Supply chains hold the future for everyone

Supply chains hold the future for everyone

September 01, 2009 - Alan Braithwaite andMartin Christopher, LCP Consulting
As the economic conditions get harder, therewill be just onemantra for CEOs and their Boards:“manage for cash”.

Companiesmay use a variety of terms to express this, talking about “tied up capital” and “freeing up cash flow”. But the focus is, quite simply, getting and keeping asmuch cash as possible. Formany companies, the extent to which they can do this – even their survival over the next 18months – lies in how well theymanage their assets in the supply chain.

And this will be harder than ever. Customers are demanding faster delivery in smaller lots with extended credit terms. Their aimis to take inventory out and pay later to release cash,while at the same time protectingmargins by avoiding obsolescence and write offs. Suppliers are seeing an accentuated decline in volumes, as their customers de-stock, and reduced manufacturing and supply efficiencies as batch cycles shrink. They are having to wait longer to get paid and often cannot pass that pain on since smaller suppliers, on which they are dependent,may simply stop trading. At the same time, commercial risk levels have increased as supply chains have become globally sourced, extended in time and geography, and intrinsicallymore vulnerable to invisible hazards, such as unexpected bankruptcy, capacity withdrawal, changes in service terms and regulatory change.

These challenging conditions do not stop with the downturn and underlying risks: the recovery phase may be equally traumatic. As production and distribution capacity exits themarket in response to poor conditions, there will be shortages during the upturn whichmay be exploited through rapidly rising prices. Inflationmay be linked with growth causing interest rates to rise and curtailing the recovery. We believe that how organisationsmanage their supply chains will be a critical success factor in their survival and success in the next few years. In the long run thismicro-economic performance willmake all the difference at the national level.

While supply chain thinking and ideas of best practice have developed and stabilised over the last 30 years, their application inmost companies is still relatively immature even though they have the potential to transform almost every business in every sector.While supply chain thinking and ideas of best practice have developed and stabilised over the last 30 years, their application inmost companies is still relatively immature even though they have the potential to transformalmost every business in every sector.Much of this success will depend not on new techniques but on the more effective application of techniques with whichmanagersmay already be familiar.However there is one key new capability required for the current economic climate.

Applying known techniques more effectively

Let’s start with re-visiting the big idea behind supply chainmanagement. It is that managing the interactions between the functions and entities in the chain for the benefit of the whole chain, rather than the individual,will yield a dramatically better overall performance. This can takemany forms, but typically organisations benefit frommore free cash due to less inventory and assets, better tradingmargins and lower operating costs.

We’d highlight five established maxims for success:
1. Reduce unprofitable complexity by truly understanding howboth customers and products erodemargin:

The universal experience is that 15% of customers and products erodemore than 50% of the profit potential. Designing this group out or designing their profitability back in is a key step to connect the supply chain to the company’s performance. The experience is that these unviable activities are often detracting fromprofitable activities as well as creating losses in their own right.We call this ‘cost to serve’ and have found it to be a profoundly powerful business tool.

2.Build customer service excellence into your supply chain:

Service excellence is often discussed as amarketing imperative, but seldom connected to the true cost of non-performance both in sales and recovery costs.Outstanding performance protects the customer base that you want to keep and avoids the costs to replace themwhen they leave, as well as making good yourmistakes.Operational excellence lead by supply chain design and planning is a critical capability.

3. Become the preferred customer of your key suppliers:

No company can survive without its suppliers and nurturing the ones that are long termcritical does not mean being soft with them. The experience is that if you align to them they will give youmore for less; but if you just negotiate on cost, you willmiss out on benefits and they will leave you high and dry when times get tough.

4. Design, plan and execute for agility:

In the current climate, demand will be unpredictable and volatile; companiesmust be able to respond without lots of inventory and huge capacity and asset surpluses to cope with change. Agility is about fast flexible processes tomeet real customer demand and put in place only inventory that will not be a risk to the business. Speed is the key; fast and accurate processes have been shown to improve customer service and reduce inventories andmanufacturing assets.

5. Synchronise and integrate to eliminate waste and cost:

Toyotamade the seven wastes famous and its practice of waste elimination has lead to world class status in manufacturing;TESCO has applied lean thinking equally effectively to its business. Both those companies would concede that there is still much more to play for; however they are in a strong position entering the downturn.

Collaboration – the new critical factor in success

Collaborating in order to share resources and leverage scale is the newmantra for competitiveness in a difficult economic world. Companies can no longer afford to try to control some aspects of their business on the basis that it 'might be' a competitive advantage. The future will be about both co-operating and competing through shared services and assets; service providers will need to create blocks of scale and give a level of cost and service transparency that has been lacking.

Thismay extend to shared supply,manufacturing capacity, and distribution and logistics. There are precedents for the competition authorities taking exception to exclusive industry arrangements and the sharing of cost and contracting data between competitors.Newspaper andmagazine distribution is a current running example where economics and service have forced service structures that have been viewed as anti-competitive. But that industry is still fiercely competitive on its content and the implications of the logistics alternatives would likely be reduced volumes and higher costs. Executives tiptoe on eggshells when approaching such potentially risky situations as theymay be inadvertently personally liable. In future the competition authoritiesmay need to adjust their thinking and guidance to reflect industrial and real competitive realities.

Together, the application of thesemaxims will release cash fromstock and assets, protect the profitable parts of the business and create the focus that will be needed to thrive in the recovery.Now is the time to act in order to be there and ready.



IBC Ltd.
http://www.logisticsit.com/

Simultaneous engineering

Logistik der Zukunft

Logistik I

Handbuch Logistik

Lean Six Sigma Logistics

principles of Chaku-Chaku

Chaku-Chaku is a takt flow job in which the operator moves the parts to be processed from one machine to another, walking a fixed path loading and unloading the machines.


In this example, the operator walk around the cell and unloads-loads the machines (automatic or semi-automatic) in the order of sequences 1 to 6.

The principle of Chaku-Chaku is to design the layout of necessary machines and equipment in the order of the work sequence, the closest from one another as possible.
The operator loads the part to be processed and walks to the next machine, and so on. If the machines do not unload themselves automatically, unloading will remain part of operator's job.

The parts don't dwell anymore in front of the machines, neither are they moved in batches, but are processed in a streamline, with a drastic reduction of leadtime.

Another highlight of this approach is the full responsibility given to the work cell for the entire production cycle and therefore a better management of deliveries, quality and traceability.

