Best Practices Guide. Manufacturing Operations Management. Solution Selection Guide. Mark Davidson, May Enterprise Quality Management Software

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1 Best Practices Guide Manufacturing Operations Management Solution Selection Guide Mark Davidson, May 2013 Enterprise Quality Management Software Matthew Littlefield, May 2012

2 Executive Summary Although the Manufacturing Operations Management (MOM) market has shown great potential and, in many instances, already proven its ability to accelerate manufacturing business performance, it remains a space that is both rapidly evolving and still in significant need of clarification and education. As shown in the figure below, MOM applications facilitate a link between and complement existing enterprise / business operations systems and industrial automation applications that provide plant floor control. When coordinated and used effectively, this collective set of applications enables organizations to address the industry s toughest challenges with a holistic, Business and Manufacturing process approach. Several top business challenges include increasing manufacturing profitability, obtaining a higher return on assets, lowering business risk, and improving customer responsiveness and service levels. Each business challenge has to be managed while simultaneously dealing with day-to-day challenges inside each plant or production facility. The corresponding manufacturing challenges include introducing new products faster and more efficiently, managing suppliers and inventories, ensuring safe and repeatable operations while managing the cost of quality, and engaging employees and partners in continuous improvement programs. This Best Practices Guide provides business operations and manufacturing professionals with a comprehensive view of MOM by going in depth into the three main areas impacting a manufacturing enterprise s business performance: processes, people, and technology. By reading this guide, executives and practitioners will gain a thorough understanding of the following topics: An overview of Manufacturing Operations Management terminology, processes, and systems functionality The relationships between MOM and the broader LNS Research Operational Excellence model for success - considering people, processes and technology An understanding of how to better translate business and manufacturing strategies and goals into action Proven examples of how MOM software solutions can support business improvement programs A review of important lessons learned, critical success factors, and specific actionable recommendations on where to start and how to best move forward with your MOM strategy

3 Table of Contents Executive Summary... 2 Overview of Manufacturing Operations Management... 4 Understanding the Integrated Value Chain... 4 MOM Business Processes... 5 MOM Software... 7 MOM Challenges People - Organizational Responsibilities and Empowerment Processes Lack of an End-to-End Business and Manufacturing Approach Technology - Complex Legacy Landscape Technology - Rapidly Evolving Future Landscape Technology Achieving Rapid Rollouts and ROI Technology - Adaptability in Support of Continuous Improvements Traditional MOM Solutions Varied Scope of MOM Solutions by Vertical Manufacturing Industry In-House and Packaged Software Approaches The Next Generation LNS Research MOM Framework Processes LNS Research MOM Business and Manufacturing Process View Processes - Examples of End-to-End and Closed-Loop Business and Manufacturing Sustainable Manufacturing Operations Best Practices and Critical Success Factors for Effective Manufacturing Operations Management 19 People - Leadership, Organizations and Empowerment Processes - Orchestrating End-to-End and Closed-Loop Processes Technology - Creating a Cohesive MOM Software & Implementation Strategy Technology Next Generation MOM Software Platform Architectures The MOM Software Solutions Vendor Landscape MOM-Focused Vendors The Push Down into MOM from Enterprise Vendors The Push Up into MOM from Industrial Automation Vendors MOM Solution Selection Guides... 25

4 Overview of Manufacturing Operations Management MOM approaches and solutions have improved over the past decades in support of continuously increasing global manufacturing competitiveness and evolving best practice initiatives in process, batch, discrete and hybrid manufacturing industries. Initiatives and strategies that have been catalysts for MOM software adoption can be separated into three main buckets: the need to better manage quality, improving speed and reducing both costs and waste, and meeting the demands of manufacturing business regulations. The rise of these initiatives and strategies has driven focus on several key areas, including: Improving Quality Management ISO 9000/9001 Total Quality Management (TQM) Six Sigma Figure 1 Optimizing Manufacturing Efficiency Lean Manufacturing Demand Driven Manufacturing Digital Manufacturing Meeting Dynamic Business Regulations Sarbanes-Oxley for Finance ISO for EH&S OSHA for Worker Safety FDA for Food & Drug Safety Understanding the Integrated Value Chain Each manufacturer and producer has a value chain that encompasses all of the major activities performed to create products and serve customers. Looked at in the broader context of business activities, the extended value chain (Figure 1) spans from design through end of life, and includes activities and relationships beyond the shop floor such as suppliers, partners, and service to customers.

