 Hello and welcome to today's webinar, Achieve Capital Project Excellence, Factory Acceptance Test Protocols for Capital Equipment in the CTG Industry. I'm Joyce Fassel, Editor-in-Chief of Pro Food World, and I'll be moderating this discussion. But before we begin, we have a few words from our sponsors. 70% of the top 10 global food and beverage manufacturers use GE software to help optimize their manufacturing operations. Are you surprised? Well, GE is the world's premier digital industrial company, transforming industry by connecting the physical and the digital, sensing, predicting, and responding to make the world work better. GE is proud to be working with the OPEX Leadership Network to solve common operational challenges, make smarter decisions, and to achieve operational excellence. For more information, please go see the GE website at GE.com Food and Beverage. The webinar is also being sponsored by BNR. Perfection and automation means we put all of our knowledge and creativity into developing products that become transcending innovations. At BNR, we turn this model into reality by providing our customers with a complete automation solution that provides maximum flexibility and economic efficiency. Miscommunication between CPGs and OEMs during line startups often result in unbudgeted costs in travel and material and delays for everyone. Using a comprehensive factory acceptance test, or FAT checklist, establishes protocols and clarifies expectations during the purchase and installation process. Today's webinar will outline the benefits of FATs, the steps to perform them, and a case study that proves their value. But before I introduce our speakers, I want to let our audience members know that this webinar will also be available for archived viewing at profoodworld.com. And you will receive notification when it's ready, and the slides will be available for download from there as well. Please feel free to ask questions at any time during the webinar by typing your question into the questions pane of the GoToWebinar control panel, and we will take some time at the end of the presentation to address as many questions as time allows. So let's get started. Today's presenter, Jose Rios, is senior director of engineering at Nature's Valley, where he leads three highly focused teams, engineering, technical engineering, and engineering strategic initiatives to build upon the collective strengths in the engineering organization and bring greater levels of excellence. Primarily responsible for capital plans, Jose supports safety, quality, service, and efficiency through the execution of capital projects, process development, and organizational capability development. And prior to joining Nature's Valley, Jose was senior operations manager for Starbucks Roasting Plant and Conagra, where he implemented total productive maintenance tools for operations, maintenance, and engineering. In other previous roles, he was responsible for the engineering and maintenance functions at Danin, Pepsi, and Hershey. And overall, his experience includes more than 20 years in the food, beverage, and nutraceutical industries. But before we begin our main presentation, I'd first like to turn the discussion over to Steve Schlegel. Steve is the managing director of PMMI's Apex Leadership Network. Thank you, Joyce, and it's a real pleasure to be speaking with you all again this morning. PMMI founded the Apex Leadership Network in 2011, and we have had the distinct pleasure over these past five or so years to build a very dynamic community of manufacturing, engineering, and operations professionals. The focus is to bring in over 250 companies who now collaborate on solving common operational challenges that are non-proprietary and non-competitive. And as a result, we develop industry best practices and make all of these best practices available for free download on our website. This word cloud that you're looking at right now is an indication of the breadth and depth of how engaged the food, beverage, and nutraceutical industry is in the Apex Leadership Network. I call your attention to the size of multinational companies, to the small privately held companies, all sharing the experiences in crafting best practices. And where do those best practices come into play? In the three main categories of any CPG manufacturing operation. You have the people focusing on the human asset, process focusing on operational performance, and the technology sector focusing on capital spend. And today as you can see that all of these published work products are available on the Apex Leadership Network website. Go to ApexLeadershipNetwork.org and you can download any one of these work products for free. And as you can see, it's a holistic approach to being of guidance and assistance to enhance your current operations. Fundamentally, it's important to note that these are not academic white papers or consult needs. These are best practices that have been developed by industry for industry and therefore of significant value to all CPG manufacturing. Today, in just a few minutes, I'm going to turn the ball over to Jose, but today we're going to be talking about factory acceptance tests. The one voice factory acceptance test is a protocol for capital equipment in