Like their counterparts at many large manufacturing companies, officials at Pratt & Whitney Canada over the years often considered the benefits of integrating the real-time shop floor systems at the company's Montreal aircraft engine manufacturing plant with its SAP enterprise applications. Until recently, however, P&WC shied away from such a plan, which it saw as fraught with complexity and risk.
"We have just about all the brands and versions of plant floor equipment that you can imagine," says Claude Poliquin, business development manager at Pratt & Whitney Canada (Longueuil, Quebec). "That made it a very complex task to connect those all in real time to SAP."
Eighteen months ago, however, concerns about complexity gave way to business imperatives. P&WC customers were demanding detailed, real-time, part-by-part quality information on the engines they were buying. At the same time, P&WC was gearing up to produce a new, small turbofan engine designed for a new generation of inexpensive "air taxi" commercial aircraft. P&WC's business plan called for the company to produce one of the new engines every 12 hours, a rate 30 times faster than the company's typical production turnaround.
P&WC couldn't pull that off without a way to track and analyze in near real time the quality of parts going into its engines. And, in order to do that, the company had to integrate real-time plant floor automation equipment with its SAP ERP system.
Rather than attempting to use traditional application programming interfaces to tie the systems together, Poliquin and his team opted for Web-service-based integration tools from Lighthammer (since acquired by SAP and renamed XMII), which helped streamline the process and included built-in analytical tools. Now entering production, the integration is expected to save P&WC $14 million per year in warranty, scrap, and rework costs, Poliquin says.
P&WC isn't the only manufacturer electing to charge ahead with integration initiatives that in the past might have been considered too high-risk or expensive to pursue. A host of pressures -- from globalization to regulation to rising customer expectations -- are forcing manufacturers to take on more ambitious and complex integration efforts, often involving building ties outside the enterprise walls to customers and partners and, for the first time, creating automated links between real-time plant floor systems and enterprise applications. Add a healthy dose of merger and acquisition activity, and the result is that integration challenges facing manufacturers are more complex and demanding than ever, experts say.
"Integration challenges facing manufacturers are as complex as they've ever been," says Kevin Roach, a vice president at Rockwell Software (Milwaukee).
And that increased level of complexity is showing up in manufacturers' spending priorities. According to a recent survey of 467 manufacturing organizations by AMR Research Inc. (Boston), better utilization and analysis of data -- particularly demand intelligence -- is the number one business initiative driving IT investments.
The Value of Visibility
The need to achieve real-time visibility into end-to-end business processes that are increasingly global and often involve multiple business partners is what ultimately is driving up integration complexity. The AMR study found that in order to improve responsiveness and reduce inventories many manufacturing companies are moving to daily or even hourly rescheduling of production based on demand signals, many of which come from partners outside of the enterprise. And that kind of visibility, experts say, requires higher levels of integration than ever before.
"Manufacturers today need to look at business processes across an entire value chain. They can't just look at optimizing a production line," says Jesper Andersen, senior vice president of application strategy at Oracle Corp. (Redwood Shores, CA). "If you optimize production without also knowing real-time demand, you will just end up carrying excess inventory. So integration complexity is driven by the need to look across many parts of the business."
The need for visibility into end-to-end product quality processes is what finally drove P&WC into its aggressive integration push. Every year, according to Poliquin, the company spends $200 million on scrap, rework, and warranty losses, much of it due to out-of-spec parts. A single defective component that makes it through inspection to the end customer can cost P&WC $500,000. Left unchecked, such losses would only escalate as P&WC began ramping up production of its new, smaller engines.
Historically, P&WC had no way to quickly analyze quality information coming from the shop floor. While some 80 coordinate measure machines (CMMs) from Zeiss, Mitutoyo, and various other brands are used to measure parts, there was no automated way to get that measurement information into SAP, which was used for quality management and procurement. This meant that often P&WC could only analyze part quality problems well after the fact.
The integration with SAP using XMII will allow P&WC not only to spot part problems sooner, it will also allow the company to present up-to-date quality information to managers, quality specialists, and others. The company also is requiring suppliers to enter quality information into the system. This is being done manually at present, but P&WC is planning an automated, real-time integration with suppliers. First, however, P&WC will need to come up with a standard operation and part numbering scheme that it and its suppliers can use.
The need for better visibility -- in this case on the production floor -- has also driven food manufacturer John I. Haas Inc. (Yakima, WA) to take on integration initiatives that in the past have proven too tough to enact. A producer of hops and hops-related products, Haas has historically been unable to maintain up-to-the-minute, accurate information about the location and status of work in progress on the shop floor. That's because the machines used to weigh and move bales of hops through the manufacturing process -- many of them 30 years old and sporting difficult-to-use serial interfaces -- had never been integrated with the company's Oracle E-Business Suite enterprise applications. As a result, inventory counts were often inaccurate, increasing scheduling problems and production costs.