5 Along each of the steps and stages of this value chain, there are many opportunities to better communicate and collaborate, share valuable information, and streamline handoffs and workflows. By capitalizing on these opportunities, organizations can transform the way that people work together, facilitating a more efficient and profitable manufacturing organization. Today, most manufacturing companies are looking at how to better orchestrate enterprise business processes by mapping and evaluating where value is generated across this chain, and using this strategy to identify opportunities for process improvements. LNS Research believes that in order to realize the business value that manufacturing can provide, the full set of end-to-end business and manufacturing processes must be evaluated and improved to create a smoother continuum. By following this approach, disconnects can be discovered and corrected, and companies can take advantage of opportunities to bi-directionally close the loop between multiple processes, enabling them to operate more effectively. By looking across the entire Enterprise, MOM, and Industrial Automation landscape, even more business benefits can accrue beyond those attained by implementing solutions in these separate silos. MOM Business Processes LNS Research s definition of the MOM market space encompasses a broad set of functionalities that support the entire continuum of real-time work process activities across the manufacturing enterprise (Figure 2). In the center of the Business and Manufacturing Process View, we have grouped the MOM process functionality into ten major areas. These ten areas include all that are specified in the ISA Manufacturing Operations Management activity model. The ISA activity model is part of the ANSI/ISA 95 global industry standard definition of the linkages between business and control systems. In addition, LNS Research has also included other major process functionality that directly supports the day-to-day as well as moment-to-moment decisions and activities of a manufacturing operation. At the top of the Business and Manufacturing process view, we can see the major related business processes that typically interact with the associated colored MOM processes depicted in the center of the diagram. Industrial Automation processes typically interact with the MOM processes that are on the bottom portion of MOM processes in the diagram. The complete picture shows the potential continuum of Business and Manufacturing processes that can be optimized to work together in order to maximize an integrated manufacturing value chain. Of course, there are different combinations of business and manufacturing work processes that will be required by each manufacturing facility, unit, or line. These varying needs determine the functionality of software applications that is used for different manufacturing industries. No one vertical industry typically requires all of the process functionality or all of the potential applications and process/application integration. Future LNS Research of the MOM space will detail the specific subsets of process functionality and supporting software that is in use by each vertical manufacturing industry.

6 Figure 2

7 MOM Software In the center of the LNS Research MOM Software / Application View (Figure 3) we have grouped the major applications and product categories that directly relate to the associated groupings of processes on the Business and Manufacturing Process View. This is not an exhaustive list, but the list is intended to cover the majority of software applications and categories that are available today. Part of the mystery and confusion about the MOM software space exists due to the many acronyms used to describe specific software offerings. To clear any ambiguity, the definitions of the MOM Application acronyms that are used inside the MOM Software / Application View are: APC Advanced Process Control EMI Enterprise Manufacturing Intelligence EWI Electronic Work Instructions HACCP Hazard Analysis and Critical Control Points IEM Industrial Energy Management LIMS Laboratory Information Management MES Manufacturing Execution Systems MRP Manufacturing Resource Planning OEE Overall Equipment Effectiveness OI Operations Intelligence OTS Operator Training Simulators RCM Reliability Centered Maintenance RFID Radio Frequency Identification RTO Real Time Optimization SPC Statistical Process Control SQC Statistical Quality Control TIS Tank Inventory Systems WHM Warehouse Management W.O. Work Order Management Enterprise-wide Business Applications are shown at the top of the MOM Software / Application View, along with the related Automation Applications at the bottom. All of the listed Business and Automation applications have potential touch points to applications within the MOM software model. Both the functionality of the MOM applications, along with the effectiveness of these touch points need to be considered when evaluating how to make manufacturing business improvements. The definitions of the Business Application acronyms at the top of the MOM Software / Application View are: APO Advanced Planning Optimization APS Advanced Planning and Scheduling BI Business Intelligence BPM Business Process Management CMMS Computerized Maintenance Management Systems CRM Customer Relationship Management DW Data Warehouse EH&S Environmental Health and Safety EQMS Enterprise Quality Management Systems ERP Enterprise Resource Planning ESB Enterprise Service Bus PLM Product Lifecycle Management SCM Supply Chain Management The definitions of the Automation Application acronyms at the bottom of the MOM Software / Application View are: DCS Distributed Control Systems PLC / PAC Programmable Logic Controllers, Programmable Automation Controllers