the CPG industry. It was published just about a year ago and like the other documents, these are protocols and checklists to help you clarify the expectations. The ultimate objective here is to assure that the value is received for the investment by you as a CPG company. Let's take a little closer look and what it is that the challenge in today's marketplace is one of miscommunication. We all know that. What does one expect about an FAT if you're a supplier? What does the CPG expect in the FAT? The solution is to creating a format, a checklist if you will, that helps to the various parties to come together and develop an agreement way up front in the purchasing process as opposed to way in the back end of the capital project process. What are the key elements of the FAT checklist? They're in three basic blocks. The first one being planning. The second one being criteria. You can see the attributes of each under each main block. And the final one being testing. And as a value proposition to this, not only does the operations professional in the CPG have a better opportunity to have sustainable OEE, there is also the significant opportunity in capital spend to have vertical startups. To have that rapid acceleration to meet your target performance, which is highly important in today's most competitive world. So let's take a look at how it's been working for some companies. Rick Fox is the CEO of Fox for technologies. And as you can see, he found it as a great structure for discussion in working with their customers. Jill Costello of Press Juicery found the tool enable them to much more effectively perform in a capital project and many, many others. We have had nearly 1,000 downloads of the FAT document off of the website. And if you haven't done so already, we encourage you at the conclusion of today's webinar to go ahead and do that. So let's take a little closer look. I mentioned that there is a checklist. And as you can see, the checklist in those three blocks that I mentioned earlier, planning, criteria, and testing. So let's drill down just a minute to give you some idea of how this will encourage the collaboration, the fact that it's not prescriptive. This is meaning you don't have to do every one of these items and it's not telling you what to do, it's encouraging dialogue. And finally, it enables project tracking on this particular topic. So as we look into an example in the planning category, look at staffing. This has been one of the perennial discussions of if you're a CPG, who do I want to send? How do I want to take care of it from an OEM perspective? How do I match up my team with the team that's coming from the CPG? Clarifying the roles and responsibilities. So as you can get a sense of this document, we've identified each other's responsibilities, what is shared, and then some leadership guidance on each of these items. Another look would be in the criteria section, one being performance. So I chose this one in particular because this is where the rubber meets the road. Does the fact of how is it that you're going to clarify that the FAT does, in fact, that the equipment meets your expectations? So the CPG clarifies your requirements, such as number of changeovers and the working conditions. The OEM responsibility is to respond to the user requirements and show that that will, in fact, occur. And finally, to verify that is the testing category. And in the testing category, I chose the example of conformance to specifications. So this is where you, the CPG and the OEM come together and they have a mutual agreement under the shared responsibility on what inspections are going to occur. So for example, how do you verify the electrical code requirements during the FAT and in particular if it's an international project? So that gives you some understanding and it sort of paints the context of the scale and the value of the FAT protocol. And now I'll want to turn this over to Jose with all of his experiences, as Joyce mentioned in his bio. And what Jose is going to be doing is sharing an example from Nature's Bounty and how they've used the FAT document. So Jose, I pass it over to you. Thank you, Steve, and good morning, everybody. Nature's Bounty, a little bit about Nature's Bounty, the leading global vertically integrated manufacturer, marketer and distributor of retailer of a broad line of high quality vitamins, nutritional supplements, related products in the United States with operations worldwide. Our portfolio includes over 22,000 SKUs, 20 brands. We do employ 14,000 associates, spread around 12 manufacturing and packaging sites. We have six warehousing and distribution sites. And from a financial standpoint, we represent over $3 billion in sales. Some of our brands to the right, Nature's Bounty, Rx, Body Fortress, Esther C, Sundown Natural, in our portfolio, other ones could be Osteobiflux. The demonstration of our factory acceptance test, prior to having this guideline, this checklist, Nature's Bounty was a bit loose when it came to the documentation and the criteria of implementation of overall capital projects. These documents truly provided us a guide where we can collaborate with our vendors and stakeholders to deliver a much better quality-driven, not only factory acceptance testing, but