Manufacturing Operations Management

The Next Generation of Manufacturing Systems

January 2008
Manufacturing Operations Management
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Executive Summary
The Manufacturing Execution System (MES) has outlived its original Research Benchmark
definition. Faced with dynamic market changes and competitive threats, Aberdeens Research
manufacturers are broadening their focus from execution within a single Benchmarks provide an in-
facility / factory to manufacturing operations management across the supply depth and comprehensive look
network. As a result, Best-in-Class manufacturers are turning to technology into process, procedure,
solutions that manage operations across maintenance, production, quality, methodologies, and
and inventory management, with the goal being to improve material technologies with best practice
utilization, asset utilization, and continuous improvement team effectiveness. identification and actionable
This will ultimately help manufacturers to reduce manufacturing costs and recommendations
improve the response to demand variability.

Best-in-Class Performance
The value of manufacturing operations management is tied to the results
attributed to its use. In the following analysis, Aberdeen uses three KPIs to
identify Best-in-Class performance in manufacturing operations
management. Across these metrics Best-in-Class manufacturers averaged
the following performances:
97% On Time Delivery (OTD)
89% Overall Equipment Effectiveness (OEE)
97% raw material utilization
This performance, when compared to Industry Average firms, accounts for
a 5% increase in OTD, an 11% increase in OEE, and an 11% increase in raw
material utilization. Clearly, the Best-in-Class are enjoying significantly lower
manufacturing costs, coupled with better customer service. The key to this
benchmark study is in determining just how the Best-in-Class are achieving
these results.

Competitive Maturity Assessment

Aberdeen's survey analysis shows that the firms enjoying Best-in-Class
performance shared several common characteristics:
Best-in-Class manufacturers are twice as likely as other
manufacturers to use automated data collection in conjunction with
data historians and manufacturing analytics.
Best-in-Class manufacturers are over four-times more likely than
other manufacturers to standardize KPI measurement, optimization,
and exception handling across the enterprise.
Best-in-Class manufacturers are more than 2.5-times more likely
than other manufacturers to link operational metrics with financials
and provide real-time role based visibility to decision makers.
Compared to the Industry Average, Best-in-Class manufacturers are
50% more likely to use Plant Floor Automation (PFA), 17% more

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Manufacturing Operations Management
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likely to use Quality Management Systems (QMS), 114% more likely

to use Manufacturing Intelligence (MI), 55% more likely to use
Advanced Planning and Scheduling (APS), and 56% more likely to
use Lean manufacturing.

Required Actions
The Scope of MOM has expanded beyond traditional MES, requiring the
following actions for manufacturers to achieve Best-in-Class performance:
Appoint an executive steering committee to define the strategy
around manufacturing solutions investments, Best-in-Class
manufacturers are 50% more likely than laggards to have done this.
Furthermore, these executive steering committees give the
responsibility of defining manufacturing solutions requirements to
the manufacturing line of business leadership, while giving joint
responsibility to both Manufacturing and IT for the deployment of
manufacturing solutions.
Plant floor automation and automated data collection are key
capabilities that serve as the building blocks for expanding and
investing in manufacturing operations. Best-in-Class manufacturers
are two-times as likely as laggards to automate data collection from
production process. Invest in these capabilities.
Establish event based real time interoperability to connect all of the
necessary business processes under the MOM umbrella quality,
maintenance, production, and inventory. This provides
manufacturers a common solution platform to standardize
processes and exchange information across the enterprise.