The key to line or cell Chaku-Chaku efficiency is the synchronization between operations and the operator path, in order to maximize his occupation. The U shaped cell is very suitable for this usage.

Can MES Play a Lead Role?

Can MES Play a Lead Role?
by Stephanie Neil

Posted on Wednesday, February 06, 2008 2:50:50 PM

The criterion for selecting a manufacturing execution system has just changed. It used to be that if a company needed an application to schedule production, trace work in progress, or manage quality, the buying decision was based purely on software functions and price. Today, however, there's a new dimension that determines which MES software will take center stage: ERP alliances.

"We would not have selected a vendor that didn't have a relationship with SAP," says George Chappelle, CIO of Sara Lee Corp.

The reason? Pressure. External factors ranging from regulatory compliance, to global competition, to increasing customer demands are putting pressure on manufacturers to integrate internal operations so that everything runs like clockwork.

Sara Lee is under pressure from the FDA to implement a robust traceability system that can track materials and ingredients in case of a recall, for example. "In the food industry, traceability requirements are stringent today, and they'll be more stringent in the next three to five years," Chappelle says.

So, if Sara Lee's SAP ERP system is ordering raw materials, and its MES system, which is Siemens AG's SIMATIC IT, is consuming the materials, naturally the two must interface so that when something changes in one system, it is automatically reflected in the other. But these systems use data in very different ways. ERP is transactional; MES, on the other hand, works in real time. Aligning the two disparate systems to seamlessly share data in a global landscape can be a challenge. And Chappelle, like many CIOs, can't afford to have staffers spending valuable time doing the nuts-and-bolts integration work.

That's why, when Chappelle went searching for an MES system, he made at least one thing crystal-clear: "Our criterion was that the [MES and ERP] systems have technology integration," he says. And because Sara Lee already had SAP installed, it relied on Siemens to prove that the integration could be done — and done with no pain to Sara Lee.

Indeed, these days, it is up to the MES vendors to step up their integration efforts. ERP software vendors, such as SAP, Oracle Corp., and even Microsoft Corp., are already entrenched in user companies. These ERP companies have spent the past few years rebuilding technologies around Web services and composite applications that are flexible. So ERP is in a leading role and doesn't have to prove much to its manufacturing audience. Rather, it's time for the MES vendors to step into the corporate spotlight. The question is, can MES deliver a great performance?

It was only a few years ago that industry observers and plant managers, alike, described MES as "a mess" — the result of an unruly evolution that led to a complex, monolithic footprint requiring mass-customization. In fact, many companies, Sara Lee included, didn't even use commercial MES applications, but rather pieced together their own homegrown solutions.

Understanding the need to make MES a strategic part of the manufacturing enterprise, many MES vendors are gravitating toward a new manufacturing enterprise model that is based on industry standards and maps out in very specific terms how to connect production operations with business operations in order to meet corporate initiatives. In devising the model, MESA International, an industry organization, broke up the monolithic MES monster into value-added pieces that have a direct impact on whatever key business processes are important to the end user.

The hope is that MES will take on new meaning. " 'MES' is still a term that people recognize and can hang their hat on, but when you get down to specifics, it means different things to different people," says Matt Bauer, director of information software marketing at Rockwell Automation and chairman of MESA International.

MESA's collaborative plant-to-enterprise model focuses on functional areas, such as lean manufacturing, quality and regulatory compliance, PLM, the real-time enterprise, and enterprise asset management. These are all areas that have business impact versus the more technical functions — quality control, key performance indicator (KPI) measurements, and overall equipment effectiveness (OEE) — that MES traditionally has performed.

"We are starting to talk about [MES] as manufacturing excellence applications that lay across the infrastructure," Bauer says. For the first time, MES is gaining recognition within the enterprise as a value-added application. "There is a lot of shakeout going on in our space now," he says. "The lines that used to be drawn between the enterprise and the plant level are history at this point."

May the Force Be with You

Erasing the line that has always stood between the plant and the enterprise requires a great force. In this case, that force is ERP.

Enterprise software vendors SAP and Microsoft are both members of MESA, working alongside major automation players, such as GE Fanuc, Invensys' Wonderware, Rockwell Automation, and Siemens, as well as large manufacturers, including Chevron, International Truck and Engine Corp., and Sara Lee. It's a community of alliances on a mission to redefine the role of manufacturing operations management within the enterprise, members say.

Manufacturing plants are significantly different in 2008 than they were in 1998, says Chris Colyer, worldwide solution director for manufacturing operations at Microsoft. The advent of Ethernet and wireless technology is exposing the plant to the corporate network. "That presents a huge opportunity to drive efficiency, better data models, and better collaboration across multiple plants and multiple time zones," Colyer says.

To get that scalability across the organization, a large number of MES players have built out solutions on .NET Web services under a partnership program with Microsoft. That same group is also lining up behind SAP to become NetWeaver-certified or to build composite applications based on SAP's xApp, Manufacturing Integration and Intelligence (xMII).

SAP tried to break into the MES domain a few years ago and quickly realized it does not have the industry expertise required to deliver a robust end-to-end solution. As a result, the company established an ecosystem of dozens of partners, including most of the MES companies — but not all (see sidebar).

SAP established three levels of partnerships. The basic level is NetWeaver Certification. Siemens, for example, has five certified SAP interfaces for SIMATIC IT. It is what SAP calls a "low-touch" engagement" but is still a worthwhile notch on the MES belt. "It shows a commitment to make sure the applications are using the most effective ways of communicating with SAP's infrastructure," says Maryanne Steidinger, in Siemens' discrete industry marketing group.

The second level is a joint-development effort, involving integration roadmaps and co-marketing agreements. Wonderware sits in this category, having jointly developed three composite applications using xMII to unite aspects of MES and ERP within the same data model. iBASEt, too, has built composite applications, investing lots of time and money in development for the sake of integration.

"We can't have it be that integration scares off everybody and detracts from the value proposition," says Conrad Leiva, vice president of product marketing at iBASEt.

The third type of SAP partnership is a reseller agreement, which SAP, to date, has only with Visiprise. SAP's own staff sells and maintains the product, under the name SAP Manufacturing Execution by Visiprise. SAP has closed a handful of deals since the reseller agreement was set in place last summer.

