Purchasing an electronic medical record (EMR) system is a daunting task, as there are many software vendors who cater to this niche industry. That’s why it’s essential for you to know what kind of functional requirements your practice or hospital will require to run your daily operational needs.

You also need to forecast that whichever system you choose (whether on-demand or on-premise), the software will allow for future growth and expandability down the road.

You should also be aware of how painstaking it will be to transfer decades of paper patient records into an electronic format, as the traditional (and still current) practice in health care is paper based records. There is a dossier about the patient, and details such as medical history, prescription changes, intravenous scheduling, and the like are transcribed onto forms for the department that contains the patient’s bed. Switching to EMR software allows multiple health care professionals to access a patient’s chart, which ensures that complete and accurate documentation is entered in real time. This is especially vital in emergency situations when multiple doctors are able to review the patient files simultaneously.

The number of patient records will significantly vary between an SMB practice and a mainstream enterprise hospital. If it’s in budget, the easiest way to transition paper documents to electronic format is to outsource transcriptionists to transfer the data (using this route will not decrease staff productivity). You should also factor in a change management aspect, because an average SMB practice could take up to six months to reach its desired goals by eliminating repetitive tasks and allowing doctors to see more patients.

Most EMR software offers health maintenance reminders to keep doctors and staff updated on what treatments or checkups the patient is scheduled for through an automatic alert or report generated by the software.

EMR systems are also capable of determining the best form of treatment by analyzing a patient’s diagnosis chart for prior conditions/prescriptions and cross referencing the drug database to prevent lethal transaction with other drugs. This plan of action will reduce malpractice suits by maintaining an up-to-date and comprehensive patient record.

Another consideration is functionality of the software as a whole: is it user friendly and intuitive enough for medical staff to interact and retrieve vital information about the patient on the fly?

3 Vital Questions You Should Ask Before Purchasing

1. Do you need an on-demand or an on-premise model?
2. Does the software suit requirements for best-of-breed small practices and outpatient services (SMB-level) or larger mainstream hospitals (enterprise-level)?
3. What is the vendor’s service level agreement (SLA) if an incident arises?

There are many adequate EMR systems on the market that will suit needs for small and large practices alike, while providing functionality and security measures to protect patient data. The most important thing is that you be satisfied that the software will meet your needs. If you are unsure, consult with a professional at TEC who will guide you through the software selection process to ensure that an informed decision is made and that the software implementation will meet the needs of your organization now and in the future.

Purchasing an electronic medical record (EMR) system is a daunting task, as there are many software vendors who cater to this niche industry. That’s why it’s essential for you to know what kind of functional requirements your practice or hospital will require to run your daily operational needs.

You also need to forecast that whichever system you choose (whether on-demand or on-premise), the software will allow for future growth and expandability down the road.

You should also be aware of how painstaking it will be to transfer decades of paper patient records into an electronic format, as the traditional (and still current) practice in health care is paper based records. There is a dossier about the patient, and details such as medical history, prescription changes, intravenous scheduling, and the like are transcribed onto forms for the department that contains the patient’s bed. Switching to EMR software allows multiple health care professionals to access a patient’s chart, which ensures that complete and accurate documentation is entered in real time. This is especially vital in emergency situations when multiple doctors are able to review the patient files simultaneously.

The number of patient records will significantly vary between an SMB practice and a mainstream enterprise hospital. If it’s in budget, the easiest way to transition paper documents to electronic format is to outsource transcriptionists to transfer the data (using this route will not decrease staff productivity). You should also factor in a change management aspect, because an average SMB practice could take up to six months to reach its desired goals by eliminating repetitive tasks and allowing doctors to see more patients.

Most EMR software offers health maintenance reminders to keep doctors and staff updated on what treatments or checkups the patient is scheduled for through an automatic alert or report generated by the software.

EMR systems are also capable of determining the best form of treatment by analyzing a patient’s diagnosis chart for prior conditions/prescriptions and cross referencing the drug database to prevent lethal transaction with other drugs. This plan of action will reduce malpractice suits by maintaining an up-to-date and comprehensive patient record.

Another consideration is functionality of the software as a whole: is it user friendly and intuitive enough for medical staff to interact and retrieve vital information about the patient on the fly?

3 Vital Questions You Should Ask Before Purchasing

1. Do you need an on-demand or an on-premise model?
2. Does the software suit requirements for best-of-breed small practices and outpatient services (SMB-level) or larger mainstream hospitals (enterprise-level)?
3. What is the vendor’s service level agreement (SLA) if an incident arises?

There are many adequate EMR systems on the market that will suit needs for small and large practices alike, while providing functionality and security measures to protect patient data. The most important thing is that you be satisfied that the software will meet your needs. If you are unsure, consult with a professional at TEC who will guide you through the software selection process to ensure that an informed decision is made and that the software implementation will meet the needs of your organization now and in the future.

The year 2008 is approaching an end, and we still haven’t seen any major acquisitions taking place in the product lifecycle management (PLM) world. Truly, after a series of acquisitions during the years 2006 and 2007, there are not many acquisitions left to happen except the one between SAP (the one likely to be a buyer), and PTC (the one likely to sell itself). So, should SAP buy PTC?