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Table of Contents
Executive Summary....................................................................................................... 2
Best-in-Class Performance..................................................................................... 2
Competitive Maturity Assessment....................................................................... 2
Required Actions...................................................................................................... 3
Chapter One: Benchmarking the Best-in-Class ..................................................... 5
Reducing Costs in the Face of Demand Uncertainty ...................................... 5
The Maturity Class Framework............................................................................ 6
The Best-in-Class PACE Model ............................................................................ 7
Top Strategies ........................................................................................................... 7
Chapter Two: Benchmarking Requirements for Success .................................... 9
Competitive Assessment........................................................................................ 9
Standardizing Processes.......................................................................................... 9
Knowledge Management ......................................................................................10
Implementing and Managing Manufacturing Solutions ...................................10
Gaining Visibility into Your Manufacturing Operations ................................11
Chapter Three: Required Actions .........................................................................15
Laggard Steps to Success......................................................................................15
Industry Average Steps to Success ....................................................................15
Best-in-Class Steps to Success ............................................................................16
Appendix A: Research Methodology.....................................................................17
Appendix B: Related Aberdeen Research............................................................19
Figures
Figure 1: Top Market Pressures ................................................................................ 5
Figure 2: Top Performers Earn Best-in-Class Status ............................................ 6
Figure 3: Strategic Actions .......................................................................................... 8
Figure 4: Technology Enablers .................................................................................13
Figure 5: Technology Interoperability ....................................................................14
Tables
Table 1: The Best-in-Class PACE Framework ....................................................... 7
Table 2: The Competitive Framework - Process .................................................. 9
Table 3: The Competitive Framework - Knowledge Management .................10
Table 4: The Competitive Framework - Organization.......................................11
Table 5: The Competitive Framework - Performance Management ..............11
Table 6: The Competitive Framework - Technology .........................................12
Table 7: The PACE Framework Key ......................................................................18
Table 8: The Competitive Framework Key ..........................................................18
Table 9: The Relationship Between PACE and Competitive Framework .....18

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Chapter One:
Benchmarking the Best-in-Class
Traditionally, manufacturing systems capabilities were built and configured Fast Facts
to address specific departmental needs. This often resulted in an inefficient Best-in-Class enterprises
use of internal resources as well as an increased cost of ownership. significantly out perform their
Commonly termed "islands of automation," information had to be competition in all three KPIs.
rationalized from disparate systems across organizational boundaries and These manufacturers enjoy:
company boundaries. In today's global manufacturing environment the
97% On Time Delivery
challenges companies face are significantly different than what they did
(OTD)
decades ago. This benchmark report will focus on the capabilities companies
are pursuing to bolster manufacturing efficiency by shifting focus from single 89% Overall Equipment
site or single functional technologies to enterprise applications that offer Effectiveness (OEE)
capabilities allowing them to manage global operations in a dynamic market
97% raw material yield
place.

Reducing Costs in the Face of Demand Uncertainty

The top two market pressures driving manufacturers to focus on
manufacturing operations management is the need to reduce manufacturing
costs and inaccurate demand forecasts (Figure1).

Figure 1: Top Market Pressures

Need to reduce manufacturing cost 63%

Inaccurate demand forecasts 44%

Need to maximize profitability 38%

Manufacturing process complexity 24%

Product proliferation / configuration 20%

Shrinking product lifecycles 9%

0% 25% 50% 75%

Source: Aberdeen Group, January 2008

The relationship between these two pressures is interesting; both clearly

touch on overlapping and interrelated aspects of Manufacturing Operations
Management (MOM). Manufacturing costs are associated with all the aspects
of manufacturing operations: maintenance, production, quality, and
inventory management. One of the ways to reduce these costs is to
optimize the amount of capacity and inventory buffers used. Another way to
reduce these costs is to improve the efficiency of production or quality
operations.

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The conflict occurs when manufacturers face increasingly inaccurate demand

forecasts; as the amount of uncertainty increases so do the optimal levels
for capacity and inventory. In such a situation, manufacturers must both
optimize demand uncertainty buffers and improve operational efficiencies;
otherwise costs could spiral out of control. To better understand how
exactly manufacturers reduce costs, often in the face of increasing forecast
inaccuracies, the analysis will continue by first identifying which
manufacturers are actually performing at the highest levels.

The Maturity Class Framework

Aberdeen uses three key performance criteria to distinguish the Best-in- "Our marketing department
Class from Industry Average and Laggard organizations. These are: forecasts volume and they have
been historically off.
On Time Delivery (OTD). Percentage of products delivered on Manufacturing is expected to
time as compared to total original commitment reduce cost by 10% year over
year. The focus of the company
Overall Equipment Effectiveness (OEE). Measured in percent is on implementing lean in all
as availability * performance * quality areas but it is most critical in
Raw Material Yield. Measured as a percentage of the total manufacturing to meet our cost
savings goals against inaccurate
material: raw material used for finished goods / total materials used
forecasts."
Respondents were divided among three categories based on their aggregate
~ Mitch Elkis, Site Leader
performances in these three metrics: the top 20% of performers (Best-in-
Lithia Springs
Class), the middle 50% (Industry Average), and the bottom 30% of
performers (Laggards). Figure 2 displays the aggregated performance of
Best-in-Class, Industry Average, and Laggard organizations.

