MAY/JUNE 2009

mbtmag.com

24-hour product
development
With collaboration tools,
global design teams
never sleep p16

ALSO:
The energy-efficient plant p18
Managing supply chain risk p20

Joshua Dees
Vice President of MIS
Black Diamond
Equipment Ltd.
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 Viewpoint —Sidney Hill, Jr., executive editor

Social networking sites: No place to

fool around
or most businesspeople, the line channel in lieu of flying to Las Vegas. I’m

F between their work and personal lives

And now that we’re firmly ensconced

away completely.
sure a lot of business executives trying to trim
travel budgets see the value of that.
has been blurry ever since companies
started issuing laptops and cell phones.
Later in the conference, IBM unveiled sev-
eral initiatives to help both its customers and
in the era of Web 2.0, that line is being washed
business partners integrate social networking
into their businesses.
There’s still some debate about the business
These announcements included:
value of certain Web 2.0 technologies—spe- • IBM Atlas for Lotus Connections; and
cifically social networking sites like Facebook,
• IBM SOAsocial.
MySpace, and Twitter. And it recently occurredIBM Atlas for Lotus Connections is a tool
for creating internal vir-
When someone questions how Tweeting will help the company tual communities in which
people seeking knowledge
turn a buck, ask them what treating a customer to a round of about specific topics can
golf has ever done for the bottom line. easily locate and submit
questions to co-workers
to me that the people who insist on continuing with expertise in those areas.
that debate don’t know what’s actually happen- SOAsocial is an IBM-hosted community in
ing on these sites. which IBM partners and customers can connect
When a corporate executive inquires about to discuss new developments in the realm of
the business value of an activity, what they’re service-oriented architecture.
really asking is, “How’s that going to make me I managed to squeeze in a few minutes with
money?” Carter to discuss her opinion on this question
The next time someone asks you how of the business value of social networking.
Tweeting will help the company turn a buck, Among the questions I asked:
this should be your response: “What has taking • Why should manufacturing executives be
a customer to dinner or out for a round of golf interested in social networking?
ever done for the bottom line?” • When did she realize social networking
There’s a social aspect to those activities— could be an actual business tool?
people are there having a good time, and every On the first question, she said social network-
now and then a business tip gets passed on, ing offers a low-risk way of connecting with
a new contact is made, or contract terms are customers to generate new ideas for developing
ironed out. products and services.
Similar things are happening in the social net- When did she realize the value? Carter said
working arena, and it’s a lot less expensive. the business value of social networking became
It was easy to see the business value of apparent to her a couple of years ago, when a
social networking at the recent IBM IMPACT customer responded to an item she posted on her
Smart SOA Conference. It started with blog. “We started a dialogue . . . and ultimately it
Sandy Carter, IBM’s VP of SOA, BPM, and resulted in a very large deal,” she said.
WebSphere, announcing that a large percent- And no one paid for a single round of golf.
age of the 3,500 people who follow her on A video of my talk with Sandy Carter is avail-
Twitter had asked if they could be apprised able on mbtmag.com. You also can follow me
of news from the conference through that on twitter at: www.twitter/mbtsid ■

4 MAY/JUNE, 2009 Manufacturing Business Technology

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But you can. With our proven supply chain intelligence software for manufacturing.

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 MARCH/APRIL 2009
VOL. 27 NO. 3 PERIODICAL
Staff
Publisher
Jim Langhenry
JLanghenry@reedbusiness.com
EDITORIAL STAFF
Executive Editor
Sidney Hill, Jr.
shill@reedbusiness.com
Managing Editor
Renee Robbins
renee.robbins@reedbusiness.com
Electronic Products Editor
Mark Hoske
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SUBSCRIPTION OFFICE
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Views from the front Plant Operations
8 Corporate fraud on the rise with market 18 A matter of commitment
slowdown
Model-based advanced process control helps
8 Hot Tomato: Food supplier hopes ‘recall create energy-efficient plants
drills’ will assure customers in a real crisis
9 Spending lag prompts supply chain Enterprise/Supply Chain
management makeovers 20 Supply chains at risk
Cover story Companies tap new technology to enact
smart contingency plans—inbound and
10 24-hour product development outbound
With collaboration tools, global design
teams never sleep Columnists
2 Viewpoint—Sidney Hill, Jr.
Emerging Technology Social networking sites: no place to
14 A new of wave prosperity: AT&T chairman fool around
sees mobile devices driving economic
development Calendar
16 Virtual commerce: Serious gaming is 22 Upcoming conferences
becoming a real business tool
8 Corporate fraud is 14 Better desktop 18 Run cleaner, more
on the rise usefulness? energy efficiently
MBT Online
A sampling of what’s happening at mbtmag.com
Webcast: SOA as a Tool for Business Blog: Operation Green
Process Management
MBT Senior Contributing Editor Roberto Michel
Hear how manufacturers are using service- separates fact from fiction in the green IT and
oriented architectures to build the agile technical manufacturing movement.
and business infrastructures necessary to
maintain a competitive edge in a constantly Columnist: Julie Fraser
changing business environment. Julie Fraser on why companies can no longer
survive on strategic sourcing alone.
www.MBTmag.com MAY/JUNE, 2009 7
 Views from the front