But the agreement, which basically gives SAP an MES solution, helps Visiprise, too. Having that tight connection to SAP is a dealmaker, says Carter Johnson, senior vice president of corporate development at Visiprise. "There have been deals that we won through SAP that we otherwise would not have been involved with," he says.

But it's more than just a marketing and sales agreement. There is coding and integration happening in the background as well. "The benefit to the customer is that we are taking the burden of integration on ourselves," Johnson says.

Indeed, that's what end users are asking for. "I don't want to do any more integration," says Mike Brooks, staff technologist at Chevron. "What's more germane is interoperability." Chevron looks to the vendors to do that as well as standards, he says.

In fact, standards could be even more important than industry alliances, Brooks says. That's because they can provide the real framework that allows application plug-and-play. In reality, "this stuff should just work together without [our] having to do anything," he says.

At Chevron, Brooks encourages vendors, such as Hewlett-Packard, IBM, Microsoft, and SAP, to come up with a set of products and services centered on work processes, he says. MES, regardless of the brand, should drop in with little to no configuration involved.

And it shouldn't matter what ERP application it is either. Even Oracle, which claims to have its own MES solution, is starting to revamp its partner program to include vendors with industry specialties, industry observers say. Today, technology is aimed at open architectures.

"We are pushing for non-proprietary solutions anchored around pieces that handle meta-data and modeling solutions that understand processes in an open way," Brooks says. That's the mission behind the OpenO&M initiative, a collaborative effort between MIMOSA and the OPC Foundation. It's also MESA's mission.

To that end, manufacturing execution would evolve not as a system, but rather as a framework built around a company's work processes, culture, and industry directives. That means getting a fresh take on MES.

"It is a narrow slice of what needs to happen," Brooks says. "MES has become a brand for certain products out there, but it should [occupy] the space between control systems and business systems, and [define] how you manage operations there."

MES' Moving Pieces

MES should also integrate horizontally across the plant — even into engineering. That's why, if you take a close look, you will see that there are not many independent pure-play MES vendors still around. Many of the companies are getting scooped up by big automation companies that recognize they've been missing a big piece of the plant operations puzzle for far too long.

MES orchestrates what's happening on the factory floor and in the plant. As a result, many vendors and end users are beginning to see the value in connecting MES to applications other than ERP.

"I think a greater integration of the supply chain beyond the first tier will also be important in the coming years," says John Plassenthal, project manager of strategic integration at International Truck and Engine.

And with talk of the digital factory, tighter integration with PLM will be just as important. Siemens, following its acquisition of UGS last year, is working on creating ties between these two domains. And in the aerospace & defense industry, where engineering and manufacturing departments are beginning to work in tandem, corporations are urging best-of-breed MES vendors, such as iBASEt, Intercim, and Visiprise, to establish PLM alliances.

Intercim, for example, which merged with Pertinence earlier this year, recently rolled out a product suite based on .NET 3.0 that is designed to easily integrate with ERP as well as 3D engineering models.

The Intercim product, called Pertinence Suite powered by Velocity, is designed to be easily configured by subject-matter experts who don't have to know how to run program code. "We put business rules in to define how business functions," says Judson Plapp, vice president of marketing and corporate strategy at Intercim. "It has the ability to quickly implement new rules and changes so it can constantly evolve."

The company also has a new pricing model: "The software is free. You pay for credits based on usage," Plapp says. The software-as-a-service approach — much like the way many cell phone plans work — offers the product for little to no cost and lets the customer pay only for the amount used. That is a dramatic departure from buying a multimillion-dollar software license to accommodate multiple sites, Plapp says.

The Intercim technology and new pricing model are clear indications that MES is changing drastically.

"People are getting a better feel for where they are competitive," Rockwell's Bauer says. "But the chess pieces are still moving around. The game is still in progress."

While the vendors figure it out, it's important that manufacturers not become a passive audience, warns Chevron's Brooks. Get involved, whether it's through MESA or an industry-specific organization, he said. If everyone comes together and it's executed right, MES could steal the show.

DeepDive: Technology Directions - How Is Your Vision? by Stephanie Neil

DeepDive: Technology Directions - How Is Your Vision?
by Stephanie Neil

Posted on

These days, manufacturers are thinking long and hard about the technologies they introduce into the enterprise. In recessionary times, those investments increasingly must follow the three “L’s” rule: They must be low-risk, low-cost, and layered.

Recognizing manufacturers’ need to do more with less, business intelligence software vendors are introducing “lightweight” tools, most of which are available in a software-as-a-service (SaaS) model. Emerging vendors, such as my-DIALS, Transpara, and PivotLink, claim these SaaS tools will empower the average user to make real-time operational and enterprise business decisions while controlling up-front costs. Not to be left out, established BI vendors, such as SAP, and best-of-breed software suppliers, such as SPSS, Inc., are simplifying user interfaces while maintaining some back-end heavy lifting in the form of sophisticated mathematical algorithms.

Of course, in these turbulent times when every penny and relationship count, companies are scanning the entire supply chain and manufacturing landscape to ensure that they are delivering the right product at the right time with quality built-in — to avoid recalls, warranties, and any other nasty and costly product problems.

While words like “optimization” and “efficiency” are often tossed about as the manufacturing mantra, managers are beginning to peel back operational layers to see what being more productive actually entails.

Layered Look

Before a company can effectively accelerate performance, it must have the right tools in place. And, following the trend toward lower risk and lower cost, vendors are offering new tools that layer on top of existing systems and extract actionable information.

Transpara, for example, offers a lightweight, Web-based tool that includes BI and visualization and can access existing back-end applications, from plant floor historians to finance systems. Transpara’s tool can track key performance indicators (KPIs), such as equipment utilization rates, and it repurposes the data for delivery to mobile devices — for example, a BlackBerry or iPhone. This layered approach makes larger back-end applications more accessible to the everyday user or executive on the road.

“The market is moving faster than a company can decide what to do,” says Transpara founder and CEO Michael Saucier. “The only way out of that dilemma is to push decisions down the food chain,” and, more important, “arm people with the right information.”

Similarly, myDIALS is a SaaS, lightweight BI tool that provides a dashboard in addition to some of its own business analytics. It, too, can connect to any business or operational system and pull customized KPIs into a visual display on a desktop. The result is an easy-to-understand summary of what’s happening behind the scenes in any particular operation. Customer Snap-on Inc., for example, taps into factory floor metrics using myDIALS in order to improve safety conditions.

While these two tools focus on what’s happening within the enterprise, PivotLink focuses on demand forecasting, optimizing inventories, and understanding cash flows.

