Oracle Manufacturing Summit Highlights Best Practices in IT-Enabling Manufacturing Operations

Key Findings

• Oracle continues to add and enhance its deep manufacturing operations management, which is tightly integrated with core ERP financial accounting functions, resource planning, business intelligence (BI) and widening supply chain functionality.
• Oracle customers are seeing tangible business benefit by leveraging the vendor's applications in support of detailed manufacturing operations capabilities for operations intelligence, manufacturing execution and integrated quality.
• Oracle is communicating a product road map for manufacturing operations that includes expanded manufacturing execution system (MES) and operations intelligence functionality, unified e-kanban replenishment application support, and support for Oracle Fusion Applications.

Recommendations

• Oracle customers in the process and discrete manufacturing segments that currently seek MES and enterprise manufacturing intelligence (EMI) application support should evaluate the Oracle Manufacturing Execution System for Discrete Manufacturing or Oracle Manufacturing Execution System for Process Manufacturing and Oracle Manufacturing Operations Center (MOC) applications accordingly. They can be delivered as stand-alone applications.
• Oracle customers with ambitions to add IT support to govern lean inventory practices across sites and with key suppliers should examine whether Oracle's e-kanban solution is a fit.
• Depending on the style of manufacture and complexity of the production environment, augmenting ERP with third-party manufacturing applications might be needed. Carefully weigh the benefits of low total cost of ownership (TCO) from a single source for ERP and manufacturing operations functionality against depth of requirements.

Gartner attended Oracle's Fourth Annual Manufacturing Operations Summit. The event took place 22 through 23 February 2012 in Salt Lake City, Utah, and was attended by 100 customers and partners.

Although Oracle doesn't match the aggressive partnering and composite application development activities of other ERP and manufacturing-operations-specific providers, its deep manufacturing functionality is embedded in Oracle E-Business Suite. Over the past five years, it has expanded beyond its ability to support multiple manufacturing styles in its ERP system, including strong support for lean and demand flow technology (DFT) for discrete manufacturers; integrated quality management systems and formula/specification management for process manufacturers with Oracle Process Manufacturing (OPM); and production planning and scheduling, e-kanban and inventory management, and quality management for both process and discrete customers. It has also made sizable investments in core manufacturing functionality with Oracle Manufacturing Execution System for Discrete Manufacturing, Oracle Manufacturing Execution System for Process Manufacturing and Oracle MOC. These products provide role-specific workbenches and dashboards for plant personnel.

Oracle's Manufacturing Operations Capabilities

This year's event highlighted how Oracle's manufacturing operations capabilities are recognized and broadly deployed by its customers. They're using Oracle applications for manufacturing execution, operations intelligence, and integrated quality, as well as to help link IT and manufacturing line of business (LOB) teams together and drive productivity improvements for the business.

Manufacturing Execution

A biotech manufacturer weighed the trade-offs between the complete Food and Drug Administration's (FDA's) 21 CFR Part 11 certified functionality of a third-party MES against the prebuilt integrations of the Oracle Manufacturing Execution System for Process Manufacturing module and its OPM ERP deployment. It decided that a third-party MES would be too time- and cost-intensive for its organization to engineer, deploy and culturally embrace. In turn, it opted to deploy Oracle's MES and integrate it with OPM modules, including quality management. The functional scope includes weigh and dispense, as well as label generation for lot-controlled inventories. Integration with scales and bar code scanners has eliminated significant manual data entry, and the net effect is less error, with preweighed material kits.

The end-to-end impact is greater. It has dropped four employees from having to sort out administrative activities often associated with batch paperwork, reducing batch record review and approval cycle times by 80%. Production performance information is easily accessible by reviewers and regulators in electronic format, allowing faster release of orders to the supply chain.

Integrated Quality Management

Nutraceuticals producer USANA Health Sciences shared its success using Oracle E-Business Suite R12.1.3 and Oracle's Agile Product Lifecycle Management applications to boost product quality and regulatory compliance. Seventy-three percent of the 1.2 billion pills produced by USANA each year are done in-house, and they must comply with FDA and Therapeutic Goods Administration (TGA) compliance mandates. End-to-end process visibility is critical for its business. It uses the Oracle OPM Quality Management module as a central repository to drive integration of quality data from receiving inspection to finished-goods release, and provides lot genealogy for compliance purposes. It also uses the module to generate all shipping documentation, such as Certificates of Approval (COAs) and Certificates of Compliance (COCs). When integrated with Agile PLM applications, which manage product specifications, the benefits of this usage include reduction in the number of deviations per month (100 to 38), reduction in nonconformance resolution cycle times (35 to 12 days) and 10% gains in inventory efficiencies.

