Trends in Production Management Software for the CPG Industries
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1 AUGUST 16, 2012 Trends in Production Management Software for the CPG Industries By John Blanchard Keywords Consumer Packaged Goods, CPG, Production Management, Production Management Software Overview ARC Advisory Group has seen and expects to continue to see significant improvements in collaborative production management (CPM) software (also referred to as MES ) intended specifically for the consumer packaged goods (CPG) industry. This is good news because production management software plays an increasingly There are some significant trends in production management software solutions that ARC believes users important role in this industry characterized by low should be aware of as they evaluate margins, stiff competition, increasing product safety the capabilities of their current or due diligence requirements, increasingly shorter product life cycles, and the need for constant product future technology providers products and services. innovation. It is also important because CPG manufacturers need to do more with less. In other words, produce more products (using the same equipment) with less available capital and less-skilled people. As new internet, mobility, and social media technologies continue to change the way business is conducted, production operations must continue to adapt and improve to remain competitive. Some significant trends in production management software solutions follow that ARC believes users should be aware of as they evaluate the capabilities of their current or future technology providers products and services. More Process-Specific Solutions While industry-specific solutions have been evolving and available for some time, these typically lack the depth and out of the box functionality generally needed for a specific CPG manufacturing process. For example, in VISION, EXPERIENCE, ANSWERS FOR INDUSTRY
2 ARC Insights, Page 2 the food & beverage industry, dairy, brewing, canning, and dry food processes are all quite different. Thus, industry-specific solutions often require a significant amount of custom engineering (typically in the order of 30 to 40 percent) to work well with a specific process. Many of these solutions also only cover a portion of the overall process, requiring users to purchase of additional software solutions from other technology providers. For example, up until recently, most suppliers of production management solutions did Conventional Project Deployment Delays not include packaging operations management functionality. Today, many suppliers include packaging operations management functionality and provide a broad predefined and extensible library of object-based display, control, and reporting functions. Suppliers have begun to extend their solutions to provide a complete set of functions for specific CPG A history of short deployment time provides an indicator of the manufacturing processes, equipment, and unit operations. Today, some solutions require as little as 5 to 15 robustness of the software functionality. percent custom engineering. The result is a shorter and less expensive deployment; a more complete functioning system; and shorter time to profitability. A history of short deployment time provides an indicator of the robustness of the software functionality. Increasing Production Management Functionality CPG manufacturers needs extend well beyond traditional solutions. Technology solution providers recognize this and are continuing to develop new functionality, adapt existing technology to specific CPG manufacturing needs, and form partnerships with suppliers of complementary production management functionality. Analytics, product quality assurance, and energy management are major focal points. Analytics Analytics involves the discovery and communication of meaningful patterns in data. One of its most common uses is to study business data to predict and improve business performance. Analytics most often uses data
3 ARC Insights, Page 3 visualization to communicate insight. Analytic tools range from the simple trending or replaying of historic data, to data mining to discover patterns in large data sets. Production management solution suppliers continue to add many simple to complex but easy to use analytics to their offerings. Most suppliers now incorporate product quality, asset utilization, sustainability, and other dashboards to communicate performance metrics. A ARC expects to see suppliers few suppliers now provide digital graphical replay of applying analytical tools from IBM, historic data, a useful tool for troubleshooting and to Microsoft (PowerPivot), and other to develop their own production support continuous improvement. Easy-to-use, on-line data analysis and prediction multivariate data analysis solutions are becoming common. Suppliers are also partnering with specialized solutions in the very near future. analytics suppliers like Umetrics, Matlab, and Northwest Analytics. In the very near future, ARC expects to see suppliers applying analytical tools from IBM, Microsoft (PowerPivot), and other to develop their own production data analysis and prediction solutions. This will help manufacturers run their production operations more efficiently and effectively. It will also lower the cost and time for deployment. Continuous Real-time Product Quality Verification Product quality and safety assurance functionality continues to be enhanced to meet business and regulatory needs. Suppliers have begun to provide real-time metrics based quality dashboards and predictive analytics, as regulations requirements move from minimize the effect of an offquality incident to prevent an incident by building ARC believes that most of the quality assurance into the production process. Although some may disagree about the potential impact of currently installed automation and IT infrastructure will not be able to the US Food Safety Modernization Act (FSMA), it is the support the evolving requirements of the US Food Safety most comprehensive food safety legislation since the Modernization Act Food, Drug, and Cosmetic Act. ARC believes that most of the currently installed automation and IT infrastructure will not be able to support the evolving requirements of the FSMA. ARC also believes that the FSMA is one of the primary drivers causing technology providers to increase the functionality of their production management systems for the food and beverage industry in the area of capturing, storing, analyzing, and reporting of product quality data.
