Global Specification Management for the Process Industries

1
Global Specification Management for the Process
Industries early findings on Best Practices

• Alison Smith
• Sr. Research Analyst
• Manufacturing Production Operations
• AMR Research
• asmith_at_amrresearch.com

2
Big drivers for manufacturing agility

• Global markets
• World-wide competition
• World-wide product visibility complex supply
  networks
• Standardized quality demographic products
• Technology
• Increasing demand for innovation shorter
  product lifecycles
• Time-to-market Time-to-volume plummeting NPD
  times
• Technology convergence - RFID
• Cost
• The China Price
• Six sigma, lean mfg
• Outsourcing
• Regulatory compliance
• Sarbanes-Oxley, 21 CFR part 11, Tread, WEEE,
  RoHS, etc

3
Manufacturing Processes will adapt to

• More Dynamic Supply Networks
• Fleet of Plants distributed production assets
• Ongoing reconfiguration of sources / destinations
• Network of suppliers, plants, co-packing,
  distribution many 3rd parties
• Better Short Term Demand Visibility
• Closed loop with SOP, frequent schedule
  adjustments in the plants
• Product segmentation, price management
• Shorter New Product Development Launch (NPDL)
• Global specification management
• Automated workflow for product spec packaging
  launch at plant
• Faster scaling and rollout to additional plants
  globally
• More product variants
• Global specification management, Retailer
  specific requirements (sizes, packing,
  promotion), Localization requirements (recipe
  labeling)

4
Brand equity management is more of a challenge
than ever before
Contract Manufacturers
Perfect Order Performance Right Product, Right
Place, Right Time, Right Price
Suppliers
Contract Manufacturers
5
Information velocity process traceability

• Escalates need for
• Near real-time exchange of key product/process
  requirements
• Performance feedback between business level and
  execution systems
• Requires
• Definition of key information (product
  specifications, process specifications, quality,
  compliance, performance, costing data)
• Who owns the master data?
• Delineation of functional ownership/stewardship
  whos going to synthesize the information, and
  what are the systems of record for each class of
  information?

6
AMRs research on global specification management
in Process Industries

• Active dialogues
• Industry leaders who have or are implementing
  global specification management systems
  Chemicals, Pharma, Biotech, CPG, FoodBev
• About
• Drivers, budgets, timeframes benefits
• Best practices project planning, implementation,
  team makeup, governance models, training
  rollouts
• Technology approach
• If you had a chance to do it again ?
• Key lessons learned

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Common specifications and business process
stakeholders
Product Lifecycle Management / Enterprise
Materials and Resource Planning

• Manufacturing (Bill of process, bill of
  materials, bill of equipment, bill of test)
• Raw Materials Specifications
• Equipment specification
• Supplier CoAs
• Intermediates Specification
• Process Specification
• Testing Specification
• Packaging Specification
• MSDS, labeling specs
• Delivery Handling specs
• Certificates of Analysis
• Site Recipe
• Master Recipe
• Control Recipe

• Fulfillment
• Retailer Specifications
• Product Information
• Delivery Handling Specs
• Certificates of Analysis

• Research Development of New Products or Product
  Variants to meet customer specifications
• Raw Material (ingredient)
• Specification
• Formula
• Process Specification
• Testing Specification
• General Recipe
• Packaging Specifications
• MSDS, labeling specs
• Delivery Handling
• Specs

8
Production asset-centric related business
processes are the largest consumers of
specifications
100
50
Suppliers
Customer
Warehousing, Transportation Logistics
Process Development/ Product Packaging
Product Development
Materials Management/ Procurement
Packing Co-packing
Production Production QA
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  Drivers by Industry Group Drivers by Industry Group Drivers by Industry Group Drivers by Industry Group
Business Drivers Food Beverage Consumer Packaged Goods Chemicals Pharma
Top Uniformity Strategic Sourcing Uniformity Compliance
Secondary Faster NPD L Faster NPD LCompliance Faster NPD L Uniformity Faster NPD L
Pain Points Managing variability seasonality, inherent variability in raw materials Regulatory rqmnts traceability, nutritional content labeling, allergens, warnings Margin optimization contain materials costs for raw materials and finished goods packaging promotions. Margin preservation price premiums for predictably performing to customer specifications. Depends on position in supply network. Regulatory compliance cGMP ramp to volume
Source AMR Research 2005 Global Specification
Management for Process Manufacturers A High
(Return) Road to MDM
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GSM project benefit potential is large
Categories of Benefits Instances Cited
IT consolidation Consolidated 60 globally distributed databases consolidated 48 disparate systems as result of acquisition consolidated 35 systems plans to eliminate separate packaging system database - can justify investment on retirement of legacy system alone.
Strategic Sourcing "Multiple" millions in material savings 3M on a single corrugated materials bid 20M annually on raw materials through strategic sourcing 500,000 annual savings on shipping alone attributed to availability of accurate case weight information
Clean Data for Procurement 13,000 obsolete/incomplete specifications identified case weights incorrect packaging systems and ERP out of synch 10 of specifications identified as incorrect/incomplete identified gross redundancies (35 unique specifications for identical ingredient)
Compliance Time to locate product/batch data reduced from days to minutes product registration data managed correctly and centrally nutritional/allergen content/warnings managed centrally for product labeling product traceability data managed centrally
Other Ready for UCCnet before WalMart executed European product launch before competitor 50 increase in general efficiencies through elimination of paper, redundant processes, correct information, workflows
Source AMR Research 2005 Global Specification
Management for Process Manufacturers A High
(Return) Road to MDM
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GSM project findings to date