Yes, go ahead

If we look at SAP’s efforts in PLM during the past few years, the company’s intent to grow its PLM business is obvious. Although the company’s $600 million PLM revenue (2007, data source: CIMdata) is just a fraction of the whole, the growth rate (roughly 30% in 2007) is well above the company’s overall revenue growth (9% in 2007).

According to PLM Market Growth in 2007 released by CIMdata, SAP is now the largest PLM provider without CAx (CAD/CAM/CAE) offerings, and the fourth in PLM mindshare leaders—if we take CAx into account. One major reason that companies need PLM is to let CAx systems talk to other management systems. This is why major CAx providers are reigning in PLM. If PTC could become a part of SAP, then the enterprise resource planning (ERP) giant will have a strong CAx wing—making its leading position more unchallengeable in collaborative product definition management (cPDm), which is believed to be the most critical segment of the PLM industry. In addition, on the SAP PLM customer list, there are a good portion using Pro/E, the CAx solution from PTC.

It would also make a lot of sense if Oracle bought PTC. Last year, by acquiring Agile, Oracle made itself into the PLM business but it’s still considerably weaker than SAP. By having PTC on board, Oracle would become equally strong in cPDm, plus possess the CAx power that SAP doesn’t have. However, in a blog post by Ralph Grabowski, the author says that Oracle rejected PTC. If that is true, it’s probably not because Oracle didn’t want it, but rather because it already had a big plate to swallow after nine acquisitions in a row through the past year. As such, the timing couldn’t be better for SAP.

No, wait a minute

Those who don’t think SAP should approach PTC probably will ask, “Does SAP really need PTC?” First of all, SAP is already very strong in cPDm. SAP’s approach in PLM is quite different from its major rivals that have CAx origins. In some cases, SAP seems to be more willing to talk about its new product development and introduction (NPDI) framework instead of PLM. This framework organizes different SAP components—ranging from strategy to planning and to execution—to manage the whole product life cycle. Thus, the question is, if PTC becomes a part of SAP, how will it manage to promote two different PLM methodologies at the same time?

The second question is, does SAP need to buy a CAx company in order to have better CAD integration? The past few years has seen SAP grow quite well in CAD integration. Besides integrating with major CAD products, SAP has also built a tight partnership with Right Hemisphere. An April, 2007 press release from Right Hemisphere said the company had received an equity investment from SAP, and another press release in September, 2008 announced that Right Hemisphere’s 2D and 3D viewing and publishing capability had been deployed for SAP PLM 7.0. According to SAP, markup will also be available in a near release SAP PLM 7.1. Will all these integration efforts be enough? Not for everyone, but probably a good portion of customers will say yes.

Another worry about the acquisition is knowledge integration. SAP has been very successful in transactional processes. It might be overwhelmed by the richness of the product knowledge domain if it acquires PTC.

The year 2008 is approaching an end, and we still haven’t seen any major acquisitions taking place in the product lifecycle management (PLM) world. Truly, after a series of acquisitions during the years 2006 and 2007, there are not many acquisitions left to happen except the one between SAP (the one likely to be a buyer), and PTC (the one likely to sell itself). So, should SAP buy PTC?

Yes, go ahead

If we look at SAP’s efforts in PLM during the past few years, the company’s intent to grow its PLM business is obvious. Although the company’s $600 million PLM revenue (2007, data source: CIMdata) is just a fraction of the whole, the growth rate (roughly 30% in 2007) is well above the company’s overall revenue growth (9% in 2007).

According to PLM Market Growth in 2007 released by CIMdata, SAP is now the largest PLM provider without CAx (CAD/CAM/CAE) offerings, and the fourth in PLM mindshare leaders—if we take CAx into account. One major reason that companies need PLM is to let CAx systems talk to other management systems. This is why major CAx providers are reigning in PLM. If PTC could become a part of SAP, then the enterprise resource planning (ERP) giant will have a strong CAx wing—making its leading position more unchallengeable in collaborative product definition management (cPDm), which is believed to be the most critical segment of the PLM industry. In addition, on the SAP PLM customer list, there are a good portion using Pro/E, the CAx solution from PTC.

It would also make a lot of sense if Oracle bought PTC. Last year, by acquiring Agile, Oracle made itself into the PLM business but it’s still considerably weaker than SAP. By having PTC on board, Oracle would become equally strong in cPDm, plus possess the CAx power that SAP doesn’t have. However, in a blog post by Ralph Grabowski, the author says that Oracle rejected PTC. If that is true, it’s probably not because Oracle didn’t want it, but rather because it already had a big plate to swallow after nine acquisitions in a row through the past year. As such, the timing couldn’t be better for SAP.