4 ARC Insights, Page 4 Energy Management for Manufacturing Process CPG manufacturers have now begun to move from energy monitoring and off-line energy management to real-time, on-line energy management at the process control level. Companies like General Mills CPG manufacturers have begun to have been scheduling product runs based on weather move from energy monitoring and conditions to minimize energy consumption for years. off-line energy management to realtime, on-line energy management The dairy industry schedules product runs to minimize at the process control level. clean-in-place (CIP). This helps lower the time, cost, and energy consumption of this process. A few manufacturers calculate, monitor, and improve overall equipment effectiveness (OEE) on their packaging lines to reduce electrical consumption. However, these are custom applications, rather than a standard function in a production management solution. Suppliers are now beginning to provide standard functionality for these types of operations within their solutions. These include product recipe scheduling, CIP optimization, real-time energy management at the unit and individual batch level, and others. Tighter Integration with Process Control and Hardware Vendor-Agnostic Solutions More and more production management functions are being performed in the controller rather than the server. This breaks from traditional solutions in which basic process unit control resides in the controller (ISA Level 2); and production management functionality (ISA Level 3) resides in a single or multiple servers. This new approach improves integration between ISA Levels 2, 3, and 4 and flattens ISA levels 2, and 3, thereby reducing the solution to a single plant floor control and information system. This frees manufacturers from the burden of havening to maintain two separate systems. It Production Management also reduces the complexity of communications between Functions Can Reside in devices and their applications, increases the speed of performance needed for such things as executing CIP ISA Levels 2 and 3 recipes, reduces integration cost and complexity, and increases system reliability. Some functions now residing in the process controller include trending, batch execution, recipe scheduling, energy management, and material routing. Production information is vital to improve performance and meet regulatory requirements. Since loss of this information can be devas-
5 ARC Insights, Page 5 tating to a manufacturer, more and more suppliers collect and at least initially store this information directly in the process controller. ARC research and surveys show that manufacturing companies can no longer afford to replace their installed base of control systems in order to implement new process control or production management functionality. As a result of this and the movement of production management functionality into the process controller, some suppliers have begun to provide hardware- vendor-agnostic solutions that can be deployed on a manufacturer s current installed base of process control hardware. Cloud and Mobility Solutions The number of manufacturing enterprise applications on mobile devices and applications sold and managed by as 3rd party cloud computing services -often in the form of software-as-a-service (SaaS) - continues to grow. This also applies for manufacturing production management software. Currently, ARC sees cloud-based SaaS-based applications being deployed by smaller CPG companies with highly manual operations. Some potential benefits of SaaS can include low capital investment, lower maintenance costs, less need for IT skill sets, more rapid deployment, and availability of a degree of computing power that companies could not support on their own. The SaaS model is also particularly attractive for production management applications when a smaller CPG company must quickly deploy a solution to meet a new Production Management government regulation time line. Often, it s the ease of Software on Mobile Devices and as Third-Party Services integration afforded by the cloud servers using standard web service practices that let a company launch a new mobile application faster, or run a business process that cuts across many partners more efficiently. Some potential drawbacks to SaaS include reduced flexibility; less functionality specific to a company s needs; and increased risk of exposing highly proprietary information. Also, given the rapid evolution of mobility devices, how does a company know which device and which operating system to
6 ARC Insights, Page 6 adopt as part of its long-term platform? The cloud is not entirely device agnostic, and making the wrong choice could prove expensive. Last Word Technology continues moving forward at a rapid pace. Global competition continues to intensify. These are changing the way business and manufacturing are conducted. Technology providers are adapting and expanding their operations management solutions and services to meet the changing needs of CPG manufacturers. As a result, user manufacturers must look beyond their traditional ISA level thinking and supplier selection criteria. Users should also expect their suppliers to share future confidential product development plans that can show how they are adapting to changing user needs. For further information or to provide feedback on this Insight, please contact your account manager or the author at jblanchard@arcweb.com. ARC Insights are published and copyrighted by ARC Advisory Group. The information is proprietary to ARC and no part of it may be reproduced without prior permission from ARC.
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