The Push For Smarter Manufacturing How several companies are bringing brains to the brawn of the production line – By Chris Warren
Courtesy nyse magazine!
When a group of CEOs, consultants and policymakers convened at the Detroit Economic Club for a special summit on manufacturing two years ago, a former U.S. Department of Commerce official shared a tale aboutToyota Motor Corp. (TM) that resonated with many at the closed-door meeting. A few years back, she said, the automaker was considering spending $1 billion to locate a factory in the southern U.S. But, she continued, its executives at the time worried that the prevailing perception of manufacturing in America — dumb, dirty and in decline — would limit their ability to hire skilled workers.
That was then, this is now: The reality of smart manufacturing directly contradicts the image of factories spewing pollution from smokestacks, while, inside, workers with little training and education perform repetitive tasks. In fact, rather than being defined by the “three Ds,” say executives from Rockwell Automation Inc. (ROK), whose executives attended that meeting, smart manufacturing is becoming even smarter, safer and more sustainable. (Learn how Rockwell is helping companies optimize their processes here.)
In an open letter to industry leaders and policymakers, Rockwell Chief Technology Officer Sujeet Chand and Jim Davis, vice provost of information technology at the University of California, Los Angeles, and the principal investigator of a National Science Foundation grant on Smart Process Manufacturing, lay out a broad definition: “Smart manufacturing marries information, technology and human ingenuity to bring about a rapid revolution in the development and application of manufacturing intelligence to every aspect of business. It will fundamentally change how products are invented, manufactured, shipped and sold. It will improve worker safety and protect the environment by making zero-emissions, zero-incident manufacturing possible.”
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In part, the evolution toward smart manufacturing is a natural reaction to the economic challenges of the recession, says Don Lesem, vice president of design and supply chain at IHS Inc. (IHS), an information and insight company that focuses on capabilities such as supply chain, energy, defense and sustainability. “If you look at 2008, the rate at which manufacturing just stopped was unbelievable — it was a hard stop,” he says. “Now, as factories are brought back up and capacity back online, companies want to better understand and anticipate the demand and the capacity they need to make available.”
As president of the industry automation division at Siemens Industry Inc., part of Siemens AG (SI), Raj Batra aims to help manufacturing companies optimize their entire value chains, from product design and development to production, sales and service. “When I talk smart manufacturing, I’m talking about elements from product design all the way to the manufacturing floor,” he says. In the past, Batra explains, each of these elements was typically handled independently, a scenario he contends led to waste and inefficiency.
Virtualization in product design is one example of how Siemens helps its customers avoid that waste. “It’s a known fact in our environment that 75 percent of manufacturing costs are pre-determined in the product design phase,” Batra says. “Whether it’s less plastic in a bottle or the reduction of the number of parts going into a jet, we are able to model a lot of scenarios. Because we can see complexity in the virtual world before we mechanically put things together, a lot of optimization is possible.”
IHS’ Lesem says that his company assists its clients by giving engineers and R&D staffers up-to-date information on the technical feasibility, price and availability of the components that go into the products they are designing. Design engineers, he says, tend to be focused on the “latest and greatest” technologies, an approach that isn’t always realistic when it comes to procuring and manufacturing the products. Lesem gives the example of working onMotorola Mobility Holdings Inc.’s (MMI) mobile phones. “We want to make sure the components that go into the device screens are available from preferred component suppliers through the life of the product,” he says. Lesem illustrates the importance of incorporating this insight into the manufacturing process by citing the potential nightmare scenario of a company having to take down a factory line and reconfigure it because components are not available or are unreliable. “If you’re unable to ship products, you can imagine that in a fast life-cycle area like electronics that would be catastrophic.”
General Mills Inc. (GIS) uses product design as just one step of an entire process it calls holistic margin management, or HMM, which the company says is the philosophy it employs in all its decision-making. According to John Church, General Mills’ senior vice president of supply chain, the company decided to redesign one of its signature products, Hamburger Helper, which Church says had become more complex over the years — to the point that it was offered with more than a dozen different noodles. But that complexity, says Church, made sense only inside the company, where employees “lived and breathed” its products. Realizing that the breadth of options didn’t mean as much to consumers, General Mills decided to cut the number of noodle choices from 16 to eight. “That allowed our supplier to have less complexity and allowed us to store less raw material and focus our technology on eight variables as opposed to 16,” Church explains. “Less complexity leads to more advantages in manufacturing.”
As consumers become more conscientious about where their products come from, supply-chain visibility becomes increasingly important. This is especially true for food companies, as the quality and safety of their ingredients is vital, says Rockwell’s Chand.
