quality control & industry compliance

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MANUFACTURING

KNOW HOW

Guide 4

How to improve

quality control &

industry compliance

4 STEPS TO

IMPROVE

your business

CRITICAL

QUESTIONS

to ask yourself

LEARN FROM

best in class

manufacturers

FIND OUT

how Microsoft Dynamics

can help

Measure up to the best!

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Compliance has quickly become one of the most pressing issues facing discrete manufacturing companies

today. Compliance truly hits an organization from all angles. If fi nancial regulations, health and safety

regulations, environmental regulations, and product stewardship regulations aren’t adhered to, it can wreak

havoc on a company’s brand and fi nancial performance.

This guide to discrete manufacturing is designed to be a quick yet eff ective reference for executives to

understand how to manage compliance in four easily implementable steps. Each step will give a high level

overview of the concept, support the concept with proof points from industry analyst research as well as

from real manufacturers’ experiences, and end with a discussion of how Columbus technology and services

can play a supporting role.

Finally, we hope this guide is only a fi rst step in your journey towards compliance and we look forward to the

opportunity to be a trusted resource and partner.

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VISIBILITY AND CONTROL

Introducing

RapidValue

, a business process modelling solution that is fully integrated with

leading ERP solution, Microsoft Dynamics AX.

It enables manufacturers to meet up to 80% of

their business requirements right out of the box.

Columbus

Manufacturing

has mapped best practice

manufacturing processes and built them into Microsoft

Dynamics AX to help organizations realize the full

potential of the solution and gain a quicker return on

investment.

How does

RapidValue

help you Improve Compliance?

• Documented processes and procedures to meet

standards (eg ISO 2000)

• Visibility of processes and procedures supporting auditability

• Consistent use of core processes across business units

• Ability to identify control points in business processes

• Application use identiﬁ ed by the process aiding audit

• User procedures deﬁ ne user role unambiguously

RapidValue

gives you consistency, visibility and control

4 STEPS TO IMPROVE QUALITY CONTROL &

INDUSTRY COMPLIANCE

Step 1:

Build the foundation of compliance around ﬁ nancial

control

Step 2:

Make Sustainability a corporate priority and improve

performance in Environment Health and Safety

Step 3:

Eliminate supply chain or revenue disruptions with

automated management of REACH and RoHS compliance

Step 4:

Eliminate compliance as a risk to enterprise performance

with an audit ready culture and integrated audit

management tools

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Watch manufactured by Georg Jensen, a Columbus customer

1:

Build the foundation of compliance

around financial control

For the past decade, managing financial risk and

ensuring compliance with financial regulations such

as Sarbanes-Oxley has been at the forefront of the

CFO’s agenda. If discrete manufacturers don’t have

an automated financial management and compliance

solution in place, it leaves many gaps in financial

processes that overtime can turn into unaccounted for

risks and non-compliance issues.

When discrete manufacturing companies rely on

spread sheets and other unsecured documents to

manage and track financial performance, it leaves many

opportunities for changing, altering, or manipulating

documentation for a range of motives. When there

are no controls or audit trails in place and these

opportunities present themselves for manipulating

revenue recognition, financial risk, or more, it can

be months or years before any of these actions are

discovered. Discrete manufacturing companies should

move towards automated solutions around both

financial reporting, risk management, and financial

compliance to ensure opportunities are eliminated for

impropriety, risk is minimized, and financial data can be

trusted.

QUICK START:

To quick start performance in financial control, leading

discrete manufacturers are taking the following actions:

• Eliminate reliance on unsecured financial documents with an automated financial control and reporting system

• Implement a formal risk management process to identify, quantify, and minimize risk in financial processes

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?

Questions to Answer:

> How much risk exists in your organization?

> Can you guarantee you are in compliance right

now?

Security and Audit Trail

Access rights to data and functionality within Microsoft Dynamics AX is provided through a robust security model. In the security model the business is able to defi ne staff roles and assign rules about the menu options they have access to, the data that they can see and the data that they can amend. In order to enable a rapid adoption of the security model the system is provided with 85 pre-defi ned roles, each of which can be tailored or used as a template for new roles. To further reduce the administration burden, access to Dynamics AX is authorized through the networks Active Directory.

Microsoft Dynamics AX provides a full audit trail of all activities performed by users in the system, including details about the data that has changed (before and after images are recorded). The system also supports “digital signatures”, whereby rules can be defi ned that will force the user to re-enter their password when making specifi c types of changes to data, approving a new product formula for example. It can also prompt the user for reason codes and notes to be recorded about their actions.

