PRODUCTION AND PERFORMANCE MANAGEMENT

YIELDS, LEAN, AND PRODUCTIVITY IMPROVING CONSUMER PACKAGED GOODS KPIS THROUGH EFFECTIVE REAL-TIME HISTORICAL ANALYSIS

TURNING DATA INTO ACTIONABLE INFORMATION

IMPROVING CONSUMER PACKAGED GOODS KPIS

Yields, Lean, and Productivity Improving Consumer Packaged Goods KPIs through Effective Real-Time Historical Analysis

Industry-wide thirst for performance visibility, not just within the four walls of one plant, but across increasingly complex fleets of plants, is at an all-time high; improved end-to-end productivity while improving overall product quality is THE focal point. Manufacturing companies are investing significant time and effort developing correlated key performance indicators (KPIs) for all stakeholders ranging from plant management and product research and development (R&D) to sales and operations planning (S&OP) groups. These knowledge workers rely on the KPIs to operate and improve the agility, responsiveness, reliability, and profitability of their manufacturing assets. When it comes to consumer packaged goods (CPG) manufacturing, this thirst is all about expansion of brands with calculated control of the costs. The top issues for todays CPG manufacturers are: Globalization Abbreviated new product development and launch (NPDL) cycles Large stock-keeping unit (SKU) proliferation Shrinking margins and the need to protect brand equity amidst spiraling costs

Plant managers need real-time decision support tools to make intelligent production trade-off decisions, to identify production losses and improvement targets, and to avoid costly waste and re-work. The next generation real-time data historians are taking a proven technology designed for process environments where real-time decision support was either a make or break decision of profitability. The needs of high-speed, high-volume worlds of oil and gas, petrochemical refining, and energy generation are increasingly finding a home in todays CPG manufacturing environments as these industries become more time-sensitive to accurate information. Unlike the data historians of the past, todays historians bring a host of capabilities beyond high-speed streaming data acquisition and retrieval. This new generation of real-time data historians aggregate information from control and operations management systems across all areas of the facility, including: Distributed control systems (DCS) Programmable logic controllers (PLCs) Scales Ovens Batch execution systems Bar code readers Manual data entry systems

Borrowing from the relational world, modern historians also accommodate a blend of data structures and types including those defined by a users business process role to accommodate the special needs of the processing environment. Increasingly, real-time data historians are employed as the aggregator of information from multiple sites; in essence, fulfilling the role of a real-time or operations data warehouse to support high-level KPI generation and multi-site performance data roll-up capabilities. In short, real-time data historians are positioned to play a key architectural role in todays CPG production environment, both at the plant and at the enterprise level.
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Consumer Packaged Goods Manufacturing Realities CPG companies face a multitude of unique challenges in the 21st century global marketplace. Like their counterparts in the high-tech consumer electronics arena, they must constantly innovate to differentiate themselves simply to maintain, or hopefully increase, market share on razor-thin margins. At the same time, like their life science counterparts, they are bound by government and industry regulations to help ensure consumer health and safety without the luxury of life science operating margins! SKU proliferation and global localization are a fact of life, as is the need to protect brand equity and limit corporate liability. Every year, an increasing number of product variants hit the shelves; new label claim regulations are enacted; and formulations and designs are modified to account for country-specific legislation and language around ingredients, materials, and attributes. Most of this is accomplished without additional capital expenditures and marginal market growth. In other words, todays CPG manufacturers are challenged to squeeze a lot more productivity from existing assets assets that, in many cases, were designed and commissioned decades ago to accommodate make-to-stock business models of the 20th century. Simultaneously, they are faced with a host of complex influences: New global competition from private-label brands Increasing supply network complexity Supplier management risk due to rising cost for raw material and energy Corporate sustainability initiatives

The CPG markets are becoming globally distributed while their retail customers contractually demand pull lean supply chains, RFID, PDM and even vendor-owned inventory. The result is a CPG plant that must become more adaptive, responsive and agile. CPG companies need ways to work faster, better, and at lower cost, but most importantly, smarter. These are no longer 20th century marketing buzzwords, but 21st century realities. How are companies planning to meet these challenges? Based on 2006 research by the Aberdeen Group, Figure 1 shows how companies are planning to respond.