Corporate fraud on the rise with market slowdown

T
he tough economic climate has
negatively impacted just about
every business sector, from real
estate to retail, and services to
manufacturing. Unfortunately,
the lackluster market simultaneously also
is stimulating growth of another disheart-
ening trend: corporate fraud.
Over the past year, fraud has grown in
depth and breadth, becoming more wide-
spread, and increasing in volume and value.
According to the latest Kroll Global Fraud
Report, the fastest growing types of fraud are information
theft—27 percent, up from 22 percent—and regulatory and
compliance breaches—25 percent, up from 19 percent. Both
areas are up by more than five percentage points from last
year’s survey.
More than four out of five companies surveyed (85 percent)
have suffered from corporate fraud in the past three years—up
from 80 percent in last year’s survey. For larger companies the
proportion suffering from fraud rose to 90 percent.
The most common types of fraud in the manufacturing
industry are theft of physical assets or
stock (53 percent), regulatory or compli-
ance breach (27 percent), vendor, supplier
or procurement fraud (25 percent), corrup-
tion and bribery (24 percent) and informa-
tion theft, loss or attack (22 percent).
The poor economy has increased com-
petition for many businesses as typical
revenue resources have dried up, says Blake
Coppotelli, senior managing director of
business intelligence and investigations
for Kroll, a risk consulting company.
“To move ahead in today’s climate, many companies have
felt the need to pursue higher-risk opportunities to gener-
ate new revenue. Some have moved into geographic areas
where they are inexperienced, or are dealing with unfamiliar
suppliers or partners, Coppotelli says. “Companies that have
been forced to cut overhead and other costs often do not
dedicate enough resources to mitigating risks.”
Coppotelli stresses the importance of training creative and
innovative individuals to combat fraud since the perpetrators
are incredibly adept and market savvy. 䡲

Hot Tomato: Food supplier hopes ‘recall drills’ will assure customers in a real crisis

I
n light of recent product recalls, manufacturers must be ready to Vaughn Foods decided to hold these drills after losing revenue
respond quickly to supply chain issues to protect consumers as when the tomato industry was hit by a recall in summer 2008.
well as their own brand reputations. No Vaughn products were tainted, but customers remained wary.
To that end, Moore, Okla.-based Vaughan Foods has enacted “We realized we have to minimize risk . . . and prevent serious
a plan to host two mock recalls a year. The events begin with the problems from happening,” Gramillo says.
company’s quality assurance department, which is notified that a “Track & trace in the process industries, such as food and
beverage, is very challenging,” says Karin
To prepare for potential recalls, Moore, Bursa, a VP with Logility, supplier of the
Okla.-based Vaughan Foods enacted software system Vaughn Foods uses for
product tracking.
a plan to host two mock recalls a year. “Production operators and co-packers
Once an event is in process, the quality may use the same semi-finished goods to
make several other finished products,” Bursa
assurance department team has three says. “Jam or jelly can be sold as a finished
hours to complete the process. product but also can be used for pie filling,
which adds another step as well as several
mock recall is in effect, and the team has three hours to complete layers and levels to the process.”
the process. The Logility Voyager system manages alert notification for a
“We must isolate the contaminated product, have knowledge recall by automatically contacting partners via the Internet or
about where the product is in the supply chain, and file accurate alerting customer relationship managers about the issue. “Since
and timely reports to the authorities,” says Victor Gramillo, quality speed is of the essence during a recall, having quick access to
assurance manager for Vaughan Foods, a supplier of fresh product data, vendor information, and locations where product last
vegetables, refrigerated deli salads, soups, and fruit. resided is very important,” says Bursa. 䡲

8 MAY/JUNE, 2009 Manufacturing Business Technology

Spending lag prompts supply chain management makeovers
T
he precipitous drop in consumer
spending that has been cited as a
major cause of the ongoing economic
recession now has manufacturers scrambling
to adjust supply chain management
strategies.
In fact, lower consumer spending took the
top position on the list of supply chain risks in
a recent survey conducted by Boston-based
AMR Research.
“As retailers cut inventories in the face of
softening demand, this risk is cascading up
consumer and industrial supply chains,” Noha
Tohamy, an AMR Research VP said in a report
summarizing the survey’s findings. “Companies
like Cisco and Procter & Gamble are grappling with tactical questions, like
where to cut and position inventory, and strategic initiatives, like where to
source and how to rationalize their supplier bases to remain healthy during
the downturn and be well-positioned for the next recovery cycle.”
Tohamy said AMR conducts this risk assessment survey on a quarterly
basis, and it’s clear from the results of the most recent canvass—covering
the first quarter of 2009—that the economic downturn is dominating
the thinking of supply chain executives.
“Lower consumer demand is dominating the
list of risks this quarter, with 37 percent of
respondents identifying it as No. 1,” Tohamy
said. “Additionally, only 15 percent expect this
risk to decrease by next year.”
Product quality failures placed second
on risk list, with 35 percent of respondents
identifying it as their second top concern.
Volatile energy and commodity prices—
which consistently took first and second place
honors last year—placed third and sixth,
respectively, on the most recent list.
The potential of having intellectual property
stolen was fourth-highest risk factor cited
in the latest survey. This fear—coupled with concern over product
quality—appears to be causing manufacturers to rethink outsourcing
and offshoring strategies.
For instance, Tohamy said, China—which continues to be plagued by
both recall and IP protection problems—is now getting more competition
from India as a manufacturing center, and more U.S.-based manufacturers
are looking at nearshoring. 䡲
 Cover Story