8 Figure 3

9 Since there are many different individual software specialties covered by MOM, there are hundreds of different suppliers that are specialized in specific functionality, as well as scores of suppliers that offer more comprehensive and pre-integrated MOM capabilities. The current situation for most manufacturers is that they often have a patchwork of MOM point software solutions that have addressed individual needs over time. The result is a lack of standardization, with different disconnected work processes, systems, and applications. It is not uncommon for a given production plant to have over one hundred different point solutions/applications supporting their manufacturing business. Newer IT and manufacturing industry integration standards, along with the supporting vendor and user organizations, have made progress in putting more order to work and information flows that can occur across Business, MOM, and Automation applications. Key examples include: ANSI/ISA 95 definitions for business to production activities World Batch Forum for business to manufacturing markup language XML definitions - B2MML The MESA organization s work on the best practices and metrics associated with Manufacturing Execution Systems MES and Manufacturing Operations Management The Open Applications Group s work to provide standard profiles for application integration using SOAP/XML OAGIS The MIMOSA organization s definitions of how to link maintenance, operations and business systems - OpenO&M The OPC Foundation s work on broad adoption of the OPC & OPC UA interoperability standard for embedded devices, automation systems, MOM applications and business applications In this complex MOM software space, there is more work to be done to streamline solutions. However, many practical opportunities exist today for manufacturers to improve and simplify these systems as each looks to use technology to better support process improvements and empower people all in the pursuit of Operational Excellence.

10 MOM Challenges Due to the complexity of the issues involved, many organizations have not taken on the entire landscape of possibilities with today s approaches to MOM software solutions in support of their Operational Excellence goals. This section will explore the key challenges that exist in the MOM solution space involving People, Processes, and Technology. People - Organizational Responsibilities and Empowerment One of the key reasons manufacturing industries are not reaping the full potential value of end-to-end Business and Manufacturing processes is that even with cross-functional Continuous Improvement (CI) teams in place, the scope and span of the CI team s responsibilities are typically limited to either within the plants or product business units. Commonly, they do not involve the full engagement or commitment necessary from across the larger enterprise organization. Executive sponsorship and alignment across corporate and manufacturing goals must be in place in order to support the full potential of end-to-end processes. This allows for the opportunity to close the loop across disconnected work that is occurring in the manufacturing enterprise. However, achieving full goal alignment across a Business and Manufacturing enterprise is its own set of process activities and a journey unto itself. There is also an associated issue in that no ongoing end-to-end process owners typically exist in an organization. Cross-functional CI team process work is possible, but it is timeand labor-intensive, requiring significant management commitment to ongoing governance work. Another related issue is that the Finance and measurement systems for performance also need to be put in place in support of these CI initiatives. In order to ensure that the improvements are fully ingrained and sustained, the individuals involved in executing work across the organization need to be empowered to make further adjustments and improvements that are aligned to their individual goals and objectives. Workers want to do the right thing, but often there are conflicting department metrics or mixed messages as to the importance of improvement initiatives in Manufacturing Operations. Therefore, it is important that MOM initiatives are continually reinforced. New accountability and visibility comes with empowerment, so making significant changes to operational procedures often requires a cultural shift for a business, which in turn requires time and patience before it can take hold. Sometimes, new incentives and rewards are needed in support of any major behavioral or cultural change. To support these changes, companies are employing performance dashboards using Enterprise Manufacturing Intelligence (EMI)/Operations Intelligence (OI) software solutions. Having the relevant Key Performance Indicators (KPIs) available to business and production workers can help support organizational alignment and people empowerment. However, it is critical that the KPI information is credible, timely, and in a form that is actionable to the role or task at hand for each individual. Processes Lack of an End-to-End Business and Manufacturing Approach By not evaluating and implementing the improvement potential across the value chain, LNS Research observes that most companies are not realizing the full potential that could be achieved. This has been a pain point for many companies in the past, in large part due to the difficulty and expense of technology integration across the manufacturing value chain. However, technology barriers have significantly reduced over time, so we believe that it is time to take a fresh look at what can be effectively achieved with today s state of technology.

11 Technology - Complex Legacy Landscape There has been much more progress among manufacturing companies consolidating and standardizing on common ERP and financial reporting applications than there has been with standardizing on MOM applications. Part of the complexity comes from the fact that MOM applications cover a wide range of functionality, so there are typically hundreds of instances of point solutions in place across a manufacturing enterprise (Figure 4). A good portion of these are often not very well supported, either on unsupportable technical platforms or with few resources that can maintain them. Across manufacturing, there is also a wide use of customized Microsoft Excel spreadsheets and Microsoft Access databases, along with difficult to support, home-grown applications that are often used for MOM applications. Moreover, research has shown that there are more in-house MOM applications in use today than there are packaged or supported software applications, but we see the trend moving towards more packaged software. MOM applications tend to be in use for decades and often, IT organizations are not even aware of the complete inventory of applications that are deployed deep within the plants. Separate manufacturing or engineering organizations may be supporting the MOM applications and IT is not always fully involved. The integration with Business and Automation applications has typically been done on an individual application-toapplication basis, instead of as part of a more strategic application platform-to-platform approach. Examples of this larger scale strategy would be: an Enterprise software platform to MOM software platform integration strategy, and an Industrial Automation software platform to MOM software platform integration strategy. Since there are usually many different Industrial Automation systems installed across a fleet of plants that would be expensive to upgrade or replace with modern software platforms, the layered use of common integration technology standards like OPC UA can help to alleviate some of the technology integration issues. There are typically multiple historians and database repositories that contain manufacturing information across Industrial Automation, MOM and Enterprise systems. Therefore, it can be difficult to analyze and correlate information across all of these data sources. Enterprise Manufacturing Intelligence (EMI) and Operations Intelligence (OI) software solutions have recently emerged to address this situation. As plant systems and networks are linked with business systems and networks that are Internet connected, there are new cybersecurity threats that have to be managed and protected against. This presents another complex challenge for IT and plant engineering to address. Technology - Rapidly Evolving Future Landscape A macro trend that we see today is that companies are moving towards standardizing manufacturing business and production processes, and supporting these processes with standardized software applications. Companies are taking this approach to modernize and simplify systems, and look for ways to streamline operations and costs. There is also another macro trend in the MOM space around the use of more packaged software applications that can be better supported and modified in the future. Most manufacturing companies only create new inhouse applications when the packaged software cannot achieve business objectives. The broad use of spreadsheets is not going away, however there is more attention and