startup once the equipment got to the floor. For our case, we chose a battle cardiner. For those of you who do not know what a battle cardiner would be, it simply inserts a bottle into a finished carton. And that carton is then placed on a shelf in places like CBS or Walgreens. Next slide, please. A little bit of the project background. Prior to the cardiner coming in to our facility, the majority of our needs were satisfied through either a manual operation or a very outdated automatic cardiner that was really constrained in terms of efficiency, variety, or flexibility. So the scope of this project included installing a new cardiner in one of our lines, upgrading some components downstream of the cardiner to make sure we had a good balance front to back in the line, purchasing the parts that would ensure expeditious, more efficient changeovers, integrating line controls for better bottle management, implementing a training program for the associates and mechanics. The majority of our equipment is dated highly mechanical. This was a transformation for our company where mainly servo-driven electronics and new technologies would be introduced to our facility. The benefits for us would be to increase our throughput by the reduction of cardiners related breakdowns. We would introduce a reduction in changeovers, therefore decreasing our downtime. We would increase yield by maximizing the amount of material we would use in our equipment. We would increase throughput on a variety of SKUs under 300 CCs, meaning smaller format type of bottles that would increase our round rate and would also eliminate the need to offline cardin with manual labor of the operations that we had in our corporation. Estimated annual savings of $250,000 were calculated by this investment. Of course, we did find some complications during our design phase in the project. We did have a large number of SKUs that resulted in some equipment redesign. The engineering and sales schedule were not completely aligned, so we had to work together to make sure that we can support the demand while implementing the new solution. Our cartons were not designed for high-speed automation and presented a lot of challenges. As you could see from the diagram on the right, there are certain tolerances that are preferred by automated equipment and we simply did not have that in-house. So we had over 61 cartons that did not meet the specifications for automation and ultimately we had to take a different look on that material and their relationship of bottle to carton. We did have some communication challenges and ultimately resulted in some trust and communication breakdown. Typically, in the big process and a normal FAT process for nature's bounty, it followed just simply a price, a proposal, and for the most part, the following lines. As per customer specifications, in the standard basic machine, it's a number of three days for customer operators training and FAT in the shop. Those are included. Transport and loading are excluded and lodging is excluded. And after that, there will be some additional charges if additional time is required. NBTY created an internal FAT design phase and shared these design with our vendor. The vendor was actively engaged and provided a lot of feedback for both our benefits. This collaborative process really leveraged the One Voice FAT document that Steve briefly talked about. We invited them on site to dialogue and truly come up with a comprehensive document that benefited added value to not only the nature's bounty company, but our OEM as well. It was used to provide the framework of discussion where we walked through the existing document and came up with some deliverables that were assigned to owners and truly created a great dialogue, great responsibility, accountability on both sides. We verified the relevance of each of the One Voice criteria. We modified the FAT document to make sure the criteria was met. We clearly defined each step of the way and the deliverables along the way. And we forced a hard look at all of the assumptions that were taken during the procurement phase, during the early design phase of this project. We were able to reallocate budgets to cover most of the critical items, crucial items on the FAT. In the end, it resulted in a well-prepared detailed schedule of events. We added a day to our FAT. We had a racy matrix that truly showed accountabilities, things that needed to be delivered. We aligned the FAT deliverables with our project success criteria. Make sure that there's direct connectivity between those two documents. We defined machine-to-machine interfaces. We improved our induced failure testing session. We removed non-applicable sections of the document. We clearly listed documentation required. We improved the maintenance requirements and the testing of these equipment. It resulted in a kickstart of the project the right way. A lot of ownership, a lot of value added in the front end of the project. We created an FAT that aligned both our provider and the company and the stakeholders on the expectations and deliverables of these equipment. We had a successful FAT on the first strip, which was overseas in Italy. We improved the existing MBTY nature spouting process for factory acceptance