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IT in manufacturing

Manufacturers are at the forefront of the Indian tiger's efforts to claw its way onto the global economic stage. They aim to use existing set-ups to enhance earnings and raise efficiencies. Vinita Gupta reports

As Indian manufacturers gird their figurative loins and make their bid for recognition on the world stage, IT is the backbone of their efforts, helping as it does to achieve critical business objectives and implement key initiatives. It’s a tough world out there with the Chinese dragon undercutting all comers, and the answer, perhaps, is to raise productivity and quality through technology.

India’s manufacturing segment is through with its base IT implementation—we’re talking ERP here—and it is now looking at systems such as product lifecycle management (PLM), manufacturing execution systems (MES) and radio frequency identification (RFID).

At the same time, the automotive and heavy industry crowd are making a concerted effort to get their partners on board by extending their ERP systems to encompass the IT systems of distributors and suppliers.

It’s all about production

For any manufacturing concern, PLM software permits the management and automation of all the processes involved in making a product, right from conceptualisation to end-of-life when a product is phased out.

Today, much of Indian manufacturing consists of OEM work for MNCs or Indian giants such as Maruti Udyog. These ancillary manufacturers must meet stringent quality standards and ship products on time; even a delay of 24 hours could result in an order being rejected. At the same time, these firms have to keep a firm rein on operating expenses, come up with new products in less time, and that’s where PLM gives manufacturers the tools to collaborate with trading partners to do all this.

“In today’s competitive scenario, where a customer’s preferences are given top priority, the ability to make changes in the design of a product without affecting production schedules is crucial,” says Mani Mulki, Vice-president, IS, Godrej Industries.

"RFID could be a key contributor when it comes to trimming inventory, reducing losses in transit, and reconciling materials" - Daya Prakash Senior Manager, IT LG Electronics

For instance, if an organisation wants to make even a tiny change in the design of a product, different projects, people and geographies must be dealt with. All this while product development has to be tracked in real-time. Hence, PLM.

Daya Prakash Senior Manager, IT, LG Electronics says, “PLM is a comprehensive information system that coordinates all aspects of a product’s life from the initial concept to when it is retired. It is sometimes called the ‘digital backbone’ of a product, and includes the requirements phase, analysis and design stages, manufacturing, product launch, distribution, quality assurance, in-service maintenance and spare parts provision.”

"PLM has gained importance in the manufacturing sector especially during the last five years" - T G Dhandapani CIO Sundaram-Clayton

T G Dhandapani, the CIO of Sundaram-Clayton (SCL), agrees with Prakash. “PLM has gained importance in the manufacturing sector especially during the last five years. In a scenario of increasing competition and technology, new product introductions at the right time have assumed greater importance if a company is to gain marketshare while maintaining its margins.” According to him, PLM helps his company leverage processes such as idea generation, concept verification, prototyping, product data management, resource and portfolio management, process and ramp-up. PLM also helps reduce product development lead time, control project and product cost, and improve quality and reliability of products.

Linking ERP and DCS

The other factor that plays an important role in the manufacturing sector is geographic spread and the need to connect far-flung centres. Most firms in the process industry already have ERP systems in place, and distributed control systems (DCS) as well, but for all these years these systems have worked and served the organisations as independent and isolated systems with little or no interconnection between the two. Companies are now realising that the effectiveness of these systems can be augmented by integrating them.

ERP and DCS systems need to be linked to the plant floor to know what’s happening at the business level—and vice-versa. This is where MES fit into the puzzle. Before MES, this process was manual via paper documents. MES applications solve this problem by automating and recording data, thereby reducing errors and the time required to transfer information.

Although MES has been around for a while, it is now being adopted by the process manufacturing industry to bridge the gap between ERP and DCS. “Systems such as barcode, barlogs and others like rolling throughput yield are the typical MES. It helps in scanning product variants,” says Prakash. This technology is being fully utilised at LG Electronics.