24-hour product development

With collaboration tools, global design teams never sleep
hile scenarios for sharing Just ask Black Diamond Equipment,

By Hope Neal,
W design data may invoke
grandiose thoughts of
enhanced collaboration
or disparate design cen-
ter interactions, sometimes all a company
really needs to do is make it easier for
two engineers sitting in the same office
a Salt Lake City-based manufacturer of
climbing and skiing equipment. Many
of its products require input from both
industrial designers and mechanical
engineers, and up until a few years
ago, the company used several dif-
ferent CAD systems to develop its
contributing editor to work together on a project. products.

Joshua Dees, Black Diamond VP of MIS Dave Mellon, Black Diamond VP of products

10 MAY/JUNE, 2009 Manufacturing Business Technology

 “Some would serve this purpose well
and some would serve that purpose well,”
says Joshua Dees, VP of MIS for Black
Diamond, referring to the CAD systems.
“None of them served all of our purpos-
es well. As you can imagine, it created
nightmares [when] translating this file
to that file.”
As Dave Mellon, Black Diamond’s VP
of products, explains, when you move
files to different CAD systems, “you’re
going to lose a lot of the history about
a part and how it was built. Being able
to contain all that and see the entire
history—how someone built the part
“None of [the CAD systems] served all of our purposes
well. As you can imagine, it created nightmares [when]
translating this file to that file.
—Joshua Dees, VP of MIS for Black Diamond
over the last eight to 10 hours—as
you open it up is helpful.”
From many to one
To retain its product design history,
Black Diamond decided to make the
switch to a more powerful CAD system
that would support all of its engineering
needs. It chose NX from Siemens PLM
Software.
Describing NX as a unified solution,
Paul Brown, senior director of NX product
marketing, Siemens PLM Software, says
its tools for styling, mechanical design,
manufacturing, and analysis are available
through a single system, “making it easier
for [Black Diamond] to share data and get
the data through the whole process.”
Having successfully addressed its engi-
”
neering collaboration problem, Black With enhanced design data sharing facilitated
Diamond had other data-sharing capa- by Siemens Teamcenter and NX solutions, Black
bilities it wanted to look at next. Along Diamond engineers in China and the U.S. are
with engineers working on products at able to quickly develop ski boot product lines
Black Diamond’s home office, the com- because they are in essence working 24 hours a
pany has product and marketing managers day across time zones.
working in other parts of Salt Lake City,
as well as in Reinach, Switzerland, and
Zhuhai, China.
Being able to effectively share data
about products in all locations is critical
to Black Diamond’s success.
www.MBTmag.com MAY/JUNE, 2009 11
 Cover Story
“Without the NX platform
and without the ability
to work around the
clock, there’s no way
we would have been
able to pull off a launch
of a product line like
boots in the time
period that we did,”
says Mellon.
In the past, the company used to
store much of its product data—e.g.,
product concept records, product briefs,
forecasts, and pricing information—in
folders in Microsoft Windows file direc-
tories. But concerns about security and
file versioning control—as well as the
potential for misplaced or unintention-
ally deleted files—led Black Diamond
to another Siemens product, called
Teamcenter.
Teamcenter lets Black Diamond cen-
tralize its product data so users from all
locations can access it. The benefit is a
much greater level of versioning control
and security than seen with the folder-
based system.
Moreover, says Dees, the value of
Teamcenter is it’s Web-based. “It’s a
challenge to share Windows file sys-
tems around the globe,” he says. “It’s
a lot easier to share applications if
you can go into the Web application
and download files from the database
server.”
This is particularly important for a
company that relies heavily on being
able to design around the clock to
bring products to market faster. With
better design-data sharing, Black
12 MAY/JUNE, 2009 Manufacturing Business Technology
Diamond engineers in China and the
U.S. can collaborate on, for example, a
new line of ski boots, so that the com-
pany is in essence working 20 hours
a day developing and delivering its
products.
“Without the NX platform and with-
out the ability to work around the clock,
there’s no way we would have been able
to pull off a launch of a product line like
boots in the time period that we did,”
says Mellon.
Interactive view
While Black Diamond can speak to
the value of Siemens products such as
Teamcenter and NX, Siemens isn’t the
only vendor offering data-sharing capa-
bilities. Dassault Systèmes, for example,
offers several solutions. One of these is
called 3DLive.
Unlike CAD viewers, which allow non-
engineers to open CAD files without
installing expensive CAD software on
their computers, 3DLive offers “much
more than a view-only look at the CAD
model in of itself—it establishes a rich
environment of information,” says Brian
Chambers, a business strategy director
for Dassault.
“You can set up collaborative review
sessions based on the 3DLive view of the
product model and do interactive ses-
sions remotely via the Web with other
engineers—and with other functional
organizations—to view and mark up the
data, and move portions of the CAD model
from one user environment to another,”
Chambers explains. “It can be quite
interactive.”
Interactivity is important because
sharing design data and using it to
collaborate often involves more than a
one-way journey from the CAD system
to members of the product development
team or outside the organization to sup-
ply chain partners.
As Hardeep Gulati, VP of product
strategy for Oracle PLM, points out, the
movement of product data should be
bidirectional.
Take the case of an engineer picking
parts when designing a product. While it’s
natural for the engineer to evaluate the
technical attributes of a potential part,
procurement concerns—such as pricing
or availability—may not be considered
if that information isn’t available to
the engineer. And once the product is
designed and sent to procurement, it can
cause delays to learn at that point that
a component is no longer available, or
is too expensive.
“When designers are picking the CAD
part, you want some of that supply chain
data to be visible to them while they’re
making selections,” says Gulati.
With the Oracle Agile PLM solution set,
Gulati adds, “[designers] have all this
supply chain information available during
the parts-selection process in the CAD
tool. They can annotate some of those
attributes and supply chain information
right into the CAD tool.” ■
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Management topics: Quality, collaboration, multi-plant production, energy
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management, and supplier performance.
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The latest thinking on optimizing product, process, and service delivery
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Emerging Technology