testing. We have much better planning, much better induced failure testing. Equipment interfaces, much improved, and again, maintenance requirements were clearly defined and implemented prior to reaching the floor for installation. Communication overall was much improved. The trust between stakeholders, engineering, and OEM was reestablished and strong. The FAT implementation truly leverages three areas. It integrates these documents into existing processes. It is a bolt-on to any early management capital execution processes anyone would have. It's truly a guide, a checklist. It removes any of the guessing work, any of the thinking on what are the areas that I must think about or come up to ensure that you have truly a great factory acceptance testing. It promotes early collaboration into this process. There was, as I said, there was a large degree of collaboration not only from the OEM, but from the stakeholders to make sure that there were certain aspects that were truly insured, that were deliverable prior to the machine hitting the floor. Lastly, it really clarified expectations. It allowed the plant to truly drill down what the expectations were, not only for the OEM for engineering, but for themselves. A plant would truly understand the need for material, the need for representation. In the OEM side of things, it truly clarified, gave them an outline and scope of the areas that would be looked at, the alarms, the induced failure testing, and for engineering, it allowed us to truly guide these build throughout inception and installation. The factory acceptance testing is truly a value proposition, as I said. It brings our industry as a service to initiate as part of your request for quotation. We start thinking about these areas very, very early in the process. So it clarifies the expectations, support customers, sales engineering, it avoids getting into the weeds and down rabbit holes that complicates situations, and it does deliver a very successful solution that reduces cost, increases sales through service, and repeats sales. This document provides structure for discussion, again, what the industry normally does. A two-month project executed cleanly between the equipment manufacturer ourselves. A little background, again, on nature's bounty proposition on our engineering execution. We truly have five phases in engineering that we execute. The first phase is assessing feasibility. That's truly where we put our business hat on. We think about what good looks like by executing success criteria. We justify our project by creating a strong business case, and then we have some supporting documentation in the form of functional block diagrams and FMEAs. In the definition phase and analysis, we truly then start looking at some areas of inputs and outputs. We drill down into the technical success criteria more by implementing a little bit of engineering. During the design phase, we will do some total cost of ownership, startup management, and some reliability center FMEAs. During the construction phase, it's where we do our factory acceptance testing. And lastly, during commissioning, we do our qualification process and a site acceptance testing. All of these processes provide very value when a strong FAT is achieved, where we can roll it out to all phases of engineering. It integrates very smoothly into all these processes. While many companies are already doing FAT, it's a standard process. It's effectiveness, clarity, early. All engineers can truly benefit from this process, as it's not prescriptive, and it's a guideline, and it ensures good customer service. Well, thank you, Jose. That's a great example of your application of the FAT, and we really appreciate you sharing that with today's audience. What I want to add value to that is going back to that initial wheel of people, process, and technology, I'd like to share with you that at the core, if you look at the FAT at the core, and as Jose just presented in their engineering process, it assures or it validates the fact that they, as Nature's bounty, are getting what they expect. So there are other aspects, though, that dovetail into this. So the existing toolbox, if you will, that best practices that are available to you also relate to it, the OEE calculator, total cost of ownership, workforce engagement, as it relates to who do you send on an FAT, PMMI's risk assessment on PACSAFE program. But in addition, there are other aspects that I wanted to let the audience know that the OPEX Leadership Network is currently working on. We're working on a complementary document for request for proposals. So guidelines for request for proposal process. Also on secured vendor access, that is the OEM's ability to securely get into and remotely monitor the performance of their machines while they're on the CPG's floor. And above all, is worker safety. So all of these documents are currently available or work in process to help you drive operational performance and excellence within your organization. So with that, I'd like to turn it back over to Joyce, who can moderate any questions for Jose. Okay. Thank you, Steve, and thanks, Jose. Please feel free to ask questions at any time. You can type your questions into the questions pane on the GoToWebinar control