Microsoft Dynamics in the spotlight:

Best-in-Class discrete manufacturers are over

75% more likely than Laggard organizations to use

standardized KPIs and reporting metrics.

According to a recent Aberdeen Group Benchmark Research Project sponsored by Columbus

Budget Management

In Microsoft Dynamics AX 2012, budget controls can be used to monitor budgets and to provide feedback about the availability of funds during an entry for budget transactions, accounting journals, or source documents, for example, purchase orders and invoices.

The budget control framework allows organizations to actively manage their expenses by providing notifi cations whenever transaction amounts for accounts exceed the funds available in their budgets. Users can defi ne the calculation that

determines the budget funds that are available and specify the transactions that are subject to budget control.

Compliance Management

Compliance Management in Microsoft Dynamics AX helps simplify compliance with one central location for viewing, managing, and controlling business process content, internal controls, and reporting. The Compliance Centre provides easy access to all compliance-related information and activities, and helps keep business information secure with a comprehensive set of tools to manage and control sensitive data and critical KPIs. The user can view graphs representing the eﬃ ciency and eff ectiveness of internal controls, manage action items from alerts or workﬂ ow, and add links to important external compliance sites.

Furniture manufactured by Orangebox, a Columbus customer

Manufactured by Kamstrup, a Columbus customer

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Make Sustainability a corporate priority and

improve performance in Environment Health

and Safety

2:

Sustainability has quickly moved from being a buzz word

to a key strategic initiative at many leading discrete

manufacturing companies. These discrete manufacturers

have reorganized around Sustainability initiatives,

often creating new roles and reporting structures that

are centered on a Chief Sustainability Oﬃ cer (CSO). In

these discrete manufacturers, the CSO is responsible

for many things internally and externally, including

the management of Environment, Health, and Safety

issues. To remain in compliance with EH&S regulations

from OSHA, Clean Air, Clean Water, and more, leading

discrete manufacturing companies are changing the way

they architect their internal processes and how they

communicate to external stakeholders.

When it comes to EH&S processes, leading discrete

manufacturers now centrally manage near misses,

lost time accidents, and environmental spills/releases

to ensure compliance. This means one reporting

system, a standardized set of causes and impacts for

adverse events, and a common root cause analysis

and best practices sharing systems. In today’s

regulatory environment, it is critical that all parts of

the organization manage EH&S issues at the same

level. Diff erences in EH&S performance can no longer

be attributed to lack of knowledge or sophistication

between facilities. If one plant is within compliance all

should be. OSHA, along with other regulators, looks

negatively upon discrete manufacturers that have

diff erent levels of performance and compliance at

diff erent facilities.

QUICK START:

To quick start performance in Environment, Health, and

Safety, leading discrete manufacturers are taking the

following actions:

• Automate collection of EH&S non-conformance data

• Centrally manage EH&S processes

• Transparently report to internal and external stakeholders on EH&S metrics

Controller manufactured by Sevcon, a Columbus customer

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Manufacturing at Thorlabs, Inc. ,

a Columbus customer Pumps manufactured by MetPro, a Columbus customer

?

Questions to Answer:

> Did your company have more or fewer LTA’s than

last year? Do you know why?

Best-in-Class discrete manufacturers are more

than 67% as likely as Laggard to understand the

environmental impact of operations.

Health and Safety Incidents

Dynamics AX provides support for logging health and safety incidents, including near misses and lost time incidents. To effectively manage the business risks of such incidents the system allows processes and tasks/reviews to be automatically assigned to staff as a result of the initial incident report. EH&S staff are able to monitor the progress of follow up that is performed on each and every reported incident. Furthermore, users can refer to and add to knowledge base articles in the system, providing a centralized reference point and supporting continuous improvement practices.

Reports, Alerts and Metrics

The rich in-built reporting, alerting and business intelligence framework within Dynamics AX allows users to gain insight into the frequency, causes and follow up to health and safety incidents.

Microsoft Dynamics in the spotlight:

DEALING WITH CHANGES QUICKLY

Global trade and custom regulations are

constantly changing, if we don’t deal with these

issues properly the first time it can have severe

impacts on our supply chain efficiency .

Torsten Lytken,

Infrastructure Systems Director, Thorlabs, Inc.

