The Perfect Plant

October 2006
What is a Perfect Plant?

How to I drive to a Perfect Plant

Capability Examples

Customer Success
 Contents

„ What is the Perfect Plant?

„ Quantifying the Perfect Plant (KPIs)

„ Pluses and Minuses of the perfect plant “the challenge and

reward”

„ Where the Industry is- Benchmarks?

„ Achieving the Perfect Plant with:

„ Asset Utilization,
„ Operations Planning
„ Manufacturing Execution

„ Enablers to reach the goal

© SAP Labs 2006, Draft – Confidential / 3

 The Perfect Plant

The Perfect Plant is the ultimate goal to optimize utilization of your

assets. In the Perfect Plant you have visibility into all operations
including production performance and your assets, providing a 360
degree view of your operations. This visibility into your plants provides
the ability to respond faster to operational issues and minimize impact to
your business and bottom line.

© SAP Labs 2006, Draft – Confidential / 4

 The 3 Pillars that must be aligned to enable the Perfect
Plant

The Perfect Plant

Perfect Plant Components and Influencers
Increased Profit
Margins
Asset Performance
and Utilization are monitored and
events are triggered automatically.
EAM processes are optimized and all
asset content is available in a single
source. EAM process are tightly linked
to Manufacturing Processes

Demand Operational Supply

Planning Manufacturing
Execution
is monitored and nearly event
Asset Manufacturing free due to proactive monitoring
and automated event handling
Performance Execution that is tightly coupled with EAM
and the enterprise

Improved Quality Improved Compliance Operational Planning

Adjustments are not driven
primarily by unplanned events
in manufacturing but rather by
demand shifts and other
Reduced Raw factors. Manufacturing is able to
Material Costs mange these changes more
rapidly and reliably.

What can really be controlled within the plant?

© SAP Labs 2006, Draft – Confidential / 5
 Quantifing the Perfect Plant
What’s your measure of success?

„OEE

„Asset Utilization

„Asset Reliability

„Yield
Not one measure can show
„Schedule Compliance a complete view operations

„Assay/Quality Index

„Production Volumes/Throughput

„Fill Rate

„Costs per unit/hour

„Customer satisfaction and on-time delivery

© SAP Labs 2006, Draft – Confidential / 6

 Benchmarks Per KPI Per Industry become the catalyst for driving
to the Perfect Plant

Example- OEE

OEE measures

World Class is considered to be 85%

Overall Equipment Effectiveness

OEE Factor World Class

Availability 90.0% Asset Performance

and Utilization Influences
Contribute to OEE
Performance 95.0% Availability and Performance
as well as Quality and
Quality 99.9% Production Volumes

Overall OEE 85.0%

© SAP Labs 2006, Draft – Confidential / 7

 Key Opportunities to Support the Perfect Plant

Key Strategic Key Areas of

Key Value Drivers
Goals Opportunity
„ Manage raw material variability in line with customer expectations
„ Increased visibility results in right material – right place – right time
1. Raw Materials „ Increased control on the use and storage of raw material
„ Reduce spend on expedited production, labor and freight costs
„ Reduce wasted energy in mechanical and electrical systems
Improve Cost
2. Energy „ Reduce energy loss due to improper PM frequencies in air / steam systems
Structure „ Maximize use of all available energy

„ Reduced maintenance labor cost from improved scheduling and execution

3. Maintenance „ Enhanced knowledge management, skills sharing and training effectiveness
Materials & Labor „ Reduced MRO inventory levels and increased turns
„ Improved supplier performance and sourcing rationalization
„ Enhanced customer satisfaction & retention due to accurate order delivery dates
Increase
4. Mfg Planning & „ Detect & resolve manufacturing exceptions minimizing rework & overtime
Operations
Execution „ Decreased inventory and higher asset utilization due to optimal planning
Efficiency „ Increased efficiency from optimal allocation and tracking of labor and resources

„ Increase asset uptime through improved maintenance planning and scheduling

Manage Asset 5. Asset Availability and faster maintenance response times
Performance & Efficiency „ Increased availability due to increased effectiveness of preventive and predictive
maintenance techniques

„ Reduced number of EH&S incidents and associated costs

6. Compliance „ Lower overall regulatory compliance costs with increased labor productivity
„ Enhanced management of hazardous goods, disposal, waste & emissions
Drive
Compliance „ Decreased variability increases product quality and customer satisfaction
7. Quality „ Proactive problem & variance detection and management of quality issues
„ Enhanced quality compliance supporting continuous quality improvement