Figure 1: How Companies Plan to Respond

IMPROVING CONSUMER PACKAGED GOODS KPIS

Applying Data Historians

Real-time data historians are part of the solution to these problems, so lets determine when and how to apply data historians.

The Need for Speed The need to capture large volumes of time-series data for literally thousands of data points and retrieve it at a fraction of the time into data historians has been well documented. The role has evolved to tie into a plants operations management (OM) middleware in order to aggregate a wider set of sources of data and then deliver information in many forms to operations and enterprise users. With this new and expanded role based on more advanced capabilities, they are better termed operation management historians. A Manufacturing 2.0 historian today provides a data abstraction layer (sometimes called metadata) between the real-time process realm and the more ponderous world of the transaction-oriented business and financial systems[and] offers various analytical mechanisms for aggregating, consolidating, and recalibrating data from various systems in the production environment. Only recently have users begun to understand the value of process data integrated with other types of operations and product data sets to generate and help visualize a comprehensive view of the state of the production systems. Historians are designed to store vast quantities of time-series data in easily accessed file structures that introduce the possibility of data and file compression during data collection at the source. Today most, if not all, historians use data compression models in order to make the most efficient use of available storage. Therefore, the operations management historian is the data storage paradigm that provides the efficient use of storage and provides the very high data access rates required in modern CPG manufacturing operations.

Tuning Manufacturing Performance with Metrics Todays quality focus, which has matured for CPG manufacturing visibility into the performance of the manufacturing process, is prerequisite to improvement. KPIs are the quantifiable measurements that reflect the critical success factors of the business and critical-to-quality (CTQs) characteristics of operations. Even more importantly, they provide the visibility necessary for management to recognize a developing problem and take the appropriate corrective actions while those actions can still have a positive impact. KPIs are composite values. By this, we mean that KPIs are typically a calculated analytic they arent just simple trends. Although for an equipment operator or line supervisor, monitoring and alarming a trend of a single process variable like temperature or flow may be sufficient to monitor the health and performance of a particular process segment or phase. In contrast, KPIs generally combine data from disparate sources. Overall equipment efficiency or effectiveness (OEE), for example, is calculated from three other KPIs: availability, performance and quality metrics. These primary KPIs are used by many
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manufacturers as a level one root cause metric to identify the next set of analytics for investigation for a corrective action. They are calculated, alarmed, and updated constantly, in step with ongoing operations, as leading indicators of whether or not the performance targets of interest (quality, order fill, schedule adherence, and the like) will be achieved under current operating conditions. Furthermore, because KPIs vary by role, the KPIs must be presented in the appropriate timeframe and terms to each group of stakeholders involved in the process. This transformation of real-time production data into role-appropriate actionable information is called enterprise manufacturing intelligence (EMI) analogous to business intelligence, but for the real-time, manufacturing environment. While many systems currently exist to collect and calculate KPIs, OM historians have emerged as a next-generation information tool for CPG manufacturing that delivers high-speed optimized data collection bolted to an analytical engine that can perform the calculations required to support EMI. Furthermore, real-time OM data historians are configured not only to perform KPI calculations, but to detect out-of-threshold events and generate alarms to notify operators and supervisors that remedial actions are needed now! The end result is a more efficient architecture that blends nicely into the Manufacturing Convergence trend we see in todays global market.

OM historians have emerged as a next-generation information tool for CPG manufacturing...

