Volume 6 Issue 11 November 2024

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Welcome to Industree 4.0 for November 2024, exclusively sponsored by SAP.

SAP

By SAP

Louisiana-Pacific: Optimizing the Cost to Serve for Sales through a next-generation planning experience

Below is an excerpt from a recent nomination for an SAP Innovation Award from Louisiana-Pacific Corporation.


Louisiana-Pacific Corporation (LP) has been a pioneering force in engineered wood siding and value-added oriented strand board solutions since 1972. Headquartered in Nashville, Tennessee, LP has earned a reputation for providing world-class products, including its flagship siding product LP® SmartSide® Trim & Siding.


LP’s expertise spans various sectors, catering to new residential construction and the intricate demands of repair and remodel projects. However, the company is about more than just innovation. It is also committed to conscientious environmental stewardship and optimizing natural resources. LP’s workforce of 4,100 employees and network of 22 mills across the United States, Canada, Chile, and Brazil all play a vital role in fulfilling that mission.


Moreover, the entire business is undergoing an evolution – a strategic shift from a commodity-focused business to becoming a specialty-centric brand. The foundation of LP’s success lies in maintaining a healthy balance sheet and a capital allocation strategy focused on shareholders to help ensure mutual growth and prosperity.


Challenge


LP’s supply chain strategy is sharply focused on meeting customer demands while optimizing the cost to serve and minimizing lead times. Achieving this supply chain goal in the mill products industry poses significant challenges. For instance, LP ships more than 1,000 rail cars and trucks of finished products weekly. The challenge lies in fulfilling these orders punctually, meeting specifications, and helping ensure satisfaction without any customer disappointment.


Additional Challenges included:

  • Supply chain disruptions causing delivery delays and increased costs, impacting customers’ timelines and budgets
  • Pricing fluctuations, economic factors, and raw material shortages of essential construction materials – such as lumber, steel, and cement – driving up costs and posing sourcing challenges
  • Increasing pressure to adopt sustainable building practices and meet stringent environmental regulations, including energy- efficient designs, waste reduction, and eco-friendly materials
  • Noncompliance with complex, ever-evolving regulatory requirements at the local, state, and federal levels, leading to costly delays and penalties
  • Need to strengthen understanding of and skills in supply chain concepts as an organization to help ensure its supply chain strategy can support future growth
  • Inefficient and complex purchase and sales order management, challenging the management of delayed and escalated orders and keeping up with sales spikes
  • Disjointed systems and tools, impeding cross-team visibility and creating duplicate work


Solution


SAP Business Technology Platform (SAP BTP) is integrated with LP’s execution system, drawing daily data to optimize cost to serve and meet sales order demand. After an order fulfillment associate creates an order, the system efficiently channels the order back into SAP BTP and optimizes it in a batch for highest profitability. The system then prompts planners to address any unallocated orders with immediate access to data on warehouse inventory, cost of fulfillment, and the production capacity of each mill.


Outcome


By using advanced algorithms, LP is optimizing its cost to serve and ability to meet customer demands. The planners are empowered to make decisions of highest profitability for exceptions that the machine is not able to allocate. Planners can also engage in more-informed decision-making to optimize allocations, maximize efficiency across production and transportation processes, scale production faster during sales peaks, and help ensure precise order fulfillment and resource utilization.


Benefits

The company is seeing benefits from multiple areas of the business including:


  • 1.7% Increase in profit for the siding division after optimizing the sales order process
  • 60% Faster order-entry time overall
  • Greater visibility of profitability at a tactical level, empowering resources to make decisions with analysis by customer, mill, and region
  • More streamlined sourcing and exception management processes
  • Accelerated delivery times, enhancing the customer experience
  • Smoother communication with mills, including better collaboration with clearer priorities at a tactical level
  • Decrease in lingering exception orders
  • Faster resolution of offline customer priorities and allocations through centralization
  • Some competing software providers quoted as much as US$2 million in subscription fees to deliver the same solution.
  • The effort enabled the company to maintain a clean core, easing and expediting its migration to SAP S/4HANA Cloud Private Edition.
  • Migrating to the cloud helps eliminate hosting overhead.
  • Business processes are more comprehensive and controlled.
  • Major production disruptions are managed with greater ease and speed.