The PivotLink product, delivered as an on-demand service, includes a data warehouse that collects sales, financial, and other operational data; a set of analytical tools that can generate reports against the data; and a Web browser interface for viewing graphical representations of the reports generated, which includes the ability to do “what-if” calculations.

The key, PivotLink CEO Quentin Gallivan says, is the ability to access BI for demand management in an easy-to-use SaaS model. “Traditional business intelligence [deployments] take six to 12 months. PivotLink can be up and running within 20 to 30 days and at one-tenth of the price” of a traditional on-premise application, he says.

While traditional BI vendors — from IBM to SAP — would argue that they, too, have Web-enabled versions of their products that make it easy to access information, these are typically more robust, complex versions of BI that are great for answering strategic business questions, such as whether to enter or exit a market. The lightweight versions offer a more on-the-spot vis-ual analysis well-suited to quick operational decisions.

“Traditional BI players still have value for strategic decision making when used in the hands of the business analysts,” says Wayne Morris, CEO of my-DIALS. “But [everyday users] don’t want to make the big strategic decision. They are totally focused on how to improve operational performance.”

Little Things Make a Big Difference

CDC Software is another technology vendor focused on enabling operational workers to use BI and analytics to make decisions. The company’s CDC Factory division makes an electronic kiosk that operators can use on the factory floor. A touchscreen interface with user-friendly graphics helps operators input information about the shift, the product, and the machine runtime, for example. If there’s a bottleneck slowing down the line, an early-warning signal flashes on the screen for operators and supervisors to see. Not only does this provide a clear, real-time picture of what’s happening on the line, but it also captures all of the information and provides plant performance metrics.

That kind of visibility can lead to performance improvements, experts say.

“What motivates people to do something is competition and peer pressure,” says Mark Sutcliffe, president of CDC Factory. “Obviously, if you do things more effectively everyday, the big numbers follow. It’s not rocket science, but it does require discipline and a framework and the [right] tools,” he says.

Another small vendor, As One Technologies Inc., delivers tools that work with existing plant systems and provide easy-to-use analytics. The company recently introduced a product, called Catalyst xM, that captures plant floor processes that manufacturing execution systems don’t typically capture. Catalyst xM, for example, tracks machine maintenance and pulls historical data that can be used to identify events that could yield a problem, says Jay Mellen, executive vice president for business development at As One. The system will send a text message, e-mail, or automated phone message to escalate management action.

“It automates the mundane actions to reduce the time it takes [to get things fixed],” Mellen says. And, while inspired by corrective and preventive action (CAPA) applications, “[Catalyst xM] is more focused on the automation of workflow,” he says.

The product also prompts users to enter information on why certain decisions were made on the plant floor, which can be fed into a BI system for analysis.

Of course, in production, quality is one of the most important business drivers. That’s why makers of quality management systems, such as IQS and CIMTEK, are adding analytical engines to their applications.

IQS recently added a quality intelligence reporting layer to its software that uses SAP’s Crystal Reports platform, as well as a quality analytics engine using MicroStrategy Inc. technology.

“What you want to know with quality are things like early-warning indicators,” says Lori Gipp, vice president of marketing at IQS. “With business intelligence, we are able to look at materials when they come into the plant or at the information going back and forth between engineers’ design changes.”

The point, Gipp says, is to manage changes in a manner that mitigates risk.

Similarly, CIMTEK offers a predictive analytics engine that can integrate with ERP, PLM, and MES systems, and can be used to build a complete quality record. The Magellan Quality Lifecycle Management is a SaaS product that provides OEMs with insight into the entire lifecycle of a product, from component quality to manufacturing testing.

Much like the PivotLink product, Magellan includes a data warehouse that can be used for analytics and to spot trends. The tool also sends out real-time alarms so that manufacturers can ensure that contract manufacturers, for example, are testing products correctly.

“The key to the system is the ability to get early warning signals before any disaster occurs,” says Chris Rehl, CIMTEK’s director of marketing. This wards off recalls and cuts costs related to warranty expenditures, he says.

But gaining actionable insight into quality issues is just one important way to drive performance. Increasingly, manufacturers must also factor in risk management and market volatility created, for example, by rising energy costs.

SAP has designed a Web-based business performance management framework that lets manufacturers plug in tools such as SAP’s Business Objects Risk Management product, which analyzes operational, financial, and human capital risks. Manufacturers can use the tool to perform what-if analysis, for example, looking at energy price trends.

Inside Out

Once you have visibility into your own enterprise’s performance, it’s time to start looking at everyone else in the supply stream. The supply network is becoming increasingly complex, and manufacturers need to be aware of what is going on not only with first-tier suppliers, but also with second- and third-tier suppliers. Also, as companies expand globally, new regulations and logistics risks enter the picture.

“The number one thing I get calls about is the feeling of being exposed,” says Jim Lawton, vice president and general manager at Dun & Bradstreet’s supply management solutions business. “After pursuing cost reduction strategies, [companies say the effort] is making their supply chain more brittle and susceptible to supply chain issues.”

Management Dynamics, a maker of on-demand supply chain and global trade management software, has layered SAP’s Business Objects BI technology on top of its applications to give manufacturers the ability to monitor overseas suppliers. The BI tools let manufacturers set and monitor KPIs, such as compliance with export and trade agreements or other issues that may produce supply chain bottlenecks.

Similarly, Dun & Bradstreet provides an on-demand service that helps manufacturers predict things such as when a second- or third-tier supplier may be in danger of going out of business. D&B tracks roughly 100 million companies in a database that includes variables such as financial, legal, regulatory, and operational data. On top of that, it adds predictive analytics to generate what it calls a “supplier stability indicator.”

“It can tell you if there’s a 37% chance that a company is going to go bankrupt within the next 90 days,” Lawton says. “The other piece of the equation is getting your arms around another company’s issues that may or may not be a problem for you.” For example, if a third-tier supplier is ready to go under, the D&B tool can help sort out how this change will impact your organization. The tool assesses factors like how much money is spent on the company, how many parts are bought, and which part of the product lifecycle is affected in order to help formulate next steps.

This can help a manufacturer accelerate its own performance because “it is clearly weeding out bad performers,” Lawton says.

