Mfg. Operations Standards Need to Converge into a Manufacturing Application Integration Framework Charlie Gifford Director Lean Production Management

Agenda “What are the tough implementation problems (infrastructure, standards) that must be solved to make “smart assembly” a reality?” State of 21st Century Plant and Production Mgt. Technology Challenges for B2M and B2B Interoperability Maturity Model Significant Events in Mfg Operations Standards What is Business-to-Manufacturing Integration? A View into an Evolving Manufacturing Application Framework 5 minutes of Discussion

GE’s Standards Liaison for Manufacturing Operations Charlie Gifford, Director of Lean Production Management Chairman, ISA95 Best Practices Working Group Chairman, ISA95 Part 4 Quality Test Ops Mgt Working Group Voting Member, ISA88 & ISA95 Committee ISA95 Representative, ISA95/SCOR Alignment Working Group Information Member: ISA99 GE Representative, Mfg Interoperability Guideline Working Group GE Representative, MESA Technical Committee Director, ISA Computer Technology Division 97-99 GE Representative, SCOR MAKE Committee Chairman, Editorial Board, Industrial Computing Magazine 98-02 Published over 35 papers on Industrial Computing Standards Work: ISA84, 88, 95, MESA, SCOR, Many DOD Standards

Aligning Mfg. Capabilities to 21st Century Challenges Mandates Change… 20th Century Manufacturing Flow Customers Suppliers Manufacturers Dist Retailers Supplier Exchanges Logistics Exchanges Customer Exchanges Virtual Mfg. Logistics Providers CMs Copyright @2004 AMR Research: All rights reserved.

Business Evolves into Configurable Demand-Driven Supply Chains Need: Production Capability Customer DC Supplier Plant Customer DC Supplier Customer DC Supplier Customer DC Supplier Customer DC Copyright @2004 AMR Research: All rights reserved. Customer DC – Dist. Channel Order to ship 48 hours – sold today, production order tomorrow, ship following day Production tracks demand closely – implications for manufacturing – DFM, product rationalization, (Schneider NA – switches) Production optimized for batch size of 1 – project payback anticipated 3 years – actual achieved 1X return in 6 months. MES/automation project. 1994

Evaluate: Customer Value + OTD + Configured Production Capability = Profit Margin Copyright @2004 AMR Research: All rights reserved. 21st Century Manufacturing Enablers: Flexibility & Real-Time Visibility

Challenges of B2M and B2B Communication and Processes Many different applications across the enterprise doing the same function No enterprise wide application and information architecture Several versions of “enterprise-objects” or language for Product, Customer, Order, etc. This is a good news / bad news message The good news is that as organizations, most everyone is in the same boat. The bad news is that most everyone has a big problem with applications. Legacy is a big issue to everyone. So we are all in the same boat.

Challenges of B2M and M2M Integration Effective and Flexible Mfg. Operations …..HARD TO DO! Various Forms of the MES / ERP solution: Industry-specific production types Mixture of work order types across plant Speed and Volume of Throughput Standardization of work flow “best practices” Must Allow Change in Production Processes Without requiring change in logistics system Provide a clear demarcation of MES / ERP responsibilities and functions Business Logistics Manufacturing Operations

Technology S Curve: Challenge Explained Also Applies to Methods Development: Delivery, Training, User, Support and Change disciplines HMI / SCADA / PLC ERP SCM MES / PM It is against this backdrop that global manufacturers are getting back to the basics and focusing attention on their core manufacturing capabilities. Why now? Fortune 1000 manufacturers have been in the midst of massive ERP rollouts and consolidations – these are wrapping up and businesses are slowly discovering that ERP alone is not enough to achieve the level of operational excellence many had hoped for – or been promised. Companies have also been working to lean out their supply chains and procurement processes, and are awakening to the realization that manufacturing – or you can think of is as the ability to reliably supply product into these lean supply chains - is a critical capability that’s been starved for investments for nearly a decade. So if you look at what the gating factor is for making that next leap in operational excellence, it boils down to manufacturing itself. There’s been a lot of talk about demand visibility and the impact of demand visibility on performance. In fact, benchmarking studies we’ve done here at AMR show that slight increases in demand visibility yield substantial improvements in what we call “perfect order” performance – and profitability. Industry leaders have figured this out, but when you look at the leaders, they’ve also invested in the manufacturing capabilities needed to respond to the demand. So the real takeaway here is that even demand visibility isn’t enough if you can’t respond to that demand with high quality products out of the gate. In short – you can have the best demand visibility in the world, but it’s not going to matter if you can’t get a quality product out the door.