MES aids in keeping track of communication between an ERP system and the plant floor. MES therefore provides important information to all parts of the manufacturing business, reduces the cost of compliance, improves overall product quality, and ensures that the correct processes are being followed.

RFID and the manufacturer

RFID technology has garnered support largely in logistics and manufacturing. Depending on a manufacturer’s profile, RFID can provide significant advantages in multiple areas. Its benefits vary, depending on what is being manufactured. Materials management is a key area of focus for manufacturers.

Opines Prakash, “RFID could be a key contributor when it comes to trimming inventory, reducing losses in transit, reconciling materials with trade partners, and overcoming out-of-stock instances. RFID could be adopted in certain areas such as inventory, warehouse, transportation, sales and distribution of the manufacturing organisation.”

Mulki concurs that RFID helps track the movements of goods at different levels, and that physically keeping track of each and every item is not required. “RFID will definitely grow in the manufacturing sector in future. We will also look at it, but the major barrier for companies wanting to go in for RFID is its cost. Currently, the cost outweighs the benefits.”

Adds Dhandapani of SCL, “RFID will be the technology that will be adopted by manufacturers at a later date when it becomes affordable. At SCL we use RFID for personnel administration, but we do not use it in manufacturing. We are looking for a cost-effective business-driven application where we can use RFID.”

However, Avinash Sankholkar, Head of IT and R&D at Larsen & Toubro’s E&C division has a contrasting viewpoint: “RFID, although good in principle, suffers from performance limitations.” L&T’s E&C division manufactures and delivers large-sized plants and systems, or complete solutions for various industries. According to him, RFID creates about 40-50 percent of errors in the data when it comes in contact with large metallic objects like steel machinery. He feels that RFID, at this point, is useful only for non-metallic objects.

L&T’s modular fabrication yard at Hazira is using an RFID-based component inventory management system for the past year. This RFID-based system has replaced the old bin-card system. Each storage location in the warehouse has an RFID tag affixed to the rack. This tag is updated as materials are added or removed, and the data is simultaneously fed into the stores inventory management system.

Sankholkar sounds a note of caution. “For RFID, the geography of the room has to be well-defined, and it shouldn’t be changed after the set-up and calibration of the sensors as this will affect the reading. For instance, when RFID is used in an open yard where cranes keep on changing, the reading shown by the RFID system is either without data (blank) or with errors in the data (47xx instead of 4715).”

Getting everyone in the loop

It’s true that IT plays a crucial role in the growth of a manufacturing concern. But what’s the use if the manufacturer’s partners are unable to leverage the same technology? Companies such as Godrej, Tata, SCL and others have taken initiatives that improve the IT infrastructure at their distributor or reseller’s end.

For instance, Sampark, which is Godrej’s supply chain management initiative, has contributed greatly in providing timely stock replenishment and minimising inventory.

In earlier years, as is the practice at most companies, the focus at Godrej was on maximising sales to distributors. This would lead to inventory build-ups, and also resulted in product obsolescence and slow response to market changes. With Sampark, they are now able to track sales at the distributor level on a continuous basis and ship out stocks on a replenishment basis. As demand increases, correspondingly larger volumes are dispatched.

“The objective of implementing Sampark was to reduce the working capital of distributors. This in turn gives a better return on investment, leading to more coverage and hence more sales,” explains Mulki. Sampark is currently being used by 550 distributors. Godrej is also in the process of improving its relationship with its retailers through an initiative named Sampurna.

Notes Prakash, “We have a high focus on improving our trade partners’ IT infrastructure and systems. As competition is growing and margins are becoming thinner, sharing details with trade partners will help them manage their operations properly.” He adds that they are also planning some initiatives on strengthening their security and business intelligence side.

After successfully deploying core systems, manufacturers intend to invest further. For instance, at L&T’s E&C division, they have already taken initiatives on data virtualisation, enterprise continuity planning, re-architecting systems in the SOA context, and looking at options that would enable them to provide security features such as IM and single sign-on. On the other hand, LG Electronics plans to invest and strengthen security and business intelligence initiatives.