12 rigor being placed on validating and automating sources of the spreadsheet data. New integration and collaboration software platforms are emerging across the Business, MOM, and Industrial Automation spaces, as vendors re-architect software solutions using software services-based architectures that can run either within a manufacturing enterprise or over the cloud. These new software architectures are evolving to a model that provides a set of common software services as part of the platforms, with functional software application modules or apps that plug into these services platforms. Common software services typically include integration, development tools, software deployment and licensing, communications, database and data models, workflow, visualization, and mobile capabilities. MOM application-specific functionality is delivered via smaller software modules that plug into the integration and collaboration platforms which enable the modules to interoperate with each other and with other platforms and systems. This is in contrast to older, larger monolithic MOM software that offers rich functionality within a single application that can be less agile or sustainable. Manufacturing companies can take advantage of these newer integration and collaboration platform development environments in order to rapidly create customized MOM solutions that are easier to integrate with other software environments in enterprise business and engineering operations. We are seeing support for standardized integration approaches, data storage and modeling, workflow enforcement, visualization and support of the increasingly mobile workforce - all becoming fundamental capabilities of MOM platforms and applications. Cloud-based application adoption is accelerating in the Enterprise business and engineering spaces, and is starting to be adopted in the MOM and Industrial Automation spaces as well. Some MOM solution providers are already providing cloudbased data historians and Manufacturing Execution Systems. In addition, there are other innovations coming from the commercial IT space that we see rapidly making their way into the MOM application space. Examples include: Wireless Networks Use of personal Mobile devices for everyday work in manufacturing Business Intelligence (BI) and Big Data analytics tools being used for Manufacturing Intelligence Linkage of Social Media as a new customer satisfaction and demand signal New visualizations of product designs with associated videos and work instructions being delivered to manufacturing workers in-context Technology Achieving Rapid Rollouts and ROI One of the key challenges for integrated MOM applications has been the time, effort, and investments required to get a solid business value or Return on Investment (ROI). Technical integration has become much simpler thanks to ongoing integration standards adoption by both Manufacturing IT organizations and vendors alike, along with the availability of configurable software applications versus the previous need for much more custom programming. However, MOM applications are considered business critical, and performing the proper business needs analysis, technology evaluations, rollouts, and training across multiple plants can still be daunting. In the best practices and critical success factors section of this document, LNS Research offers proven successful recommendations for achieving more rapid and widespread MOM rollouts.

13 Technology - Adaptability in Support of Continuous Improvements Another key challenge for MOM software solutions is the ability to simply and easily reconfigure and re-deploy changes to business processes as well as associated production and plant engineering processes after these systems have been installed and running especially across a fleet of plants. Ease of reconfiguration and ease of re-deployment are critical MOM software considerations, as manufacturing companies need to be able to more rapidly change business and manufacturing processes, add new production capacity, and add more new products faster. This is an area where MOM software solutions need to continue to improve, and LNS Research believes that this should be a primary criteria for companies that are evaluating MOM software solutions.

14 Traditional MOM Solutions Traditional MOM software solutions have evolved over the past decades, but many of them are grounded in a specific and limited scope of the broad MOM application space. Examples include: MES systems focused on ensuring consistent production execution and tracking Data Historians focused on data collection and reporting Figure 4 Detailed scheduling and planning applications focused on optimizing production order handling In-process quality analysis software focused on ensuring product quality Advanced Process Control (APC) and Optimization applications that use process and production models to predict and propose optimum manufacturing settings across multiple variables and constraints