2006 Top Strategic Platform Investments Focus on Mfg Operations! Customer Management 14% 11% 34% ERP 39% Product Lifecycle Management 5% 4% Sourcing and Procurement 3% 3% Supply Chain Management 15% 12% Manufacturing 21% Operations 22% Desktop software 9% 10% It is against this backdrop that global manufacturers are getting back to the basics and focusing attention on their core manufacturing capabilities. Why now? Fortune 1000 manufacturers have been in the midst of massive ERP rollouts and consolidations – these are wrapping up and businesses are slowly discovering that ERP alone is not enough to achieve the level of operational excellence many had hoped for – or been promised. Companies have also been working to lean out their supply chains and procurement processes, and are awakening to the realization that manufacturing – or you can think of is as the ability to reliably supply product into these lean supply chains - is a critical capability that’s been starved for investments for nearly a decade. So if you look at what the gating factor is for making that next leap in operational excellence, it boils down to manufacturing itself. There’s been a lot of talk about demand visibility and the impact of demand visibility on performance. In fact, benchmarking studies we’ve done here at AMR show that slight increases in demand visibility yield substantial improvements in what we call “perfect order” performance – and profitability. Industry leaders have figured this out, but when you look at the leaders, they’ve also invested in the manufacturing capabilities needed to respond to the demand. So the real takeaway here is that even demand visibility isn’t enough if you can’t respond to that demand with high quality products out of the gate. In short – you can have the best demand visibility in the world, but it’s not going to matter if you can’t get a quality product out the door. Most Important (n=442) Largest Dollar (n=439) Source: AMR Research 2006 IT Spend Survey

Interoperability Maturity Models Applied to Logistics and Operations Systems Level of Information System Interoperability (LISI) Framework scopes connectivity level for technical interoperability Does not account for system response required for mfg. workflows And other organizations even up to the Department of Defense had tried to put together interoperability measurements for all parts of a system. Dept. of Defense

Efforts Now on How to Model Systems to Business Process Before Going Live Levels of Conceptual Interoperability Model (LCIM) provides a framework for planning your data before modeling your application And a group close to our home office in Charlottesville Virginia, is trying to put together a model for you to access your data before you even put together your system for modeling. Everyone knows that a project that is planned ahead and modeled before implementation usually goes a lot smoother at time of installation. Virginia Modeling, Analysis & Simulation Center Old Dominion University

Lean Manufacturing Transformation Road Map Common ISA-95 Definition of Work Unit and Flows and their Resources “Leans Out” Business Tools and Processes Single Piece Flow, Line Balancing and Thoughput Analytics, Reporting, Alarm & Event Shop Loading, Scheduling, & Dispatching Method comparisons of Activities and Work Budge Cost Estimating Standard Costing or Activity Based Costing Metrics Labor performance measurement and control Manpower and production requirements Payment by results (incentives) Business Cost justification Simplified PLM (Standard Design & Planning for Methods for Product, Manufacturing & Quality) MOM Architecture Administration & Project Management Build Single Schema to Accelerate

Standardization Effect of Mfg. Application Framework S =Standardization I = Improvement Key elements behind standardization are: Takt time scheduling Standard Work towards single schema & process Route & Recipe verification process Change mgt. process The Lean MES Improvement Cycle, graph below, illustrates the typical basic process used to continuously improve the manufacturing environment and conduct change management as new products, new technologies, and market changes alter the optimized environment. Effect of ISA95 together with Lean process and 6 Sigma production improvements

Lots of Standards Convergence Activity: 10+ Years of Work Moves toward Product

OMAC-ISA Activity

An Integration Evolution: MIG WG Manufacturing Domain Mapping Data Modeling: Real-Time Data Aggregation vs. Business Process Transactions OPC UA OAGIS, SCOR Level 5+: Inter-Enterprise OAGIS, SCOR Level 4+: Enterprise MIMOSA Hybrid ISA-99 Discrete Process Level 3: Manufacturing Operations ISA-95 ISA-88 OAGIS B2MML OPC: DA, HDA, A&E OMAC Levels 2, 1, 0: Machine / Plant Work

Operations Management ISA-95 & Purdue Hierarchy Model Defines MOM and ERP+ Domains for Information Exchanges Business Planning & Logistics Plant Production Scheduling, Operational Management, etc 4 - Establishes the basic plant schedule - production, material use, delivery, and shipping. Determines inventory levels. Time Frame Months, weeks, days ISA 95.01, .02, & .05 Standards 3 - Work Unit and Flow Defined. Work flow / recipe control produces desired end products. Analyzes Work Data, Maintains records and optimizes the production process. Time Frame Days, Shifts, hours, minutes, seconds Manufacturing Operations Management Dispatching Production, Detailed Production Scheduling, Reliability Assurance, ... ISA 95.03, .04 & .06 Standards 2 - Work unit (operation): Monitor, supervisory control and automated control of the production work process Batch Control Continuous Control Discrete Control 1 - Sensing of production work process, manipulate the production work process 0 - The actual production work process

