Ramesh Subramanian, Vice President, Global Services, SYSTIME, explores the challenges facing the plastic processing industry and its possible rise in the future Globally, the plastic processing industry is likely to witness a rise in demand of 4.7 percent annually through 2012. While the major recipient of this increase will be China, which will account for one-fourth of the global demand, countries like Russia and India will also benefit from growing market needs. The key drivers of this increase in demand will be the economic growth in developing countries and a consequent rise in personal incomes. This will in turn result in increased consumption of plastic products, spurring increased processing activity and related demand for plastic processing equipment.

For the manufacturing industry, there is a considerable emphasis on driving product and service innovation to stay ahead. From the 1980s, when the industry began to witness a move towards knowledge-based manufacturing systems, companies had started laying emphasis on creating valueadded collaborative networks across the supply chain, extending outside the enterprise as well. Quality systems underwent a sea change to eliminate all non-value adding quality activities through innovative, technology-based processes. Needless to say, information technology (IT) has been at the helm of this industrywide transformation.

Today, as both demand and production are set to grow, plastic processing machinery manufacturers need to accelerate innovation in products as well as ensure greater visibility and accountability into its production process. Support functions related to design, sales, marketing, finance and accounting, channel effectiveness and complying with regulatory requirements are key focus areas for transformation. In the case of manufacturers in emerging markets like China and India, the stress is far greater on the latter owing to traditional business models of disintegrated functions within organisations. Added to this, the critical need for these companies to remain lean and agile to be able to respond to market demands quickly and efficiently and the role of IT is clear cut.

Key challenges

While it would be an overstatement to attribute these set of challenges to every plastic processing machinery manufacturer in India, by and large most of these scenarios are applicable to organisations.

Ability to respond quickly to market demands and competition: With stiff competition from Chinese and local counterparts, Indian manufacturers face the challenge of building deep customer focus while simultaneously ensuring that products and services are differentiated.

Transforming legacy systems: Most manufacturers run on a patchwork of legacy systems that are either not integrated or are partly integrated. In addition, these systems are not aligned to business goals, and they do not leverage industry best practices.

Crunching accounting cycles: Typically, most accounting processes for inventory and production units take weeks to close.

Simplifying data management and report generation: Data management within organisations is very complex, primarily owing to the disparate records kept by various functions, namely, manufacturing, purchasing, planning and sales.

This problem is amplified with the prevalence of legacy systems that lack transparency and seamless flow of data, resulting in inaccuracies of forecasting cost calculation and consequently, pricing. In the absence of accurate and complete valuation of inventory, material price and usage, it is not possible to ascertain production costs and overheads.

Moreover, since there is no integration of systems with a central database, MIS reports take a long time, require manual effort and fail to achieve accurate standards.

Accelerating order processing: Essential revenue generation tasks such as sales order booking and work-order creation are carried out manually and take a long time, leading to delay in data being released for planning and machine production.

Optimising capacity utilisation based on accurate forecasting: It is not uncommon for manufacturers to initiate production runs with speculative forecasts, which are impacted in the interim with shortage reports. This further contributes to the complexity of ensuring capacity utilisation. In addition, due to the lack of proper maintenance systems in place, critical equipment breakdowns at crucial points lead to elongated production cycles.

Standardising the pricing process: Pricing in the industry largely depends on the life of the machine, driving customers to opt for contracts with the minimum tenure of the machine. With manufacturers ascertaining product costs manually, providing quotes to new customers is a tedious process, especially in the absence of a robust productcosting method.

Statutory compliance: There is no centralised process to ensure compliance of all government and regulatory reporting requirements.

Driving efficiencies: There is a need to build efficiencies across the value chain, right from having a single global part master to achieving a ‘one-design vision’ for laying down processes for sales and service efficiencies.

The Role of IT

IT and enterprise solutions has always held a great potential to transform enterprises across industries. While service industries such as banking have significantly realised the benefits that technology has to offer, the manufacturing industry is still catching up with this trend.

When planned and implemented well, an enterprise solution for the plastics processing machinery manufacturer can seamlessly connect complex and diverse functions such as planning, production, accounting, sales, external manufacturing chain, inventory, quality, etc. It can deliver a centralised pricing process that can account for statutory requirements and cater to variable tax levies across regions.