Figure 2: Top Performers Earn Best-in-Class Status

BIC Industry Average Laggard

100% 97% 97%

92%
89%
87%

80% 81%
80%
71%
66%

60%
On Time Delivery Overall Equipment Raw Material Yield
Effectiveness

Source: Aberdeen Group, January 2008

Best-in-Class manufacturers realize higher performance results both in

customer metrics by delivering 97% of products promised on time as well as
internal plant metrics, by effectively utilizing assets (89% OEE) and raw
material (97% raw material yield). Which, when compared to Industry
Average firms, accounts for a 5% increase in OTD, an 11% increase in OEE,

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Manufacturing Operations Management
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and an 11% increase in raw material utilization. Clearly, the Best-in-Class are
enjoying significantly lower manufacturing costs coupled with better
customer service. The key to this benchmark study is in determining just
how the Best-in-Class are achieving these results.

The Best-in-Class PACE Model

Reducing manufacturing costs in the face of forecast inaccuracies can be a
daunting task. Table 1 summarizes some of the strategic actions, business
process capabilities, and technology enablers Best-in-Class companies have
implemented to address these market pressures.

Table 1: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers
Need to Implement Measurement of operational Plant Floor
reduce continuous Key Performance Indicators Automation
manufacturing improvement (KPIs) is standardized (PFA) and
costs programs across the enterprise automated data
Inaccurate Optimize Executive steering collection
forecast asset committee is responsible Maintenance
demands utilization for manufacturing solutions management
Increase investment strategy Manufacturing
visibility Manufacturing and IT are Intelligence (MI)
across responsible for the Quality
manufacturing deployment of management
networks manufacturing solutions Lean
Operational metrics are manufacturing
linked with financial metrics
KPI are displayed in real
time to role based decision
makers
Asset and raw material
optimization uses real time
data
Source: Aberdeen Group, January 2008

Top Strategies
The top strategic action, being taken by more than two thirds of all
manufacturers, is to implement continuous improvement teams.
Manufacturers are implementing continuous improvement teams with the
goal of reducing overall manufacturing costs and positioning these teams for
success in several ways. Thirty-nine percent (39%) of manufacturers are
attempting to provide visibility into manufacturing operations and 40% are
attempting to optimize the utilization of manufacturing assets; either way, it
is important that continuous improvement teams are given purpose and the
tools needed to succeed.

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Figure 3: Strategic Actions

Implement continuous improvement

68%
programs

Optimize asset utilization 40%

Increase visibility across manufacturing

39%
operations

Optimize material utilization 18%

Improve response time to adverse events 16%

Increase product velocity 17%

0% 25% 50% 75%

Source: Aberdeen Group, January 2008

Manufacturers of all performance levels face the same market pressures and
are responding with the same strategic actions. When compared, there is
no significant difference between the market pressures faced by the Best-in-
Class, Industry Average, or Laggard manufacturers. Similarly, there is no
significant difference in the strategic actions these different categories of
manufacturers are taking. However Best-in-Class manufacturers realize
improved performance as compared to Industry Average and Laggard
manufacturers (Figure 2). In the next chapter, Aberdeen will link specific
business capabilities and technology enablers to Best-in-Class performance
and identify how the above strategic actions can be assured success.

Aberdeen Insights Strategy

"By leveraging the flexibility of
Reducing manufacturing costs has been a top pressure across many enterprise-MES, it was easy to
customize individual plant
Aberdeen manufacturing benchmark reports. In Lean Scheduling and
conditions while at the same
Execution it was the number one pressure with 71% of manufacturers time retain global best
focusing on it. It was also one of the top pressures in the Cost of Quality, practices. This means that we
Enterprise Asset Management, and Demand Driven Manufacturing, with have the best of both worlds
55%, 73%, and 44% of manufacturers in each of these respective standardization of procedures
benchmarks focusing on reducing cost s. that are proven to be
successful, yet also the
Given that each of the above reports analyzes some aspect of freedom to adapt these best
manufacturing operations management, it is of no surprise then that 63% of practices when appropriate."
manufacturers from this study are focusing on reducing manufacturing
costs and that it is the number one pressure. Moving forward, it can be ~Hangmin Cho
Manager Info Team
expected that a galvanizing force behind connecting the disparate aspects of
manufacturing operations management will be the need to reduce costs SI FLEX
across the interdependent aspects of manufacturing operations.