Manufacturing Application Framework and Transformation Methodology Functional Segregation & Metrics by Scenarios and Domain Functions & Data Flows of Interest Supply Chain & Mfg. Scenario & Metrics Domain Definitions QA Service R&D Inbound Logistics - Mfg. Ops. Production Package Inputs (Supplier) Conversion (Mfg.) Distribution Consumer Material Prep Out- bound Mkting & Sales Assembly Metrics Construction Categories for Information Analytics Information Data Model, Objects and Definitions Manufacturing Use Case Metrics Use Cases and Transaction Set Construction Company Production Canonical Schema From ANSI/ISA-95.00.01-1995 Copyright ISA 2006. Used with permission. www.isa.org

ISA-95 Functional Enterprise-Control Model Procurement (5.0) Production Scheduling (2.0) Material and Energy Control (4.0) Product Inventory Control(7.0) Product Cost Accounting (8.0) Quality Assurance (6.0) Shipping Admin (9.0) Order Processing (1.0) Control (3.0) Maintenance Management (10.0) Research Development & Engineering Marketing & Sales ISA S95 Part 1&2 Remind them that the ellipses are functions, the solid arrows indicate information flows that are defined, the dotted arrows indicate information flows that are not defined in the model. The overlapping shape is really where the scope of manufacturing operations exists, this includes some of the activities of maintenance management, QA, material & energy control, scheduling, and product inventory control (as required to meet the goals of regulatory compliance, safety, and quality) Order processing Production scheduling Production control Material and energy management Procurement Quality assurance Product inventory control Product cost accounting Product shipping administration Maintenance management Research development & engineering Marketing & sales From ISA-95 Copyright ISA 2004. Used with permission. www.isa.org

Production Capability Production Performance ISA 95: 4x4 Object Model Defines Production Work for B2M Data Exchanges 4 Resource Categories 4 Information Categories Resources Product Definition Product Product Time Production Capability Capability People Equipment Materials Production Schedule Production Performance Production Structure / View Segments From ISA-95 Copyright ISA 2004. Used with permission. www.isa.org

First, Lets Understand Primary Drivers for MOM / ERP+ Segregation Requirements Work Flow Complexity Matrix Production Types Discrete Manufacturing Batch Processing Continuous Processing Work Order Types Engineer-to-Order (ETO) Make-to-Order (MTO) Make-to-Stock (MTS) 9 Mfg. Scenarios (with hybrids) of Production and WO Types Each have a specific set of business processes and rules Contributors: Legacy, Speed, Volume, Size, Compliance, SKU Count Packaging & Assembly Complexity Production Mtl. Prep Complexity= interfaces (ERP, Quality, Maintenance, PLM, Inventory), Support processes (WI, CAPA, CID, Scheduling, Maintenance), 1X to 3X, Custom vs. Configuration. The work flow data model changes as the WIP matures across the plant.

Level 2 Process Control/ Plant Work Interoperability Interface Depends on Production Environment, Industry, Products… Production Capability Performance Schedule Product Definition D/B-ETO Detailed Production Scheduling B-MTO Production Resource Mgt. Production tracking B/P-MTO Production Dispatching Production Performance Analysis P-MTS Product Definition Mgt. Production Data Collection P-MTS Production Execution Level 2 Process Control/ Plant Work From ISA-95 Copyright ISA 2004. Used with permission. www.isa.org

Level 4+: Extended Enterprise System Function Segregation & Interoperability Determines Lean Performance ISA 95.03 “- Part 3: Activity Models of MOM” Maintenance Production Quality Test Inventory Level 4+: Extended Enterprise Maintenance Definitions Maintenance Capability Maintenance Request Maintenance Response Product Definition Production Capability Production Schedule Production Performance Quality Definitions Quality Test Capability Quality Test Request Quality Test Response Inventory Definitions Inventory Capability Inventory Request Inventory Response B2M Detailed maintenance scheduling Detailed production scheduling Detailed quality test scheduling Detailed inventory scheduling Maintenance resource management Maintenance tracking Production resource management Production tracking Quality test resource management Quality test tracking Inventory management resource Inventory tracking U Maintenance dispatching Maintenance analysis Production dispatching Production performance analysis Quality test dispatching Quality analysis Inventory dispatching Inventory analysis Maintenance definition management Maintenance data collection Product definition management Production data collection Quality definition management Quality test data collection Inventory definition management Inventory data collection Maintenance execution Production execution Quality test execution execution Inventory What user execute what function and what system executes what function in the mfg ops workflows? Level 2: Plant Work Manufacturing Application (Use Case) Framework (MAF) System Architecture Must Support Continuous Improvement Must Allow Change in Production Processes Clear demarcation of MOM / ERP+ responsibilities & functions From ISA-95 Copyright ISA 2004. Used with permission. www.isa.org

