quality control & industry compliance

Transcription

1 MANUFACTURING KNOW HOW Guide 4 How to improve quality control & industry compliance 4 STEPS TO IMPROVE your business CRITICAL QUESTIONS to ask yourself LEARN FROM best in class manufacturers FIND OUT how Microsoft Dynamics can help Measure up to the best! Based on Aberdeen Group Benchmarking Research Commissioned by Columbus

2 Compliance has quickly become one of the most pressing issues facing discrete manufacturing companies today. Compliance truly hits an organization from all angles. If financial regulations, health and safety regulations, environmental regulations, and product stewardship regulations aren t adhered to, it can wreak havoc on a company s brand and financial performance. This guide to discrete manufacturing is designed to be a quick yet effective reference for executives to understand how to manage compliance in four easily implementable steps. Each step will give a high level overview of the concept, support the concept with proof points from industry analyst research as well as from real manufacturers experiences, and end with a discussion of how Columbus technology and services can play a supporting role. Finally, we hope this guide is only a first step in your journey towards compliance and we look forward to the opportunity to be a trusted resource and partner. Based on Aberdeen Group Benchmarking Research Commissioned by Columbus

3 4 STEPS TO IMPROVE QUALITY CONTROL & INDUSTRY COMPLIANCE Step 1: Build the foundation of compliance around financial control Step 2: Make Sustainability a corporate priority and improve performance in Environment Health and Safety Step 3: Eliminate supply chain or revenue disruptions with automated management of REACH and RoHS compliance Step 4: Eliminate compliance as a risk to enterprise performance with an audit ready culture and integrated audit management tools VISIBILITY AND CONTROL Introducing RapidValue, a business process modelling solution that is fully integrated with leading ERP solution, Microsoft Dynamics AX. It enables manufacturers to meet up to 80% of their business requirements right out of the box. ColumbusManufacturing has mapped best practice manufacturing processes and built them into Microsoft Dynamics AX to help organizations realize the full potential of the solution and gain a quicker return on investment. How does RapidValue help you Improve Compliance? Documented processes and procedures to meet standards (eg ISO 2000) Visibility of processes and procedures supporting auditability Consistent use of core processes across business units Ability to identify control points in business processes Application use identified by the process aiding audit User procedures define user role unambiguously RapidValue gives you consistency, visibility and control For more information on RapidValue please go to

4 1: Build the foundation of compliance around financial control For the past decade, managing financial risk and ensuring compliance with financial regulations such as Sarbanes-Oxley has been at the forefront of the CFO s agenda. If discrete manufacturers don t have an automated financial management and compliance solution in place, it leaves many gaps in financial processes that overtime can turn into unaccounted for risks and non-compliance issues. When discrete manufacturing companies rely on spread sheets and other unsecured documents to manage and track financial performance, it leaves many opportunities for changing, altering, or manipulating documentation for a range of motives. When there are no controls or audit trails in place and these opportunities present themselves for manipulating revenue recognition, financial risk, or more, it can be months or years before any of these actions are discovered. Discrete manufacturing companies should move towards automated solutions around both financial reporting, risk management, and financial compliance to ensure opportunities are eliminated for impropriety, risk is minimized, and financial data can be trusted. QUICK START: To quick start performance in financial control, leading discrete manufacturers are taking the following actions: Eliminate reliance on unsecured financial documents with an automated financial control and reporting system Implement a formal risk management process to identify, quantify, and minimize risk in financial processes Watch manufactured by Georg Jensen, 4

