CPM Identified as RPM Engine at ARC Forum

1. THOUGHT LEADERS FOR MANUFACTURING & SUPPLY CHAIN
ARC INSIGHTS
By Tom Fiske
& Sal Spada
INSIGHT# 2003-28M
JULY 16, 2003
CPM is the performance engine of
RPM that extracts hidden value from
existing assets. CPM enables an
easy flow of events and information
throughout the business to drive
innovation, continuously improve
manufacturing operations, and
sustain value.
CPM Identified as RPM Engine at ARC Forum
Keywords
Real-time Performance Management (RPM), Operational Excellence (OpX),
Collaborative Manufacturing Management (CMM), Collaborative Produc-
tion Management (CPM)
Summary
CPM plays a vital role in gathering, organizing, and providing context for
manufacturing data used to generate KPIs. Effective KPIs require real-time
collection of information on internal performance, mar-
ket requirements, and competitor activities. This
paradigm of performance-based operation embodies
best practices to direct and drive production and opera-
tions. Modern CPM systems extend throughout all of
operations, but systems are not monolithic and no sin-
gle supplier can provide the entire spectrum of RPM
needs. An effective CPM solution, however, is capable
of extracting additional value from existing manufacturing assets, thus
making the “hidden plant” productive. This is the final installment of a
series of insights that cover the highlights of the ARC Forum.
Analysis
CPM solutions are software systems that support
and manage production activities. By coordinat-
ing manufacturing data related to operations, CPM
solutions provide manufacturers with the means
to plan & schedule, track & analyze, and direct &
optimize operations on a continual basis. While
performing the production-centric functions, CPM
systems integrate with production control systems,
business systems, engineering systems, and main-
tenance management systems to provide visibility
into real-time production status and performance
analysis of production operations. Currently
Business Process Management
Integrate Manufacturing & Business Processes
Connect Factory Operations & Supply Chain
Visibility and Analytics
Manufacturing Intelligence
Workflow Planning
Production Process Simulation
Process Optimization
Regulatory Compliance Support
CPM Incorporated Functions

2. ARC Insights, Page 2
©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
The benefits of the “Hidden
Plant” produced a measurable
financial impact of $6million by
preventing an investment in new
machinery to achieve the same
production volumes.
available CPM solutions are not monolithic and no one supplier provides
the entire RPM needs of an organization.
CPM Uncovers Hidden Capacity
Identifying the correct KPIs and a committed partner enabled CNH to un-
cover additional capacity, “The Hidden Plant”, in their metal working
operations. CNH incorporated Overall Equipment Effectiveness (OEE) as a
KPI over 5 years ago, but it wasn’t until OEE became a Dynamic KPI were
they able to discover the additional capacity they really had. ABB’s Opti-
mizeIT CPM infrastructure enabled the collection of dy-
namic measurements directly from machinery without
operator intervention. As a direct result of using dynamic
measurements, OEE metrics were used to reveal the
“Hidden Plant” by raising capacity as well as allowing
CNH to set target performance when negotiating to pur-
chase new machinery. The benefits of the “Hidden Plant”
produced a measurable financial impact of $6 million by setting expected
performance standards on new machinery purchases as well as reducing
the investment in new machinery to achieve production volumes.
Transcending Production Lifecycles
A CPM system is a decision support system that relates product informa-
tion to events throughout the production lifecycle. Business systems in the
context of RPM are dynamic systems seeking to optimize profitability by
managing capacity and product mix in real time. They are driven by mar-
ket opportunities and empowered with a view from suppliers to customers.
Real-time Performance
Management
Future TimePast Time Current Time
Production Lifecycle
Real-time
Accounting
System
Operations
Data
Sources
Current
Costs
CFO COO
Performance
Targets
Leverage Production Time to Extract the Benefits of RPM

3. ARC Insights, Page 3
©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
In the last two years,
Fonterra attributes over $9
million in cost savings from
the used of Advanced Process
Control (APC).
The predictive control strategy utilized by Fonterra, a $6.8 billion milk co-
operative based in New Zealand, incorporated the concept of “Production
Lifecycle”. Illustrating the diversity in CPM solutions, Fonterra employed
an Advanced Process Control (APC) component of CPM
from Pavilion to reduce production variability and identify
additional capacity in existing production assets. Displaying
information in meaningful ways that are easily understood is
essential to encourage employees to respond appropriately.
In the last two years, Fonterra attributes over $9 million in
cost savings from the use of APC. Fonterra stated that there were two piv-
otal elements during the course of an implementation. Plant operators
need to have a sense of ownership in the new technology and they must
have confidence in the system’s ability to make decisions. In Fonterra’s
view, it is the people that provide the value of the new technology.
DuPont believes that chemical companies are at a point where cost and effi-
ciency focused efforts provide little or no incremental value. The next wave
of improvements will be driven by OpX and RPM for manufacturing and
supply chain optimization. Currently, their major challenge is to improve
the manufacturing process continuously and sustain excellence and value
over time. To accomplish this, they have embarked on an enterprise inte-
gration journey that provides increased visibility into performance enabling
managers and operators to become micro CFOs. They are using Aspen-
Tech’s Enterprise Platform, Performance Management, and Information
Management tools to align individual daily operational decisions with fi-
nancial business objectives and to lock-in gains made from improvements.
The system also facilitates modeling technology to look beyond actuals and
targets to predict and run at optimal conditions, which is an important as-
pect of CPM systems.
Standard Eases Flow of Information
RPM requires an easy flow of events and information throughout the busi-
ness to increase visibility and keep operations running as close as possible
to optimum. In ARC’s view, ISA 95 takes a step to eliminate the persistent
problem of integration and interoperability between business and produc-
tion systems. The SP95 committee envisions the ISA 95 standard as a
backbone behind leveraging the benefits of RPM. The ISA 95 standard has
identified the common elements of enterprise integration with the produc-
tion floor that are widely used throughout the industry. ARC believes that

4. ARC Insights, Page 4
©2003 • ARC • 3 Allied Drive • Dedham, MA 02026 USA • 781-471-1000 • ARCweb.com
ISA 95 will provide the basis of model for a consistent set of business proc-
esses and data structures to ease the integration with CPM functionality.
Recommendations
• The outgrowth of a well founded collaborative manufacturing infra-
structure is RPM. Making information available from disparate
organizations and systems creates knowledge workers, ensuring that
every decision can make a difference.
• Since RPM is not a monolithic solution, an organization must develop a
strategy to determine the CPM components that provide the most
value.
• RPM is about looking ahead and anticipating issues, but this philoso-
phy provides the best results when incorporated all the time.
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information, contact your account manager or the author at tfiske@arcweb.com or
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