NOTE: The following is a prelude to the upcoming microforum discussion, "Embrace the New Real-Time Enterprise", scheduled for SAP Sapphire on May 5 in Orlando.
How can we benefit from new technology today?
I was asked this question during a recent user group meeting. A small group of manufacturers talked about the their perceptions (and misperceptions) about topics such as in-memory processing, big data, the Internet of Things (IoT), Industry 4.0, Machine-to-Machine (M2M), and a few other hot topics that the media is bombarding us with these days.
While everyone agrees that these new technologies have the potential to dramatically change how we run our businesses, two questions rose to the top: "What does it mean to me and what should I do right now?"
Many of the attendees of this user group meeting are people with responsibility for managing the enterprise systems for their companies. Many are entrenched in their ERP systems. Some see a vastly different future in the next 10 years when enterprise systems will be very different, but they aren't sure just how different. Most of the conversation was centered on the things that can be done today with minimal possible disruption to take advantage of these new concepts and technologies.
Managing planned versus unplanned events
The answer to the questions will likely be in the area of managing unplanned circumstances and events. Most ERP systems today are good at taking a snap shot of the current situation (i.e. inventory status, customer orders, etc.) and determining a good plan for meeting customer requirements at an acceptable cost. And since an MRP run can take hours to complete, it will be run at night so that a new set of schedules are available in the morning. Many times,since receipts and other inventory transactions are not recorded as they physically happen, the perpetual inventory is not accurate and therefore cannot be used confidently throughout the rest of the day.
But unplanned events can happen all day long; unplanned events that threaten on-time shipments to customers, as well as threats to profit margins as incremental costs are incurred in order to make those shipments.
How do we use new technology to manage unplanned events?
The advances made in in-memory proicessing have made it possible to better manage unplanned events. The following are the four steps of an issue resolution process for detecting and resolving unplanned events:
- Monitor and Alert - Instead of relying on casual observation and word of mouth to be aware of potential production issues, the enterprise system should be used to monitor for situations and events that will possibly create production issues. For example, immediately notify the right material scheduler as a cycle count transaction reduces a required inventory item, or send an alert if a freight carrier is delayed (read Internet of Things here) immediately notifying the right person so that resolution work can begin. The sooner a problem is known, the less disruptive it will be and the less expensive the resolution will be.
- Resolution Determination - If three different people are faced with the same issue, they likely could come up with three different remedies. Each option could have different results, as well as different costs. A key initiative today by many companies is the definition of Standard Operating Procedures that provide guidance on the preferred way to handle issues. Instead of this being a paper document that rarely sees the light of day, the enterprise system should present not only the issue to the right person, but also deliver a suggested course of action in accordance with the standard operating procedure.
- Option Simulation - When multiple options exist for issue resolution, the enterprise system can be modeled to determine the best solution by computing the expected impact on key performance indicators (KPI's) for each option. For example,the system could determine the potential impact on customer service levels or incremental costs for each option. A manager can then select the option that is most appropriate for the company.
- Corrective Action - Like the preceding three steps, resolutions to unplanned events are almost always handled through manual methods today. This may involve telephone calls, emails, preparation of analytical spreadsheets, manual rescheduling, etc. With simplification and standardization of corrective action options, more and more routines can be become standard parts of the company's standard operating procedure and automated within the enterprise system. For example, a production line stoppage today may involve many time-consuming phone calls to suppliers and freight companies to slow or stop inbound material. A fairly simple application could be created to use in-memory processing to quickly compute a revised schedule and immediately broadcast the revised plan to suppliers and transportation companies within minutes.
These processes are probably in effect today at about all manufacturing enterprises, but most likely as very manual processes. Enterprise systems have not had the power to continuously monitor for potentially hundreds of unplanned situations that pose a threat to the established plan. And effective simulation of resolution alternatives certainly is not practical with disk-based database systems.
Big benefits by complimenting existing enterprise systems
Deploying this sort of issue resolution system does not need to be a major implementation project. An enterprise could select a single KPI to focus on, and model the system to monitor for issues that negatively impact that partulcar KPI. Monitoring for opportunities can also be modeled in this fashion. Early detection of issues and opportunities will greatly improve management's ability to make on-time shipments with less cost due to unplanned downtime, material shortages, customer demand changes, and so on.
Further, this sort of real-time issue resolution process can be deployed without a wholesale switch from disk-based systems to in-memory systems.
It is time to begin moving forward
In conclusion, many manufacturers are left scratching their heads when it come to how to benefit from from in-memory processing and the Internet of Things. But some manufacturers are beginning to embrace these new technologies as opportunities to run their businesses in different ways and far better than ever before. While existing enterprise systems are very good at planning based upon known or expected events, they are not capable or are not used appropriately to manage unplanned events in a real-time manner.
The most forward-thinking, creative, and innovative manufacturers are leveraging these new capabilities to better monitor and manage their operations and gain competitive advantage over the IT laggards. And this is just the beginning of reinventing the "New Real-Time Enterprise".
Please join me at Sapphire on May 5 in Orlando to discuss how your company can reach a whole new level of real-time performance management through the adoption of in-memory processing and the "Internet of Things".
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