© SAP Labs 2006, Draft – Confidential / 8

 Key Opportunities to Support the Perfect Plant

Key Strategic Key Areas of

Key Value Drivers
Goals Opportunity
„ Manage raw material variability in line with customer expectations
„ Increased visibility results in right material – right place – right time
1. Raw Materials „ Increased control on the use and storage of raw material
„ Reduce spend on expedited production, labor and freight costs
„ Reduce wasted energy in mechanical and electrical systems
Improve Cost
2. Energy „ Reduce energy loss due to improper PM frequencies in air / steam systems
Structure „ Maximize use of all available energy

„ Reduced maintenance labor cost from improved scheduling and execution

3. Maintenance „ Enhanced knowledge management, skills sharing and training effectiveness
Materials & Labor „ Reduced MRO inventory levels and increased turns
„ Improved supplier performance and sourcing rationalization
„ Enhanced customer satisfaction & retention due to accurate order delivery dates
Increase
4. Mfg Planning & „ Detect & resolve manufacturing exceptions minimizing rework & overtime
Operations
Execution „ Decreased inventory and higher asset utilization due to optimal planning
Efficiency „ Increased efficiency from optimal allocation and tracking of labor and resources

„ Increase asset uptime through improved maintenance planning and scheduling

Manage Asset 5. Asset Availability and faster maintenance response times
Performance & Efficiency „ Increased availability due to increased effectiveness of preventive and predictive
maintenance techniques

„ Reduced number of EH&S incidents and associated costs

6. Compliance „ Lower overall regulatory compliance costs with increased labor productivity
„ Enhanced management of hazardous goods, disposal, waste & emissions
Drive
Compliance „ Decreased variability increases product quality and customer satisfaction
7. Quality „ Proactive problem & variance detection and management of quality issues
„ Enhanced quality compliance supporting continuous quality improvement

© SAP Labs 2006, Draft – Confidential / 9

What is a Perfect Plant?

How to I drive to a Perfect Plant

Capability Examples

Customer Success
 Achieving the Perfect Plant with Asset Utilization, Planning and
Manufacturing Execution all Aligned- The hill climb challenge

Operations Planning is influenced by the

The Perfect Plant
Variability in Asset Performance
Real-time monitoring
and Utilization as well as Collaborative OEE 85%
Collaborative
Manufacturing Execution Asset
Asset Mgmt
Mgmt Yield XX%
Utilization XX%
Predictive
Predictive
Maintenance
Maintenance Near
Near Real
Real Time
Time
Planning
Planning
Advanced
Advanced
Maintenance
Maintenance Shift
Shift
Asset Planning
Planning Automated
Automated
Performance Manufacturing
Manufacturing
Preventative
Preventative
and Utilization Maintenance
Maintenance Weekly Without event
Weekly Proactive
Proactive
Planning
Planning Manufacturing
Manufacturing

Monthly
Monthly Before the Event
Operations Responsive
Responsive
Planning
Planning
Planning Manufacturing
Manufacturing

Reactive
Reactive During the Event
Manufacturing
Manufacturing
Manufacturing
Execution After the Event
Unplanned
Events

© SAP Labs 2006, Draft – Confidential / 11

 Achieving the Perfect Plant Requires Asset Utilization to be
tightly coupled with Manufacturing Execution

The Perfect Plant

Asset Performance
Collaborative Real-time
and Utilization moved from traditional Collaborative
Preventative Maintenance to a Asset
Asset Mgmt
Mgmt OEE 85%
Collaborative Model that has Asset Consistent Quality,
Management tightly integrated with Predictive
Predictive Yields and
Manufacturing Maintenance
Maintenance Throughput
Predictable Utilization
Advanced
Advanced
Maintenance
Maintenance

Preventative
Preventative Manufacturing
Maintenance
Maintenance Automated
Automated
Execution
Monitoring
Monitoring
Linked with Asset
Management Before Event impacts
Proactive
Proactive production
Monitoring
Monitoring and tightly coupled with
Asset Performance and EAM
Issues alerted
Responsive
Responsive Before the Event
Monitoring
Monitoring has a major impact