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Manufacturing Operations Management
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Chapter Two:
Benchmarking Requirements for Success
Competitive Assessment
Aberdeen analyzed the aggregated metrics of surveyed companies to Fast Facts
determine whether their performance ranked as Best-in-Class, Industry Best-in-Class manufacturers are
Average, or Laggard. In addition to having common performance levels, each more likely than Laggards to
class also shared characteristics in five key categories: (1) process (the adopt the following solutions
standardization and management of processes across the enterprise); (2) for manufacturing operations
organization (corporate focus and collaboration of manufacturing and IT management:
for technology decisions); (3) knowledge management (automating data 3-times more likely to adopt
collection and using it as actionable intelligence); (4) technology (the Manufacturing Intelligence
software and capabilities that are crucial for achieving operational (MI)
excellence); and (5) performance management (measuring the metrics
and linking those metrics to financials). These characteristics serve as 2-times more likely to adopt
Lean manufacturing solution
guidelines for best practices, and correlate directly with Best-in-Class
performance across the key metrics. 35% more likely to adopt
Quality Management
Standardizing Processes Solution (QMS)
To efficiently manage manufacturing operations, it is critical to standardize
business processes across the enterprise. One area that clearly
differentiates Best-in-Class performance is the standardization of
optimization processes across the enterprise (Table 2). Best-in-Class
manufacturers are more than three-times as likely as Laggards to
standardize asset and material optimization procedures across the
enterprise.

Table 2: The Competitive Framework - Process

Best-in-Class Average Laggards

Exception handling processes and procedures are
standardized across the manufacturing operations
53% 34% 29%
Measurement of operational Key Performance Indicators
Process (KPI) is standardized across the enterprise
67% 47% 35%
Optimization processes are standardized across the
enterprise
41% 19% 13%
Source: Aberdeen Group, January 2008

Best-in-Class manufacturers are also 91% more likely to standardize the

measurement of key performance indicators across the enterprise. This
ensures that KPI are calculated in the same way from plant to plant and
decision maker to decision maker, giving senior executives the ability to
equitably compare performance across the enterprise. Finally, Best-in-Class
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manufacturers are almost 50% more likely to standardize exception handling

across the enterprise. This allows Best-in-Class manufacturers to then
optimize work-flows and ensure best responses are taken in the face of
what could be indecisiveness and costly mistakes when attempting to
respond to non-conformances.
Knowledge Management
Collaboration across multiple functional groups such as maintenance,
operations, engineering, and information technology is the major theme
underlying Best-in-Class performance in regards to knowledge management.
Results from the survey analysis indicate that Best-in-Class manufacturers
are more likely than other manufacturers to include cross-functional teams
as key components of shift review as well as production team meetings
(Table 3).
The other capability that differentiates Best-in-Class performance is
automating data collection from manufacturing operations. Best-in-Class are
not only more likely to automate data collection, but they are also managing
this data in a central data warehouse application so that operations data is
easily accessible by different functional groups. This is an area that needs
attention from Laggard manufacturers, as only 35% of the manufacturers in
this performance category have invested in this capability (Table 3.)

Table 3: The Competitive Framework - Knowledge Management

Best-in-Class Average Laggards
Shift change review meetings include operations,
maintenance, IT and other relevant departments
57% 47% 36%
Production operations review meetings include
operations, maintenance, and IT
Knowledge 72% 70% 55%
Management
Data collection from production processes is automated
51% 43% 25%
Manufacturing data is maintained and managed in a data
warehouse application
63% 52% 35%
Source: Aberdeen Group, January 2008

Implementing and Managing Manufacturing Solutions

In regards to the organizational architecture of Best-in-Class manufacturers,
collaboration is again the theme. Best-in Class manufacturers are 50% more
likely than Laggards to appoint an executive steering committee to define
the strategy around manufacturing solutions investments. When it comes to
defining requirements for the solution, these executive steering committees
recognize the value of involving experts with knowledge in the challenges
and shortcomings of manufacturing operations. Consequently, Best-in-Class
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manufacturers are more likely to give the responsibility of defining

manufacturing solutions requirements to the manufacturing line of business,
while giving joint responsibility to both manufacturing and IT for the
deployment of manufacturing solutions.