15 Traditional MOM software architectures have been database-centric, as opposed to software services platform-centric. Over time, more comprehensive MOM functionality has been combined into vendors core offerings in the form of integrated suites of software. However, because of advancements in technology as well as needs by users, many have been built upon original core offering architectures. The issues associated with monolithic, database-centric architectures (Figure 4) can include: Multiple databases and configuration tools to manage the complete set of MOM functionality Difficulty in expanding functionality to new or improved modules without shutting down MOM system functionality as these modifications can require multiple database schema updates and conversions Complexity of integration with Enterprise / Business and Industrial Automation applications due to multiple integration layers across the complete set of MOM application functionality Inconsistent user interface and visualization approaches due to multiple, different application database approaches, versus a universal visualization approach Difficulty for vendors to rapidly develop and evolve functionality due to unforeseen limitations that may exist in the primary product and production database schema LNS Research believes that the future of MOM software solutions are those that deliver software modules or apps that are built upon a common Integration and Collaboration platform, one that offers open integration to Enterprise business and engineering systems, and Industrial Automation systems, while providing a productive development toolset for ongoing application modification, customization, configuration management and software deployment management. The future goals of these platforms need to be speeding the time to value and limiting the percent of customization programming versus fill-in-theblanks configuration. We will explore more details on next generation MOM platforms later in this guide. Varied Scope of MOM Solutions by Vertical Manufacturing Industry Most companies only require and use a subset of the MOM functionality in the LNS Research MOM Software / Application View, and a subset of the possible integrations with Enterprise / Business and Industrial Automation applications. Each of the different vertical manufacturing industries typically uses a similar subset of the available MOM application functionality. There are also commonalities of MOM functionality being used among the major production modes - Discrete, Process and Batch. Although there are a number of examples of these functionalities that span across industries, there are several key functionalities that relate to specific industries. First, there is a heavy use of data historians, APC, and optimization in process manufacturing applications. Next, in Discrete manufacturing applications, MES systems replace paper based procedures and in-line quality systems are prevalent. And finally, in Batch manufacturing, MES and Batch Management software applications are often tightly integrated with control logic execution that runs inside of Industrial Automation systems LNS Research will detail industry-specific solutions, along with the associated vendorspecific capabilities in two future Solution Selection Guides. One will be published for the Process and Batch industries and another for the Discrete industries.

16 In-House and Packaged Software Approaches From a sheer number or count point of view, there are many more in-house developed software applications deployed in manufacturing than there are packaged software applications. Even though we have stated the trend towards more packaged software application use, the other trend that LNS Research sees is one towards higher IT department involvement in manufacturing applications, as well as more commercial IT apps being plugged into and extending the functionality of MOM applications. Corporate IT departments bring the requisite network, hardware, software and security expertise to the party, and successful MOM deployments require the active involvement of a combination of IT, Plant / Process Engineering, and Plant Operations talents.

17 The Next Generation LNS Research MOM Framework The LNS Research MOM Framework highlights how industrial companies can make significant step changes in manufacturing business performance. Specifically, it focuses on the areas of speed, efficiency, safety, customer responsiveness, and costs. By aligning and then optimizing processes, people, and technology, organizations can build this framework into Operational Excellence initiatives and make measureable improvements toward strategic objectives. This holistic approach looks across key Business and Manufacturing processes that span from the enterprise through a network of plants. It aims to streamline and orchestrate critical processes in a more closed-loop fashion and using best-fit technology platforms and software applications. By taking this approach, executives in charge of manufacturing operations can create additional value-add to their companies, and reap greater returns on investments in MOM technology and people. Processes LNS Research MOM Business and Manufacturing Process View On the LNS Research MOM Business and Manufacturing Process View (Figure 2), we describe the key business process activities that directly impact manufacturing business performance. From the graphic, we see that organizations require the ability to accelerate and tune the responses to Production Demand and Supply. There needs to be clear linkages, visibility, and organizational actions between Business and Production Performance. Manufacturing operations require the ability to manage both Product and Production Definitions for greater speed, efficiency, and certainty as well as end-to-end business and production recordkeeping. It is also critical to have the ability to better predict, manage, control and improve Product and Production Capabilities to meet new product introductions, in addition to ongoing modifications to products and manufacturing execution strategies. These core business processes have associated MOM processes, depicted in the middle of the model diagram that should be viewed as a continuum of information integration and collaboration across an organization. The time domain required by the MOM processes needs to be fast enough to react, adjust, and respond to the dynamics of production. The required time domain is typically sub-seconds for Industrial Automation, seconds, minutes and hours for MOM, and hours, days, weeks for Enterprise / Business applications. However these times are accelerating across the entire Business and Manufacturing process continuum due to faster capabilities of technology, and ever higher and faster competitive pressures. Processes - Examples of End-to-End and Closed-Loop Business and Manufacturing Some examples of End-to-End and Closed- Loop Business and Manufacturing processes that could better work as a continuum include: Enterprise Production Demand & Supply directly linking 'what and where to make' decisions to plant level detailed schedules and dispatching of resources, further linking to production execution systems that ensure and track proper manufacturing, further coordinating across the work of both people and industrial automation systems for the automated portions of production. Business & Production performance analysis and visualizations that link both fixed costs and variable / dynamic costs of materials, energy and labor required for actual production and for individual products in order to fully understand and