Reactive
Reactive Issues Captured
Manufacturing Monitoring
Monitoring During the Event
Execution
Unplanned Issues reported
Events after the Event
Occurred

© SAP Labs 2006, Draft – Confidential / 12

The real challenges

Global Competitiveness is HERE placing tremendous

pressure on cost, reliability and responsiveness
„ Asset efficiency is a premium, but effective
comparative measures are difficult to achieve
„ Plants use copies of master data creating compliance
and quality issues
„ Production personnel lack the decision support
information to meet their targets
„ Business and financial impact of production
exceptions cannot be monitored or controlled at the
enterprise level

© SAP Labs 2006, Draft – Confidential / 13

Production & Operational Key Challenges

„ Remote Sites: Production sites in distant locations

difficult to integrate into Enterprise
„ Unplanned Events: production exceptions cannot be
monitored or controlled at the enterprise level.
„ Legacy Systems: Many remote sites contain older
systems with valuable data.
„ Data Transformation: Platforms produce enormous
quantities of data creating information management
nightmares. Key business indicators buried.
„ Human Integration: Relying on people to do low level
data integration not profitable
Deducing Business Performance from high volume, low
value data hidden in legacy/proprietary systems limits
improvement to the Perfect Plant Goal

© SAP Labs 2006, Draft – Confidential / 14

 Getting control of Operations is a key focus
in 2006

Production performance monitoring 18%

Customer 14% (yield, cycle times, OEE)
Management 11%
Execution of production orders 11%
34%
ERP
39% Shop floor work order/recipe 11%
Product Lifecycle 5% scheduling/sequencing
Management 4%
Business process integration with ERP, PLM, and 10%
Sourcing and 3%
LIMS
Procurement 3%
Asset maintenance and equipment reliability 9%
Supply Chain 15%
Management 12%
Product quality and compliance management 9%
Manufacturing 21%
Operations 22% Product and process traceability and genealogy 5%
9%
Desktop software
10%
RFID (Workflow Management) 5%

Most Important (n=442) Largest Dollar (n=439)

Compliant Introduction and Ramp Up of New 4%
Products in Manufacturing

Asset performance management 3%

Most Strategically Business Processes Driving

Important Software Manufacturing Operations Software
Investment for 2006 to Investments to address these
address these challenges challenges

Source: AMR Research 2006 IT Spend Survey Source: AMR Research

© SAP Labs 2006, Draft – Confidential / 15

 Initiatives Driving These Efforts

Production performance monitoring 18%

(yield, cycle times, OEE)

Execution of production orders 11%

Shop floor work order/recipe 11%

scheduling/sequencing
Business process integration with ERP, PLM, and 10%
LIMS

Asset maintenance and equipment reliability 9%

Product quality and compliance management 9%

Product and process traceability and genealogy 5%

RFID (Workflow Management) 5%

Compliant Introduction and Ramp Up of New 4%

Products in Manufacturing

Asset performance management 3%

Business Processes Driving

Source: AMR Research Operations Software
Investments to address these
challenges
© SAP Labs 2006, Draft – Confidential / 16
 Why strive to for the Perfect Plant

„ Significant investments in manufacturing assets.

„ Companies have made significant investments in systems to

manage individual assets and processes.

„ Existing assets must be leveraged in lieu of making further

investments to maintain profit margins

“Make more with less.”

© SAP Labs 2006, Draft – Confidential / 17

 The Challenge-

Multiple functions must be aligned,

Various stages of the functions

© SAP Labs 2006, Draft – Confidential / 18

 Manufacturing and Enterprise business processes need to be
synchronized … the Plant to Business (P2B) Challenge

How are we hitting our targets?

„ Fixed and Variable Asset Utilization
? „ Total Cost of Production and Variance
„ Labor and Resource Productivity
ERP „ Order Fill Rates and Cycle Times
DISCONNECT

DISCONNECT
What’s happening during every shift?
„ Asset Performance and Reliability Trends
EAM/ ? „ Capacity availability and utilization
„ Product Genealogy tracking and QM
Operations „ Process Variability
DISCONNECT

DISCONNECT
What’s happening at each line?
„ Predictive Maintenance requirements
? „ Machine Breakdowns / Unplanned Downtime
Plant Level „ Operating Efficiencies
„ Quality Index
SFAC - Plant Floor Automation and Control Systems
EAM-Enterprise Asset Management
DCS – Distributed Control Systems
© SAP Labs 2006, Draft – Confidential / 19
 Addressing these needs requires integrating the real-time Plant Floor with
the Enterprise and poses serious challenges….