IT and Business Collaboration

Panduit and Worthington Industries shared how IT and business collaboration can accelerate broader manufacturing transformation:

• Panduit, a producer of data center equipment, is growing its international presence and is challenged to create product closer to the customers to shorten lead times. By adopting a standard configuration of Oracle E-Business Suite R12, as well as Demantra Demand Management and Demantra Real-Time Sales and Operations Planning process templates, the company has reduced its safety stock globally by 30%, while improving forecast cycle times by three days. The standard process template configurations have reduced IT support costs by 50% and, in some instances, cut deployment times by 90%. The company can also ship orders faster, purely due to direct integration with its global deployment of Oracle E-Business Suite, including Oracle Order Management, Oracle Warehouse Management (in some locations, it can do drop shipments) and Oracle Manufacturing Execution System for Discrete Manufacturing.
• Worthington Industries' manufacturing center of excellence (COE) defines the work for its IT organization to perform in its factories. The business defines the prioritization, requirements and definition of "done" (that is, when the project is complete) for IT. Both parties have worked together to create a performance management and metrics management hierarchy that allows the company to assess the performance of individual facilities, and track any associated continuous improvement efforts. Through real-time access of its manufacturing data, as well as contextualized key performance indicators (KPIs) as defined by Worthington manufacturing leadership and captured in Oracle Manufacturing Execution System for Discrete Manufacturing, the company is much more knowledgeable about its production processes. It's tracking scrap rates and holding costs as well as overall improvements to business performance in Oracle. In the past two years, overall equipment effectiveness (OEE) has jumped 41%, and tons per scheduled hour has increased 60%.

A Look to the Future: Oracle Is Deepening Its Manufacturing Operations Functionality

Oracle shared details about future enhancements and product offerings for process and discrete manufacturers:

• For discrete manufacturers seeking deeper MES support, Oracle will enhance the serialization functionality in R12 Oracle Manufacturing Execution Systems. New capabilities for linking a serialized part or subassembly to all aspects of a job and work order are forthcoming. Additionally, there will be enhanced labor-costing functionality to help tie shop-floor workers to specific production tasks.
• Future versions of Oracle Process Manufacturing will support better collaboration with contract manufacturers by allowing brand owners visibility into inventory and quality levels. Initially, there will be functionality for electronic data interchange (EDI) transactions, but, over time, Oracle intends to deliver functional capabilities for creating purchase requisitions and batch orders directly, as well as for generating bills of lading (BOL), at the contract manufacturer.
• Oracle plans to deliver a unified reporting capability for operations intelligence, leveraging Oracle Hyperion Enterprise Performance Management, Oracle Business Intelligence Enterprise Edition (OBIEE) and Oracle Exalytics atop the current Oracle MOC product. Some of the prebuilt analytics scenarios include job costing, produce to plan and resource utilization modeling.
• A dedicated e-kanban solution has been built. It links with master production schedules, forecasts and real-time production data to manage multiple kanban signals and cards simultaneously, providing a multiline and site view of inventory consumption. Users can track material consumption at a detailed product attribute level, allowing them to link to the recipes and bills of materials (BOMs). This creates potential for automated backflushing, should it be integrated with Oracle MES. It also has OBIEE-based dashboards for inventory health and lead times.

What about Oracle Fusion Applications? Oracle is just starting to examine delivering Fusion Applications for manufacturing operations. Oracle Fusion Middleware (OFM) and Oracle Fusion Distributed Order Orchestration (DOO) are available today to orchestrate the flow between multiple order capture systems, and synchronize multiple fulfillment solutions. Oracle's plan to introduce manufacturing capabilities is to start with functionality for contract manufacturing support in Oracle Fusion v.2 and build upon that with industry specificity (such as copackers in food and beverage) in subsequent releases. Specifically, Oracle Fusion Applications intend to use information from production environments (asset and capacity availability/capability information, for example) to provide decision support for where to best fulfill orders in the supply network.

The vision of a product supply network platform is commendable and should appeal to many customers, especially Oracle's small to midsize customers, who are outgrowing less scalable manufacturing resource planning (MRP) and ERP systems, but also need more detailed manufacturing operations functionality. Although Oracle has proven it has the technological chops with its existing manufacturing applications, as well as support for mobile devices, sensors and scanners to deliver a foundational set of these capabilities, it will need to broaden them should it intend to involve outsourced manufacturing in the mix. Specifically, a foundation for data capture, visibility into inventory (such as raw materials, work in process and finished goods), and detailed tracking and tracing of product genealogy data is needed — and can be provided with Oracle's current applications today. Understanding the core technological requirements and product versioning to reap these future capabilities is also a requirement.

Despite offering substantially deep capabilities across a broad cross-section of manufacturing styles, Oracle's go-to-market strategy for manufacturing operations remains a hurdle. It must build mind share of its capabilities versus other independent software vendors in the manufacturing operations space (many of which are Microsoft-based). Although Oracle has a credible TCO story of augmenting Java-based ERP applications with deeper, integrated manufacturing functionality, it still must contend against stand-alone manufacturing operations providers in manufacturing environments, where a high degree of changeover, product complexity and detailed process traceability requirements are the norm. Furthermore, although Oracle MOC is backward-compatible to older versions of Oracle E-Business Suite and JD Edwards applications, reaping the benefits of an integrated MES requires being on the latest version of Oracle E-Business Suite. This doesn't rule out the ability to run Oracle MES as stand-alone on a separate instance. In these instances, the companies seeking deeper manufacturing functionality might have to wait through the early stages of upgrade and reimplementation efforts, which typically don't have MES as a part of the first phase.

The Bottom Line

In recent years, Oracle has continued to build on its strength of enterprise and extended supply chain systems by quietly evolving deep functionality for manufacturing. It should be appealing to manufacturers in the process and discrete industries seeking a one-stop shop to IT-enable their production operations.