• Initial project budgets start in 800K range
  more recent (w/in past 2 years) projects have
  initial budgets of around 2M
• Starting points vary (raw materials, ingredients,
  attributes versus finished goods view)
• Final costs approach 10M
• Timelines converge at 10 years no strong
  correlation between number of SKUs or number of
  specifications managed
• Manufacturing is not tightly integrated 90 of
  time

Global companies, multiple sites (5 85), 10K
100K product codes, various technology platforms
12
Production asset-centric related business
processes are the largest consumers of
specifications
100
50
Suppliers
Customer
Warehousing, Transportation Logistics
Materials Management/ Procurement
Process Development/ Product Packaging
Product Development
Packing Co-packing
Production Production QA
13
Consider the case of Global Recipe Management

• Processing information
• No equipment listed
• Used primarily for planning
• or investment decisions or
• activities

Today Process sheets delivered in electronic
form plant engineering manually transforms into
site, master and control recipes.
General Recipe

• Site-specific information
• In local language
• Based on local raw materials
• Considers site-specific storage
• constraints

Site (plant) Recipe
Site (plant) Recipe
Site (plant) Recipe
Site (plant) Recipe
Master Recipe
Master Recipe
Master Recipe

• Process cell-specific information
• Depends on equipment types/classes
• Template for control recipes

• Equipment-specific information
• Batch-specific information batch ID, batch
  size, raw
• materials used, processing steps

Control Recipe
ANSI/ISA-S88.01-1995 Batch Control Systems,
Part 1 Models and Terminology
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The information management challenge today
General Recipe Management Bill(s) of
Materials Bill of Assay General Recipe (Process
Sheet)
raw materials intermediates finished
goods ingredients attributes suppliers labelin
g specs equipment classes
Product Formulation Specification
Management
Local raw materials intermediates finished
goods ingredients attributes Local labeling
specs Site equip. specifications control
recipes local storage handling
Site Recipe Creation Management Bill of
Materials Bill of Process Bill of Equipment Bill
of Assay
Site Packaging Management Bill of Packaging
Materials Bill of Process Bill of Equipment
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The rapidly evolving application landscape

• Formulation vendors extending product offerings
  to encompass collaborative PLM processes
• ERP extending reach into manufacturing may
  require costly re-optimization
• Classic discrete PLM vendors consider morphing
  to support recipe/formula based products
• Best of breed specification management systems
  adding enterprise capabilities

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Emerging best practices

• Executive-level sponsorship
• Cross-functional design teams
• Invest heavily in the design and planning phase
• Design for greatest level of detail a bottom-up
  top-down approach is required
• Plan on using best of breed solutions to augment
  ERP/PLM
• Designate clear project ownership
• Allocate sufficient resources for implementation
  required to meet rollout timelines, budget, and
  MA activities
• Budget for training, training, and more training

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Common gotchas

• Transformation of unstructured specification data
  into structured data
• Schema design and organizational buy-in is a time
  consuming process.
• 2 years identifying consolidating unstructured
  data. More for schema design.
• Data cleansing
• 38 different specifications for water. Cleansing
  is time consuming and generally underestimated
  (no one wants to admit their data is that dirty!)
  
• The devils in the details
• Neglecting to design for scaling, units
  conversion, chemical compound data, packaging
  design details can result in large setbacks such
  as scrubbed project phases, significantly reduced
  scope, significantly higher costs.

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Great Global Specification Management Project
Quotes

• If we knew then what we know now we never
  would have done it no, just kidding .really
• Our real budget? It never would have been
  approved!
• Its like turning over a rock you have no idea
  what youre going to find

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• Today, global specification management is viewed
  as a business essential by these same
  companies.

Thank you!
Alison Smith asmith_at_amrresearch.com