Consumers today are driving the industry forward with fast-changing demands and the desire for high quality and personalized products — all at a lower cost. For manufacturing, this is so complex that it can be compared to building a Lego set without the directions. While this is a tall order for many CG brands, some leaders have learned that adapting their digital transformation (DX) strategies even faster is key to survival in an increasingly competitive market.
CGT recently explored how advanced planning and scheduling can play a key role in achieving this DX, including digging into two CG brands — Granado Cosmetics and Natural One Beverages — and how they were able to achieve better visibility, flexibility, and on-time delivery, among other business benefits. Read on for the edited transcript, including all of the presentation slides to find out why.
Craig Goulding: Thank you. Hello everyone. Thank you for participating in this webinar and a warm welcome from myself. So as mentioned, I'd like to take this opportunity to discuss how the CPG market is evolving and how Opcenter APS can help your company and to demonstrate some of the key successes our customers are having using the application. So, what's going on with the market today? As we all know, the industry is changing. We have in a higher increase in demand. Demand is now no longer localized, and demand is coming further up field. Demand is being gathered from across the globe with logistics.
Manufacturing technologies are changing. There are more innovative materials, changing your manufacturing processes and companies need to adapt quickly, because of the increased demand, there's more emerging markets, more localized, which is also having an effect on everyone's profits and has with everything else. There are environmental guidelines to take into account. Reduction in plastic waste, changes of ingredients, depending on the region, the product is sold increase in that complexity. So, this is where APS will help you. I brought with me just a short video to highlight how the CPG market is challenged by consumers and so if we could just spend a few moments just to, to watch that video.
Goulding: Let’s have a look at the landscape. What needs to change? No longer are we in the situation of yesterday where big beats small, mass production of single items is no longer the cure. Companies need to be more flexible. Produce some products in smaller batches, getting them to your customers quickly to fulfill their needs, but supplying them more frequently. There is more complexity coming in, there is more need for personalized goods to fulfill the customer-specific requirements. Just going from the traditional large-scale production, going to the small batch sizes, you now have to be flexible doing that personalization and again, this is where APS comes into help.
So a couple of the key questions we get asked quite frequently, from the questions that are posed to us is, how can I organize the organization, sustain this new constellation? Where do I get the know-how, and how do I manage it? How can my company afford this, and how can we predict and plan my design and productivity effectively? Here’s how the role APS plays into that environment.
Goulding: So, let's just start by setting the digital landscape and the position of APS. I'll come into the two flavors of APS, more in a moment, but APS stands for Advanced Planning and Scheduling and here we've modeled, this as two separate applications because they have a different position in the IT landscape. First of all, we start talking at planning. That's usually long-term capacity planning and that's directly connected to your ERP system, gathering the forecast and demand data and looking to see what sort of bucketed capacity you need to produce. Moving further down the spectrum. We start to look at shop floor scheduling, which has that direct connection then to your MES system, getting the real-time updates, I'm actually doing the production flow, for your shop flow. So you can see on this slide, there are various other parts of the IT landscape, but you can see where APS is mainly connected.
Rajagopal: Okay Craig, If I can just interrupt for a second. So this all seems to be a good picture of an ideal digital factory, but sometimes the reality is far different from ideal, right? So do you have any examples that you can share with us, or I guess from your perspective in working with your customers, where does digitalization start and what is the sequence to implement these solutions?
Goulding: Well, it’ll change dependent on the company size, but from experience, the usual first place for the digitalization is with your ERP system, because at the end of the day, that is the backbone of all the data flow throughout your organization, certainly from a manufacturing point of view. So, ERP would be the first, moving down to your MES/APS system in combination depending on which flavor of APS you're installing. If you're looking at the planning side of things, you don't need the MES up front, but if you're going down the shop floor scheduling route, then you would also need to look at digitalizing your MES system, because at the end of the day, it's the source of information and automates that process easier.
Rajagopal: Thank you.
Goulding: Okay. So, moving on to what's and why do we actually need an APS system? You'll see, on this slide, we've highlighted some key value drivers of the typical sort of questions. The typical benefits customers get from using the APS system. When you think of any sort of production manufacturing environment, these are the common questions which get asked all the time, how do you utilize the resources, the best possible way, looking at tooling, looking at how to introduce changes, et cetera. Where's my bottlenecks on the shop floor. Planning everything through spreadsheets, you don't have that visibility. An APS system gives you that visibility to do that.
