository, and provide feedback to operational systems to support continuous process improvement.

Process understanding in manufacturing and service

Through structured analysis, users can explore relationships across the organization, correlating upstream and downstream variables. By analyzing across process steps, the downstream effects of upstream changes become clear. This type of analysis can identify process issues much earlier, when scrap loss is less costly. And it can reveal which factors most heavily influence final quality, pointing to where closer monitoring will yield the greatest benefits. The benefits of analytics extend beyond increasing production yields. Through analytical modeling, organizations can determine where they stand, where they are going and how well they are moving toward overall business goals. Business-rule modeling helps everybody understand corporate strategy and their roles in helping the organization reach those goals.

Key #3. Tools for proactive analysis and action

The historical trending and analysis tools described earlier work with data from the data warehouse and are useful when you already know the questions you want to answer. How many did we produce? What was the cost? What was the waste? But what if you could investigate processes based on business rules and statistical models while an event is occurring? What if you could identify and correct potential quality flaws while the product is being created, rather than having to scrap it after the whole batch is already headed for shipment? An effective system for process understanding monitors data flowing into the data warehouse. That means you can identify key issues and trends sooner, resolve and correct them sooner, and thereby reduce variance or waste earlier. You could even adjust the ongoing process to save the batch. Sophisticated statistical analysis tools sifting through millions of metrics can uncover critical issues that cannot be revealed by intuition and visual monitoring systems. When a production run costs US$100,000 or more, uncovering potential problems before you shut down a line or scrap a batch can return significant savings.

Key #4. A living archive of collective knowledge

If only teams knew collectively what each member knows individually. If only you could clone the expertise of the indispensable specialist who just retired. If only you could tap into the knowledge of the engineer who fixed this problem on another continent two years ago. How can organizations capture and use the intellectual assets of their people and the cumulative knowledge of historical events documented in their systems? A knowledge repository does exactly that. It leverages distributed wisdom of all those who contribute to creating value. Team members collectively contribute to and benefit from knowledge gained in the past or elsewhere.

Process understanding in manufacturing and service

A knowledge repository can be automatically populated with issues surfaced by historical and proactive analysis results enriched with full context in data and narrative formats. Reports, discussions, follow-up analysis, actions taken and results obtained a complete picture of an issues identification and resolution becomes part of a lasting and dynamic body of knowledge. This knowledge repository supports collaborative learning within and between teams to support problemsolving and improvement projects.

Key #5. Availability of knowledge to all stakeholders

Process understanding is only as useful as its reach. Organizations are increasingly embracing information democracy and acknowledging the value of sharing consistent information at different levels of management and across departments. Everyone shares the same vision and insight. To give the power to the people, its not enough to provide tools and data to select specialists or quantitative analysts. All contributors must be able to see critical metrics and gain the sense of ownership that stems from understanding their roles in the value-creation processes. People in different functional areas need to have the same vision of the process and the organizations strategy, but they need it in different views. Analysis and reporting tools must offer up the appropriate data and level of detail to suit widely diverse users, from line managers to technicians to engineers and executives. For example, manufacturing data can help R&D teams develop new products with full knowledge of the manufacturing implications, past shortfalls and past successes. The same data can give sales and marketing teams better understanding of what is required to modify product characteristics or quantities. Executives can more closely align corporate objectives and strategies with day-to-day realities.

Process understanding in action

The best way to illustrate the merits of end-to-end process understanding is to show it in action. SAS customers for this solution span a wide range of manufacturing and service industries food processing, industrial equipment, steel, chemicals, automotive, microelectronics and computers, to name a few. Here are some snapshot views of the benefits SAS is bringing to diverse organizations. Trimming valuable time and waste from costly processes Electronics manufacturing is a high-stakes game with a short cycle in which to recoup investments. One global supplier told SAS that it cost more than $1 billion to build a new fabrication facility that will probably be obsolete for leading-edge technologies in three to five years.

Process understanding in manufacturing and service

So youve got only a short time to get a return on your investment, said a process section head at the company. We use SAS software to analyze and report on manufacturing process data to ensure quality, reduce waste and improve yields. We must always prevent a process problem from becoming a customer problem, let alone from resulting in a failure in the field. Because it is very expensive to produce their high-tech product, even marginal increases in yield and quality can result in multi-million-dollar savings. Our approach, which involves using SAS software, enables us to be more responsive to customer needs and make significant savings each year. If someone wants, say, a DPMO (defective parts per million opportunities) number, or a first pass yield number for a specific part or a pareto of defects, they can go to the system, specify their parameters, press Enter and it will give them what they want, said the manager of quality information systems. SAS software provides the quality analysis tools, but we also use SAS software to give our users easy access to these tools through a menu system. Taming data at an automotive supplier A manufacturer of high quality automotive parts needed a way to improve the use of collected data for better quality control and business processes, while increasing competitiveness and profitability. There was no shortage of data. For one product alone, about 450 quality control tests were performed and as many as 1.5 million data points collected per day. The manager of test engineering turned to SAS for a way to make that data meaningful and put it in the hands of people building the product across the plant, not just a small cadre of engineers. Their SAS solution organizes that mass of data into logical subgroups to enable very fast reporting. You can look at any value in the system in no more than seven or eight seconds, said the companys manager of test engineering. In the past, we have made decisions based on limited test data, but now we really can see the benefits of using all our data. The system is now used in daily operations by the quality group, manufacturing group and test group. Bringing power to the desktop for a computer manufacturer A major computer manufacturer turned to SAS for help gaining visibility into their quality process. Their old spreadsheet-based process consumed four hours a day, five days a week for three quality engineers to massage the data and generate charts. And only those engineers knew how to use the tools. When we tried to find trends with defective components, we were always unsure if we made those calculations correctly, because of the tools we had, said the quality program manager. We were looking for something more consistent.