Developing Operations KPIs That Count Manufacturing organizations cannot and should not attempt to measure everything. Metrics drive behavior and should be chosen carefully. Ideally, operational metrics should be aligned with business strategies and goals. Metrics that translate operational measures like feeds and speeds are most effective when they are linked to financial outcomes. Metrics, then, should focus on measuring performance in the areas that matter most to the companies success. Choosing a metric is a collaborative effort. Several groups of stakeholders may need to be involved in the choice of manufacturing KPIs, including, but not limited to, manufacturing operations, plant management, information technology (IT), finance, engineering, accounting, and the lines of business (LOB). The measures chosen must be actionable; the processes must be able to be changed in the short term, characterized change management process. Too often financial KPIs actually constrain production, such as limiting the purchase of spare parts or operations materials, while production is ramping existing products or introducing new products. KPIs in all industries need be developed top-down and verified bottom-up. The key is to ensure the chosen metrics (KPIs) are linked to a business metric. MESA International states in Metrics That Matter, While there is no algorithmic link between operational and financial metrics, the relationship is clear; activities in manufacturing operations are a major driver of financial results. MESAs study demonstrates that companies having sound manufacturing metrics that support their business processes improve their manufacturing and business performance at a ratio of 2 to 1. The key is to understand which metrics drive the ongoing success of the business.

IMPROVING CONSUMER PACKAGED GOODS KPIS

The CPG Solution Matrix, Table 1, shows common metrics that are monitored within the CPG industry.
Table 1: CPG Solution Matrix

CPG Solution Matrix

Justification Legal Requirement Physical Assets Improve compliance with multi-government regulations Minimize delays due to customs intervention with multi-government regulations Improve production reliability: - Higher output - Better quality Information Assets Better control and accuracy of data Reduced license noncompliance Key Metrics Compliance rates Advanced shipping notices & UCC128 Container labeling errors

Revenue Enhancement

Improved employee productivity

Cost Reduction

Risk Mitigation

Competitive Advantage

Reduce number of obsolete or inactive capital assets Improve spare parts optimization Improve completion rate on PM work orders Reduce risk of hazardous leaks and/or spills Reduce risk of noncompliance Improve customer satisfaction Improve supply and demand Improve public record/image

Improved supplier/source data Improved asset visibility and allocation Fewer faulty installations Reduce risk of noncompliance Increase employee satisfaction Improved public record/image Fewer defective products

Reduced plant downtime Overall Equipment Effectiveness (OEE) Mean Time Between Failure (MTBF) Mean Time to Repair (MTTR) Maintenance costs per unit Capacity utilization Predictive maintenance monitoring (Maintenance events per cycle) Reduction in penalties Reduced Time to Productivity Industry benchmark performance Quality improvement (firstpass yield)

Automation World reports that measures of yield and productivity top the list of KPIs monitored. However, metrics by themselves do not improve performance; they only identify areas where changes need to be made. They are an indicator to drive the event or process of root cause analysis and correction. The organizations that have been most successful in improving their competitive positions are the ones that have as few KPIs as possible, link them to business goals and refresh them frequently through periodic review.

The Myth of Standard KPIs KPIs are not necessarily the same across different businesses or organizations. Also, the method of calculation for the same KPI may vary. The KPIs support the organizations goals and the organization needs to set targets for the KPIs that move them toward their goals. KPIs are current measures (less than 24 hours) while most organizational and financial measures are past measures. Past measures are never key performance indicators. The number of KPIs should be kept small (more is not always better) so they can get the focus of attention within the organization and be the metric for root cause analysis.

PRODUCTION AND PERFORMANCE MANAGEMENT

Speed Counts Time is always of the essence. Timeliness is the critical factor in the ability to take corrective actions that have an opportunity to change process outcomes. Factors such as speed, frequency of data collection, frequency of operator feedback, and the latency between operation and measurement have an impact. The sooner corrective action is initiated, the smaller the impact of the situation (often by orders of magnitude). Hence, real-time is the ideal, but as a minimum, KPIs need to be revised, updated and reviewed daily based on the demand state of the plant and business. The best in class CPG organizations that identify and correct production problems to improve the businesses bottom line performance have several things in common: Well analyzed and chosen KPIs that are refreshed frequently Key operations software such as integrated MES, LIMs and EAM Role-based OM Portals mapped to business process and production workflows Data historians as their data collection and aggregation paradigm

Role-based OM Portals and the Rockwell Automation Incuity Product Accelerate Operations Performance There is an additional requirement for OM historians to be integrated with the operations and control systems in order to provide an additional level of capability for drilling down into the data in order to find root cause. Role-based OM Portals are simply a way to present KPI, alarm and event, and other role-appropriate information in an easily understood graphical presentation for manager, supervisor, or the operator or mechanic addressing a directed event. The Rockwell Automation Enterprise Manufacturing Intelligence (EMI) solution integrates plant-floor production data and enterprise business information from disparate sources everywhere in a company and provides context for the data to enable better business decisions to be made at every level. Combining a manufacturing portal product like Incuity with the OM historian based on the OSIsoft PI system, will provide Rockwell Automation with a unique industry application for CPG manufacturers. CPG companies are now under tremendous pressure to increase their profitability and competitiveness in a global economy. The key to improving profitability is not for companies to generate more data but to gain a better understanding of the data they already have in multiple applications across the enterprise. The capability of Incuity leads to an ability to bring established legacy data stores together in what is referred to in industry as a federated data system. This collection and aggregation of data from disparate sources without delay and the delivery of actionable information in interactive reports and dashboards brings a new level of agility to the CPG industry. EMI research has repeatedly demonstrated that a highly graphical portal utilizing trending with A&E are the key to establishing the early warning and predictive capabilities required by plant management. This interactive tool quickly aggregates, calculates, and coordinates the raw data to provide drill down for root cause analysis. Business logic can be applied to formulate the actions required to correct the trends. The ability to drill down and initiate alerts also has positive impacts on performance. The OM infrastructure must also support the delivery of plant-level
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IMPROVING CONSUMER PACKAGED GOODS KPIS

information to users throughout the enterprise via the Internet or wireless devices. An OM portal should provide enterprise-wide visibility of manufacturing data. MESA International states, Its increasingly clear that those who have plant portals and MES are more likely to know whats happening in plant operations and improve their business performance rapidly.

KPIs Enable Performance Management Methods such as Lean, TOC, and Six Sigma KPIs applied with continuous improvement (CI) methods give everyone in the organization a clear and concise picture of what is important to the business. Everyone across the organization is focused on responding to meet or exceed the KPIs to enable performance management by creating Lean Visual Controls and posting them where everyone can see themshow the target and show the progress. These drive a CI culture for change toward adaptive manufacturing through operations. In Figure 2, FactoryTalk Historian SE architecture depicts the central role that OM historians play in the 21st centurys adaptive manufacturing IT architecture.

Figure 2: FactoryTalk Historian SE Architecture

Utilizing compressed data storage algorithms to manage and store vast quantities of data in a small storage format, multiple data sources over multiple OM and enterprise servers are easily mapped and contextualized to produce sophisticated analytics. These trigger actionable intelligence in terms of KPIs for event-driven workflows. Utilizing FactoryTalk ProductionCentre, with its ISA-95 plant/production model and workflow engine, FactoryTalk Historian SE data is able to trigger the production MES functional capabilities as well as to have the ability to tailor the execution processes to individual plant requirements. This capability is augmented and extended with the IBM WebSphere technology and sets the FactoryTalk platform apart from the competition. Designed to be easy to install, configure and manage, FactoryTalk Historian SE delivers a major advancement in the rapid time to value. It provides the capability to support CI methods with the ease of computation of production KPIs.
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Conclusion Consumer packaged goods companies are experiencing an unprecedented set of competitive pressures as they move into the 21st century. Their key to competing is to understand their manufacturing systems critical to quality characteristics and monitor them closely through the use of strategically selected key performance indicators in order to avoid costly excursions from required quality. The development of KPIs fosters the use of the lean manufacturing and continuous improvement initiatives that are critical to the 21st century adaptive manufacturing environments. FactoryTalk Historian SE has the power and flexibility to be the CPG manufacturing middleware and meet the needs of the complex CPG manufacturing environments for KPI calculation and presentation, product genealogy and traceability, and increased productivity and profits. It enables CPG companies to work faster, work better, work more economically, and most importantly, work smarter.

INTEGRATED CONTROL AND INFORMATION SYSTEMS

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Publication FTALK-WP008C-EN-E January 2010

Supersedes Publication FTALK-WP008B-EN-E June 2008

Copyright 2010 Rockwell Automation, Inc. All Rights Reserved.