Looking at trying to reduce the work in progress, reducing the changeovers, reducing the time it takes to actually make that product from the raw materials arrive in, to actually being packaged, to shipped off to your customers. Because you're using an APS system, you don't have that problem of all the information is within one person, you have a tool set, which can be shared. So, you're sharing the knowledge but the bottom line is the introduction of an APS system is first of all, it improves productivity, which is the key improving productivity means you have a better flow of the production for your shop flow, which means you have a better turnaround, and you'll be able to fulfill more orders quickly. And in turn that improves customer service. You're no longer having to negotiate due date as with a crystal ball. You have rule data actually there to be able to give a more accurate due date to your customer when you'll be able to fulfill your obligation to them. So, these are all the key values which an APS system will bring you.
So, let's just take a look at an example of why scheduling can be quite difficult. In this example, we have one production line. We have five sets of orders. As you can see from the animation on the side, the sequence of those orders can change frequently. Just with these five orders, there can be 120 different permutations of sequence. Do you do order one first, then order five, depending on the priority, depending on the availability of materials? It can get quite complex and doing this modeling in a spreadsheet or in another system can be quite difficult. Add some more complexity to it where we introduce two production lines at the same five sets of works orders. The number of permutations increases twofold, as you can see from the size where we're talking over 10,000 different permutations just looking at that small snapshot of orders, you can imagine in a real production environment where you have, possibly up to tens of thousands of work orders going through and multiple production lines.
This gets very complex. Certainly, when you start looking at the outside influence, which might affect your production. This is where APS comes into play. With that complexity, it's sort of like doing a Lego set without any instructions. It will take you five times as long, you would have to destroy what you've built to try and get the picture of the box and to try and get the model, which, brings you that toy at the end of it. So that, makes it very difficult in the legacy systems you see on the screen.
Goulding: So now, diving into actual Opcenter APS. I mentioned there are two flavors of the product when we started to talk about the traditional IT landscape and where they fit in that digital landscape. We talked about planning, and we talked about scheduling. Sometimes people get confused between the two and put them in the same box, but we try to split them out into actually two separate areas because they target two different parts of that IT landscape. So, if we look at planning, planning talks about, what to make, what batch sizes to possibly make, when to make it, where to make it if you have multiple facilities, gives you an idea of what materials may be required and gives you a high-level capacity report of what resources are needed to do that. Because we're looking at longer term and the granularity of the details, we’re really looking at finished goods only.
Because we look at that higher level of granularity, we're not really talking about capacity planning in weeks months, or even possibly years ahead, because everything is done in bucketed views and those bucketed views could be days, weeks, or months. And then we moved down to the actual shop floor scheduling, which is more short term. This is how best to make it. So going back to the previous few slides where we had that sequence of different permutations of how to schedule an order, this is where scheduling comes in, how to synchronize the data, not just within the APS system itself, but to share that information across the shop floor, by your MES system, or by works orders to the individual workstations. Shop floor scheduling that allows you to handle changes in priorities, constraints you may have, when I talk constraints, we talk about materials availability constraints.
If you use certain tooling in the operations, or if you only got a certain number of tanks, which can to fill out a certain process. All those complex sorts of constraints, which actually allows you to fulfill a sequence is taken into account. It allows you to monitor what's happening with shop floor updates of collecting that data from the shop floor and visualizing that and seeing what impact that has now, and for already positioned orders. It allows you to also do the, what if scenarios, but I'll come into a bit more detail in both of those in a moment, but it gives you the idea of why we positioned two separate products and where they fit on that digital landscape scheduling, talking more to the MES system for those shop floor updates, but the planning looking directly at ERP system, because it works on forecast and demand data.
Rajagopal: Craig, before you move on first off I love the Lego, building a Lego set without the instructions, I think is a great way to paint the picture of the complexity, right? And then here we understand that both solutions sort of answer different needs. So, in case they need both planning and scheduling, how can CGs run both, or can they, run both simultaneously or do you suggest starting with one or the other?
Goulding: Because they're quite independent, they can be started in parallel. There's no rule of thumb, that'd you need to start one before the other. It really depends on the need of the customer. Usually people find that the planning is easy to implement because you have the data already in your ERP system. Whereas scheduling can be a little bit more complex because you have to cleanse the data a little bit more. One of the things implementing scheduling does sometimes is highlight such discrepancies in the master data. But the rule of thumb is focused on at the same time. And they can feed each other so you can get scheduled orders from scheduling to actually feed into planning as well to help with that calculation of the capacity.
Rajagopal: Great, thank you, Craig.