Production Management and Analytics Lead Pharma/Biotech Technology Investments

by

Stephanie Neil is a Senior Editor at Managing Automation magazine. She joined the publication in 2000, covering factory floor automation technology trends and case studies. Since then her cover story and special report coverage has expanded to include all aspects of the manufacturing enterprise in order to provide information on sensor-to-boardroom applications and business processes. Prior to joining MA, Neil spent 11 years at eWeek (formerly PC Week), a weekly IT journal, where she was Managing Editor of the Features department.

')" href="mailto:editorial@thomaspublishing.com?subject=Mail%20bag:%20Stephanie%20Neil" style="color: rgb(0, 51, 153); ">Stephanie Neil, MA Editorial Staff

A new report by ARC Advisory Group predicts widespread automation investments in the pharmaceutical and biotech industries, despite tightening budgets in the current financial crisis.

The report, “Automation Expenditures for Pharmaceutical and Biotech Industry Worldwide Outlook,” forecasts that these industry segments will invest more than $3 billion in automation technology by 2012. Much of that money will be directed at projects that will deliver immediate return on investment in areas such as manufacturing operations consolidation and applications standardization across the enterprise, the report says.

Because the discovery and commercialization of new drug products will remain the cornerstone of competitive advantage, pharmaceutical and biotech manufacturers are also focusing on production management software — such as MES — andanalytics software to increase productivity and flexibility as well as ensure product quality. The industry will also be focused on regulatory compliance and increasing automation while shortening time to market.

To that end, some suppliers offer analytics to help reduce production cycle time and throughput. Others provide analytics that can evaluate numerous solvent extraction schemes, reducing the number of experiments performed during the drug development phase. This ARC study will help users learn what others in the industry are doing and the capabilities of each supplier. The report also discusses strategies and tactics that suppliers and manufacturers can use to succeed in the rapidly changing worldwide pharmaceutical and biotech industry.

Statistical Education Resource Kit

Statistical Education Resource Kit

This web site is organized by the following statistical topics:

• Overview of statistics
• Collecting data
• Types of data
• Describing data numerically
• Describing data graphically
• Probability and random variables
• Expected value
• Binomial distribution
• Normal distribution
• Sampling distributions
• Confidence intervals
• Hypothesis testing: concepts
• Hypothesis testing: means
• Hypothesis testing: proportions
• Linear regression
• Correlation and causation
• Principles of experimental design
• Samples, surveys, and polls
• Time series

Finally, A CEO Speaks Up on How to Renew America

Finally, A CEO Speaks Up on How to Renew America

10:40 AM Monday June 29, 2009
by Steve Prokesch

A couple of weeks ago I met with GE's CEO Jeff Immelt and we were talking about the financial meltdown, the deep recession, and what it would take to fix America. He was outspoken about how business and government had let down the American people and the need for radical change.

That's fine, I said, but if he felt that way, why hadn't he spoken up publicly? Immelt ran from the room and quickly returned with a speech he was working on--one he delivered last week at the Detroit Economic Club. This was his speech and not something he had fobbed off to a speechwriter, he told me.

I urge you to watch it, here:

Immelt exhorted Americans to give up the notion that the U.S. can make it as a services-led, consumption-based economy, where "a mortgage broker is pulling down $5 million a year while a Ph.D. chemist is earning $100,000."

The country must refocus on manufacturing and R&D and must strive to be a leading exporter, he said. He announced that GE was opening an advanced manufacturing and software technology center outside of Detroit near the headquarters of Visteon, the auto parts maker that recently sought bankruptcy protection.

Coincidentally, "Restoring American Competitiveness," an article in the July-August special issue of the Harvard Business Review makes the same case about the importance of manufacturing. It warns that the erosion of the U.S. manufacturing base is seriously undermining the country's ability to innovate. (So much for the idea that we can succeed by letting other countries manufacture the products we invent!)

In his speech, Immelt offered a vision for how the business and government together can revive the economy and solve grand challenges such as clean energy and affordable health care. "We should welcome the government as a catalyst for leadership and change," he said, calling for a "real public-private partnership." (This from a self-described "Republican and free market guy.")

Finally, he lectured his fellow business leaders to take personal responsibility for turning things around. "We must end the impression that American CEOs are short-term speculators," he says.

Amen!

JUST-IN-TIME (JIT) PRODUCTION

JUST-IN-TIME (JIT) PRODUCTION

Just-in-time (JIT) is defined in the APICS dictionary as “a philosophy of manufacturing based on planned elimination of all waste and on continuous improvement of productivity”. It also has been described as an approach with the objective of producing the right part in the right place at the right time (in other words, “just in time”). Waste results from any activity that adds cost without adding value, such as the unnecessary moving of materials, the accumulation of excess inventory, or the use of faulty production methods that create products requiring subsequent rework. JIT (also known as lean production or stockless production) should improve profits and return on investment by reducing inventory levels (increasing the inventory turnover rate), reducing variability, improving product quality, reducing production and delivery lead times, and reducing other costs (such as those associated with machine setup and equipment breakdown). In a JIT system, underutilized (excess) capacity is used instead of buffer inventories to hedge against problems that may arise.

JIT applies primarily to repetitive manufacturing processes in which the same products and components are produced over and over again. The general idea is to establish flow processes (even when the facility uses a jobbing or batch process layout) by linking work centers so that there is an even, balanced flow of materials throughout the entire production process, similar to that found in an assembly line. To accomplish this, an attempt is made to reach the goals of driving all inventory buffers toward zero and achieving the ideal lot size of one unit.

The basic elements of JIT were developed by Toyota in the 1950's, and became known as the Toyota Production System (TPS). JIT was well-established in many Japanese factories by the early 1970's. JIT began to be adopted in the U.S. in the 1980's (General Electric was an early adopter), and the JIT/lean concepts are now widely accepted and used.

Some Key Elements of JIT

1. Stabilize and level the MPS with uniform plant loading (heijunka in Japanese): create a uniform load on all work centers through constant daily production(establish freeze windows to prevent changes in the production plan for some period of time) and mixed model assembly (produce roughly the same mix of products each day, using a repeating sequence if several products are produced on the same line). Meet demand fluctuations through end‑item inventory rather than through fluctuations in production level. Use of a stable production schedule also permits the use of backflushing to manage inventory: an end item’s bill of materials is periodically exploded to calculate the usage quantities of the various components that were used to make the item, eliminating the need to collect detailed usage information on the shop floor.