A new of wave prosperity: AT&T chairman sees

mobile devices driving economic development
Sidney Hill, Jr., executive editor

T he rise of mobile broadband technology will drive a new

wave of productivity and economic development similar
to that produced by the advent of the Internet.
Randall Stephenson, chairman and CEO of AT&T, made
that declaration during his keynote address at the annual
“imagine having that capability” on a mobile phone.
Once that happens, he predicted, there will be a new wave
of productivity, commerce, and prosperity rivaling the one
sparked by the emergence of the Internet.

conference for customers of Sterling Commerce, a supplier

of B2B integration solutions, and an AT&T company.
“New devices will come with 4G networks, and soon it will
be difficult to find any electronic device that is not connected
wirelessly,” Stephenson said. “We are just on the edge of
this with the iPhone, which has an entire ecosystem created
around it. There are now 35,000 applications available for the
iPhone, and Apple recently reported that more than 1 billion
people have downloaded those applications.”
AT&T is the primary service provider for Apple’s wildly suc-
cessful iPhone.
Holding up one of the devices, Stephenson said AT&T’s
vision is for users—including businesspeople—to be able
to have the same experience on an iPhone or a BlackBerry
that they have when accessing applications from desktop or
laptop computers.
When asked about the synergy between a telecommunica-
tions giant like AT&T and an e-commerce software provider
like Sterling Commerce, Stephenson once again held up
his iPhone and said, “All of the applications that Sterling
Commerce provides should be available on this device.”
Sterling Commerce offers two categories of solutions:
• B2B integration solutions; and
• Selling and fulfillment applications.
At the user conference, held April 27 – 29 in San Antonio,
Texas, Sterling introduced a new set of B2B integration solu-
tions under the name, Sterling Business Integration Suite.
“Fast data and video from any location is what we expect
to provide,” Stephenson continued. “We spent $9 billion last
year buying spectrum to accommodate that.”
Noting that his weekly staff meetings are now held via
video conference rather than face-to-face, Stephenson said, AT&T wants mobile devices to provide
desktop-type usefulness.
14 MAY/JUNE, 2009 Manufacturing Business Technology
How do we turn more ideas
into successful products?

The Siemens Answer:

PLM Software for a 50 percent reduction in time-to-market.
An idea comes from one part of the world; needs to be manufactured in another; and needs to sell everywhere.
Medium to large businesses need a Product Lifecycle Management (PLM) solution that moves more ideas efficiently
through the innovation process, so that the complexities of a global enterprise are managed with the simplicity of a
local environment. www.siemens.com/plm/answers/mle.

Answers for Industry.