At Smithfield Foods Inc. (SFD), Henry Morris, the company’s senior corporate vice president of operations and engineering, says that technology is deployed throughout the manufacturing process to allow for a complete record of the supply chain. “Smithfield employs computerized systems to provide traceability all the way from farm to fork,” he says. Morris says that Smithfield has incorporated enterprisewide software systems tailored to its needs to include information it requires from suppliers of ingredients, packing materials and other items.
Batra recounts how Siemens recently worked with an automotive supplier that had won a piston contract from a European car company. “The supplier wouldn’t be awarded the order until it had a very clearly documented and verifiable process to track the genealogy of that piston,” he says. “So if there were ever a recall or a situation where something went wrong with that piston, the car company would have a documentable way to understand where the breakdown occurred in the process.” The solution was to use a Siemens Manufacturing Execution System software product called SIMATIC IT, which links processes from order management to assembly on the factory floor to achieve transparency. The same software is used in the pharmaceutical industry to track the origins of drugs, Batra notes.
Leaner & Greener
In a small New England town on the banks of the Androscoggin River is a manufacturing facility making big environmental strides. At the end of 2010,The Procter & Gamble Co. (PG) announced that its facility in Auburn, Maine, which makes Tampax feminine-care products, had become the company’s first in North America — and its ninth globally — to send zero waste to landfills. The Cincinnati-based maker of consumer products such as Pampers diapers and Head & Shoulders shampoo says that the Auburn manufacturing facility is part of an ambitious long-term environmental sustainability vision that includes powering all of its plants with 100 percent renewable energy and using 100 percent renewable or recycled materials for all of its products and packaging.
According to Keith Harrison, Procter & Gamble’s global product supply officer, achieving this goal is possible when manufacturing waste is disposed of in three ways: recycling, repurposing and turning waste into energy. “These give value to waste, whereas waste that ends up in landfills has no value,” he says. “We want to ensure that more than 99.5 percent of what enters our plants goes out the door as finished product or has some other beneficial end-of-life use by 2020.”
At the Auburn manufacturing facility, Procter & Gamble teamed up with Sonoco Sustainability Solutions LLC, a.k.a. S3, a division of Sonoco Products Co. (SON), in a three-year effort to ensure that none of the nearly 2,300 tons of waste it generates annually goes into a landfill. Harrison says that all manner of techniques were used by Sonoco and the plant’s employees, who he says are naturally thrifty Mainers. “They donate samples and auction off retired tools and used furniture to employees, and then donate the money to the United Way,” he says. “They partner with Sonoco to recycle more than 60 percent of the plant’s waste, such as cardboard, plastics and mixed paper, and send the remaining 40 percent to a local waste-to-energy incineration facility to generate energy.” That energy, Harrison notes, is then sold to the local power company.
Marty Pignone, Sonoco’s vice president of global manufacturing, says that his company is working with other companies, including Kraft Foods Inc.(KFT) and Unilever Plc (UL), to achieve the most sustainable factories possible. Pignone says that S3 experts visit each customer’s manufacturing site and identify all of its waste streams — even climbing into Dumpsters when necessary — to figure out where it all should go. Making this effort is both sustainable and economical, he says, because it results in lower disposal fees and more revenue from the sale of recyclable materials and waste converted to energy. “A large consumer-goods plant will typically net several hundred thousand dollars,” he explains. “What some people see as garbage we see as revenue.”
Joe von Rosenberg, the chairman, president and CEO of Omega Protein Corp. (OME), a manufacturer of fish meal and organic fish solubles and reportedly the world’s largest producer of omega-3 fish oil, says that the company’s sustainability initiatives are a way to both improve its operations and enhance its reputation in the community. “Everything we do has the end goal of increasing efficiency and improving environmental responsibility,”he says. For the past few years, von Rosenberg says, the company has taken steps to become a cleaner manufacturer, making significant investments in equipment that reduces the amount of water and energy required to convert menhaden fish into end products.
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Omega’s most significant recent investment, he says, was its $10 million acquisition of airless dryers for its manufacturing facility in Virginia, which are used after the fish are caught and pressed and before they’re separated into fish meal and fish oil. “ That had far-reaching environmental impact,” von Rosenberg recalls. “Most noticeably, we were able to remove a tall smokestack at our factory that was visible to boaters and neighbors. They were happy to see it removed and pleased with the reduction of the steam and gases that cause the unpleasant odor associated with fish processing.”