Process understanding in manufacturing and service

After only a few weeks, their SAS solution was serving executives, engineers, product managers, technicians and component engineers. The application serves all of those users from the very detailed level such as what the product failed for in temperatures and voltages, and other very specific information that engineers need to drive quality issues back to our suppliers to a simple test yield that the executive level likes to review on new products. So it has been a big benefit, were using it daily. In the first week we already had several improvements in quality or at least visibility to some of the problems we didnt know we had, along with many other areas where we knew we had problems but didnt realize the magnitude. Keeping a giant light on its feet POSCO, the worlds largest steel manufacturer, is a gentle giant, modest about its achievements, even though its products are everywhere. Founded in 1968, POSCO has two large production plants that produce 28.5 million tons of steel annually, with revenues in the tens of billions. On this scale, a process improvement strategy such as Six Sigma can have tremendous impact. POSCO used SAS software to build the information framework for its process innovation programs. SAS is used to extract, transfer and transform data from ERP and legacy systems into a SAS data warehouse, where it is quality-checked and prepared for analysis. The first process innovation phase achieved a 50 percent reduction in lead times for standard hot coil production (from 30 to 14 days), and a 60 percent reduction in inventory (from 1 million to 400,000 tons). It also enabled POSCO to introduce new processes that reduced planning and sales cycles. In the second process innovation phase, POSCO used SAS for a project tracking system that analyzes processes. To find out whats going on with a particular project, all we have to do is enter the Six Sigma portal and select the project title and CTQ (critical to quality) name. Data is gathered automatically by SAS, enabling daily and monthly monitoring, also done with SAS software, said the project leader. Everyone in the company can access the information to see how the company is performing. The results of Six Sigma at POSCO have been remarkable. In the first phases, the program saved nearly $450 million. SAS has directly contributed an ROI of $14 million on Six Sigma projects and an additional $1.5 million on other projects, said the POSCO project leader. Thats an impressive result in less than two years, and we have anticipated ways to gain even greater returns in the future.

Process understanding in manufacturing and service

Summary
Whatever the organizations goals achieving an output target, meeting customer specifications, increasing profits, decreasing time to market, lowering defects or increasing business efficiency process understanding can improve all aspects of an organization, at all levels: At the shop-floor level, line controllers and production supervisors operate a userfriendly system that puts decision-making power at their fingertips, even if they dont have statistical backgrounds or prior computer experience. At the middle management level, quality control and process control managers have timely and reliable information about process performance to improve decision-making and agility. Researchers and senior managers can assess overall quality performance at a higher level with composite data across functional areas, production lines, product categories and organizational units, even across multiple production sites. Executives have ready access to high-level summary information to guide strategic decision-making and set achievable goals that can be translated from business terms to technology terms. The foundation for these multitiered benefits is an information framework that provides five key capabilities: 1. An up-to-the-minute, unified view of process, product and equipment from an integrated data warehouse that stores and manages data from multiple input systems to create one version of the truth. 2. A framework for structured analysis, one that can apply business rules and engineering criteria against data from the data warehouse spanning multiple functions, variables, data dimensions and layers of detail. 3. The tools for proactive analysis and action, continuously scanning operational data as it is being generated, to identify potential problems for earlier resolution. 4. A knowledge repository that stores the results of historical and proactive analysis, complete with cross-functional context, to support collaborative decision-making and learning within and among teams. 5. Ready availability of this knowledge to all contributors through an intuitive, Webbased interface that supplies information in a form that is meaningful to the specific user.

This years Global 100 list represents the best and brightest software vendors targeting the manufacturing industry. SAS stability and strength in the manufacturing arena proves the company is capable of competing with even the largest publicly traded vendors. We also applaud SAS efforts in establishing the value of business intelligence in the manufacturing environment.
Kevin Parker, Editorial Director, Manufacturing Business Technology, on the magazines 2007 Global 100 rankings

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Process understanding in manufacturing and service

About SAS
Manufacturing Business Technology magazine named SAS sixth in its annual Global 100 rankings for business performance technology (August 2007). SAS offers all of the capabilities described in this document to improve the quality of products, processes and services. SAS solutions for process understanding can help any manufacturing or service organization: Respond to process deviations with reliable analytics that solve problems the first time. Develop quality practices that save time, cut costs and enable quick response to customers. Distribute analysis tools so everyone in the organization can contribute to process improvement. Consolidate multiplant strategies to maximize return on investment. Incorporate lean and agile production techniques that are critical for world-class competition. SAS is the leader in business intelligence and analytical software and services. Customers at 43,000 sites use SAS software to improve performance through insight from data, resulting in faster, more accurate business decisions; more profitable relationships with customers and suppliers; compliance with governmental regulations; research breakthroughs; and better products and processes. Only SAS offers leading data integration, storage, analytics and business intelligence applications within a comprehensive enterprise intelligence platform. Since 1976, SAS has been giving customers around the world THE POWER TO KNOW . For more information, visit us at www.sas.com.



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