© 2009 Siemens Product Lifecycle Management Software Inc. All rights reserved. Siemens and the Siemens logo are registered
trademarks of Siemens AG. All other logos, trademarks or service marks used herein are the property of their respective owners.
Emerging Technology
Virtual commerce:
Serious gaming is becoming a real business tool
Sidney Hill, Jr., executive editor
V ideo game aficionados have become a powerful force
in the computer industry, with chipmakers constantly
striving to create products with the power to make the
scenarios simulated in these games ever more realistic.
Manufacturers have reaped side benefits from this, as
faster, more powerful processors accommodate programs
that allow for simulating stress tests on product designs
or even seeing how well new production lines will operate
before they go live.
Now, serious gaming is working its way further into the
enterprise.
In May, IBM introduced Innov8 2.0, the second generation
of its serious gaming application.
The Web-based application presents users with real-world
business scenarios and challenges them to come up with
solutions that achieve bottom-line results.
Current game scenarios include:
• Managing customer call center problems;
• Alleviating traffic congestion on urban roadways; and
• Optimizing a manufacturing supply chain.
Each of these scenarios was demonstrated at the IBM
IMPACT Smart SOA conference, which took place in Las
Vegas, the week of May 4.
Pilot project in place for training
Also at the conference, IBM announced that the University
of Farmers Claims, a unit of Farmers Insurance Exchange, is
piloting Innov8 2.0 as tool for giving its roughly 11,500 employ-
ees hands-on experience in processing insurance claims and
handling and managing customer service calls.
Sandy Carter, an IBM VP, said the idea for developing a
serious application arose roughly two years ago when she
was holding a case study seminar with a group of college
students, and presented them with the problem of how to
educate the market on business process management (BPM)
and service-oriented architecture (SOA).
“Every team recommended serious gaming,” she said. “So
we developed Innov8 1.0 for universities to pilot.”
16 MAY/JUNE, 2009 Manufacturing Business Technology
A serious gaming
solution from IBM
allows companies to
see in advance how
various approaches
to managing a supply
chain crisis will impact key
performance indicators
such as customer satis-
faction and profitability.
Better learning
Carter said roughly 1,100 schools are now using Innov8 1.0
as part of their curriculum and they have found that people
experience anywhere from 80 percent to 108 percent better
recall when learning through serious gaming as opposed to
traditional teaching methods. She also said those numbers
convinced a large number of IBM customers and business
partners to get serious about gaming as well, and thus came
Innov8 2.0, which is geared for customers and partners.
The supply chain component of the application currently
allows users to work on solutions for three situations:
• Streamlining the process for bringing new suppliers
onboard;
• Altering product sourcing and delivery routes in response
to an impending hurricane; and
• Responding to a product recall.
Scenarios, simulations; try it now
In the latter two scenarios, customers can lay out various
approaches to solving the problem and then simulate the
impact those approaches have on key performance indica-
tors such as: customer satisfaction, environmental impact,
and profitability.
If those indicators are not to the company’s liking, a different
set of choices can be made to achieve the desired outcome.
Anyone wishing try the game can do so now at www.ibm.
com/innov8.
 Plant Operations

A matter of commitment
Model-based advanced process control helps create energy efficient plants

Roberto Michel, senior contributing editor
f cost weren’t a factor, numerous tech-
The value of APC powdered products. The coal-fired boilers
Advanced process control uses software
that supply high-pressure steam to the
to model how multiple variables inter-
driers were exhibiting unwanted variabil-

I nologies could be tapped to create

the most energy-efficient plant. The
latest furnaces, boilers, or co-gener-
ation equipment could be installed.
The facility could have solar panels or
geo-thermal heating. A new distributed
process control system (DCS) could be
deployed.
But that’s not today’s reality.
The economic reality dictates that
manufacturers must be as energy-effi-
cient as they can, largely with the assets
that exist. As John Nesi, VP of market
development for Rockwell Automation,
a vendor of plant automation systems,
acknowledges, “We are in a phase of
Draconian cutbacks in terms of capital
expense.”
Still there are technologies that make
existing assets more energy efficient,
act during a process, and integrates with
ity, so in 1997, the company deployed
automation hardware such as program-
Pavilion’s Model Predictive Control APC
mable logic controllers (PLC) or DCSs
solution to, as Hunter explains it, “run
to control the process optimally. APC
the boilers smarter.”
projects historically have been aimed at
throughput, but APC can also optimize
energy use.
More specifically, APC reduces variabil-
ity and minimizes excess oxygen in the
flue gas of the boilers, as well as reducing
To deploy APC, plant testing is typi-
variability in the high pressure steam sup-
cally used, whereby incremental inputs
ply. The project cut oxygen variability in
from the control layer are fed into the
the boiler’s flue gas by up to 50 percent,
software to build a model. while high-pressure steam variability was
“We start by building models of how
reduced by at least 60 percent. What’s
a process works,” says Mike Tay, man-
more, the steadier operation brought
ager of sales engineering with Pavilion,
close to a 4-percent reduction in coal
a Rockwell Automation division that
consumption.
offers APC. “It’s a virtual plant that you
To work well, APC needs a solid control
can then optimize to achieve various
foundation, Hunter warns.
goals, such as minimum cost, energy, or
“Your existing control systems need to
emissions.” be running well,” he says. “You need to
Fonterra Cooperative Group, an review the instrumentation, the calibra-
tion, and the tuning of the low-level

“ It’s a virtual plant that you can then optimize to achieve loops. When APC is running, the plant
needs to respond reliably to what the
various goals—minimum cost, energy, or emissions. ”
control moves are.”
Over the years, Fonterra has estab-
—Mike Tay, Rockwell Automation
lished an APC group of 10 people who
says Nesi. These include advanced pro- Auckland, New Zealand-based dairy prod- deploy projects with help from Pavilion.
cess control (APC), a class of software ucts manufacturer, has used APC for more With this expertise, says Hunter, proj-
that optimizes real-time plant-floor than a decade. ects can be better aligned with corporate
processes; variable speed control, “We have a track record for APC projects goals, rather than focused on immediate
which allows gears and motors to adjust where people in the business understand pain points. “We are now aligning more
speed efficiently; and energy monitor- what it can do and what it can deliver with the strategy of our business, looking
ing software. to the business,” says Tristan Hunter, where we are headed in the next two to
According to Allen Avery, an analyst manager of Fonterra’s advanced process three years,” says Hunter.
with Dedham, Mass.-based analyst firm control group.
ARC Advisory Group, “Technology is an An early project was aimed at improved Beyond basic control
enabler, but improved energy management boiler operation at Fonterra’s Waitoa At Yara Belle Plaine, a manufacturer of
is mainly a matter of people, processes, plant in New Zealand. The site has sev- ammonia, granular urea, and urea ammo-
and organizational commitment.” eral spray driers that make a range of nium nitrate (UAN) products used in agri-