No, wait a minute

Those who don’t think SAP should approach PTC probably will ask, “Does SAP really need PTC?” First of all, SAP is already very strong in cPDm. SAP’s approach in PLM is quite different from its major rivals that have CAx origins. In some cases, SAP seems to be more willing to talk about its new product development and introduction (NPDI) framework instead of PLM. This framework organizes different SAP components—ranging from strategy to planning and to execution—to manage the whole product life cycle. Thus, the question is, if PTC becomes a part of SAP, how will it manage to promote two different PLM methodologies at the same time?

The second question is, does SAP need to buy a CAx company in order to have better CAD integration? The past few years has seen SAP grow quite well in CAD integration. Besides integrating with major CAD products, SAP has also built a tight partnership with Right Hemisphere. An April, 2007 press release from Right Hemisphere said the company had received an equity investment from SAP, and another press release in September, 2008 announced that Right Hemisphere’s 2D and 3D viewing and publishing capability had been deployed for SAP PLM 7.0. According to SAP, markup will also be available in a near release SAP PLM 7.1. Will all these integration efforts be enough? Not for everyone, but probably a good portion of customers will say yes.

Another worry about the acquisition is knowledge integration. SAP has been very successful in transactional processes. It might be overwhelmed by the richness of the product knowledge domain if it acquires PTC.

expanded on some of TEC’s earlier articles about companies’ need for better links between the plant (”blue collar trenches”) and the enterprise (”white collar ivory tower”). It also pointed out the difficulties in achieving this idea. An obvious solution would be a tightly integrated enterprise resource planning (ERP) and manufacturing execution system (MES) package that would help manufacturers close the gap between the shop floor and the offices by gaining visibility into manufacturing operations, achieving shop floor control, managing product/process traceability, genealogy, and so on.

MES solutions that integrate seamlessly into existing enterprise applications thus connect manufacturing to the enterprise in order to:

* Reduce costs and improve profits by collecting and communicating real-time manufacturing data throughout the product lifecycle; and
* Closely control and continuously improve operations, quality, and visibility across facilities worldwide.

By standardizing the best practices of lean manufacturing, overall equipment effectiveness (OEE), and continuous process improvement (CPI), such solutions should provide a real-time framework that would unite capabilities like finite factory scheduling (constraints-based), operations, quality, safety, performance management (via analytics), and enterprise asset maintenance (EAM).

Plant-level execution systems have thus far largely been adopted by big companies in a big way. The historic condition in this highly fragmented market was that offerings were too niche-oriented and offered by many small software companies. A large enterprise would have to purchase many offerings and stitch them together to get a full solution. Today, however, comprehensive packaged factory solutions that are repeatable, scaleable, and transferable are changing that dynamic.

Some Shining Examples

Some good examples in this regard would be a rare few ERP vendors with native MES capabilities, starting with IQMS and its EnterpriseIQ suite [evaluate this product]. Mid-2008, IQMS launched a new Automation Group to expand the interface capabilities of its EnterpriseIQ ERP system with manufacturing equipment on the shop floor.

Look for a separate article on IQMS down the track. In the meantime, you can find more information about the vendor here and in TEC’s earlier article entitled “Manufacturer’s Nirvana — Real-Time Actionable Information.” Also, there is an informative Enterprise Systems Spectator’s blog post on IQMS here.

Solarsoft (formerly CMS Software [evaluate this product]) would be another good ERP-MES example following the acquisition of Mattec a couple of years ago. The upcoming Epicor 9 product, which represents a complete rewrite and convergence, on the basis of service-oriented architecture (SOA) and Web 2.0, of the selected best-of-breed functional concepts from the respective individual products (like Epicor Vantage [evaluate this product], Epicor Enterprise [evaluate this product], Epicor iScala [evaluate this product], and so on) will feature the native MES module. Of course, some functionality within Epicor 9 will be brand new, while some modules will represent embedded third-party products (unbeknownst to the customer).

Again, Forget Not About Oracle

Last but not least, Oracle delivered its own integrated MES-ERP-Supply Chain Management (SCM) offering within Oracle E-Business Suite (EBS) release 12. This was in great part possible due to the vendor’s existing manufacturing capabilities/modules (e.g, flow manufacturing, work-in-process [WIP], etc.) and many customer deployments in certain manufacturing industries.

More recently though, Oracle has been deeply involved in delivering its own integrated MES-ERP-Supply Chain Management (SCM) offering entitled Oracle Manufacturing Operations Center (OMOC, formerly Oracle Manufacturing Hub). Oracle hails this enterprise manufacturing intelligence (EMI, or operational intelligence, shop-floor integration, and real-time intelligence, for that matter) layer (based on the Oracle Business Intelligence Enterprise Edition [OBIEE] architecture) as the foundation for continuous process improvement (CPI) in manufacturing operations.

While the initial generally available parts of this ambitious undertaking such as contextualization engine, manufacturing operations data model (based on the ISA-95 standard), and role-based dashboards, were recently launched, look for much more to come down the track. In the meantime, Oracle points out that MOC should not be confused with being:

* A substitute for Oracle MES for Discrete Manufacturing or Oracle MES for Process Manufacturing;
* A Substitute for Oracle BI Applications;
* A data historian (like e.g., the OSIsoft PI or Wonderware Historian products); or
* A pure middleware solution (it performs some integration, but is an application suite after all).

A SaaSy ERP + MES Example

Plexus Systems deserves attention for offering broad and deep software as a service (SaaS) offering, with a zero-client footprint (i.e., web browser only) and subscription-based pricing. Contrary to ingrained beliefs that SaaS solutions are only suited for individual departments with limited functional footprints, the Plexus Online product features an impressively deep and broad range of features for industries like automotive or medical devices manufacturing.

In fact the Plexus Online solution map reveals not only a traditional ERP scope, but also SCM modules such as program management, supplier quality, Electronic Data Interchange (EDI), lean replenishment and corrective actions. While Plexus Online (and any other product mentioned here for that matter) deserves a separate blog post, some of its MES capabilities worth mentioning here are: production scheduling, quality management, tooling, statistic process control (SPC), traceability, and costing (labor and material tracking).

Plexus has extensive manufacturing industry experience, since it was developed at an actual manufacturing plant, from 1989-1995. The company has been focused on manufacturing within industries like automotive, aerospace & defense (A&D), and industrial machinery since its founding. Plexus’ initial on-premise offering was on Progress Software’s OpenEdge technology, but the SaaS rewrite in the early 2000s has leveraged the Microsoft .NET Framework technology.

expanded on some of TEC’s earlier articles about companies’ need for better links between the plant (”blue collar trenches”) and the enterprise (”white collar ivory tower”). It also pointed out the difficulties in achieving this idea. An obvious solution would be a tightly integrated enterprise resource planning (ERP) and manufacturing execution system (MES) package that would help manufacturers close the gap between the shop floor and the offices by gaining visibility into manufacturing operations, achieving shop floor control, managing product/process traceability, genealogy, and so on.

MES solutions that integrate seamlessly into existing enterprise applications thus connect manufacturing to the enterprise in order to:

* Reduce costs and improve profits by collecting and communicating real-time manufacturing data throughout the product lifecycle; and
* Closely control and continuously improve operations, quality, and visibility across facilities worldwide.

By standardizing the best practices of lean manufacturing, overall equipment effectiveness (OEE), and continuous process improvement (CPI), such solutions should provide a real-time framework that would unite capabilities like finite factory scheduling (constraints-based), operations, quality, safety, performance management (via analytics), and enterprise asset maintenance (EAM).

Plant-level execution systems have thus far largely been adopted by big companies in a big way. The historic condition in this highly fragmented market was that offerings were too niche-oriented and offered by many small software companies. A large enterprise would have to purchase many offerings and stitch them together to get a full solution. Today, however, comprehensive packaged factory solutions that are repeatable, scaleable, and transferable are changing that dynamic.

Some Shining Examples

Some good examples in this regard would be a rare few ERP vendors with native MES capabilities, starting with IQMS and its EnterpriseIQ suite [evaluate this product]. Mid-2008, IQMS launched a new Automation Group to expand the interface capabilities of its EnterpriseIQ ERP system with manufacturing equipment on the shop floor.

Look for a separate article on IQMS down the track. In the meantime, you can find more information about the vendor here and in TEC’s earlier article entitled “Manufacturer’s Nirvana — Real-Time Actionable Information.” Also, there is an informative Enterprise Systems Spectator’s blog post on IQMS here.

Solarsoft (formerly CMS Software [evaluate this product]) would be another good ERP-MES example following the acquisition of Mattec a couple of years ago. The upcoming Epicor 9 product, which represents a complete rewrite and convergence, on the basis of service-oriented architecture (SOA) and Web 2.0, of the selected best-of-breed functional concepts from the respective individual products (like Epicor Vantage [evaluate this product], Epicor Enterprise [evaluate this product], Epicor iScala [evaluate this product], and so on) will feature the native MES module. Of course, some functionality within Epicor 9 will be brand new, while some modules will represent embedded third-party products (unbeknownst to the customer).

Again, Forget Not About Oracle

Last but not least, Oracle delivered its own integrated MES-ERP-Supply Chain Management (SCM) offering within Oracle E-Business Suite (EBS) release 12. This was in great part possible due to the vendor’s existing manufacturing capabilities/modules (e.g, flow manufacturing, work-in-process [WIP], etc.) and many customer deployments in certain manufacturing industries.

More recently though, Oracle has been deeply involved in delivering its own integrated MES-ERP-Supply Chain Management (SCM) offering entitled Oracle Manufacturing Operations Center (OMOC, formerly Oracle Manufacturing Hub). Oracle hails this enterprise manufacturing intelligence (EMI, or operational intelligence, shop-floor integration, and real-time intelligence, for that matter) layer (based on the Oracle Business Intelligence Enterprise Edition [OBIEE] architecture) as the foundation for continuous process improvement (CPI) in manufacturing operations.

While the initial generally available parts of this ambitious undertaking such as contextualization engine, manufacturing operations data model (based on the ISA-95 standard), and role-based dashboards, were recently launched, look for much more to come down the track. In the meantime, Oracle points out that MOC should not be confused with being:

* A substitute for Oracle MES for Discrete Manufacturing or Oracle MES for Process Manufacturing;
* A Substitute for Oracle BI Applications;
* A data historian (like e.g., the OSIsoft PI or Wonderware Historian products); or
* A pure middleware solution (it performs some integration, but is an application suite after all).

A SaaSy ERP + MES Example

Plexus Systems deserves attention for offering broad and deep software as a service (SaaS) offering, with a zero-client footprint (i.e., web browser only) and subscription-based pricing. Contrary to ingrained beliefs that SaaS solutions are only suited for individual departments with limited functional footprints, the Plexus Online product features an impressively deep and broad range of features for industries like automotive or medical devices manufacturing.

In fact the Plexus Online solution map reveals not only a traditional ERP scope, but also SCM modules such as program management, supplier quality, Electronic Data Interchange (EDI), lean replenishment and corrective actions. While Plexus Online (and any other product mentioned here for that matter) deserves a separate blog post, some of its MES capabilities worth mentioning here are: production scheduling, quality management, tooling, statistic process control (SPC), traceability, and costing (labor and material tracking).

Plexus has extensive manufacturing industry experience, since it was developed at an actual manufacturing plant, from 1989-1995. The company has been focused on manufacturing within industries like automotive, aerospace & defense (A&D), and industrial machinery since its founding. Plexus’ initial on-premise offering was on Progress Software’s OpenEdge technology, but the SaaS rewrite in the early 2000s has leveraged the Microsoft .NET Framework technology.

My office is in the downtown core of Montreal and last week I attended a briefing session by two aerospace companies, Pratt and Whitney (PW) and Bombardier, at a hotel up the street. The subject was about a new initiative by PW and Bombardier to improve supplier performance. What this involved was explanations of the impact late deliveries have financially on both companies and to their supply chain process. Following an introduction to the topic by Bombardier, PW continued for the balance of the session. To overcome these problems and to streamline business processes, PW introduced a new procedure allowing suppliers to input data via a portal before items are shipped, as opposed to shipping master waybills and packing slips with the material. Aerospace requires more than just a PO number and line number; it requires a complete set of inspection approvals, and sometimes custom export or import papers. Their new system also accommodates this.

We watched a movie and saw a very informative set of PowerPoint slides. The presentation showed how critical the on-time delivery of every supplier’s part is and how these deliveries become part of the manufacturing process. The lateness of a part is very expensive to PW, so much so that PW charges suppliers up to $1,000 for a late shipment or for poor quality. Interestingly, an entry on the PowerPoint slides showed that one of the late deliverers of engine parts to PW was another PW shop.

The reason for such penalties is that a missing part for an engine, for example, results in changes to its manufacturing sequence and red-flags the engine. When the part arrives, it is finally destined to the engine that was red-flagged; however the engine has to enter a rework shop where the assembly may be partially disassembled, in order to allow for the part to be installed. In other situations, the engine’s assembly is stalled because the part is internal to the engine and there is no point in continuing without it. After rework, there is a doubling up at the next production stations because of the backlog.

In regular routings (assembly sequences), the part and its serial number would be entered by the inventory pick list crew, and would be part of the build-kit. Rework is very costly as the part’s serial number is not known until the last minute when it arrives at the rework station. The late arrival of the part may also cause additional delays because of need for quality assurance inspections. In either case, it is entered at the last minute. Loss of time and potential loss of control add to record keeping and QA expenses.

Benefits mentioned of the New System

* No more CoFC (Certificate of Compliance)—now to be entered on the portal in advance of shipping.
* Full validation tool for quality requirements at time of shipment (not at time of receipt). QA by PW is done at vendor’s site
* Gated tool to ensure completeness of required information (BPM implemented)
* Optimization of the material and information flow
* It’s paperless

To support its new system, PW provided a day of training on the use of the portal, and explained future business incentive rewards to suppliers. To qualify, suppliers must be able to deliver daily (lean manufacturing), and it is the suppliers responsibility to carry sufficient inventory to cover employee’s vacations, absenteeism, weekends, or even legal holidays. Lateness of delivery incurs penalties.

Why?

PW is a global industry with customers around the world. Fast turn-around means better cash flow and higher profits. Global requirements mean suppliers must be more proactive. A customer’s airplane that does not have a working engine is an expense item, not a revenue item. Customers also feel the impact of late deliveries.

Supplier on-time performance reduces back orders and allows PW to mostly deliver on time, thereby retaining customer satisfaction. PW occasionally receives penalties for late deliveries, thus the concept of sharing the supply chain delay costs downstream. Suppliers to PW, and even work units within PW, are occasionally hit with late delivery penalties.

Manufacturing planning (MPS) is done 12 weeks in advance of material requirements planning (MRP). Suppliers are required to have superb quality control for their parts and, in many cases, to have PW inspectors on site.

The remaining part of the day was geared to a PW University training. There was one laptop per student and suppliers took classroom training learning how to input supply information into the various electronic forms on the PW portal. (As I was an observer, and not a vendor, I did not stay for the course.)

. The domino impacts due to lateness when lean manufacturing (low safety stock inventories) in the supply chain environment was my educational eye-opener.

My office is in the downtown core of Montreal and last week I attended a briefing session by two aerospace companies, Pratt and Whitney (PW) and Bombardier, at a hotel up the street. The subject was about a new initiative by PW and Bombardier to improve supplier performance. What this involved was explanations of the impact late deliveries have financially on both companies and to their supply chain process. Following an introduction to the topic by Bombardier, PW continued for the balance of the session. To overcome these problems and to streamline business processes, PW introduced a new procedure allowing suppliers to input data via a portal before items are shipped, as opposed to shipping master waybills and packing slips with the material. Aerospace requires more than just a PO number and line number; it requires a complete set of inspection approvals, and sometimes custom export or import papers. Their new system also accommodates this.

We watched a movie and saw a very informative set of PowerPoint slides. The presentation showed how critical the on-time delivery of every supplier’s part is and how these deliveries become part of the manufacturing process. The lateness of a part is very expensive to PW, so much so that PW charges suppliers up to $1,000 for a late shipment or for poor quality. Interestingly, an entry on the PowerPoint slides showed that one of the late deliverers of engine parts to PW was another PW shop.

The reason for such penalties is that a missing part for an engine, for example, results in changes to its manufacturing sequence and red-flags the engine. When the part arrives, it is finally destined to the engine that was red-flagged; however the engine has to enter a rework shop where the assembly may be partially disassembled, in order to allow for the part to be installed. In other situations, the engine’s assembly is stalled because the part is internal to the engine and there is no point in continuing without it. After rework, there is a doubling up at the next production stations because of the backlog.

In regular routings (assembly sequences), the part and its serial number would be entered by the inventory pick list crew, and would be part of the build-kit. Rework is very costly as the part’s serial number is not known until the last minute when it arrives at the rework station. The late arrival of the part may also cause additional delays because of need for quality assurance inspections. In either case, it is entered at the last minute. Loss of time and potential loss of control add to record keeping and QA expenses.

Benefits mentioned of the New System

* No more CoFC (Certificate of Compliance)—now to be entered on the portal in advance of shipping.
* Full validation tool for quality requirements at time of shipment (not at time of receipt). QA by PW is done at vendor’s site
* Gated tool to ensure completeness of required information (BPM implemented)
* Optimization of the material and information flow
* It’s paperless

To support its new system, PW provided a day of training on the use of the portal, and explained future business incentive rewards to suppliers. To qualify, suppliers must be able to deliver daily (lean manufacturing), and it is the suppliers responsibility to carry sufficient inventory to cover employee’s vacations, absenteeism, weekends, or even legal holidays. Lateness of delivery incurs penalties.

Why?

PW is a global industry with customers around the world. Fast turn-around means better cash flow and higher profits. Global requirements mean suppliers must be more proactive. A customer’s airplane that does not have a working engine is an expense item, not a revenue item. Customers also feel the impact of late deliveries.

Supplier on-time performance reduces back orders and allows PW to mostly deliver on time, thereby retaining customer satisfaction. PW occasionally receives penalties for late deliveries, thus the concept of sharing the supply chain delay costs downstream. Suppliers to PW, and even work units within PW, are occasionally hit with late delivery penalties.

Manufacturing planning (MPS) is done 12 weeks in advance of material requirements planning (MRP). Suppliers are required to have superb quality control for their parts and, in many cases, to have PW inspectors on site.

The remaining part of the day was geared to a PW University training. There was one laptop per student and suppliers took classroom training learning how to input supply information into the various electronic forms on the PW portal. (As I was an observer, and not a vendor, I did not stay for the course.)

. The domino impacts due to lateness when lean manufacturing (low safety stock inventories) in the supply chain environment was my educational eye-opener.

Recent uncertainty in the global economy is not only having a negative impact on international economies, but an equally deleterious effect on global supply chains. As with the international economies they serve, global supply chains are interwoven and inextricably linked to one another. For instance, if one link is severed in the supply chain it can cause a ripple effect which could collapse the entire chain. I’ll look at some of the concerns for potential supply chain collapse, and some strategies to limit your exposure to such a risk.

Supply Chain Management Challenges
The good news: Supply chain management professionals have been able to implement important technology and strategic business initiatives (such as ERP systems) and value-added strategic business initiatives like outsourcing, just-in-time inventory, and lean manufacturing programs to reduce costs and minimize supply and service interruptions.

The bad news: These initiatives have unwittingly pushed supply chains to their breaking points. A disruption in any key area (as indicated below) could leave an organization unable to manufacture goods, and unable to ship product to customers—and will ultimately result in lost market share.

Potential Causes of Supply Chain Collapse
If you deprive a person of oxygen, he or she will turn blue, collapse, and eventually die. If you deprive global economies of credit financing a similar process occurs. The recent published by the International Monetary Fund on November 6 stated that

…world output is projected to expand by 2.2 percent in 2009, down by some ¾ percentage point of GDP relative to the projections in the October WEO. In advanced economies, output is forecast to contract on a full-year basis in 2009, the first such fall in the postwar period. In emerging economies, growth is projected to slow appreciably but still reach 5 percent in 2009.

What this means for global supply chains is that certain key industries that rely heavily on consumer spending will likely be affected.

Let’s take the North American auto industry as an example. In September 2008 in the US, 159,000 jobs were lost—the most in one month since 2003. Auto sales fell to a 16-year-low as would-be buyers were unable to obtain credit financing. In other indicators,a survey of purchasing managers sponsored by the US-based Institute for Supply Management suggested that the manufacturing sector overall is weak. Among the report highlights:

• “Financial services industry continues to be impacted by the global economic crisis — impacting all aspects and areas of the business and supply management.” (Finance & Insurance)
• “Economic slowdown starting to have an impact on customer count and check averages.” (Accommodation & Food Services)
• “Uncertainty is having the usual effect on business. Our response is traditional — stop all discretionary spending.” (Management of Companies & Support Services)
• “General pick-up in business in spite of all the bad economic global news.” (Wholesale Trade)
• “We are experiencing a slowdown in new job orders and existing job awards are lower. Clients are not extending project support professionals.” (Professional, Scientific & Technical Services)
• “Business down significantly! Discretionary spending disappearing.” (Arts, Entertainment & Recreation)

To illustrate the global vulnerability of the global supply chain, the World Economic Forum (an international think tank not particularly well known as a source for SCM information) in its 2008 global risk document cited supply chain vulnerability as one of the key global risks in 2008.

Additional Factors that Can Lead to Supply Chain Collapse

• If a supplier goes out of business

During this economic downtown there inevitably going to be casualties, whereby companies will determine they cannot weather the storm and have to go out of business. If one of the key vendors in your supply chain goes out of business, what impact will this have on your organization? With a global economy, many suppliers are located offshore, and managing a disruption in supply will become more difficult to manage.

• Geopolitical problems

Although many of these situations are unforeseen, you have to consider risk elements when you try to assess vulnerabilities within your supply chain. It could be in the form of an attack by a terrorist organization to a major seaport, which could cause a major disruption to shipments of key raw materials or finished products.

• Damage to product reputation

For an organization connected to a global supply chain, sometimes issues arise whereby a licensed subcontractor to the manufacturing organization engages in unlawful business practices (such as child labor, or poor labor and environmental practices). These elements can have a negative impact on your brand. Alternatively, outsourced suppliers may consider substitution of lower-cost and unapproved raw material substances without advising anyone. One example of this was when lead paint was found on children’s toys destined for North American consumers and when melamine was found in both pet food and in toothpaste.

• Natural Disasters

As many key commodities are sourced on a global basis, it’s not improbable that a key component in a process may be manufactured in a global region which is struck by a natural disaster like a hurricane or earthquake. This can have a destabilizing impact on a manufacturer’s ability to procure vital raw materials and meet customer orders. There have been notable cases where an unforeseen incident has caused an organization considerable harm. One well documented case occurred in 2001, when a fire occurred (the result of a lightning strike) at a semiconductor plant where Swedish cell phone manufacturer Ericcson was single-sourcing a supply of semiconductors. This fire caused Ericsson to lose significant market share to their key competitor.

Preventing Supply Chain Collapse
Proactive organizations have increasingly taken steps to minimize their exposure to risk, in much the same way manufacturing organizations have instituted quality control programs such as six sigma.

This has seen the development of risk management teams being set up in companies to review current practices and identify areas of potential exposure to risk, including their supply chain. The development of the practice first was introduced in a book written by Professor Yossi Sheffi.

Among the key recommendations made by Professor Sheffi is to build redundancy and flexibility into your supply chain in order to minimize disruption:

Redundancy
Redundancy is the first line of defense to minimize supply chain disruption. This means adhering to safety stocks of finished goods to minimize the impact of demand variability, managing available capacity within the manufacturing location, and managing a wide variety of multiple vendors in your purchasing database.

Flexibility
Flexibility provides many options when faced with supply chain disruptions, including the ability to standardize operations in any location where a manufacturing organization is sourcing the same parts from the same vendor or multiple vendors. Having a similar set of machinery and training personnel will ensure that if there is a disruption, manufacturing operations elsewhere can partially fill the void until the effects of the disruption are known and managed.

Process Flow for Developing an In-house SCM Risk Assessment Program
The diagram below illustrates the steps that an organization could follow to implement their in-house SCM risk management program.

Recent uncertainty in the global economy is not only having a negative impact on international economies, but an equally deleterious effect on global supply chains. As with the international economies they serve, global supply chains are interwoven and inextricably linked to one another. For instance, if one link is severed in the supply chain it can cause a ripple effect which could collapse the entire chain. I’ll look at some of the concerns for potential supply chain collapse, and some strategies to limit your exposure to such a risk.

Supply Chain Management Challenges
The good news: Supply chain management professionals have been able to implement important technology and strategic business initiatives (such as ERP systems) and value-added strategic business initiatives like outsourcing, just-in-time inventory, and lean manufacturing programs to reduce costs and minimize supply and service interruptions.

The bad news: These initiatives have unwittingly pushed supply chains to their breaking points. A disruption in any key area (as indicated below) could leave an organization unable to manufacture goods, and unable to ship product to customers—and will ultimately result in lost market share.

Potential Causes of Supply Chain Collapse
If you deprive a person of oxygen, he or she will turn blue, collapse, and eventually die. If you deprive global economies of credit financing a similar process occurs. The recent published by the International Monetary Fund on November 6 stated that

…world output is projected to expand by 2.2 percent in 2009, down by some ¾ percentage point of GDP relative to the projections in the October WEO. In advanced economies, output is forecast to contract on a full-year basis in 2009, the first such fall in the postwar period. In emerging economies, growth is projected to slow appreciably but still reach 5 percent in 2009.

What this means for global supply chains is that certain key industries that rely heavily on consumer spending will likely be affected.

Let’s take the North American auto industry as an example. In September 2008 in the US, 159,000 jobs were lost—the most in one month since 2003. Auto sales fell to a 16-year-low as would-be buyers were unable to obtain credit financing. In other indicators,a survey of purchasing managers sponsored by the US-based Institute for Supply Management suggested that the manufacturing sector overall is weak. Among the report highlights:

• “Financial services industry continues to be impacted by the global economic crisis — impacting all aspects and areas of the business and supply management.” (Finance & Insurance)
• “Economic slowdown starting to have an impact on customer count and check averages.” (Accommodation & Food Services)
• “Uncertainty is having the usual effect on business. Our response is traditional — stop all discretionary spending.” (Management of Companies & Support Services)
• “General pick-up in business in spite of all the bad economic global news.” (Wholesale Trade)
• “We are experiencing a slowdown in new job orders and existing job awards are lower. Clients are not extending project support professionals.” (Professional, Scientific & Technical Services)
• “Business down significantly! Discretionary spending disappearing.” (Arts, Entertainment & Recreation)

To illustrate the global vulnerability of the global supply chain, the World Economic Forum (an international think tank not particularly well known as a source for SCM information) in its 2008 global risk document cited supply chain vulnerability as one of the key global risks in 2008.

Additional Factors that Can Lead to Supply Chain Collapse

• If a supplier goes out of business

During this economic downtown there inevitably going to be casualties, whereby companies will determine they cannot weather the storm and have to go out of business. If one of the key vendors in your supply chain goes out of business, what impact will this have on your organization? With a global economy, many suppliers are located offshore, and managing a disruption in supply will become more difficult to manage.

• Geopolitical problems

Although many of these situations are unforeseen, you have to consider risk elements when you try to assess vulnerabilities within your supply chain. It could be in the form of an attack by a terrorist organization to a major seaport, which could cause a major disruption to shipments of key raw materials or finished products.

• Damage to product reputation

For an organization connected to a global supply chain, sometimes issues arise whereby a licensed subcontractor to the manufacturing organization engages in unlawful business practices (such as child labor, or poor labor and environmental practices). These elements can have a negative impact on your brand. Alternatively, outsourced suppliers may consider substitution of lower-cost and unapproved raw material substances without advising anyone. One example of this was when lead paint was found on children’s toys destined for North American consumers and when melamine was found in both pet food and in toothpaste.

• Natural Disasters

As many key commodities are sourced on a global basis, it’s not improbable that a key component in a process may be manufactured in a global region which is struck by a natural disaster like a hurricane or earthquake. This can have a destabilizing impact on a manufacturer’s ability to procure vital raw materials and meet customer orders. There have been notable cases where an unforeseen incident has caused an organization considerable harm. One well documented case occurred in 2001, when a fire occurred (the result of a lightning strike) at a semiconductor plant where Swedish cell phone manufacturer Ericcson was single-sourcing a supply of semiconductors. This fire caused Ericsson to lose significant market share to their key competitor.

Preventing Supply Chain Collapse
Proactive organizations have increasingly taken steps to minimize their exposure to risk, in much the same way manufacturing organizations have instituted quality control programs such as six sigma.

This has seen the development of risk management teams being set up in companies to review current practices and identify areas of potential exposure to risk, including their supply chain. The development of the practice first was introduced in a book written by Professor Yossi Sheffi.

Among the key recommendations made by Professor Sheffi is to build redundancy and flexibility into your supply chain in order to minimize disruption:

Redundancy
Redundancy is the first line of defense to minimize supply chain disruption. This means adhering to safety stocks of finished goods to minimize the impact of demand variability, managing available capacity within the manufacturing location, and managing a wide variety of multiple vendors in your purchasing database.

Flexibility
Flexibility provides many options when faced with supply chain disruptions, including the ability to standardize operations in any location where a manufacturing organization is sourcing the same parts from the same vendor or multiple vendors. Having a similar set of machinery and training personnel will ensure that if there is a disruption, manufacturing operations elsewhere can partially fill the void until the effects of the disruption are known and managed.

Process Flow for Developing an In-house SCM Risk Assessment Program
The diagram below illustrates the steps that an organization could follow to implement their in-house SCM risk management program.