Table 4: The Competitive Framework - Organization

Best-in-Class Average Laggards
Executive Steering committee is responsible for
manufacturing solutions investment strategy
66% 46% 43%
Manufacturing is responsible for defining requirements of
Organization manufacturing solutions
59% 57% 45%
IT and manufacturing are jointly responsible for
manufacturing solutions deployment
47% 35% 32%

Source: Aberdeen Group, January 2008

Gaining Visibility into Your Manufacturing Operations

While Best-in-Class manufacturers have automated data collection, that
alone is not sufficient to realize higher manufacturing performance. Having
data is important, but it is also necessary to act on that data and use it to
drive efficiency across manufacturing operations.

Table 5: The Competitive Framework - Performance

Management
Best-in-Class Average Laggards
Operational metrics are linked with financial metrics
71% 48% 18%
Analytics system used to mine data for decision making
46% 26% 15%
Performance
KPIs are displayed in real time and are role based for
Management
optimal decision making
44% 28% 13%
Production optimization is conducted in real-time
43% 30% 16%
Source: Aberdeen Group, January 2008

The findings in the above table are telling. Best-in-Class manufacturers are
more likely to be connecting to the plant floor level and automating data
collection. They are connecting this data to historians, using manufacturing
analytics to enable root cause analysis while at the same time providing
visibility to decision makers with real time role based dashboards and
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Manufacturing Operations Management
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monitoring exception handling. Furthermore, Best-in-Class manufacturers are

contextualizing operational metrics with financial metrics and optimizing
production with this real-time data. This is a significant differentiator, with the
Best-in-Class being three-times more likely than Laggards to optimize
production in real-time, perhaps also contributing to how the Best-in-Class are
able realize 97% raw material yield (Chapter One Best-in-Class Performance).

Aberdeen Insight Performance Management

While Best-in-Class manufacturers are more likely than others to adopt

many of the above capabilities; it is important to note that the adoption of
these capabilities in a vacuum does not necessarily have the greatest impact
on performance. The key is in simultaneously using multiple capabilities to
achieve Best-in-Class performance.
Best-in-Class manufacturers are found twice as likely as other manufacturers
to use automated data collection in conjunction with data historians and
manufacturing analytics. These manufacturers are also over four-times as
likely as other manufacturers to standardize KPI measurement, optimization,
and exception handling across the enterprise.
Finally Best-in-Class manufacturers are over 2.5-times as likely as other
manufacturers to link operational metrics with financials and provide real-
time role based visibility to decision makers. Manufacturers in the Industry
Average and Laggard performance category should use these capabilities in
conjunction with each other to improve visibility across manufacturing
operations, resulting in the success of strategic actions.

Technology
Manufacturing operations management has been evolving to supersede the
original definition of Manufacturing Execution Systems (MES). While prior
Aberdeen research have shown that Best-in-Class manufacturers are more
likely to use MES, this new benchmark report illustrates that Best-in-Class
manufacturing companies are also more likely to implement additional
capabilities such as Quality Management Systems (QMS), Lean,
Manufacturing Intelligence (MI), and Advanced Planning and Scheduling (APS)
among others, as central components to an overall Manufacturing
Operations Management (MOM) solution.

Table 6: The Competitive Framework - Technology

Best-in-Class Average Laggards
Share of manufacturers currently using technology:
PFA: 39% PFA: 26% PFA: 22%
MI: 30% MI: 14% MI: 11%
Technology
QMS: 74% QMS: 63% QMS: 55%
APS: 45% APS: 29% APS: 28%
Lean Mfg: 50% Lean Mfg: 32% Lean Mfg: 26%
Source: Aberdeen Group, January 2008

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Beyond the use of broad technology categories such as QMS, Lean

manufacturing, MI or APS, there are specific features and functionalities that
can be delivered by many of the solutions that are specifically correlated to
Best-in-Class performance. Best-in-Class manufacturers are utilizing the
tools listed in Figure 4 to assist with the process, knowledge management
and performance management capabilities discussed before.