2. Reduce or eliminate setup times: aim for single digit setup times (less than 10 minutes) or "one‑touch" setup ‑‑ this can be done through better planning, process redesign, and product redesign. A good example of the potential for improved setup times can be found in auto racing, where a NASCAR pit crew can change all four tires and put gas in the tank in under 20 seconds. (How long would it take you to change just one tire on your car?) The pit crew’s efficiency is the result of a team effort using specialized equipment and a coordinated, well-rehearsed process.

3. Reduce lot sizes (manufacturing and purchase): reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reductions in order lot sizes for purchased items, since this will require more frequent deliveries.

4. Reduce lead times (production and delivery): production lead times can be reduced by moving work stations closer together, applying group technology and cellular manufacturing concepts, reducing queue length (reducing the number of jobs waiting to be processed at a given machine), and improving the coordination and cooperation between successive processes; delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory.

5. Preventive maintenance: use machine and worker idle time to maintain equipment and prevent breakdowns.

6. Flexible work force: workers should be trained to operate several machines, to perform maintenance tasks, and to perform quality inspections. In general, JIT requires teams of competent, empowered employees who have more responsibility for their own work. The Toyota Production System concept of “respect for people” contributes to a good relationship between workers and management.

7. Require supplier quality assurance and implement a zero defects quality program: errors leading to defective items must be eliminated, since there are no buffers of excess parts. A quality at the source (jidoka) program must be implemented to give workers the personal responsibility for the quality of the work they do, and the authority to stop production when something goes wrong. Techniques such as "JIT lights" (to indicate line slowdowns or stoppages) and "tally boards" (to record and analyze causes of production stoppages and slowdowns to facilitate correcting them later) may be used.

8. Small‑lot (single unit) conveyance: use a control system such as a kanban (card) system (or other signaling system) to convey parts between work stations in small quantities (ideally, one unit at a time). In its largest sense, JIT is not the same thing as a kanban system, and a kanban system is not required to implement JIT (some companies have instituted a JIT program along with a MRP system), although JIT is required to implement a kanban system and the two concepts are frequently equated with one another.

Kanban Production Control System

A kanban or “pull” production control system uses simple, visual signals to control the movement of materials between work centers as well as the production of new materials to replenish those sent downstream to the next work center. Originally, the name kanban (translated as “signboard” or “visible record”) referred to a Japanese shop sign that communicated the type of product sold at the shop through the visual image on the sign (for example, using circles of various colors to indicate a shop that sells paint). As implemented in the Toyota Production System, a kanban is a card that is attached to a storage and transport container. It identifies the part number and container capacity, along with other information, and is used to provide an easily understood, visual signal that a specific activity is required.

In Toyota’s dual-card kanban system, there are two main types of kanban:

1. Production Kanban: signals the need to produce more parts

2. Withdrawal Kanban (also called a "move" or a "conveyance” kanban): signals the need to withdraw parts from one work center and deliver them to the next work center.

In some pull systems, other signaling approaches are used in place of kanban cards. For example, an empty container alone (with appropriate identification on the container) could serve as a signal for replenishment. Similarly, a labeled, pallet-sized square painted on the shop floor, if uncovered and visible, could indicate the need to go get another pallet of materials from its point of production and move it on top of the empty square at its point of use.

A kanban system is referred to as a pull‑system, because the kanban is used to pull parts to the next production stage only when they are needed. In contrast, an MRP system (or any schedule‑based system) is a push system, in which a detailed production schedule for each part is used to push parts to the next production stage when scheduled. Thus, in a pull system, material movement occurs only when the work station needing more material asks for it to be sent, while in a push system the station producing the material initiates its movement to the receiving station, assuming that it is needed because it was scheduled for production. The weakness of a push system (MRP) is that customer demand must be forecast and production lead times must be estimated. Bad guesses (forecasts or estimates) result in excess inventory and the longer the lead time, the more room for error. The weakness of a pull system (kanban) is that following the JIT production philosophy is essential, especially concerning the elements of short setup times and small lot sizes, because each station in the process must be able to respond quickly to requests for more materials.

Dual-card Kanban Rules:

1. No parts are made unless there is a production kanban to authorize production. If no production kanban are in the “in box” at a work center, the process remains idle, and workers perform other assigned activities. This rule enforces the “pull” nature of the process control.
2. There is exactly one kanban per container.
3. Containers for each specific part are standardized, and they are always filled with the same (ideally, small) quantity. (Think of an egg carton, always filled with exactly one dozen eggs.)

Decisions regarding the number of kanban (and containers) at each stage of the process are carefully considered, because this number sets an upper bound on the work-in-process inventory at that stage. For example, if 10 containers holding 12 units each are used to move materials between two work centers, the maximum inventory possible is 120 units, occurring only when all 10 containers are full. At this point, all kanban will be attached to full containers, so no additional units will be produced (because there are no unattached production kanban to authorize production). This feature of a dual-card kanban system enables systematic productivity improvement to take place. By deliberately removing one or more kanban (and containers) from the system, a manager will also reduce the maximum level of work-in-process (buffer) inventory. This reduction can be done until a shortage of materials occurs. This shortage is an indication of problems (accidents, machine breakdowns, production delays, defective products) that were previously hidden by excessive inventory. Once the problem is observed and a solution is identified, corrective action is taken so that the system can function at the lower level of buffer inventory. This simple, systematic method of inventory reduction is a key benefit of a dual card kanban system.

Log.Punkt

http://www.logpunkt.de/ejournal/index.html

Early March, Industry Week published an article, titled "The Dead of the Supply Chain", arguing that the supply chain as it has traditionally been defined is no longer feasible. Gone are the days when supply chains were linear, static, in-country and tightly coupled to the brand owner or OEM's internal manufacturing.

Having spent time in studying the HP supply chain, I can fully agree with the statement. Indeed, supply chains such as ours have become global, outsourced and demand driven. Balancing demand and supply is critical to set-up and manage lean supply chains these days. In the article, Andrew Salzman describes five requirements that need to be addressed to achieve this:

• B2B Integration
• Business Process Management
• Exception and Event Management
• Business Intelligent
• Operations management

I believe he misses a major point. The approach he promotes is an operational approach, which only covers part of the needs. Yes, OEM's and Brand Owners need to be able to react quickly when something goes wrong, yes, data needs to be normalized and aggregated, and stakeholders need to be connected. However, that only provides information on what's happening now and how potential problems can be resolved. It does however not use the present situation to improve the future.