18 track what it costs to make each product as it is being produced and delivered to customers. Product & Production definitions that originate in Enterprise engineering design processes, that can be linked with Enterprise systems with the master bill of materials, automatically populating the manufacturing bill of materials, along with the associated new product processes and production procedures into production execution systems - in order to speed time to production and minimize errors. The ability for production assets to diagnose and track their runtime, utilization and performance in order to predict their future availability thereby impacting future Product & Production Capabilities for a given line, production unit or plant. Sustainable Manufacturing Operations There are also some new opportunities that we see as future End to End and Closed Loop Business and Manufacturing processes. A key one is the future ability to connect production, maintenance, safety, and energy/carbon information together in realtime. This has the potential to greatly simplify the process of Sustainability reporting, while giving greater visibility across organizations to Sustainability performance. This could also help to ensure EH&S compliance processes are being followed. LNS Research will explore this opportunity more in the future as part our Sustainability research agenda.

19 Best Practices and Critical Success Factors for Effective Manufacturing Operations Management Technology is at a great point, whereby so much return on investment is readily achievable and possible with today's solutions. However, success in manufacturing operations requires an organizational effort. LNS Research believes that in order to ensure ongoing business success, it is important for your MOM strategy to address all three pillars of Operational Excellence - people, processes, and technology. The biggest unfulfilled challenges tend to be those that involve people and cultural issues, which is a great starting point for this discussion. People - Leadership, Organizations and Empowerment Executive leadership needs to understand that manufacturing plants are not just interchangeable black boxes. Strategic advantages in manufacturing agility, speed, quality and costs can be attained for a business by implementing effective MOM strategies and investments. These investments should not only span across Enterprise business systems and functions, but also IT infrastructure and Enterprise engineering systems and functions, MOM systems and functions, and Industrial Automation systems and functions. Executive leadership is required to help break down silos of organizations that have a direct impact on manufacturing operations, from sales & marketing to business operations, supply chain, IT, engineering, manufacturing, maintenance, and service. All of these silos need to understand how they can contribute to End-to-End and Closed-Loop Business and Manufacturing process improvements that create new breakthroughs in overall business results. Project and improvement team members need to have involvement from all of these organizations, and everyone needs to be working towards a common set of problem solving objectives. Executives must take the lead in linking strategic company business goals to manufacturing strategy. From there, related goals need to relate to every cross-functional team member's individual associated goals. These goals need to be aligned and reinforced by a performance-oriented culture and the associated recognition and rewards. Processes - Orchestrating End-to-End and Closed-Loop Processes Organizations should start by using a crossfunctional team to analyze (process map) one major Business and Manufacturing process in an End-to-End fashion. This should be a process continuum that could have the largest business or customer impact. After understanding the major disconnects and the opportunity areas from the process mapping exercise, the team should recommend specific process improvements that could be addressed. The team should focus on inefficient, broken handoffs, missing gaps for timely information, systems and teams that do not provide Business and Manufacturing benefits when working together. Next, the team should prioritize specific actions that address these process issues and estimate what the range of impacts and outcomes could be if they were addressed. It is important to then fully commit a team and resources to address a subset of specific process improvements that can be addressed in a relatively short period of time (weeks/months) in order to build confidence. Have the team baseline performance before, during, and after the improvement project. The team should pilot and test process changes manually to start, and then automate or modify the supporting software systems after there is confidence that the process changes are creating the desired results.