5 Manufactured by Kamstrup, Furniture manufactured by Orangebox, Microsoft Dynamics in the spotlight: Security and Audit Trail Access rights to data and functionality within Microsoft Dynamics AX is provided through a robust security model. In the security model the business is able to define staff roles and assign rules about the menu options they have access to, the data that they can see and the data that they can amend. In order to enable a rapid adoption of the security model the system is provided with 85 pre-defined roles, each of which can be tailored or used as a template for new roles. To further reduce the administration burden, access to Dynamics AX is authorized through the networks Active Directory. Microsoft Dynamics AX provides a full audit trail of all activities performed by users in the system, including details about the data that has changed (before and after images are recorded). The system also supports digital signatures, whereby rules can be defined that will force the user to re-enter their password when making specific types of changes to data, approving a new product formula for example. It can also prompt the user for reason codes and notes to be recorded about their actions. Budget Management In Microsoft Dynamics AX 2012, budget controls can be used to monitor budgets and to provide feedback about the availability of funds during an entry for budget transactions, accounting journals, or source documents, for example, purchase orders and invoices. The budget control framework allows organizations to actively manage their expenses by providing notifications whenever transaction amounts for accounts exceed the funds available in their budgets. Users can define the calculation that determines the budget funds that are available and specify the transactions that are subject to budget control. Compliance Management Compliance Management in Microsoft Dynamics AX helps simplify compliance with one central location for viewing, managing, and controlling business process content, internal controls, and reporting. The Compliance Centre provides easy access to all compliance-related information and activities, and helps keep business information secure with a comprehensive set of tools to manage and control sensitive data and critical KPIs. The user can view graphs representing the efficiency and effectiveness of internal controls, manage action items from alerts or workflow, and add links to important external compliance sites.? Questions to Answer: > How much risk exists in your organization? > Can you guarantee you are in compliance right now? Best-in-Class discrete manufacturers are over 75% more likely than Laggard organizations to use standardized KPIs and reporting metrics. According to a recent Aberdeen Group Benchmark Research Project sponsored by Columbus 5

6 2: Controller manufactured by Sevcon, Make Sustainability a corporate priority and improve performance in Environment Health and Safety Sustainability has quickly moved from being a buzz word to a key strategic initiative at many leading discrete manufacturing companies. These discrete manufacturers have reorganized around Sustainability initiatives, often creating new roles and reporting structures that are centered on a Chief Sustainability Officer (CSO). In these discrete manufacturers, the CSO is responsible for many things internally and externally, including the management of Environment, Health, and Safety issues. To remain in compliance with EH&S regulations from OSHA, Clean Air, Clean Water, and more, leading discrete manufacturing companies are changing the way they architect their internal processes and how they communicate to external stakeholders. When it comes to EH&S processes, leading discrete manufacturers now centrally manage near misses, lost time accidents, and environmental spills/releases to ensure compliance. This means one reporting system, a standardized set of causes and impacts for adverse events, and a common root cause analysis and best practices sharing systems. In today s regulatory environment, it is critical that all parts of the organization manage EH&S issues at the same level. Differences in EH&S performance can no longer be attributed to lack of knowledge or sophistication between facilities. If one plant is within compliance all should be. OSHA, along with other regulators, looks negatively upon discrete manufacturers that have different levels of performance and compliance at different facilities. QUICK START: To quick start performance in Environment, Health, and Safety, leading discrete manufacturers are taking the following actions: Automate collection of EH&S non-conformance data Centrally manage EH&S processes Transparently report to internal and external stakeholders on EH&S metrics 6

7 Manufacturing at Thorlabs, Inc., Pumps manufactured by MetPro, Microsoft Dynamics in the spotlight: Health and Safety Incidents Dynamics AX provides support for logging health and safety incidents, including near misses and lost time incidents. To effectively manage the business risks of such incidents the system allows processes and tasks/reviews to be automatically assigned to staff as a result of the initial incident report. EH&S staff are able to monitor the progress of follow up that is performed on each and every reported incident. Furthermore, users can refer to and add to knowledge base articles in the system, providing a centralized reference point and supporting continuous improvement practices. Reports, Alerts and Metrics The rich in-built reporting, alerting and business intelligence framework within Dynamics AX allows users to gain insight into the frequency, causes and follow up to health and safety incidents. Torsten Lytken, Infrastructure Systems Director, Thorlabs, Inc. DEALING WITH CHANGES QUICKLY Global trade and custom regulations are constantly changing, if we don t deal with these issues properly the first time it can have severe impacts on our supply chain efficiency.? Questions to Answer: > > Did your company have more or fewer LTA s than last year? Do you know why? Best-in-Class discrete manufacturers are more than 67% as likely as Laggard to understand the environmental impact of operations. According to a recent Aberdeen Group Benchmark Research Project sponsored by Columbus Heating equipment manufactured by Exheat, 7