It can help in monitoring quality parameters at each stage of the supply chain. It can standardise how data is captured, stored and retrieved across the organisation in real time, thus enabling faster and accurate decision-making.

It can build industry best practices into business processes across functions and subfunctions, enabling optimal efficiency throughout the organisation. Overall, an effective enterprise solution can ensure the alignment of business goals right down to the factory floor operations. Advantage of enterprise solutions While there are no two ways about transforming a manufacturing enterprise, there is no single solution that fits all enterprises as well.

Plastic processing machinery manufacturers need to look for an IT partner who brings in a deep understanding of their business and has the technological expertise to customise the solution to their unique organisational and market needs. In effect, enterprise solution is not a technology solution, but rather a business solution.

It necessarily transcends the backend and has a direct impact on customer experience and consequent revenues. Depending on the depth and scale of an enterprise solution’s roll out within
an organisation, various compelling business benefits can emerge.

Seamless and real-time integration of business processes: Traditionally, disparate business activities such as planning, production, quality, accounting, finance and sales can be seamlessly integrated. Moreover, data capture, storage and retrieval between them will be on time and in real time.

Data automation and standardisation: Data should be standardised for accuracy across all the functions in the organisation. Person-dependent and manual MIS reports are done away with, and instead, reporting tools are built-in for ad-hoc enquiries, thereby enabling all key decision makers to generate accurate reports as and when required.

Support to multiple lines of business: Manufacturers with multiple lines of business do not have to re-invent the wheel to implement an integrated solution. The enterprise solution can be implemented to support multiple lines of businesses and extended to meet the growing needs of the business.

Consolidated systems for effective tracking and resolution of issues: The IT solution consolidates all systems of the enterprise across multiple locations. Integration of data from production facilities, sales offices across the country, tracking of inventory and spares of machinery sold, catering to customers for after-sales services, are some examples of how manufacturers can understand and respond to customer needs quickly. Given the intensifying competitive scenario, both locally in India and from China, these aspects are very imperative to competitive advantage.

Real-time data availability: With user-based information views accessible across various levels of the organisation, effective decisions can be taken in realtime, while maintaining strict data security.

Whether it is strategic and long term or tactical sales related or onground factory floor, everyone in the organisation has access to the information they need, which is updated and accurate at all times. For instance, inventory data of finished goods is available in real time to all sales personnel across the country.

Online and real-time accounting: While helping maintain data integrity between transactions at various locations, the enterprise solution enables online accounting in terms of accounts payables and receivables. This also helps to eliminate the tedious, error-prone and speculative activity of consolidating accounts at the end of every quarter or financial year.

Satisfying customer and regulatory requirements: By providing the right information about the market at the right time to production functions and by providing the right information about ready inventory to the sales function, the enterprise solution enables better customer service and more predictable delivery. Moreover, by leveraging industry best practices and custom-building regulatory checks into the IT process, the solution makes it easier and simpler for the business to comply with statutory laws.

Creating the ‘one enterprise’: By making the master product and part designs accessible via a centralised design database at all times and all locations, the enterprise solution keeps everyone in the company glued to the same vision. While this is successful in the design-to-manufacturing process, the solution also enables the alignment of operational activities of support functions with business goals, essentially creating the ‘oneenterprise’ environment across functions and regions.

In cases where manufacturing companies are a part of a multinational parent, the solution integrates all systems with the global manufacturing processes and disciplines, and helps maintain quality, product and service standards as defined by the parent company.

Smart manufacturing process

A few plastic processing machinery manufacturers in India have already implemented enterprise solutions to transform their organisations. One of them is Ferromatik Milacron India Ltd (www.milacronindia.com), a strategic manufacturing base of Milacron Inc, USA. The company partnered with SYSTIME, a global technology and business solutions provider to design, manage and implement the JD Edwards Enterprise One 8.11 solution for its manufacturing plant in Ahmedabad, Gujarat, and its various selling depots across the world. Moving forward, the mandate for IT (not merely for the Indian and Chinese markets, but across the world) is likely to intensify with respect to building sales, marketing and channel effectiveness into enterprise solutions. As manufacturing companies increasingly focus on support functions to drive profitable growth for the business, IT solutions will seek to leverage the available information to deliver insights and competitive differentiators.

The author is the Vice President, Global Services, SYSTIME Computer Systems Ltd. He can be contacted at rsubramanian@SYSTIME.net