18 MAY/JUNE, 2009 Manufacturing Business Technology

Advanced process control (APC) technology is helping Yara Belle Plaine’s nitric acid plant in Western Canada run cleaner and more energy efficiently.
cultural products, APC is saving energy by
achieving consistent, cleaner operations.
Located near Belle Plaine, Saskatchewan,
Canada, the company deployed Honeywell
International’s Profit Controller APC solu-
tion for the nitric acid processing unit
within the plant.
The unit or “plant” feeds UAN produc-
tion within the site. The APC solution
optimally controls the amount of NOx
emissions leaving the plant’s combustor
while minimizing the consumption of the
combustor’s fuel gases.
Since deploying APC in November of
2007, combustor fuel consumption has
dropped by up to 5 percent, NOx emis-
sions have been held at 200 parts per
million, and methane emissions dropped
25 percent.
“The benefits have held up,” says Rob
Harkness, controls supervisor for Yara
Belle Plaine. “We’ve consistently kept the
3-percent to 5-percent improvements in
fuel reduction.”
Yara Belle Plaine is upgrading its DCS to
Honeywell’s latest Experion PKS system,
but APC goes a step beyond DCS in that
it’s able to model and control multiple
variables without operator intervention.
The APC integrates with DCS, but runs on
its own server.
“APC technology can take a whole plant
into consideration,” says Harkness. “It
looks at all the critical elements, where
typically with conventional control, you’d
have one input, one controller, and one
output—or possibly a cascade control
arrangement. But with APC, it takes in
numerous measurements throughout the
plant and works with all of them to opti-
mize the entire process—not just one
part of the process.”
Why energy reduction is
everyone’s business
Attention surrounding the metric for
energy intensity—i.e., energy consumed
per unit of product produced—is espe-
“It’s important that you treat energy reduction as a
continuous-improvement program.”
—Allen Avery, analyst, ARC Advisory Group
cially high among process manufacturers,
with Fortune 500 firms like DuPont and
Dow Chemical elevating their energy pro-
grams to board-level importance.
Avery, the ARC analyst, says, “The sheer
amount of energy that process manufac-
turers use is startling . . . “For some it’s
higher than that of many small coun-
tries, but the payoff when [an energy
management] program is adopted top to
bottom in an organization can be equally
surprising.”
Allen says a recent ARC study found
that companies in the forefront of the
energy management movement treat
it like a continuous improvement
program.
“It requires involvement at all levels of
the plant, with everyone aligned around
it,” Allen says. “You have to give them
visibility, the tools, and the authority to
make a difference. Technology can clearly
play a role in this.”
Advanced process control, decision sup-
port, and real-time performance manage-
ment software were the top three areas of
technology investment among companies
identified as energy-management leaders
in the ARC survey.
“In tough economic times like now,
vendors should focus on helping custom-
ers understand how these technologies
can assist them in energy reduction,”
Allen says.
A comprehensive energy assessment
of plant operations to determine where
and how much energy is consumed is the
starting point for any energy-management
effort. ARC found that the vast majority
of the companies it identified as leaders
have performed an energy assessment.
These companies also perform audits more
regularly and at shorter intervals than
their peers.
Energy management is worthy of
being a core tenet in managing the
business, “as the potential payoff is
huge,” Allen states. Underscoring the
point, one process manufacturer ARC
spoke with claimed energy savings of
$7 billion over 12 years. ■
www.MBTmag.com MAY/JUNE, 2009 19
 Enterprise/Supply Chain

Supply chains at risk:

Companies tap new technology to enact smart contingency plans—inbound and outbound

Malcolm Wheatley, senior contributing editor to seven days to conduct—while pos- that dealing with supply chain risk was
sible biological contaminants grew to the second-highest priority on their agen-
ast June, Cary, Ill.-based Sage detectable levels—can take place in das, and “significantly” or “very signifi-

L Products asked for a voluntary

recall of certain lots of a preop-
erative skin preparation product.
For Sage, a manufacturer of personal care
products sold to hospitals and medical
practitioners, the measure was precau-
tionary: A batch of chlorhexidine gluco-
nate, bought from an outside supplier,
had been found to contain the burkhold-
eria cepacia bacterium.
While the bacterium posed little
medical risk to healthy people, the
incident underscored the wisdom of
an investment Sage had made in a
rapid testing system from Celsis that
enabled Sage to detect microbiologi-
cal contamination far faster than was
possible using conventional testing
methods. Using the Celsis system, a
test that once might have taken three
under 24 hours.
In the wake of high-profile product
recall scares ranging from vegetables
and peanut butter to children’s bath
products and cribs, supply chain risk
is center-stage. Businesses are under
renewed pressure from customers to
strip the risk from their outbound sup-
ply chains even as they acknowledge
the vulnerability of their inbound sup-
ply chains. The result is a profound
emphasis on technology as manufac-
turers rush to play catch-up in a world
that is suddenly far riskier than many
had realized.
Many observers
A recent IBM survey on “smarter supply
chains,” based on interviews with 400
senior supply chain executives, found
cantly” affected 60 percent of businesses
involved.
The finding “was a huge surprise,” says
Karen Butner, supply chain management
lead at the IBM Institute of Business
Value. “Not that it was on the agenda—
but that it was supply chain executives’
second-biggest concern.”
According to Butner, IBM is seeing
heightened interest from companies in
anything that has to do with risk iden-
tification and mitigation. Manufacturers
are looking at their supply chains and
putting contingency plans in place. “If
there’s going to be a problem, they want
to know in advance what they are going
to do about it,” she says.
The recession only exacerbates the risk
of those problems arising.
“With the economic recession in full