Figure 4: Technology Enablers

100% BIC Industry Average
88%
70%
63% 61%
51% 56% 52%
50% 50%
44% 42%
39%
23%

0%
Master Data Raw Material Dash Boards Maintenance Supplier NC/CAPA
Management Optimization Management Scorecards
(BOM)

Source: Aberdeen Group, January 2008

Dashboards, master data management, supplier scorecards and NC / CAPA

capabilities are core to improving visibility, decision making, root cause
analysis and the overall efficiency of manufacturing operations. Best-in-Class
manufacturers have also adopted raw material optimization and
maintenance management capabilities to optimally utilize raw materials and
assets across the enterprise. This will reduce raw material inventory and
maintenance costs, allowing manufacturers to reduce overall manufacturing
costs while also maintaining customer service levels.
Technology Interoperability
As complexity in the manufacturing environment has increased over the last
decade, the needs of manufacturers have expanded beyond the original
definition of MES. MES now encompasses capabilities such as maintenance,
production, quality, and inventory management. While Best-in-Class
manufacturers are more likely than other manufacturers to adopt the above
capabilities, these manufacturers are also investing in creating real-time
interoperability across these solutions. This allows manufacturers to
eliminate the traditional approach of managing silo-ed departments and
business processes, providing a common solution platform to standardize
processes and exchange information across the enterprise

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Figure 5: Technology Interoperability

100%
83% 80%
63% 63%
50% 50%
50% 38%
20%

0%
PFA and QMS QMS and MES MES and ERP MI and ERP

BIC Industry Average

Source: Aberdeen Group, January 2008

Aberdeen Case Study

he Woodbridge Group is a leader in automotive urethane technologies and is a specialist in

Just-in-Time assembly and sequencing systems. With facilities distributed globally, Woodbridge
has 63 facilities in 58 cities and 21 countries; however, one of these facilities is of particular
interest. In 2001, a green-field facility was opened that is now the de facto standard for
managing manufacturing operations across the enterprise.
Since 2001, this facility has maintained a Defects per Million Opportunities (DPMO), in the
single digits and has nearly a negligible Cost of Quality (COQ). Additionally, this facility
maintains a Finished Goods Inventory (FGI) that is consistently limited at 30 minutes to an
hour of production, with virtually all FGI in transit at any given time. Furthermore the facility is
a top performer in audits and maintains complete compliance with ISO, TS-16949, and OSHA.
Plant Manager Scott Wolbers attributes these successes, in a large degree, to their deployment
of technology across many aspects of manufacturing operations. With a Bill of Materials (BOM)
at 1200 parts, a takt time of 76 seconds, an order to delivery time of 240 minutes, and a single
piece flow mode of manufacturing, the base for managing these operations is their MES
platform.
From this platform, work orders based on actual customer demands are released and managed
through out the manufacturing process. At each stage of manufacturing, work orders are
electronically disseminated, and verified complete, materials are scanned in and recorded for
traceability, along with process data such as torques and asset statuses. In addition to these
core manufacturing processes, from the same platform, CAPAs are initiated and root-cause
analysis is performed, WIP flow is optimized, fluctuations in demand can be seen and
responded to, compliance and traceability is ensured, and finally all of this data can be rolled up
to management through visualization capabilities.
The next step for the Woodbridge Group is extending this platform across the enterprise in a
standardized way. Such an approach has yielded tremendous results already, is even leveraged
as a competitive differentiator when earning business from key customers, and is beginning to
take hold in other facilities.