8 3: Rail manufacturing by Progress Rail, Eliminate supply chain or revenue disruptions with automated management of REACH and RoHS compliance REACH (Registration, Authorization and Restriction of Chemicals, European Union Regulation (EC) 1907/2006) and RoHS (Restriction of Hazardous Substances Directive, EU Directive 2002/95/EC) have impacted the regulatory environment for many discrete manufacturing companies over the past ten years. Although these regulations are EU centric, they have impacted discrete manufacturers around the globe, both because suppliers are global and many discrete manufacturers don t want to manage multiple sets of products that are compliant and non-compliant depending on the region the product is for. To comply with REACH and RoHS regulations, discrete manufacturers have to have control over their supply chain; specifically what restricted chemicals and hazardous substances have made their way into their products. Discrete manufacturers also must be able to provide the proper labeling and regulatory data declaring which substances are in products. Finally, providing component level traceability across the supply chain is the final piece of the compliance puzzle. Unfortunately, dealing with these requirements with traditional disparate or manual system can be very challenging and costly so many discrete manufacturers have moved to a single instance ERP system with specific traceability and compliance capabilities to deal with these regulations. QUICK START: To quick start performance in REACH and RoHS compliance, leading discrete manufacturers are taking the following actions: Begin to measure the impact of REACH and RoHS non-compliance on revenue loss Automate collection of REACH and RoHS data across the supply chain 8

9 Manufacturing by Hi-Tech Mold and Engineering S.E. Inc., Bike rack manufactured by Thule, Microsoft Dynamics in the spotlight: Compliance The burden of compliance on manufacturing business is growing daily. Adherence to business practices is coming under increased scrutiny and audit, while at the same time new environmental directives are becoming prevalent (REACH, Material Safety Data Sheets, etc.). Dynamics AX helps the business to better manage this burden of compliance through centralized product information and classification, including analysis of volumes of materials in and out of the business. Material Safety Data Sheet Information is recorded for both supplied and sold materials and rules surrounding the receipt and dispatch of materials can be defined for situations where MSDS information is lacking or has expired. Quote from a Columbus Customer KEEP COMPLIANCE TOP OF MIND Compliance issues are very much top of mind for executives in discrete manufacturing and Columbus with AX helps us continually improve on accounting, quality, and traceability. It is also vital that change management practices are clear and well established in order to avoid the on-going risk of non-compliance. Dynamics AX is able to provide effective management of product change through in-built workflow processes, ensuring that the product is signed off by all necessary parties prior to use in the supply chain. Inventory Management Dynamics AX provides control that can be used to enforce policies surrounding the movement and use of inventory that may be subject to quality issues. Furthermore Dynamics AX provides support for the control of expiry dated products or materials, with rules surrounding their assignment to production and to customers.? Questions to Answer: > Do you know all of the restricted materials in all your products today? Printing solutions manufactured by Mueller Martini, 9

10 4: Lighting system manufactured by Urbis Lighting Limited, Eliminate compliance as a risk to enterprise performance with an audit ready culture and integrated audit management tools Given the regulatory and macroeconomic trends of the past ten years, government agencies and auditors will only continue to become more aggressive over the coming years. To address the changing regulatory environment, discrete manufacturers are changing from the inside out and moving away from internal processes and leadership approaches that have prevailed in the past. On the leadership side, executives are making compliance a top priority. This means rewarding a culture of transparency, believing in sustainability issues, and putting people first. On the process side, it means believing in being audit ready at all times and not waiting for a third party to find something wrong in your organization. When discrete manufacturers take this approach to compliance, they find the audit process goes much smoother if the systems already in place provide the right information, in the right form, to the auditors when needed. Employees can also see the difference in the culture. When discrete manufacturers are forced to spend more time, energy, and resource than they should every once or twice a year to prepare for an audit, it sends a message. When discrete manufacturers change this approach and instead put in place processes to achieve compliance 100% of the time, people get this message too and it changes culture. It is also important to note that in regards to third party and supplier audits, sometimes a failed audit can be just as damaging, or more so, as a failed regulatory audit. There are real business benefits to always being audit ready. Finally, to help maintain an audit ready organization, discrete manufacturers are building in audit management and compliance management capabilities into their ERP systems that are already managing financial, EH&S, product stewardship, and traceability compliance issues. QUICK START: To quick start performance in Environment, Health, and Safety, leading discrete manufacturers are taking the following actions: Implement an audit ready culture all the time Use audit management capabilities to manage all areas of compliance and sustainability Integrate audit management and compliance systems with ERP 10