Industry Spotlight: Emerging markets

While doing business in emerging markets offers many rewards, it also poses risks.
Manufacturing Business Technology recently spoke with Mike Novels, CEO of
Preactor, a supplier of supply chain planning and scheduling solutions, about this trend.
MBT: Preactor has experienced success in the so-called BRIC China has been the more difficult market to penetrate. Of our 30
countries (Brazil, Russia, India, China) in recent years—with accounts there, most are U.S. or European companies who have
nearly 200 customers in Brazil alone—what advice to you have plants there.
for manufacturers wishing to increase their presence in emerging MBT: Planning and scheduling applications are generally
markets? considered more specialized solutions used by companies that
Novels: The key working in these countries is working with local already have established business processes supported by ERP
partners who understand the local language and local culture. systems. Have companies in emerging markets reached a level of
MBT: In which emerging markets do you see the most demand maturity that allows them to fully take advantage of APS technology?
for advanced planning and scheduling solutions like those Preactor Novels: That varies enormously from one market to the next.
offers? Companies in the Indian sub-continent—especially in Sri Lanka for
Novels: There has been a considerable level of adoption in example—are up to date with enterprise software such as ERP and
Brazil, where we have more than 170 accounts. However we’ve had they recognize like so many companies around the world that ERP
a very active partner there for 10 years—whereas we’ve only just does not offer detailed scheduling functionality. The same can be
penetrated the Russian and Chinese markets in the last two years. said of Brazil.
We’re also developing a healthy market in India.

20 MAY/JUNE, 2009 Manufacturing Business Technology

 50
48% Methods used to mitigate risk
Most sucessful method used to mitigate risk
40
41% 40%
38% 37%
35% 34%
30 32%
29%
27%
18% 24%
20 21%
14%
10% 10%
10 9%
6% 7% 6%
4% 5% 4% 10%
3% 2%
0
tne n

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pli s

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ch of

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on
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sto se

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ly tte
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rs

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ms

ain

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cti

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lp e

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P

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Inc
wi

swing, supply chain managers face a grow-
ing array of risks,” warns David Simchi-
Levi, professor of engineering systems at
Cambridge, Mass.-based MIT, and chief
scientist for supply chain optimization
vendor ILOG, an IBM company.
“Fluctuating transportation costs,
high volatility in demand volume and
mix, commodity price volatility, increased
labor costs in developing countries, and
the pressure to reduce inventories—these
are just a few of the challenges compa-
nies are struggling to overcome today
and will likely face throughout 2009,”
Simchi-Levi adds.
Greg Quinn, president of Quinn &
Associates, a reseller for planning &
scheduling solutions vendor Preactor in
North America, says rising supply chain
risks are forcing manufacturers to focus
more the use of supply chain execution
systems, which provide a greater ability
to respond to immediate circumstances,
as opposed to supply chain planning
systems, which focus more on long-term
time horizons.
“We’re seeing a lot more interest in
execution systems,” Quinn says. “It’s like
someone has flipped a switch.”
The good news is, despite the com-
mon perceptions, eliminating risk needn’t
always add cost. When St. Louis-based
coatings manufacturer U.S. Paint
deployed Preactor to minimize the risk
of outbound supply chain disruption
impacting the North American operations
of Toyota, Subaru, and Kawasaki, costs
went down and efficiencies went up.
“As on-time delivery performance
improved, they found that they could
eliminate work-in-process and finished
goods inventory without jeopardizing
delivery reliability,” notes Quinn. “It
became a virtuous circle.”
New kind of crisis
Supplier viability is another height-
ened risk factor in the present econ-
omy. New York-based advisory firm
PricewaterhouseCoopers, for example,
estimates 670,000 small companies
have shuttered across China due to the
global crisis—with many of them linked
to Western supply chains.
But nearer home, transport provider
viability is a growing concern, adds
Mike Maris, senior director of the global
transportation and logistics group at
Schaumburg, Ill.-based Motorola. “There’s
something of a crisis in the transport sec-
tor,” he notes. “In North America alone,
up to a thousand transportation compa-
nies have gone out of business.”
And when those transport companies
are tied into enterprise networks through
outsourced contract operations, disrup-
tion follows. Third-party logistics pro-
vider Ryder System, for instance, has been
called upon to provide back-up service to
a major office equipment manufacturer,
supplying system-savvy logistics person-
nel familiar with its ERP system in the
event of a depot’s local transport provider
going out of business.
Covering up to 50 service depots
nationwide, the service has been invoked
twice during the last few months, says
Jim Moore, VP of supply chain solutions
at Ryder. “We peel people off, put them
on a plane, and fly them to wherever the
problem is,” he says. ■