In the past, says Haas Information Solutions Vice President Kyle Lambert, the company failed when it tried to integrate these shop floor systems with ERP, in large part because its only option was to custom code the links using proprietary application programming interfaces presented by Oracle and the various shop floor equipment vendors. That proved complex and frustrating, Lambert says, particularly when one of the vendors involved would upgrade a product, requiring Haas to tweak the integration program.
"There were so many technology hurdles that by the time we resolved those, people lost confidence," Lambert says.
Now Haas is attempting the integration initiative again, this time using service-oriented tools including the BPEL Process Manager tool from Oracle Corp., which employs standard integration interfaces and, using workflow, helps manufacturers compose business processes using data from different systems. So far, Haas has created a proof-of-concept implementation.
Increasing regulatory requirements are also pushing many manufacturers to take on more complex integration initiatives. Financial regulations such as the Sarbanes Oxley Act are forcing companies such as Dow Corning Corp. (Midland, MI) to build links between previously discrete financial and operational systems.
"We've got to do a better job of integrating so we can have a single version of the truth and show evidence that we are managing the business properly," says Kirk Royster, director of enterprise architecture at the maker of silicone-based products.
Is There A Cure for Complexity?
Fortunately for Dow Chemical and other manufacturers facing steeper integration requirements, technology vendors are beginning to roll out tools that promise to reduce at least some of the complexity. Service-oriented tools and technologies such as Oracle's BPEL Process Manager, the recently announced Service Connect tool from ERP vendor Epicor Software Corp. (Irvine, CA), the Enterprise Integration Application 2.0 product from the Wonderware unit of Invensys plc, and SAP's XMII all use Web services and Web-based standards to build data and workflow links between enterprise and shop floor systems. Meanwhile, GE Fanuc Automation (Charlottesville, VA) is working on a new suite of SOA-based applications and integration tools, says Pete Safe, the company's chief software architect.
Other makers of shop floor control systems are beginning to do the same. Later this quarter, for example, Rockwell plans to release FactoryTalk Integrator, a service-oriented tool for integrating shop floor systems with enterprise applications, Roach says.
Such tools make integration easier in a couple of ways. First, because they integrate systems by using XML and other Web standards rather than proprietary and inflexible application programming interfaces, the integration code they produce doesn't have to be updated every time one of the integrated applications changes. And, second, because many of these tools incorporate business process modeling tools, they can be used to easily build workflows that tie different systems together into composite applications.
"We're seeing evidence that these service-oriented tools are helping reduce integration complexity," says Dennis Gaughan, a research director at AMR Research. "They provide a standard mechanism for doing integration across all the disparate platforms companies have. If I can expose applications -- or pieces of applications -- as services, I can start tying them together using these tools."
According to a recent survey by researcher Aberdeen Group (Boston), that's exactly how SOA technology is beginning to be used. Experienced adopters of service-oriented technologies, the survey said, are focusing their efforts on integration.
Dow Corning is one of those experienced manufacturing companies. An early adopter of the Lighthammer technology, Dow Corning has developed over 100 Web services that represent key pieces of existing applications. Dow Corning is now putting in place the processes and infrastructure that will be needed to manage the process of combining those Web services into integrated, composite applications, Royster says. The company recently decided to standardize on an SOA management platform from Systinet Corp. (Burlington, MA) which will help Dow Corning put in place and manage policies around creating and using Web services.
"Long term, we see SOA technology making it easier to manage the integration we have in front of us," Royster says.
SOA tools and technologies won't erase integration complexity overnight, however. One reason: It will take time for manufacturers -- particularly mid-size companies -- to gain experience, skills, and confidence working with the new tools. Wonderware's ArchestrA services-oriented integration and deployment platform has been in the market for three years, notes program manager Claus Abildgren, "and only now are customers beginning to make the transition," he says. "It's a fundamentally different approach, and it requires a lot of work upfront to understand what SOA can do."
In fact, applying service-oriented tools and principals to tasks like integration is so different, manufacturers say, that it will require fundamental organizational change. Because integration using SOA tools is less about coding and more about understanding and modeling business processes, it will require individuals with a mix of IT skills and deep business knowledge. In an attempt to develop such skills, Dow Corning has created the new role of information delivery analyst. Reporting mainly through line-of-business functions, these individuals are responsible for understanding the business rules that underlie Web services so that they can be used properly in composite applications, Royster says.
So, while new service-oriented tools offer a long-term answer to some of the mounting integration complexity facing manufacturers, they are not a short-term panacea.