2008 Aberdeen Group. Telephone: 617 723 7890

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Manufacturing Operations Management
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Chapter Three:
Required Actions
Whether a company is trying to move its performance in Manufacturing Fast Facts
Operations Management from Laggard to Industry Average, or Industry To achieve Best in Class status
Average to Best-in-Class, the following actions will help spur the necessary manufacturers must:
performance improvements:
Automate data collection
and use it as actionable
Laggard Steps to Success intelligence
Appoint an executive steering committee to define the Align operational data with
manufacturing solutions investment strategy, delegate the definition financial metrics
of solution requirements to the manufacturing line of business, while
Appoint executive steering
giving joint responsibility to IT and manufacturing for deploying
committee to define
these solutions. manufacturing solutions
When defining the requirements for manufacturing solutions, investment strategy
remember the ultimate goal of reducing overall manufacturing costs. Adopt technology to
Furthermore, this reduction should be accomplished by enabling automate quality, execution,
continuous improvement teams, providing visibility across planning and scheduling,
operations, and optimizing asset and raw material utilization. visibility and maintenance
aspects of manufacturing
Standardize production optimization, KPI measurement, and
operation.
exception handling processes across the enterprise. Best-in-Class
manufacturers are found more likely to standardize all the above Establish real time
processes than other manufacturers. This is critical to gaining the interoperability among plant
full benefits of further investment in enterprise wide manufacturing floor and enterprise level
operations management solutions. technology solutions

Industry Average Steps to Success

PFA and automated data collection are key capabilities that serve as
the building blocks for expanding and investing in manufacturing
operations. Best-in-Class manufacturers are two-times more likely
to invest in this capability than Laggard manufacturers. Invest in
these capabilities.
Adopt a technology platform capable of connecting all aspects of
manufacturing operations management. This will enable
manufacturers to leverage the platform for standardizing processes,
implementing key capabilities, and ultimately interoperating across
the enterprise. All of which are key for achieving Best-in-Class
performance.
Provide visibility to decision makers with real time role based
dashboards. Best-in-Class manufacturers are three-times more likely
to invest in this capability than Laggard manufacturers.
Invest in manufacturing intelligence (MI) and analytics capabilities to
improve decision making and visibility into manufacturing
operations. The adoption rate of MI solution is still very low (30%

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Manufacturing Operations Management
Page 16

BIC and 14% Industry Average). Manufacturers that have not yet
adopted this capability should do so to gain early competitive
advantage.

Best-in-Class Steps to Success

Choose the additional technology capabilities that are integrated We have implemented an
enterprise system to provide a
through a common solution platform and support all aspects of
completely unified solution for
manufacturing operations: maintenance, production, quality, and manufacturing and logistics
inventory management. While Best-in-Class manufacturers are across 30 of our European
more likely than others to invest separately in each of the manufacturing and distribution
technologies supporting Manufacturing Operations Management; sites. With our solution we
there are still Best-in-Class manufacturers that have not yet adopted have enforced manufacturing
technology solutions spanning the entire MOM space. consistency and best practices
across our operations. We
Establish event based real time interoperability among plant floor now have real-time visibility
and enterprise level technology solutions. This enables into manufacturing, order and
manufacturers to seamlessly connect all of the necessary business logistics status from anywhere
processes under the MOM umbrella quality, maintenance, in the company.
production, and inventory to achieve operational excellence.
~Hans Cordes, CEO,
Aberdeen Insights Summary Saint-Gobain Sekurit

Managing manufacturing operations in today's global and competitive

market environment is a challenge. Manufacturers are continually faced
with the pressure to reduce costs, while at the same time it is extremely
difficult to forecast demand accurately. To address these interrelated
pressures, manufacturers are investing resources in optimizing assets and
raw materials across the enterprise, while at the same time enabling
continuous improvement teams with tools and focus needed to succeed.
To support these strategic actions, Best-in-Class manufacturers are
investing in capabilities that span across maintenance, production, quality,
and inventory management. These manufacturers are more likely to have
adopted solutions in these categories and are also more likely to connect
the solutions by creating real time interoperability across these disparate
systems.
As the research shows, Best-in-Class manufacturers are enjoying , on
average, 5% more OTD deliveries, a 11% higher OEE, , and have an 11%
higher utilization of raw materials. Manufacturers looking to perform at
such levels should disregard the need for specific technology categories,
focus on capabilities shown to enable elevated performance, invest in
developing a common platform that spans across the key areas of
manufacturing operations management, and truly achieve operational
excellence.