Enterprise
Disparate Plant System Landscape
A Typical plant will have between 10 and 50 Plant
floor systems

DISCONNECT
A multi-site producers will have between 40 and
700 Plant systems across its enterprise Factory

“Less than 1% of respondents indicated that plant level data is

automatically integrated with ERP with no manual intervention”
Managing Automation and AMR Research
September 2005, Customer Survey

© SAP Labs 2006, Draft – Confidential / 20

What is a Perfect Plant?

How to I drive to a Perfect Plant

Capability Examples

Customer Success
 Enterprise Asset Management Landscape and value to produce
the Perfect Plant- Just one example
Together, EAM and Production
Data provide a comprehensive
solution that includes asset
connectivity, performance
monitoring and maintenance
execution extending the value of
SAP EAM.
Aggregation of information for execution of common EAM
transactions from a single point.
Providing views of key information such as BOMS, maintenance
work orders and materials, vendor manuals.
Leverage performance content provided to help drive increased
decision support and EAM maintenance execution
had automatically alerted that there was a Preventative
Maintenance Notification and operations

SAP Enterprise Portal Mobile Devices

Manufacturing xMII
Execution Plant User Interface
Performance and Portal
provides intelligence
over the performance
data. xMII can monitor
for asset performance
trends and trigger
alerts in SAP EAM Manufacturing EAM Mobile Target Users
such as a Maintenance Operations Maintenance Operations
Notification or Users Users and
dashboard before bad Maintenance
product is produced .
xMII provides
Users
integration with and
visualization of key
Production Intelligence
performance data from
plant level systems that
can then be viewed in
Production Integration SAP EAM Source Systems
VIP.

SAP ERP

Disparate plant level systems

© SAP Labs 2006, Draft – Confidential / 22
 Scenario Work Flow

1 Manager receives a machine breakdown

alert in the Event Alert Inbox

2 Double-clicks on the alert to open page

for creating maintenance notification

3 Verifies details automatically filled in by

the system

4 Fills in additional information and posts

to SAP

5 Notification gets created in SAP PM and

worked upon by Maintenance

6 Receives machine repaired alert in Event

TECHNOFUNCTIONAL OVERVIEW Alert Inbox & maintenance notification
gets closed in SAP PM

© SAP Labs 2006, Draft – Confidential / 23

© SAP Labs 2006, Draft – Confidential / 24
 Prod_operator1

********

© SAP Labs 2006, Draft – Confidential / 25

© SAP Labs 2006, Draft – Confidential / 26
© SAP Labs 2006, Draft – Confidential / 27
© SAP Labs 2006, Draft – Confidential / 28
© SAP Labs 2006, Draft – Confidential / 29
© SAP Labs 2006, Draft – Confidential / 30
© SAP Labs 2006, Draft – Confidential / 31
© SAP Labs 2006, Draft – Confidential / 32
 stopped moving after power changeover

© SAP Labs 2006, Draft – Confidential / 33

© SAP Labs 2006, Draft – Confidential / 34
 Productionmanager

********

© SAP Labs 2006, Draft – Confidential / 35

© SAP Labs 2006, Draft – Confidential / 36
 John

This problem is repeating quite often

© SAP Labs 2006, Draft – Confidential / 37

© SAP Labs 2006, Draft – Confidential / 38
© SAP Labs 2006, Draft – Confidential / 39
 Conclusion

Pre SAP xMII With SAP xMII

1 Manager receives a machine breakdown
Unavailability of alert in the Event Alert Inbox Real-time time visibility
information in real-time with minimum delays

2 Double-clicks on the alert to open page No need to logon to SAP

Log-on to SAP for which helps in simplifying
for creating maintenance notification
creating maintenance the process and increases
notification user acceptance

3 Verifies details automatically filled in by

Automatic data filling helps
All the data fields the system in improving the
needs to be filled productivity
manually

4 Fills in additional information and post to

SAP

No/ little visibility

regarding the
5 Notification gets created in SAP PM and Proper visibility leads to
maintenance worked upon by Maintenance creation of a responsive
notification and the environment
machine repair
status
6 Receives machine repaired alert in Event
Alert Inbox & maintenance notification
gets closed in SAP PM
© SAP Labs 2006, Draft – Confidential / 40
 SAP VIP – Collaborative Enterprise Asset Management

„ Provides a centralized
view of all asset
content
by employing role-
based, simplified
functionality

„ Extends SAP PM to
streamline work
processes.

