In a move that further expands its integrated manufacturing operations strategy, SAP yesterday disclosed that it has acquired Factory Logic, a supplier of software for lean scheduling and supply synchronization. Financial terms of the acquisition weren't disclosed. The acquisition of Factory Logic, a small Austin, TX, firm that was partly funded by SAP Ventures, the venture capital arm of the software giant, comes about 18 months after SAP's acquisition of Lighthammer, a developer of manufacturing intelligence software. The Lighthammer purchase was a key step in SAP's strategy to become a leading player in enabling the integration of plant floor systems with enterprise business systems, such as its backbone ERP product. SAP's acquisition of Factory Logic, disclosed at SAP's fourth-annual analysts meeting in Las Vegas yesterday, conforms to SAP's policy of acquiring companies for technological expertise. "We started out two years ago and said shop floor to top floor is key," said Sudipta Bhattacharya, SAP's senior vice president for supply chain, product lifecycle management, and manufacturing applications, in an interview with Managing Automation. "Phase one involved support for the ISA-95 standard. Next, we needed Lighthammer to get visibility capabilities and analytics. Now, with Factory Logic, we will give people on the plant floor the ability to have a schedule." Founded in 1998, Factory Logic offers the Lean Operations Suite, which is based on concepts from the Toyota Production System and is described as providing a scalable approach to production leveling and supply synchronization for automotive, aerospace and defense, and high-tech manufacturers. The system "fills the gap" between enterprise systems and shop floor "visual factory" methods, Factory Logic says. Factory Logic has at least one customer: Johnson Controls, which is rolling out the Lean Operations Suite across 30 plants, according to a Factory Logic press release. In addition to SAP Ventures, other key investors in Factory Logic included Siemens Venture Capital and Adams Capital Management. Bhattacharya described the deal for Factory Logic as an "asset purchase." He also said the Factory Logic management team will join SAP. Bhattacharya said that SAP decided to acquire Factory Logic, rather than continue as an investor, to extend its manufacturing operations strategy as well as to advance the adoption of the lean manufacturing concept. "The reason we wanted to bring them in house is that, in the next few years, lean is going to become so important that it will become a mass market application," Bhattacharya said. "You must be able to package lean applications and what we want to do is give legitimacy to the lean manufacturing space. We are systematically going after this market." In other developments at the SAP analysts meeting, the theme of which was "Delivering the Value of Enterprise SOA," the software company announced the availability of the first of what it calls "enhancement packages" for its core ERP software product as well as the launch of a collaboration initiative for the mill product industry. Enhancement packages, according to SAP, are designed to enable users to adopt new product functions, industry-specific features, and enterprise services by "shielding them from the complexity" of upgrades. The enhancement package announced yesterday, for customers running mySAP ERP 2005, includes hundreds of enhancements for SAP's human capital management, financial, retail, and manufacturing applications. Improvements to the manufacturing applications, for example, include the integration of manufacturing execution systems, manufacturing work instructions, and quality management into the SAP ERP system, the company said. SAP said it intends to deliver two or three enhancement packages per year. The company introduced the enhancement package concept at its TechEd conference in September. The collaboration initiative for the mill products industry, which SAP calls an Industry Value Network, will involve the development of "solutions and integration scenarios" for paper manufacturers and forest companies dealing with enterprise asset management, manufacturing scheduling and execution, price and margin management, quality management, and compliance issues. SAP said that International Paper as well as members of SAP's Global Forest and Paper Council will be involved in the network.