20 Lastly, it is important to institutionalize the improvements and train the people affected on the process and systems changes to ensure that the improvements stick. It is also critical to continually measure results, internally recognizing and promoting successes where appropriate. Rewards and incentive programs are critical to building a culture of success. Technology - Creating a Cohesive MOM Software & Implementation Strategy When it comes to technology, companies should start by taking complete inventory of both in-house and packaged MOM software applications that are deployed, along with who is supporting them. You may be surprised by how many technologies and processes there are, and how fragile the situation is with some production critical applications. Instead of simply replicating existing point applications with newer technology versions, look to standardize on the implementation of software solutions that address a broader set of End-to- End processes and functionalities in an integrated fashion. Today, there are software solutions available that will provide more comprehensive functionality, while also limiting the number of integration challenges with Enterprise and Industrial Automation applications. In addition to looking at aging systems, given that most manufacturers are also dealing with an aging workforce, it is important to understand critical production processes and activities that need to be sustained, and to have a strategy to capture and institutionalize the experience and knowledge of seasoned workers into modern, supportable and extensible MOM software applications. It is important to create complete, End-to-End Business and Manufacturing process maps to help guide your company as to the required functionality for MOM applications. A subset of the functionality described in the full LNS Research MOM Software / Application View is likely to be required for a given manufacturing business. It is advisable to start with a MOM pilot / proof of concept application at one production site to ensure that the results can be achieved, starting with a subset of the completely envisioned functionality that still addresses a significant manufacturing business pain point with high ROI potential. By completing a pilot / proof of concept, it is easier to assess how the time, effort, investment and resulting business value will ultimately scale across a manufacturing enterprise. This small pilot project will help to prove functionality, usability, and results prior to committing to massive deployments. At the same time, it will ensure that any MOM software solution can scale in functionality, size, and to the number of users that will meet your ultimate enterprise objectives. Another best practice is to start with preconfigured templates that exist with some vendors MOM application packages. To the extent possible, it is usually best to adapt some of your production processes to these proven templates, instead of customizing the software to conform precisely to existing processes. Often, there are best practice processes embedded in these preconfigured templates. This creates a new opportunity to improve processes instead of blindly reimplementing and automating existing processes using software. The pre-configured template approach will reduce the amount of customization required, speeding the time to value, and making the application more supportable by both the vendor and the manufacturing company over a long life-cycle. Next, you should evaluate your existing Enterprise and IT infrastructure to ensure that MOM software solutions fit with those existing IT investments. Look for opportunities to leverage existing Enterprise and IT investments and to use them in combination with MOM software solutions that are specifically designed to address the speed and dynamics of manufacturing processes.

21 Examples include leveraging existing Enterprise collaboration portals and BI applications in combination with MOM EMI/OI solutions, as well as leveraging the full functionality of existing ERP systems in combination with MOM MES solutions. Consider not only the initial implementation effort and time, but also evaluate MOM software solutions based on the ability to support ongoing continuous improvement efforts, based on ease of configurability, change management and rapid deployment. Whenever possible, it is advisable to standardize integration approaches using proven industry standards instead of using vendor-specific integration approaches. Other considerations include: Whether the MOM software solutions support the appropriate security mechanisms that fit into your overall Enterprise IT security scheme. The appropriateness of user interfaces by role / user. Consider mobile worker strategies as part of role-based user interfaces. References from others using the MOM software solution in similar ways. platform-based architectures incorporate open standards-based integration and collaboration capabilities at their core (Figure 5). These platform-based offerings provide underlying software services that enable a highly modular solution approach that reduces duplicative functionality across a broad set of available MOM software apps. By having a common services approach for all MOM applications to integrate to Enterprise / Business and Industrial Automation applications, this greatly eases data/information and workflow integration across all software domains in the manufacturing enterprise. MOM software offerings based on a services platform approach will be much more compatible with Enterprise service bus technologies that becoming prevalent in business and IT applications. In contrast to traditional, monolithic databasecentric architectures described earlier, modern platform based architectures are much better poised to support future functionality modifications and enhancements, They can readily scale from small, single plant applications to large on-premise or cloudbased enterprise applications. Technology Next Generation MOM Software Platform Architectures As you evaluate MOM software partners, look for vendors that are investing in modern, services-based software platforms. Newer

22 Figure 5

23 The MOM Software Solutions Vendor Landscape As described earlier, the LNS Research MOM Software / Application View (Figure 2) defines ten major functional areas of MOM software. LNS Research takes a broad view of MOM the software solutions landscape as we believe that all of the software that directly supports the day-to-day and moment-to-moment decisions and activities of a manufacturing operation need to be considered. Since there are many different individual software specialties covered by MOM, there are also many different suppliers of specific functionality, as well as scores of suppliers that offer more comprehensive and preintegrated MOM capabilities. This section aims to discuss the MOM software solutions vendor landscape more in depth. MOM-Focused Vendors There are hundreds of small-to-mid-sized companies that have built businesses exclusively by focusing on delivering software solutions in the MOM space that exists between Enterprise and Industrial Automation applications. These vendors tend to have deep expertise in the operations functions of a specific set of vertical manufacturing industries. Each usually offers good integration with Enterprise and Industrial Automation systems, as offerings have been built with the understanding of how software fills gaps within the existing landscape of manufacturing software investments. A number of these vendors have built out comprehensive suites of pre-integrated MOM capabilities that cover a wide range of the functionalities described in the LNS Research Software / Application View. The Push Down into MOM from Enterprise Vendors A subset of the mid-and-large-sized Enterprise software suppliers have been developing and acquiring MOM capabilities, and preintegrating these into offerings. Examples include: Suppliers of Enterprise Resource Planning (ERP) applications have been adding MOM production scheduling, production execution, Electronic Work Instructions (EWI), Quality Management, Computerized Maintenance Management Systems (CMMS) and Enterprise Manufacturing Intelligence (EMI) / Operations Intelligence (OI) capabilities. Proven / productized linkages between Enterprise applications like ERP, Advanced Planning & Scheduling (APO/APS), Supply Chain Management (SCM) with MOM applications like Manufacturing Execution Systems (MES) and Historians are commonplace today. This integration is provided in order to better predict and respond to supply and demand changes, and to reduce stocks and inventories. Enterprise BI software, and EMI / OI software within the MOM application set, are being integrated together to mash up business and manufacturing metrics into meaningful views that include the business impacts of real-time manufacturing metrics. Also, some vendor's enterprise BI applications are being specifically extended to cover the MOM application space. Enterprise BPM software is starting to be integrated with MOM software, creating End-to-End and Closed-Loop Business and Manufacturing workflows. Many MES and other MOM software applications have workflow capability built into the individual applications. Other vendors are taking an Integration and Collaboration Platform approach, whereby workflow functionality is part of either an Enterprise or a MOM software platform.