Heating equipment manufactured by Exheat, a Columbus customer

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Eliminate supply chain or revenue disruptions

with automated management of REACH and

RoHS compliance

3:

REACH (Registration, Authorization and Restriction of

Chemicals, European Union Regulation (EC) 1907/2006)

and RoHS (Restriction of Hazardous Substances

Directive, EU Directive 2002/95/EC) have impacted the

regulatory environment for many discrete manufacturing

companies over the past ten years. Although these

regulations are EU centric, they have impacted discrete

manufacturers around the globe, both because suppliers

are global and many discrete manufacturers don’t want

to manage multiple sets of products that are compliant

and non-compliant depending on the region the product

is for.

To comply with REACH and RoHS regulations, discrete

manufacturers have to have control over their supply

chain; specifi cally what restricted chemicals and

hazardous substances have made their way into their

products. Discrete manufacturers also must be able to

provide the proper labeling and regulatory data declaring

which substances are in products. Finally, providing

component level traceability across the supply chain is

the fi nal piece of the compliance puzzle. Unfortunately,

dealing with these requirements with traditional

disparate or manual system can be very challenging and

costly so many discrete manufacturers have moved to a

single instance ERP system with specifi c traceability and

compliance capabilities to deal with these regulations.

QUICK START:

To quick start performance in REACH and RoHS

compliance, leading discrete manufacturers are taking

the following actions:

• Begin to measure the impact of REACH and RoHS non-compliance on revenue loss

• Automate collection of REACH and RoHS data across the supply chain

Rail manufacturing by Progress Rail, a Columbus customer

(9)

?

Questions to Answer:

> Do you know all of the restricted materials in all

your products today?

Compliance

The burden of compliance on manufacturing business is growing daily. Adherence to business practices is coming under increased scrutiny and audit, while at the same time new environmental directives are becoming prevalent (REACH, Material Safety Data Sheets, etc.).

Dynamics AX helps the business to better manage this burden of compliance through centralized product information and classifi cation, including analysis of volumes of materials in and out of the business. Material Safety Data Sheet Information is recorded for both supplied and sold materials and rules surrounding the receipt and dispatch of materials can be defi ned for situations where MSDS information is lacking or has expired.

It is also vital that change management practices are clear and well established in order to avoid the on-going risk of non-compliance. Dynamics AX is able to provide eff ective management of product change through in-built workﬂ ow processes, ensuring that the product is signed off by all necessary parties prior to use in the supply chain.

Inventory Management

Dynamics AX provides control that can be used to enforce policies surrounding the movement and use of inventory that may be subject to quality issues. Furthermore Dynamics AX provides support for the control of expiry dated products or materials, with rules surrounding their assignment to production and to customers.

Microsoft Dynamics in the spotlight:

KEEP COMPLIANCE TOP OF MIND

Compliance issues are very much top of mind

for executives in discrete manufacturing and

Columbus with AX helps us continually improve

on accounting, quality, and traceability.

Quote from a

Columbus Customer

Printing solutions manufactured by Mueller Martini, a Columbus customer

Manufacturing by Hi-Tech Mold and Engineering S.E. Inc.,

a Columbus customer Bike rack manufactured by Thule,a Columbus customer

9 9

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Eliminate compliance as a risk to enterprise

performance with an audit ready culture and

integrated audit management tools

4:

Given the regulatory and macroeconomic trends of

the past ten years, government agencies and auditors

will only continue to become more aggressive over

the coming years. To address the changing regulatory

environment, discrete manufacturers are changing from

the inside out and moving away from internal processes

and leadership approaches that have prevailed in the

past. On the leadership side, executives are making

compliance a top priority. This means rewarding a

culture of transparency, believing in sustainability

issues, and putting people fi rst. On the process side, it

means believing in being audit ready at all times and not

waiting for a third party to fi nd something wrong in your

organization.

When discrete manufacturers take this approach to

compliance, they fi nd the audit process goes much

smoother if the systems already in place provide the

right information, in the right form, to the auditors when

needed. Employees can also see the diff erence in the

culture. When discrete manufacturers are forced to

spend more time, energy, and resource than they should

every once or twice a year to prepare for an audit, it

sends a message. When discrete manufacturers change

this approach and instead put in place processes to

achieve compliance 100% of the time, people get this

message too and it changes culture. It is also important

to note that in regards to third party and supplier audits,

sometimes a failed audit can be just as damaging, or

more so, as a failed regulatory audit. There are real

business benefi ts to always being audit ready. Finally,

to help maintain an audit ready organization, discrete

manufacturers are building in audit management and

compliance management capabilities into their ERP

systems that are already managing fi nancial, EH&S,

product stewardship, and traceability compliance issues.