Goulding: So, just going into a little bit more detail on planning, I've already mentioned previously it's a longer term, higher level, less granularity looking at the forecast and demand planning really is a strategic decision support tool. It allows you to look at that demand coming in over the weeks, months, possibly years, and to make decisions for the company of how and what you might want to do to invest, to be able to fulfill that demand coming forward. Looking at things like extending the shift patterns of your employees, if you have production only running nine to five, but you have a certain product which has seasonal trends, you might want to introduce a two-ship period a few months before that seasonal trend hits to make sure you've got the stock available to fulfill your customer's obligations, looking at not just extending workforce, but also looking, do you need to invest in more production lines or even greater? Are you actually going to be able to fulfill your obligation, bringing on not just one or two, but do you actually need to extend and invest in a new facility?
Maybe that demand is coming from a certain area, certain region, and logistically it doesn't make sense to keep transportation, take transport on the jobs across the globe. So, you might want to invest in a facility in another country and planning will allow you to start looking at that information, giving you that idea of what lead times are happening, the costs and so forth. That's why it's targeted at that ERP level, looking at that high level of granularity of data.
Goulding: And then going back down to the scheduling product, scheduling is more of the tactical support tool, which you use on a day-to-day basis. Planning you, use maybe once or twice a week, a couple of times a month, but scheduling is usually a daily activity. Maybe even more frequently than one or two times a day, depending on the environment it's being deployed in. Which is why is it a tactical decision support tool? It gives you that upfront visibility of what's happening. It gives you an idea of what's happening on that production line, what effect maintenance might be having. What effect is having on the shop floor, if are arriving late from the supplier. So you can renegotiate due dates or possibly alternative supplies for that raw material.
It allows you to introduce, short-term overtime planning, looks at seasonal trends, but scheduling is looking at that shorter term, if you just increase overtime, introduce it on a weekend, does that fulfill the obligation and get through that backlog of few orders possibly because of a breakdown or an issue on the shop floor a few days prior? It allows you to juggle the priority of the orders. Every customer thinks that they're the number one priority, but you can imagine juggling that sequence when you've got possibly tens of thousands of different customers' orders in there. Navigating around that may still be quite complex, going back to large mass production. Go into where it is now of smaller production cycles, but more frequently APS allows you to do that. Changing the batch sizes, to see how you can fulfill that and meet those obligations in smaller batches, more frequently and quicker and that achieves the customer demand, making sure that production is running through with no gaps to fill in that customer success, really.
And, finally, because you have that granularity of detail in scheduling, you can do what if scenarios. You can take those requests from the sales team. If they have a new order to come through, you can have a look, see what impact that would have on the production to see if what they're negotiating with the customer is actually achievable. There's no good them achieving a delivery date with a customer, which is not achievable because of the existing capacity on the shop floor and then being penalized and fined afterwards. So, it gets into that sort of closed loop system where you can start building a relationship, both with the sales team and having full visibility of what's happening. So, you get more of that understanding.
Goulding: What's the competition today for APS? Spreadsheets is the number one competition to APS. It allows you to do that basic schedule looking at how you can model seasonal trends, etc., looking at our forecast and demand and plotting your graphs, but it doesn't give you the same level of freedom you get in a planning system or the scheduling system itself. And then you have the planning and scheduling assistance, which come native within your ERP system. The scheduling systems, which are built into ERP are not very vast and flexible to allow you to put bespoke business logic in there to look at putting business rules in that you want to utilize certain resources before others trying to model how you consume more goods in the most efficient way possible. So, the competition for APS is the sketching of systems which are built into your ERP and Excel.
Rajagopal: So, Craig if I could jump in with another question here, I really like how you're spelling this out, because sometimes it's tough to go get executive buy-in and they say, well, we don't need it because we have X or Y or Z. So, I think this comparison chart is very helpful and if I understand correctly it doesn't necessarily compete with the ERP, but it's kind of a combination, right? So, if that's accurate and with so many ERP systems out there, how do you connect with all of them? It sounds like it would be complicated.
Goulding: It can be quite complicated, but it comes back down to how ... where the data source is and how good that quality of data is, but we've built our application to be sort of an ERP system and MES system diagnostic system. So, it doesn't make a difference what your ERP vendor is, or your MES system. We built a framework within APS to make that model learning as easy as possible. So, we can connect our application to any sort of ERP system on the market. There's just some delivery effort needed on that to actually do the transformation of data from one system into the other. So really there isn't any ERP system or MES system or shop floor information system where we haven't had some form of customer deploying that and integrating.
Rajagopal: Thank you, Craig.