Current State of Integration Mostly at the data level Mostly point to point Custom program interfaces or flat file exchange Grows at exponential rate Our (OAGi) experience in seeing hundreds or more organizations tell us that most integration is done at the data level today. (not process). Also people are doing point to point connections, uniquely to each business partner, even in the EDI world. Because this work is all custom, the model grows according to the N-squared Model. This leaves us all in the same place of trying to break out from this dilemma. We are spending so much on maintaining what we have, we have no money to fix the problem. Just maintain status quo.

Integration Technology Evolves From Data to Process Level Capabilities… Integration Architecture Patterns Point to Point (Custom) Enterprise Application Integration Business Process Management Message Oriented Middleware Object Brokers Service Oriented Architecture Continually Evolving Data Replication & File Transfer Extract Transform Load (ETL) Enterprise Service Bus The preferred template works with a wider margin allowing easier readability and a cleaner, more professional look. © CSC 2005 All rights reserved. Application Servers Workflow Web Services

BUT….Semantic Layer in Integration is Lagging Interoperability requires interfaces to be standardized. Only 5% of the interface is a function of the middleware. The other 95% is a function of the application semantics. (Gartner Group) 95% 5% Application Integration Semantics Messaging and Transport Services

OAGIS® 9.0 Scope Provides Business Semantics Domains Addressed eCommerce 10 Years in the Field Manufacturing Logistics CRM ERP 70 Business Scenarios, 434 Messages (BODs) 77 Nouns (Common Objects) & 12 Verbs Defined 7 Workgroups of new Content More localization for more International support UN/CEFACT/ISO compliant ISO 11179, CCTS 2.01/ISO 15000-5, TBG17 BIE/ABIE

OAGIS B2M Integration: ISA95/OAGIS Convergence Plant Functions Product Definitions and Production Capabilities Production Orders WIP and Inventory Status Order Completion & Resource Consumption BODS Sync/Get/Show ItemMaster Sync/Get/Show Production Order Get/Show/Update Inventory Count Get & Show Consumption Sync/Get/Show Inventory Sync/Get/Show Routing Get/Show/Confirm Inventory Issue Allocate Costing Activity Sync/Get/Show Unit of Measure Group Sync/Get/Show Dispatch List Issue/Receive Inventory Movement Update Inspection Sync/Get/Show Bill Of Material Sync/Get/Show Maintenance Order Get/Show/Update WIP Confirm Get/Show/Sync Engineering Change Document Sync/Get/Show Planning Schedule Process WIP Merge Sync/Get/Show Engineering Work Document Sync/Get/Show Sequence Schedule Process WIP Move Show Shipment Schedule Sync/Get/Show Planning Schedule Sync/Get/Show Employee Schedule Process WIP Recover Show Shipment Sync/Get/Show Sequence Schedule Process WIP Split Get/Show/Update Picklist Sync/Get/Show Inspection Get/Show WIP Status Time & Attendance

MAF Best Practice Transformation Methodology Utilizes ISA95 with other Models throughout Best Practices ISA95/MESA BP Working Group: Book 1.0, December 2006 Step 1: (Define) Train Staff on Technical Applications used to benchmark & design business process in Methodology (Steps 2-4) Step 2: (Define, Measure, Analyze) Structured Mfg. Ops. Assessment and Schema Migration Plan Step 3: (Analyze, Improve, Control) Accelerated MOM Application Implementation & Transformation Step 4: (Analyze, Improve, Control) Life Cycle Management of MOM Application, Interfaces & Metrics

Smart Assembly Need Methods for Schema, Process, & Lean 6 Sigma Transformations Interoperable MOM / ERP solutions require consistent: Production Data Model and Schema based on Work Definition Functional and Data Exchange Models Consistent Message Structure from M2B and B2M Methodology for MOM / ERP integration Single Production Schema Reinforces Lean practices such as: Standard work flow practices across MOM Activities: Production, Quality, Maintenance, & Inventory Operations Schedule/Dispatch, Data entry methods, CID, ECO, Routes, etc. Cross-training operators and mechanics: Common work definition for operations and resources Single XML production schema across all MOM applications simplify Data Collection, Analytics, Interfaces and Reporting

Questions? Charlie Gifford charlie.gifford@ge.com Director-Lean Performance Mgt. GE Fanuc America Chairman, ISA-95 Best Practices Working Group