www.MBTmag.com MAY/JUNE, 2009 21

 Events/Calendar
Honeywell Process Solutions User Group Conference
June 14 -18, Phoenix
http://hpsweb.honeywell.com/Cultures/en-US/NewsEvents/
UsersGroupSymposia/Americas/default.htm
East Pack/Automation Technology Expo (ATX Expo)
June 9-11, New York City
www.devicelink.com/expo/atxe09
Growth, Innovation and Leadership (GIL) 2009: NA
A Frost & Sullivan Global Congress on Corporate Growth
September 13-16, Phoenix
www.frost.com/prod/servlet/summits-details.
pag?eventid=144109086
Council of Supply Chain Management Professionals
(CSCMP) Annual Global Conference
September 20-23, Chicago
http://cscmp.org/events/annual-global/index.asp
National Manufacturing Week
September 22-24, Rosemont, Ill. (Chicago)
www.devicelink.com/expo/nmw08
Growth, Innovation and Leadership (GIL) 2009: Asia Pacific
A Frost & Sullivan Global Congress on Corporate Growth
October 12-15, Kuala Lumpur, Malaysia
www.frost-gil.com
Rockwell Automation Fair
November 11-12, Anaheim, Calif.
www.rockwellautomation.com/events/automationfair
WonderWorld 2009 North America Conference
November 3-5, 2009, Anaheim, Calif.
http://pacwest.wonderware.com/web/News/NewsDetails.
aspx?NewsThreadID=2&NewsID=202600
Editor’s note: If there’s a seminar, conference, or
exhibition you’d like posted on MBT’s Web site, email
the description to mbtonlinenews@reedbusiness.com.
22 MAY/JUNE, 2009 Manufacturing Business Technology
Publisher
Jim Langhenry 630-288-8789
jlanghenry@reedbusiness.com
Production Coordinator
Mark Skipworth 630-288-8432
mskipworth@reedbusiness.com
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 In perspective
Managing Supplier Relationships:
Beyond Strategic Sourcing
igh profile news stories about taint- The supplier selection process can also be

H ed or unsafe toys, food, comput-

ers, and pharmaceuticals point to a
problem every manufacturer faces:
managing suppliers. Companies can
suffer immeasurable brand damage when a
supplier’s quality slips, not to mention the
more concrete costs of recalls, customer
supported by buying sites such as GlobalSpec,
PartMiner, and Mfg.com. Look for the ability
to build up relationship data and scorecards
over time, not just during selection.
A private or public network can be a dynam-
ic and low-infrastructure means to collabo-
rate and manage suppliers effectively. While
alerts, and lawsuits. exchanges such as AxWay, ChemConnect,
DemandTech, e2open, Exostar,
Strategic sourcing is not sufficient . . . Once a supplier is and GXS started as EDI focused,
these now provide deeper buyer-
selected, the ongoing work of monitoring and improving supplier services.
There is one other angle of sup-
their performance begins. plier relationship management
that is not well known, and may
As industry networks stretch beyond tradi- be a cornerstone to success in this volatile envi-
tional regional boundaries and companies seek ronment: supplier risk management.
to limit travel, differences in communication This software can help predict whether and
styles and culture will only increase these risks. when a supplier will have a glitch—financial,
Strategic sourcing is a critical start to a sup- quality, or delivery. Dun & Bradstreet has added
plier relationship, but it is not nearly sufficient. this capability to its portfolio through acquisi-
Once a supplier is selected, the ongoing work tion, and has some major customers reaping
of monitoring and helping improve their per- extraordinary benefits.
formance and practices begins. Companies must learn to work with suppli-
This involves rationalizing and consolidating ers as effectively as if they were part of their
sourcing, managing parts and suppliers, control- own company. This requires a new level of
ling contracts through their life-cycle, evaluating communication and collaboration to build
and delivering supplier scorecards, and collabo- the trust and visibility that allows everyone
rating with suppliers to better ensure mutual to truly create win-win situations. SRM can
success. So why is it that we hear so little about contribute to:
supplier relationship management (SRM)? • lower risks of supply delays, quality prob-
One reason may be that it’s now often a lems, and negative publicity;
component part of larger software suites. • improved ability for supplier management
For example, i2, Oracle, SAP, IBM and JDA, teams to focus on exceptions, relationships,
Julie Fraser all have acquired and subsequently built out and strategy;
SRM capabilities as part of their supply chain • reduced cost of goods sold; and
Julie Fraser is Principal
Industry Analyst for Cambashi capabilities. • greater supply chain effectiveness and
Inc., and has been an PLM companies have also extended into flexibility.
industry analyst, consultant, certain areas of SRM. Siemens PLM has Perhaps this is the year—while volumes for
and marketer for more than
20 years, specializing in Teamcenter for SRM with its services partner many products are relatively low—companies
manufacturing value network CapGemini. Dassault works with i2. Most will re-focus on the supply base. SRM is not
processes and systems. of the PLM focus is on sourcing and supplier the answer to the questions, but it can reduce
Julie can be reached through
Manufacturing Business selection, but it can be extended across the the effort to help ensure that sound processes
Technology, or email at Julie. life-cycle successfully. are in place and working reliably.
fraser@cambashi.com.

www.MBTmag.com MAY/JUNE, 2009 25