Goulding: So, I've just given a quick overview really of what our APS system is doing both in the planning scenario and in the scheduling scenario. So now I've just really got a couple of slides just to give feedback of what our customers have been saying about the product and also a couple of reference sites, case studies of where APS has been deployed most recently and the sort of success they've been getting after deployment. These are the comments which our customers come back to us on. I mentioned right at the beginning, one of the value drivers is that communication, because everything is in one application and the business logic is defined in the application and you can share the results quite visually through the various displays. The communication has started to build up across the organization.
You're no longer having sales teams coming under fire for negotiating the due dates, which are not achievable, the shop floor manager knows what's in the pipeline. What he is going to have to try and achieve. You have the maintenance teams, having the visualization of what's happening to try and schedule in maintenance activities. And you can also negotiate them back because you have that visibility to talk to your suppliers, to introduce maybe longer lead times, which might reduce the costs et cetera.
It also shortens the cycle. That's not just the production cycle of producing the product, but also the production cycle of generating an achievable schedule as you'll see, in one of the slides in a moment because everything is in the application and gives you that sort of look ahead to see what could be happening and then what might happen and I need to do these. What if scenarios: it does increase the level of service you're giving to your customers, and these aren't statements I've written. These are actually statements which have come back from our customers, using the application.
Overall using an application like APS, once you've defined the business rules and have interfaces between your MES system, your shop floor, ERP systems, it reduces the stress on your production planner. He's no longer spending possibly hours, if not days, trying to come up with an achievable schedule for something to cause a conflict on the shop floor or materials arrived late and then have to redo everything again and be in that constant loop. Once you've defined those business rules, a few presses of a button, a few analyzing the results, which have come back and you have a new achievable production schedule delivered within minutes.
Goulding: One of the oldest pharmaceutical companies in Brazil, introduced both the planning and the scheduling application and you can see on the screen that their challenges come back to some of the points I highlighted at the beginning. They have now an increase in exports, but demand is coming from further up field. They’re introducing a new product line because of the change in requirements (customers wanting those more personalized goods). They’re growing their business, not just from a production point of view, but where it's sold, and then the stores it's been sold into, and that's where the planning comes into it. So, I'm not going to go through the entire slide, but you can see these are the challenges which have been highlighted throughout this whole deck.
Hopefully you can see some of these challenges reflected back in your own organization and to see how you can adopt. So, what was the solution for this customer? They mentioned both the planning and the scheduling to fulfill their requirements and we talked about the stress on the planner and you can see from some of the key indicators on here, they reduce their planning cycle down by 70%. So instead of spending hours doing their production cycle, it's down to those short timeframes, they improve the efficiency on the shop floor and because of the data flows coming through there as I mentioned highlighting and making sure the data's cleansed correctly in a good fashion. They've managed to improve their production processes. That's not just production processes in terms of working out where best to make it, but they're now getting the real-time data from the MES system into APS to actually give you more accurate, achievable schedule going forward.
Goulding: Moving on to another customer, Natural One. This customer as you can see from the slide makes pressed fruit drinks. Again, this customer is based in Brazil. They've implemented both the planning and scheduling application and you can see they have a similar challenge. They wanted to improve the productivity on production lines or their filling lines, how you handle changeovers, how you handle contamination, all that gets taken into account when you start building your business rules into a scheduling application.
Goulding: You can see from here, once they implemented the two solutions, they've actually taken their planning time down 97% which the achievable result on there. And it starts then to easily just to give you that feedback of what the return on investment is going to be. It's not just being able to fulfill the orders more, but also people time is expensive. They've managed to look further up field, instead of just looking at the short-term horizon of what they can do on the shop floor. They expanded that right out to a 12-month window and overall. One of the challenges they had was working with inventory and because APS allows you to juggle the inventory, knowing what you need when you need it, negotiating those lead times with your suppliers, they've actually been able to reduce that stock intake.
Rajagopal: Great. Thanks, Craig. I especially liked the case studies at the end because that's something our audience is always asking for. So, thank you for that. We do have some time for questions, so I'd like to dive right in and if you haven't submitted a question yet, now would be the right time to do so again, you can find that Q and A function on the left side of your screen down below the presenter head shots. Okay. So the first question I have coming in here, it looks like from a mid-sized company and they want to know, does this solution area work for any size company?
Goulding: Yes. So, there is no real limitation of the size of the company for APS. There's also not a limitation on the size of the challenge because a large multi-site company could have the easiest challenge, but a small company could also have the largest challenge. Because APS is quite flexible and can be adopted to the business requirements and the business rules, there isn't really that concept of no organization too small or too big.
Rajagopal: Okay, great. The next one says, do you have specific teams in charge of the implementation, or do you work with local or any partners?