„ Unifies critical
functions and
information into xMII
one workspace

„ Integration with xMII

to provide a holistic,
360 degree view of
asset and
maintenance

„ Portal-based solution
with over 50 iViews
provides speed-to-
value

© SAP Labs 2006, Draft – Confidential / 41

 VIP and xMII integration

© SAP Labs 2006, Draft – Confidential / 42

Customer Success Story

Pepsico

Deploying a Live Event Data

System to improve Plant
Performance

© SAP Labs 2006, Draft – Confidential / 43

 Pepsico
Improving Plant Performance thru a Live Event Data System
Business Overview
„ PepsiCo Corporation is a world leader in
convenient foods and beverages
„ Comprises Frito-Lay North America, PepsiCo
Beverages North America, PepsiCo
International, and Quaker Foods.
„ Over 50 manufacturing locations in North
America -153,000 employees worldwide
„ Annual revenues of $29 billion
Key Challenges
„ Key operational data dispersed across a variety
of enterprise systems
„ Lack of timeliness, accuracy and consistency
in reporting across the organization
„ Key performance indicators (KPIs) applied
inconsistently across plants
„ High contract manufacturing costs because of
less than acceptable plant efficiencies
© SAP Labs 2006, Draft – Confidential / 44
SAP Solution
„ SAP xMII
Why SAP xMII?
„ Pre-built connectivity to plant floor solutions
„ Allows leverage of existing infrastructure
„ Offers flexibility to meet future business needs
„ Provides high degree of usability for employees
„ Rapid deployment in as little as weeks per plant
Strategic & Tactical Goals
„ Improve margins by reducing contract
manufacturing expenses
„ Ensure consistent aggregation, analysis and role-
based visualization
„ Deliver timely, detailed, and accurate information
to empower production personnel for decision
making
„ Provide insight into data across enterprise and
plants to improve performance
 Pepsico
Improving Plant Performance thru a Live Event Data System

Value from the SAP xMII Solution:

„ Significant savings in material waste

„ Appreciable cost avoidance for contract manufacturing and new production

lines thru higher efficiency

„ Combined downtime reduction of 21% anticipated

„ Efficiency improvement of 25% expected by 2007 – world class

performance with anticipated savings greater than $ 200 MM

With SAP xMII in place, we are driving efficiencies to world-class performance

“ levels and that allows us to manufacture product in-house, which in turn, gives
us a competitive advantage.”

Ken Owens, Senior Consultant, Pepsico

Presentation at the SAP xMII User Group Conference,
Philadelphia, October 2005

© SAP Labs 2006, Draft – Confidential / 45

 Performance Optimization - PepsiCo
1. Equipment Status Changes and
6 associated Status Codes
immediately detected from
existing Shop Floor Automation
Systems
1 2 3 4 2. Status Codes are compared to
7
Maintenance System for
standard Event Descriptions
3. Status Codes are compared to
Operational Excellence / TPM
System for current acceptable
Cause Codes for that asset
4. Operators enter additional
5 commentary as needed
5. Maintenance can be alerted if
the issue is beyond the
operator’s abilities.
6. Real-time feedback on
performance based on standard
run rate and actual thru-put for
order in process
7. Every event, including
associated data, is captured for
further review and analysis –
only events over a certain
threshold are shown on-screen
/ or require operator input

© SAP Labs 2006, Draft – Confidential / 46

 Value from SAP in striving for the Perfect Plant

Improved Overall Equipment

Effectiveness (OEE) from 65% to 80%;
implemented in 120 days

Deployed SAP xMII in over 30 plants

globally for process improvement;
20 X ROI in the first two years

© SAP Labs 2006, Draft – Confidential / 47

 Conclusion

„The Perfect Plant is what most effects your ability to deliver

product effectively.

„Must have both asset centric and manufacturing centric resources

and processes aligned.

„Is achievable with incremental measures and awareness of what

you can influence.

© SAP Labs 2006, Draft – Confidential / 48