11 Industrial robots manufactured by Kuka Systems, Manufacturing equipment from Wheelabrator Group, Microsoft Dynamics in the spotlight: Compliance Centre and Audit Management Compliance Management in Microsoft Dynamics AX helps simplify compliance with one central location for viewing, managing, and controlling business process content, internal controls, and reporting. The Compliance Centre provides easy access to all compliance-related information and activities, and helps keep business information secure with a comprehensive set of tools to manage and control sensitive data and critical KPIs. Process documents can be stored, reviewed and approved. Against each process any identified risks can be recorded along with risk assessment information (e.g. likelihood, impact, etc.). Against each risk the business can record their mitigation plans and test plans. Process documents are highly likely to be referring to features of the computer system; features like security definitions, workflow rules and alerting tools. To provide the auditor with visibility of how these are implemented in the system the compliance center features a suite of system reports that prove that the security, workflow and alerting mechanisms have been set up correctly and are being utilized. The user can view graphs representing the efficiency and effectiveness of internal controls, manage action items from alerts or workflow, and add links to important external compliance sites. Of course, the production of business process documents can be an onerous task. However, Dynamics AX even has a tool that can reduce this burden. The Task Recorder allows the users to start recording a series of events as they navigate through the system in order to complete a task. The user can then use the recording to generate a Microsoft Office Word document, complete with details about the actions taken by the user and screen shots of each action. This can then be further edited by the user to form a complete process document. The Task Recorded is also able to generate Office PowerPoint presentation (useful for internal training) and Office Visio flowcharts. As well as tools to support external audits, Dynamics AX provides tools for internal audits. Internal audit cases can be generated automatically by the system for transactions including expenses, purchase orders and supplier invoices. The audit case can then be managed through a workflow process, ensuring that tasks are completed and that there is full visibility of the audit process.? Questions to Answer: > How well did you do on your last audit? Could you have done better? > Do you think your competitors did be tter? Best-in-Class discrete manufacturers are more than 25% as likely as Laggard organizations to have business processes in place to deal with non-conformance, non-compliance, and traceability events. According to a recent Aberdeen Group Benchmark Research Project sponsored by Columbus 11

12 DON T MISS OUR OTHER GUIDES Guide 1: How to improve operational efficiency Guide 2: How to improve revenue growth Guide 3: How to improve supply chain collaboration Columbus has a deep engagement in the manufacturing industry; we build targeted solution sets on top of the reliable Microsoft platform. Our solutions often meet 80% of the industry requirements right off, and with basic system configuration, you will experience the full impact on your business performance with a lower total cost of ownership. To-Increase, a global ISV and division of Columbus, has been developing high quality software solutions for Manufacturing since Today, they offer an extensive library of customized modules and industry-specific solutions to reduce implementation time and cost, and improve business operations. Customers from all over the world tap into this vast library of software modules to improve performance and shareholder value. The full Columbus solution includes best practice process modelling with RapidValue, the leading ERP solution with Microsoft Dynamics AX, specifically built manufacturing modules from our To-Increase software division and SureStep+, a proven implementation methodology. ABOUT COLUMBUS Columbus is widely recognized as a global leader in maximizing efficiency and business performance for manufacturing and distribution companies. With deep industry expertise we know how to make our clients more successful by adapting and implementing proven Microsoft-based solution sets for immediate business impact. Columbus is a part of the registered trademark Columbus IT Implementation Methodology SureStep+ Business Integration Solutions To-Increase Business Process Modeling RapidValue COLUMBUS KNOW HOW Industry Solutions To-Increase ERP Solutions Microsoft Dynamics FOR FURTHER INFORMATION PLEASE VISIT Address: Icon Business Centre, Lake View Drive Annesley, Nottinghamshire, NG15 0DT United Kingdom Phone: +44 (0) Fax: +44 (0) Web: