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Walking the Talk of The Connected Enterprise

Nov. 18, 2014
How Rockwell Automation Restructured Its Own Supply Chain to Turn Data into Better Business Decisions
About Mike Bacidore
Mike Bacidore is the editor in chief for Control Design magazine. He is an award-winning columnist, earning a Gold Regional Award and a Silver National Award from the American Society of Business Publication Editors. He may be reached at 630-467-1300 ext. 444 or [email protected] or check out his .Rockwell Automation provides controls and technology to many of the world's manufacturers. But it's easy to forget that Rockwell Automation is a global manufacturer in its own right and shares many of the same challenges that its global customers face. Martin Thomas, senior vice president, operations and engineering services (OES), at Rockwell Automation, explained the progress and success of his company's own Connected Enterprise journey during his Automation Perspectives keynote address at Automation Fair in Anaheim, California.

The Rockwell product catalog has grown to 387,000 stock–keeping units (SKUs) ranging from $100 configurable stacks of tower lights delivered in two or three days to $500,000 medium-voltage drives with a lead time of several months. Average product life is 20 years, and the average order is 200 line items.

To improve visibility across its global operations, the company embarked on a corporate-wide ERP implementation at the enterprise level, together with an extensive standardization of manufacturing execution system (MES) workflow processes based on the company's own FactoryTalk ProductionCentre platform. Meanwhile, the company committed to maintaining or improving the service level its customers had come to expect.

"The journey started in 2005," said Thomas. "It was a journey we took at Rockwell Automation to restructure our global supply chain, which turned out to be much more. When we looked at our supply chain, it didn't matter which metric we looked at. It all pointed in the same direction. We had to redesign and refootprint our supply chain. The challenge was to create a five-year plan. We had to move 70% of our factories all over the world, and today we have only 2,100 of the 3,000 suppliers we used to have. We had to redesign all of the MES."

The team also developed a detailed playbook that identified the one and only way to do things. "As you're getting ready to fire 1,000 suppliers and relocate operations, you have to do it without alarming your customers," said Thomas. "We had a very U.S.-based supply chain. We had tremendous difficulty finding the talent. And when we could find it, we couldn't afford the costs to replicate our U.S. talent in other parts of the world."

"We had to move 70% of our factories all over the world, and today we have only 2,100 of the 3,000 suppliers we used to have." Rockwell Automation's Martin Thomas explained the path his company took to become a Connected Enterprise.

To help alleviate the situation, Rockwell moved to standardize its global processes. "Employees with 20 to 30 years of experience have the knowledge to decide what type of equipment is best and how to run that equipment," said Thomas. "But you couldn't start up all these factories around the world and let every plant decide. We had to go to global processes. Our factories have always been excellent at machine-level control. Every factory in Rockwell Automation was running its own ERP system, and none of them were talking to each other at the enterprise level." And the connectivity from the machinery to ERP varied greatly, with some plants having no connectivity at all, some with a homegrown MES solution, and some with industrial software.

When the enterprise standardized on its own FactoryTalk ProductionCentre to connect equipment to SAP, it eliminated human intervention wherever possible. "We now have the ability to watch every machine around the world on a daily/hourly/weekly basis," said Thomas. "In the past, every factory had to do everything themselves. But we can now plan our inventory around the world from Wisconsin. In 2005, we had 120 days of inventory. That's a lot of cash sitting on the balance sheet. And we were at 82% time to delivery. We're now at 98% on–time delivery, and productivity has increased 4–5% per year. People ask about the costs to implement these systems; but we've found they're self–funding. Our product types include stock, configure–to–order and engineered–to–order items. Eighty–five percent of our orders come through our stock business and are shipped in two days or less. Fourteen percent are configured to order and are shipped in 14 days or less. The remaining 1% of our products are engineered to order. That means 99% of our products are shipped in 14 days."

From an operations point of view, silos of information are scary. Now decisions are made faster than ever before. "To make sure you're ready for this change, know this journey never ends," warned Thomas. "We're now nine years into the journey. We still hold monthly meetings with all plant managers from around the world."

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