2008 Aberdeen Group. Telephone: 617 723 7890

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Manufacturing Operations Management
Page 17

Appendix A:
Research Methodology
Between December 2007 and January 2008, Aberdeen examined the use, Study Focus
the experiences, and the intentions of more than 240 enterprises across
different industry verticals regarding their manufacturing operations Responding manufacturing
executives completed an online
management
survey that included questions
Aberdeen supplemented this online survey effort with interviews with select designed to determine the
survey respondents, gathering additional information on their strategies, following:
experiences, and results. The pressures driving their
Responding enterprises included the following: focus on manufacturing
operations management
Job title / function: The research sample included respondents with
The structure and
the following job titles: Manager (35%); Senior Management (31%); effectiveness of existing
Director (19%); Consultant (8%); Staff (5%) and other (2%). technology implementations
Industry: The research sample included respondents from Industrial Top technology enablers
Equipment Manufacturing (20%); Automotive (17%); Metals (13%); adopted to facilitate
Consumer Goods (10%); High-Technology (12%) Food and manufacturing operations
Beverage (9%) and Aerospace and Defense (9%). management
Geography: The majority of respondents (64%) were from North The benefits, if any, that have
America. Remaining respondents were from the Europe (16%), Asia been derived from
/ Pacific region (12%), South America (4%) Middle East, Africa (4%). technology adoption and
integration
Company size: Eighteen percent (18%) of respondents were from
large enterprises (annual revenues above US $1 billion); 42% were The study is aimed to identify
from midsize enterprises (annual revenues between $50 million and emerging best practices for
$1 billion); and 40% of respondents were from small businesses manufacturing operations
management across the
(annual revenues of $50 million or less).
industry, and to provide a
Headcount: Thirty percent (30%) of respondents were from large framework by which readers
enterprises (headcount greater than 1,000 employees); 56% were could assess their own
from midsize enterprises (headcount between 100 and 999 capabilities
employees); and 14% of respondents were from small businesses
(headcount between 1 and 99 employees).
Solution providers recognized as sponsors were solicited after the fact and
had no substantive influence on the direction of this report. Their
sponsorship has made it possible for Aberdeen Group to make these
findings available to readers at no charge.

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Manufacturing Operations Management
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Table 7: The PACE Framework Key

Overview
Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and
enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows:
Pressures external forces that impact an organizations market position, competitiveness, or business operations
(e.g., economic, political and regulatory, technology, changing customer preferences, competitive)
Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the
corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial
strategy, go-to-market, and sales strategy)
Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people, brand,
market positioning, viable products / services, ecosystem partners, financing)
Enablers the key functionality of technology solutions required to support the organizations enabling business
practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner
interfaces, data cleansing, and management)
Source: Aberdeen Group, January 2008

Table 8: The Competitive Framework Key

Overview

The Aberdeen Competitive Framework defines enterprises In the following categories:

as falling into one of the following three levels of practices Process What is the scope of process standardization?
and performance: What is the efficiency and effectiveness of this process?
Best-in-Class (20%) Practices that are the best Organization How is your company currently
currently being employed and are significantly superior to organized to manage and optimize this particular process?
the Industry Average, and result in the top industry Knowledge What visibility do you have into key data
performance. and intelligence required to manage this process?
Industry Average (50%) Practices that represent the Technology What level of automation have you used
average or norm, and result in average industry to support this process? How is this automation integrated
performance. and aligned?
Laggards (30%) Practices that are significantly behind Performance What do you measure? How frequently?
the average of the industry, and result in below average Whats your actual performance?
performance.

Source: Aberdeen Group, January 2008

Table 9: The Relationship Between PACE and Competitive Framework

PACE and the Competitive Framework How They Interact
Aberdeen research indicates that companies that identify the most influential pressures and take the most transformational
and effective actions are most likely to achieve superior performance. The level of competitive performance that a
company achieves is strongly determined by the PACE choices that they make and how well they execute those decisions.

Source: Aberdeen Group, January 2008

2008 Aberdeen Group. Telephone: 617 723 7890

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Manufacturing Operations Management
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Appendix B:
Related Aberdeen Research
Related Aberdeen research that forms a companion or reference to this
report includes:
Compliance and Traceability in Manufacturing; December 2007
Demand Driven Manufacturing; November 2007
The Cost of Quality Benchmarking Enterprise Quality Management;
July 2007
Manufacturing IQ: Taking Manufacturing Intelligence to the
Enterprise; July 2007
Benchmarking Enterprise Asset Management; June 2007
Lean Scheduling and Execution; May 2007

Authors: Matthew Littlefield, Research Analyst, Manufacturing,

[email protected]
Mehul Shah, Research Analyst, Manufacturing,
[email protected]
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