Goulding: So, there is two routes of deploying APS, obviously being a Siemens product. Siemens has its own direct sales team and deployments team throughout various regions, but we also have a vast partner network. So, you can see those two case studies I've highlighted a moment ago. Both of those, customer solutions actually are implemented from our partners in Brazil. So, there are various means for it, it really depends on the location of the customer, where they purchasing from, what systems they might be implementing, is it just APS they’re implementing, or could they be implemented in the MES system as well? And also, certain partners have an expertise in certain ERP systems. So, they might also specialize in the implementation of Opcenter APS with that particular vendor, but all that information could be shared at the time of the request.
Rajagopal: Great. The next question, and you touched on it a little bit, but it's sort of two parts here. It's talking about getting buy-in from key stakeholders. It's always a challenge, right? It does not matter the solution area. So, do you have any more examples of concrete ROI that can be shared with management or to those key stakeholders? And then the second part is do you typically provide this kind of support to help CGs gain that executive buy-in?
Goulding: So, there's various case study examples and reference material talking about those key challenges in the solutions and the benefits APS, provides. There's a few more case studies on the Siemens website, but the information can be shared with what's been submitted to us from the feedback from our customers once they've been deployed.
As you can see from those slides usually the benefit of implementing APS can be seen before the go live date, because it's not just looking at what's happening on the shop floor and being able to do that, but sometimes implementing APS highlights some of those discrepancies around run rates or your master data. So, you start to see the benefits very early on. Obviously, you don't see that until you start doing the deployment, so it's not upfront to the stakeholders, but the benefits are visible as soon as you really start using the product and doing that deployment work in the project.
Rajagopal: Okay, Great. Got it. It's sort of like the elephant in the room, so I've been asking everyone when we talk about the impact of the last year, right. Have you seen any kind of priority shifts or even within investing in the solution area or just in general, maybe there's something that has really changed or within APS pre- and post-COVID? Have you found that it's even become even more of a priority to invest in something like this? Or are you seeing CGs shying away a little bit as they reprioritize or are figuring out other things? Or how has the importance changed?
Goulding: I think it's two-fold really, it's always been very on the top of the radar because it gives you that visibility, but obviously because of COVID, because of the restriction in movement of goods, etc., it's impacted supply chain people. Our customers are coming now, seeing there is that need to be more flexible being able to look at that longer term picture because you might not always be able tomorrow to get your raw material from that supplier because of whatever reason. It could be a possible COVID lockdown or because a travel restriction or something else. So, it gives you that visibility and it does give you that challenge to manage it. So if anything, through the COVID situation and back probably 10 years ago when we were going sort of through the credit crunch I think both of these times have highlighted the fact of the urgency and the need and the benefits of bringing on board this system.
Rajagopal: And did you see with, with maybe some of your clients who already had APS in place, were they able to kind of go with “business as usual” through this, or did you see them kind of benefit in a different way with already having it implemented?
Goulding: I don't have the direct information, but we've not heard any sort of issues, certainly from our customers who have deployed nothing, outside of the ordinary depending on the industry of the customer, they everyone's had their usual issues in terms of isolation and maybe production shutting down for short periods of time. But the nice thing is because of the tool, they've been able to adjust and try and ramp up and pick up quite quickly, as soon as things were able to get back to normal. But I think it also changes from locations in how COVID is impacting different parts of the globe.
Rajagopal: Right. I was going to say sometimes no news is good news where you, if you can operate business as usual through a major disruption like that, maybe that's the benefit. So that's, great. Before we wrap up, I always like to leave the audience with a tip, a best practice, or sometimes it's even what not to do during implementation. So, before we close out, I just want to come back to you for any last thoughts?
Goulding: My only thought would be don't run before you could walk when implementing APS. You’re never going to have that big bang straight up. We do deployments in a phased approach because that will be the best way to benefit the business. So, although you might have a fast amount of requirements, try and break them down into phases.
Rajagopal: I think that's great advice, and a good way to end. I'm afraid that's all the time we have for today. So, we'll go ahead and wrap things up. If we weren't able to get to your question, we'll be sure to follow up with you. Or you can also find our information on consumergoods.com if you do want to follow up and any questions after the fact. I'd like to, again, thank Craig for giving us his subject matter expertise for today and I'd also like to thank Siemens for sponsoring today's webinar.
Rajagopal: Finally, I'd like to thank all of you, our attendees, for devoting some of your very valuable time to be with us, and we hope you found it worthwhile. Again, the webinar recording will be available on demand shortly on consumergoods.com. And thank you all again for joining, everyone. Enjoy the rest of your day.