What we need is "closing the loop", in other words combine the information on what has and is happening to be able to improve operations both in real time and over the duration. What does this mean? Well, first, there is a need to integrate suppliers and channel partners alike. Yes, this requires a B to B integration, but more importantly, it can only be achieved if collaborative relationships are built between partners. Developing those is a whole discussion in its own right, and I will defer this one to another entry. Building the electronic data transfer mechanisms is reasonably easy; building the trustworthy relationships is more difficult. Data needs to be put in a common format and will be used, through an operational data store, for exception and event management. However, the time dimension is not taken into account here. Indeed, it is by understanding trends, what has happened prior to specific events etc. that the dynamics of the supply chain is understood. Business Intelligence can be used here. Consolidated data is stored in a data warehouse for extended periods of time, analysis tools can then be used to understand what is happening and why.

This understanding allows the development of modeling tools that mathematically simulate how the eco-system will behave. This is where simulation comes in and where the difference is. Using simulation allows the analysis of multiple scenario's and the identification of how the supply chain should be transformed to be capable to react better to fluctuation in demand, absorption of events, and result in major reductions in risks of running a global supply chain. It is surprising to see how little companies are using simulation these days. It has been proven extremely valuable over and over again, but many companies seem to be bogged down in operational management, forgetting the importance of planning things right. Yes, when a fire burns, it needs to be extinguished, but doesn't avoiding the fire make more sense? This is why we, at HP, are focusing so much on business intelligence and intelligent decision making. Over and over again it has proven beneficial.

The Death of the Supply Chain

The Death of the Supply Chain

Gone are the days when supply chains were linear, static, in-country and tightly coupled to the brand owner or OEM's internal manufacturing captivity.

Monday, March 09, 2009
By

The supply chain as it has traditionally been defined is no longer feasible. The changing nature of global business has had a dramatic effect on how companies design, build and deliver goods and services across virtually every industry. Gone are the days when supply chain were linear, static, in-country and tightly coupled to the brand owner or OEM's internal manufacturing captivity. Nowadays, globalization and outsourcing are pervasive -- thereby dramatically transforming the traditional notion of a supply chain from a traditional linear model to a highly dynamic demand-supply network.

Visibility: A Victim to a Highly Dynamic Demand-Supply Network

Often times, supply chain visibility is the first and most significant victim of this shift from a static, linear to a dynamic, networked model. Also militating against supply chain efficiency is the rapid pace of business: demand now moves at Internet speed, from around the globe, while supplies and finished goods can only travel as fast as a cargo jet, or, more often, an ocean-going freighter. This dichotomy between the speed of supply and demand makes the supply chain as much the problem as the solution to the problem. Without dramatically changing how the supply chain functions to compensate for this dichotomy, the supply chain itself becomes the main barrier to success for a modern, global company.

Visibility requires real-time information about not only what's happening inside the linear supply chain, but what's happening across a complex global network of suppliers, contract manufacturers (CMs), assemblers, distributors, channel partners, logistics companies, retailers, and, even, end consumers. These different stakeholders, by definition, have vastly different qualities and quantities of technology at their disposal in order to communicate with one another, and by themselves lack any self-organizing principle -- not to mention a common currency, time zone, and legal regime -- that could facilitate such a dialogue.

This makes the brand owner or OEM's task daunting at best. The Tower of Babel that has emerged from these dynamic demand-supply networks is largely incomprehensible to the vast majority of supply chain and ERP solutions today, most of which are designed to work within a linear supply chain largely defined by intra-company processes. These aging technologies have a singular difficulty in making the transition to supporting a networked, global, dynamic business model.

Technology Barriers

As the need for managing complex, multi-enterprise demand-supply networks vastly outpaces the ability of standard, on-premise supply chain management (SCM) and enterprise resource planning (ERP) systems, companies are increasingly realizing that their existing software and business models are inadequate for today's outsourced, multi-tiered, global 24/7 business world. Nowadays, companies require a new class of demand-supply management systems that are adept at managing external processes, partners and even buyers.

On top of this, the problems of integrating transactional data from multiple heterogeneous systems -- a key means by which a networked supply chain can automate supply chain operations -- is an ongoing issue across the enterprise, and one that is particularly problematic with respect to a demand-supply network. This limitation is due to the fact that heterogeneity among external suppliers and other partners is a given, and represents an enormous support burden for an on-premise system.

Five Requirements for Breaking the Supply Chain Barrier

With the shortfalls of on-premise ERP and SCM acting as a barrier to implementing the manufacturing enterprises of the 21st century, a growing number of companies have turned to an on-demand model to meet their demand-supply network goals.

Today's companies require a new class of demand-supply management systems that are adept at managing external processes, partners and even buyers. To support the kind of dynamic, demand-supply network that is needed today -- and well into the future -- companies must consider these five requirements:

1. B2B Integration: The ability to connect multiple stakeholders in a single networked environment provides the basis for the process and data integration needed to support a twenty-first century demand-supply network
2. Business Process Management: Managing a complex set of business processes from a single on-demand platform allows for a level of business process orchestration between partners that is largely impossible in an on-premise world.
3. Exception and Event Management: Once process management and data are standardized, exception and event management can be greatly facilitated as well. One of the problems that has always limited exception management across trading partners has been inconsistencies in how exceptions are defined and communicated across the network. With a single on-demand environment functioning as a data and process management hub, exception and event management can become highly automated and remediation can be greatly accelerated.
4. Business Intelligence: The ability to normalize and aggregate data and processes, and to directly connect all stakeholders across the demand-supply network, makes it an ideal launching pad for an expanded set of analytics and business intelligence services. The on-demand environment effectively creates its own data mart that readily lends itself to producing comprehensive analyses of a quality and reliability not possible in the on-premise world. This is a direct result of the increased visibility offered by on-demand services.
5. Operations Management: None of the above would be possible without an extremely well designed, highly functional, secure on-demand platform. Having the on-demand network owner function as the domain expert removes this burden -- and its costs -- from the individual stakeholders

By embracing an on-demand model, manufacturers who are shifting from a linear supply chain to a network system are able to work in concert with their entire demand-supply networks -- thereby maximizing visibility and better positioning themselves for success in this new paradigm of demand and supply management. The supply chain -- as we have known it -- is dead.

Andrew Salzman is the Chief Marketing Officer for E2open Inc. E2open provides SaaS-based demand and supply network solutions. www.e2open.com

Thought Leader -- Reducing the Supply Chain Footprint

Thought Leader -- Reducing the Supply Chain Footprint

HP's Christian Verstraete brings a systems engineer's eye for the big picture to managing the supply chain's "ecosystem."