QUICK START:

To quick start performance in Environment, Health, and

Safety, leading discrete manufacturers are taking the

following actions:

• Implement an audit ready culture all the time

• Use audit management capabilities to manage all areas of compliance and sustainability

• Integrate audit management and compliance systems with ERP

Lighting system manufactured by Urbis Lighting Limited, a Columbus customer

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?

Questions to Answer:

> How well did you do on your last audit? Could you

have done better?

> Do you think your competitors did be tter?

Best-in-Class discrete manufacturers are more

than 25% as likely as Laggard organizations to

have business processes in place to deal with

non-conformance, non-compliance, and traceability

events.

Compliance Centre and Audit Management

Compliance Management in Microsoft Dynamics AX helps simplify compliance with one central location for viewing, managing, and controlling business process content, internal controls, and reporting. The Compliance Centre provides easy access to all compliance-related information and activities, and helps keep business information secure with a comprehensive set of tools to manage and control sensitive data and critical KPIs.

Process documents can be stored, reviewed and approved. Against each process any identifi ed risks can be recorded along with risk assessment information (e.g. likelihood, impact, etc.). Against each risk the business can record their mitigation plans and test plans.

Process documents are highly likely to be referring to features of the computer system; features like security defi nitions, workﬂ ow rules and alerting tools. To provide the auditor with visibility of how these are implemented in the system the compliance center features a suite of system reports that prove that the security, workﬂ ow and alerting mechanisms have been set up correctly and are being utilized.

Microsoft Dynamics in the spotlight:

The user can view graphs representing the eﬃ ciency and eff ectiveness of internal controls, manage action items from alerts or workﬂ ow, and add links to important external compliance sites.

Of course, the production of business process documents can be an onerous task. However, Dynamics AX even has a tool that can reduce this burden. The Task Recorder allows the users to start recording a series of events as they navigate through the system in order to complete a task. The user can then use the recording to generate a Microsoft Offi ce Word document, complete with details about the actions taken by the user and screen shots of each action. This can then be further edited by the user to form a complete process document. The Task Recorded is also able to generate Offi ce PowerPoint presentation (useful for internal training) and Offi ce Visio fl owcharts.

As well as tools to support external audits, Dynamics AX provides tools for internal audits. Internal audit cases can be generated automatically by the system for transactions including expenses, purchase orders and supplier invoices. The audit case can then be managed through a workﬂ ow process, ensuring that tasks are completed and that there is full visibility of the audit process.

Manufacturing equipment from Wheelabrator Group, a Columbus customer Industrial robots manufactured by

Kuka Systems, a Columbus customer

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DON’T MISS OUR

OTHER GUIDES

Guide 1:

“How to improve operational efficiency”

Guide 2:

“How to improve revenue growth”

Guide 3:

“How to improve supply chain collaboration”

Columbus is widely recognized as a global leader in

maximizing efficiency and business performance

for manufacturing and distribution companies.

With deep industry expertise we know how to

make our clients more successful by adapting and

implementing proven Microsoft-based solution sets

for immediate business impact.

ABOUT COLUMBUS

Columbus has a deep engagement in the

manufacturing industry; we build targeted

solution sets on top of the reliable Microsoft

platform. Our solutions often meet 80%

of the industry requirements right off, and

with basic system configuration, you will

experience the full impact on your business

performance with a lower total cost of

ownership.

To-Increase, a global ISV and division of

Columbus, has been developing high quality

software solutions for Manufacturing

since 1999. Today, they offer an extensive

library of customized modules and

industry-specific solutions to reduce

implementation time and cost, and improve

business operations. Customers from all

over the world tap into this vast library of

software modules to improve performance

and shareholder value.

The full Columbus solution includes

best practice process modelling with

RapidValue, the leading ERP solution

with Microsoft Dynamics AX, specifically

built manufacturing modules from

our To-Increase software division and

SureStep+, a proven implementation

methodology.

Business Process Modeling RapidValue ERP Solutions Microsoft Dynamics Implementation Methodology SureStep+ Industry Solutions To-Increase Business Integration Solutions To-Increase COLUMBUS KNOW HOW

FOR FURTHER INFORMATION PLEASE VISIT

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