panel. So, Jose, here's our first question from the audience. This person would like to know how difficult it was to integrate the OPEX FAT solution into your existing processes, and did you have to make a lot of changes to either your process or the tool, the FAT tool, that you downloaded? Yeah, that's a great question. Thanks for the question. No, I found that these guidelines really seamlessly integrated well with our current processes. Again, the fact that it's not prescriptive, it just really removes all the thought process from the final document that you will present really made it very smooth to integrate into our existing process. Not only in the FAT side of things, but throughout the whole process, it really guided you to think about the areas that you wanted to test, the responsibilities of their team, and it truly made it a very seamless and collaborative effort. Okay. Another question we have is, how was this process received or viewed in your organization? Yes. So definitely, it was received well, not without some hesitation, some doubt. At the beginning, the overall impression that is felt by a group is, here comes additional work. However, once you realize that the guideline really facilitates the thought process, the dialogue, the collaboration between teams, it really was well received. It removed all the emotion out of the process and truly focused the team in data-driven responsibilities and deliverables. Okay. Jose, here's another question. I don't know if you're going to know the answer to this, but we'll put it out there. How does this differ than what P&G uses and conducts for FATs? I am not familiar with the P&G process. I'm not one of my former employers. However, I would venture to guess that there is a document that is written already for the most part in all my former experiences. There's a document that is already written, and this one is very different because it's not again a prescriptive document. What it truly is doing is outlining responsibilities, areas, it defines well the process, provides clarity in the different areas of an FAT without having to adjust your existing FAT documentation. So it truly provides you that checklist for everyone involved to think about not only the piece of equipment, but other areas outside the piece of equipment that will ensure the return on investment, areas like maintenance practices, areas like documentation, areas of budgeting, all of those areas are inclusive in this document whereas typical FAT documentation will ignore or neglect that. Okay. We have another question concerning OEE. This person says, what OEE expectations have you given to the OEMs within the FAT process and how do you resolve them missing that number? Great question. So for the most part, everybody starts for a world class OEE of 85%. In this situation, again, this document guides you through a dialogue and deliverable or realistic expectations based on all of the factors that are needed to consider. For example, in our case, we had challenges with material. That will definitely affect the OEE of a piece of equipment. We had extremely new aggressive technology coming in, so we knew we needed to implement strong training regimen in order for us to be successful. The value of these documents is outlined and identified those needs so that everybody has a realistic expectations, knows what they need to deliver, and when it comes to OEE or performance, it's clearly defined based on all of those factors I mentioned. Okay, another question is, how would you suggest engaging your suppliers in using this process? Great question. For us, our supplier was very, very receptive to utilizing this document. If we are talking about a manufacturer of equipment, it added the value in the front end, as they knew exactly what to expect when the visit was performed. They knew exactly what to expect during the installation phases, so it provided not only a value at the present, but having gone through the process, it provides resellable value to other customers down the pipeline. When it comes to suppliers, like components suppliers, it truly does identify as well some of the challenges that going from instance from a manual operation would be to an automated application, and it provides the vehicle, the framework to successful partnership. Jose, do you recommend using all sections and elements of the FAT? Yes, I recommend that at least you scan through them and identify what is applicable to your situation and process. In our case, there were certain areas that were not applicable in the nutraceutical industry, and the way we operate it, so therefore we just simply omitted those in the final product. But it is a very comprehensive, all-inclusive document that allows you that flexibility to be non-prescriptive, to add or subtract to the checklist as you see fit. Well Jose, I'd like to thank you for a great presentation today on factory acceptance testing, and for more information about PMMI's OPEX Leadership Network, please visit OPEXleadershipNetwork.org. For the latest news about engineering and operations in the food and beverage manufacturing industry, and to view news about our upcoming webinars, please visit profoodworld.com. Thank you for attending this presentation and have a great day.