24 Suppliers of Enterprise engineering software including PLM in the Discrete Manufacturing industries, and Plant / Process Design software in the Process & Batch industries, are starting to be integrated into both ERP and MOM applications. The intended purpose is to enable manufacturers to bring products to market faster, manage ongoing product and manufacturing Bill of Material (BOM) changes, and manage the full life cycle of engineering designs and production setup changes in a more streamlined fashion. Most Enterprise solution providers are starting to move forward with customers to bridge and streamline Business and Manufacturing processes. However, many of these processes stop at the intersections of the Enterprise applications and do not carry all the way through the entire set of MOM and Industrial Automation applications used on the plant floor. LNS Research has been observing that Enterprise-to-Enterprise application and Enterprise-to-MOM application integrations appear to be accelerating in practice and use. Notably, this integration has been faster than MOM-to-Industrial Automation software integrations. However, the technology today clearly supports opportunities for all of these types of integrations. The Push Up into MOM from Industrial Automation Vendors A number of the large Industrial Automation vendors have developed and acquired MOM capabilities, and pre-integrated these solutions into plant floor offerings. In addition, offerings also have capabilities for integrating with Enterprise applications. Key examples include: MOM production execution applications like MES and Batch Management are preintegrated with Industrial Automation systems in support of highly automated manufacturing lines and units. For the Process and Batch industries, Plant / Process Design software has been linked into the real-time Production and Process Engineering applications, and to feed process design models into Advanced Process Control (APC) and Optimization applications. This is done in order to shorten the time to build and deploy new plants and plant units, and to have a continuum of plant engineering definitions and models for ongoing process and production improvements. Similarly for the Discrete production industries, some vendors MES software has recently been integrated with PLM systems in order to automate production setups inside the execution systems whenever new products are introduced into production or when approved product design changes are made. Many EMI/OI applications in the MOM space rely on data Historians provided by Industrial Automation or MOM Focused vendors. The Historians are used for data collection across a broad range of different automation systems. Integrations between Industrial Automation systems and Computerized Maintenance Management Systems (CMMS) are starting to accelerate. This is being done with in support of Reliability Centered Maintenance (RCM) strategies, whereby actual equipment use, health and diagnostic information are helping to predict or notify the maintenance departments who use these systems. Common integration technologies supported by Industrial Automation vendors include open standards like OPC / OPC UA as well as OpenO&M.

25 MOM Solution Selection Guides As you can see from these three sets of vendor orientations, vendor focus and capabilities have both similarities and differences across the landscape of MOM software solutions. In order to assist companies in the selection criteria and process, LNS Research is creating two MOM Solution Selection Guides: one for Process and Batch industries and one for Discreteoriented production industries. These guides will assist manufacturing companies with where to focus and narrow down software solution evaluations based on criteria such as geographical and industry coverage, MOM functionality required, technology fit within an existing Manufacturing IT infrastructure. It will also explore the different solution delivery models, key areas of strength and areas of challenge across the landscape of MOM software solution providers. Executives and business leaders can expect these selection guides to be published in the coming months.

26 About LNS RESEARCH LNS Research provides advisory and benchmarking services to help Line-of-Business, IT, and Industrial Automation executives make critical business and operational decisions. LNS research focuses on providing insights into the key business processes, metrics, and technologies adopted in industrial operations. LNS Research Solution Selection Guides are specifically designed to help executives quickly assess a particular software segment and build a framework for identifying which vendors best meet the business need. Authors: Mark Davidson, Principal Analyst, [email protected] Matthew Littlefield, President and Principal Analyst, [email protected] Mike Roberts, Research Associate, [email protected]