To read the full story click here. To hear about what other paper, packaging or mill products companies are doing to transform their business with SAP click here.

How the NFL works

By Pat Dixon, PE, PMP


Vice President of Automation, Pulmac Systems International (pulmac.com)

This will not be a technical article. While the subject matter of the Industree 4.0 series is about the technical inflection point that brought the Internet to industrial operation, there is also a non-technical inflection point that deals with management of technical talent.


My friend Tariq Samad has an interesting and important article in IEEE Spectrum. The online version is entitled “Management Versus Technical Track” with a publish date 5/9/24, co-authored with Gus Gaynor. I met Tariq when I worked at Honeywell and worked with him on a neural network application at the Minneapolis research center. The article provides advice for those who see two paths that diverge in a yellow wood, and consider which to travel by.


Throughout my career I have always been conflicted about my passion for engineering going up against peers and mentors suggesting I had management talent. I resisted this because I didn’t have high regard for management, or frankly anything that didn’t require scientific or engineering content. I wondered why we need management, or for that matter sales, marketing or human resources.


Then I began to work with engineers. I discovered some of them required management.  


I saw that there were people that had a combination of hard engineering skills with soft social skills that helped engineers to perform as a team. When these people managed engineering teams, there was productivity and an inspiring work environment. However, in many cases high performing engineers wanted to be rewarded for their work by getting promotions. Many firms that employ engineers use the ladder climbing incentive to retain talent. It is conditioned into business and employees that this is the logical reward system.


On YouTube is you search for “Simon Sinek - Trust vs Performance”, you will find a two-and-a-half-minute video that is quite pertinent. I think the core issue in business is high performing engineers/scientists can get rewarded by promotions to management, where they might not be well suited and harmful to the team. Instead, high performers could be well compensated while people with management skills can lead even if they are paid less. 


That is how the NFL works. Bill Belichick, Mike Tomlin, and Andy Reid would never make the pro football hall of fame based on their playing career. They aren’t great coaches because they were great players. They are great coaches because they have skills unique to coaching. As great as these coaches are, their salaries do not exceed those of the superstar quarterbacks, receivers, and linebackers on their teams.  


In the 4th industrial era, as we are increasingly reliant on technology, we need not only the engineering talent but the right coaches to bring industry to the current era.

Keeping Track of Bits & Pieces

The lead article in this issue does an excellent job of describing the needs of modern manufacturers to keep track of all the bits and pieces necessary to run a profitable business these days. Louisiana-Pacific certainly has their collective hands full, so to speak.


SAP's modern systems not only provide labor savings, such systems provide massive speed improvements and reduced inventory requirements as well. I am old enough to remember when such an inventory moved at a crawl and it required warehouses all over a region in order to supply the customers in a timely manner--when a timely manner of those days would be considered an unacceptable schedule today.


Superior software, cloud computing and high speed data communications make today's enterprises very efficient and make a path for even more efficiency tomorrow when you stick with an experienced and established company like SAP.

How does IIoT enable automation and control in manufacturing?

By Engineering.com

Here’s the basics on how IIoT helps manufacturers create an automated ecosystem, driving optimization and continuous improvement.

Read the full article here

Working in Industry 4.0

By David Muller

Being able to quickly change work-holding pieces while automating processes and even gathering data will lead to greater efficiency amid a dearth of skilled labor.

Read the full article here

How IIoT and Machine Learning Transform Energy Management

By Gary Elinoff

The goal of Energy Management is not only to use less energy, but also to use it more effectively. This is a critical part of the goal towards enhanced sustainability and the eventual goal of net carbon neutrality.  

Read the full article here

High Warehouse Accident Rates? IoT Can Help

By Emily Newton

Cameras observe the daily activities of warehouse workers, noting occupancy schedules and workflow habits. Industry implementers of The Internet of Things (IoT) must know how their workforce operates before understanding how safety incidents occur.

Read the full article here
Industree 4.0 is exclusively sponsored by SAP