An enduring misperception about manufacturing work is that it is repetitive and mindless, requiring little skill or education. But given today’s high-tech factories, the bar for highly trained, skilled manufacturing workers tightly aligned with design and procurement has been raised, typical in the current competitive market, says IHS’ Lesem. The Heritage Foundation, a Washington, D.C., think tank, released a report last October indicating that although U.S. manufacturing jobs disappeared over the past decade, down to 11.7 million in 2010 from 17.5 million in 1987, the number of employees in manufacturing with advanced degrees increased 44.4 percent between 1992 and 2009.
Sonoco’s Pignone agrees that it takes a lot of education and training to optimally run complex processes. “In a paper mill, there are thousands of process parameters that can be important and should be monitored,” he says. “Things can go wrong and equipment can fail, but by monitoring the processes and data you can react quickly and fix things.” For example, Pignone says, the quality of recycled paper is very much dependent on the amount of moisture in it, which can be affected by a variety of factors that need skillful monitoring and adjustments. “With the digital control systems and analytical tools we have today, an engineer can quickly and automatically have a computer identify where the process shifted upstream and run correlations and statistical analysis to determine what the source of that moisture variation can be.” That is hardly a rote task, Pignone notes, which is why many workers at Sonoco paper mills are engineers who also get additional on-the-job training in Six Sigma, a quality-assurance program based on statistics developed by Motorola in 1986.
THE IMPORTANCE OF QUALITY CONTROL
Smithfield’s Morris says that employees throughout his company must be properly trained to use the software and production equipment in its manufacturing facilities. “Even production-line workers often interact with computerized touch screens and electronic equipment that requires specialized skills and training to generate the quality and efficiency that these systems are designed to produce,” he says.
One way Morris says his company ensures that employees have the skills they need is by working with universities, community colleges and suppliers to provide training. Morris says Smithfield partnered with Iowa State University to develop the Brown Belt Meat & Poultry Science Training Program, in which employees participate in three weeklong sessions focusing on microbiology, computer formulation and processed-meat technology. “As a final assignment, students must develop a lean manufacturing project to be implemented at their facility,” he says. “Close to 200 employees have been through the program, with the projects they developed generating savings in excess of $20 million.”
Regardless of where companies are in the process, a full transformation to smart manufacturing requires continuous innovative thinking. At General Mills, Church admits, the move toward holistic margin management, or HMM — which includes smart manufacturing — was disruptive, requiring the company to change its overall business model. “As a consumer products company, we enjoyed a long run through the ’70s, ’80s and ’90s of steady, reliable input costs,” he says. “We lived in a land of plenty. Our business model was predictable, and we enjoyed a period where our manufacturing organization delivered a 2 to 3 percent productivity increase year over year, which we could then use to offset any inflation.” But during the past decade, he explains, the increasing globalization of the economy, characterized by higher demand driven by developing markets, pushed up input costs by two to three times inflation. Church says this challenge — and the recognition that tweaks to the supply chain would not be sufficient to keep pace with the changing business environment — led General Mills to recalibrate its business model and adopt HMM as its centerpiece, a process that began in 2005. Revamping products like Hamburger Helper, coupled with steps such as locating factories closer to where consumers live to reduce transportation fuel usage, has been a long process, but one that Church says has been financially worthwhile. In fact, in 2010 General Mills announced that it expected its HMM changes to yield savings of $1 billion through fiscal 2012 and $4 billion by 2020.
Akzo Nobel NV (NYSE Euronext: AKZA) says that a commitment to constant product innovation helps it assist manufacturers in their quest to become smarter. Reportedly the largest global paint and coatings company and a major producer of specialty chemicals, AkzoNobel believes it has developed solutions that make one part of the manufacturing process much easier and cheaper for customers — for example, products that reduce or eliminate drying time when cars, planes or boats are painted. Graeme Armstrong, the company’s executive committee member responsible for research, development and innovation, gives the example of AkzoNobel’s work with the makers of a Formula 1 race car. “What we have done with them is create a paint technology that massively increases their efficiency in the painting process for the car, taking it from eight hours to four hours,” he says. “The idea behind it is that time is money.”
Armstrong says that AkzoNobel is also in a trial phase of doing away with wet paint and the drying process that accompanies it for certain cars and trucks. “Instead of liquid, which takes time to dry, we are experimenting with spraying vehicles with a solid polymer powder and then flashing it through the oven after it is painted,” he says. “We want to make smart manufacturing take drying out of the process entirely.”
As companies work to accelerate turnaround, decrease their environmental footprint and keep the innovations coming, expect the world of manufacturing to continue its evolution. Omega Protein’s von Rosenberg, for one, says that his company won’t be cutting back on its manufacturing upgrades anytime soon. “As a publicly traded company, we are mindful that our obligation to make a profit has to factor in somewhere,” he explains. “To make these investments, you have to come up with significant capital. But at the end of the day, you can’t afford not to do it.”