Wednesday, June 17, 2009
By Adrienne Selko

You might think that a person would run out of ideas after being at the same company for 30 years. Not the case with Christian Verstraete, who began his career with Hewlett-Packard as a systems engineer. These days he is pushing the lean frontier to see "how it can be incorporated into the wider view of the complete ecosystem." That view must extend beyond the boundaries of the enterprise and reach across the whole supply chain. For example, he warns, "Today companies must have a handle on risk management and mitigation across the supply chain while simultaneously reducing the variants. Rather than do Six Sigma within the company, do Six Sigma across the supply chain."

Q: How is HP able to continuously improve its supply chain?

A: Once we have identified potential improvements in our supply chain and before we implement the improvements, we develop a model. We inject multiple scenarios and variances and see how the model reacts. Simulation tools are relatively inexpensive and it is money that you can recoup very quickly by avoiding implementing the wrong thing.

Here's an example. In the mid '90s HP moved into the notebook business, and while they took off like rockets, we weren't making any money. We didn't understand why this was the case until we got our supply chain modeling people involved and discovered that there were a number of things that we hadn't taken into account. We revised our supply chain design and are now the largest notebook manufacturer in the world.

Q: HP won Wal-Mart's 2008 Home Entertainment Design Challenge. How did that happen?

Christian Verstraete Chief Technology Officer / Manufacturing & Distribution Industries Worldwide, Hewlett-Packard Co. Responsible for thought leadership and innovation Spends his time scanning trends and figuring out how to capitalize on them Is busy figuring out ways to quantify "green" efforts Proud of HP's efforts to help employees become environmentally conscious in their own homes

A: It was actually very simple. Wal-Mart asked its top 100 suppliers to reduce the amount of packaging material in an effort to be environmentally responsible. One of our employees was contemplating how to protect the laptop when it was coming from China or Thailand. He found padded bags that were made from recycled material. He designed one package that was able to contain everything that the PC needs. It reduces shipping material by 97%, and it conserves fuel and reduces CO₂ emissions by removing the equivalent of one out of every four trucks previously needed to deliver the notebooks to Wal-Mart stores.

Q: Looking forward, what "green" issues do you see?

A: First of all you need to measure the result of your green efforts. We are among the first companies to calculate the carbon footprint of the supply chain. While it's still in its early stage of development, we hope over the next three to five years we will be able to more closely calculate and express all of the aspects of an environmental footprint. We need to go beyond emission only and look at water and other resources. We are teaming up with research institutes and universities to ensure that we take a holistic approach.

From a manufacturing viewpoint we need to move environmental concerns up to the product development stage so that design takes into consideration the whole life cycle as well as the end use. For example, if we put the paint in the plastic rather than paint the end product, we can ensure proper recycling.

Watching out for the environment is a priority not only for HP but also for Verstraete personally. "A company is a community of human beings," he says. "Everyone is responsible for doing their part at work and at home."

35 years later, bar codes, and scanning, are everywhere

35 years later, bar codes, and scanning, are everywhere
Now bar codes are scanned billions of times a day
Matt Hamblen


June 25, 2009 (Computerworld) Tomorrow marks the 35th anniversary of the first time a laser scanner was used to "read" a bar code, according to Motorola Inc.

The company has a few of the pertinent facts from that day, including that the first scan occurred at 8:06 a.m., June 26, 1974, at a Marsh supermarket in Troy, Ohio. The bar code was imprinted on a 10-pack of Wrigley's Juicy Fruit gum.

There were bar code patent applications going back to the early 1950s, but a bar code alone couldn't do much. Jerome Swartz, an electrical engineer, invented the laser scanner used for reading bar codes. He also co-founded Symbol Technologies, which is now part of Motorola Enterprise Mobility Solutions, said Bob Sanders, vice president of the group.

The technology has grown to the point that bar codes are ubiquitous, Sanders said. Motorola estimates that a specific type of bar code called the Universal Product Code is used more than 10 billion times a day in applications that service 25 industries, including packaged goods, food services and medicine.

Bar codes are used everywhere, including to identify babies in delivery rooms and to track medicines used by critical care patients. They can be transmitted to cell phones to be read by a scanner directly from the phone for admittance to a baseball game. It won't be long before air travelers will check in for a flight with a handheld device displaying a bar code on its screen, instead of printing out the bar code, Sanders said.

One of its most clever applications is the use of a bar code on a packet of coffee that is read by a coffee maker to give specific instructions on the amount of pressure and heat needed for a specific kind of drink, Sanders said. Motorola provides the scanning technology in such machines, he said.

Bar codes have evolved to the point where two-dimensional bar codes can be read by cameras, instead of lasers. A related tracking technology is RFID, which uses a radio signal emitted from a chip to track a device. The RFID chip can include specific information about a product, such as a dress or a shirt, while a UPC has an optical pattern that is translated into 12 characters that provides more general information.

Only 10 of the 12 characters are used to identify the product, the first five describing the manufacturer and the second five the specific product. By itself, that information is meaningless, but when it is transmitted to a server with a database from a cash register with a scanner, a price can be determined.

Sanders said there are efforts underway to add more fields to the bar code, which could make it helpful in tracking certain products. A tainted food, for example, could be tracked down to a single item, such as a bag of peanuts.

"I don't see the bar code going away any time soon," Sanders said.

For at least a decade, inventors have talked about using bar codes as hyperlinks to find specific items on the Internet. A customer in a store, for example, could use a cell-phone camera to read a product's bar code and learn about competitor's products through a quick browser search. "Some groups are dabbling with that technology and its day will come, it's not far off," Sanders said. Some smartphones, such as the T-Mobile G1, already have an application that turns the phone's camera into a price tag scanner.

When bar codes and scanning were paired in the 1970s, the technology set off a national tremor among privacy advocates. "That worry has gone away, and people see the bar code as a productivity tool now. They see there's no secret society tracking them," Sanders said. "People were worried about bar codes on frequent shopper cards, until they discovered they might be used to save 50 cents on a purchase."

Chinese upper class growing

The country's widening income disparity is considered to be one of its most pressing social problems, with the average income of 20 percent of the richest Chinese families 17 times higher than the poorest households, the CASS reported in its 2009 Blue Book on Chinese Society.

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