Microsoft, Sun Microsystems, IBM and their ilk provide the platforms upon which our manufacturing businesses infrastructures increasingly so depend. Brian Tinham dips into their strategic thinking and advice.
So what should guide a manufacturing company in developing an IT strategy for themselves and for their supply chain? A curious question to put to the developers of the IT platforms that provide our data, transactional and communication infrastructures perhaps, but these giants spend a lot on strategy – getting it right for the markets they serve. And manufacturing is a big one.
Phil Hanson, who heads the European discrete manufacturing sector at IBM Global Services in Warwick, kicks off. “I’m edgy about the term ‘IT strategy’ because it’s a CEO agenda item now, not an IT director agenda item. We’ve come out of the process, culture and behavioural change times of introducing lean manufacturing, total quality and the rest – and there’s a technical discontinuity [between IT and the business]. That has to be clarified – the business and IT agendas are inextricably intertwined.”
That said, Microsoft’s new UK manufacturing industries marketing manager Paul Burgum does the consultant bit: “First they must identify their core business activities – and outsource those that don’t add value. It all relates back to business process re-engineering (BPR): do what makes sense, don’t do what doesn’t.” And, he adds, “you need to build processes to support a demand-driven paradigm – not supply-driven. The IT is there for this now.”
Chris Nugent, director of enterprise modelling software firm Popkin, agrees. He puts it thus: “The key to defining IT strategy is the gearing of the business – the way you want it to work: as an e-business, in a distributed mode, with centralised manufacturing processes, or whatever.” And he observes that IT itself also has to be a big input into defining any manufacturing strategy today – “what is now possible, at what cost.”
Meanwhile, “Join it all up, and join it up collaboratively,” advises David Atkinson, manufacturing e-commerce strategist for Sun Microsystems. “Companies’ internal processes are not as good as they should be; rarely do they support the processes of suppliers of the Tier 1 and Tier 2 businesses; and very rarely the customers. Only now have we got the technology to do this.” And he continues: “I actually don’t think the Internet matters ‘diddly squat’. It’s just a transport mechanism – but it has spawned a new raft of technologies, and it’s how we use these.”
OK, but where should manufacturers start? Atkinson insists that change will be so fundamental that, “you have to start by building an infrastructure that’s wide open to collaboration (open standards, XML, etc, and an emphasis on enterprise application integration (EAI) and the browser HMI). Of course, think about automating as many of your business processes as possible – but then share the benefits.” And he says the obvious gains of collaborative engineering (faster development, more input from suppliers and customers, etc) also apply to business processes. “How big a jump is it? It’s not just about driving cost out: it’s about aligning with your suppliers and customers.”
IBM’s Hanson believes getting into some form of e-business holds the key. “Clients are frightened about the buying behaviour of web auctions,” he observes. “But they feel they can’t not be in that ‘pressure cooker’ of activity. They know the business processes of those that get in there will improve faster than those not involved – because it doesn’t half expose the holes.”
Nugent agrees: “Companies need to take their internal ‘batch’ processes and create on-line supply chains.” And business processes, he continues, “need to work like a production line”. Which brings with it it’s own requirements – “like ensuring that [the system and its processes] is properly stress tested so that if one part goes down it doesn’t drag everything else down with it.”
So what to do first with the web? Burgum believes coming at it from a desire to connect processes holds the answer. “Most people think that the Internet is just a shop window, but it’s not. Most of the returns will be around the other business processes: connection, communication, knowledge. It’s about quicker reactions, more responses, more done in less time.” And he cites on-line collaboration in design and engineering, lean manufacturing, e-procurement, web sales and service, and web trading exchanges. His advice: “look for what is achievable in real short term: it’s all part of the mix.” But he adds, “the biggest challenge is going to be connecting the business process to the manufacturing processes. That’s where the gap is, and that’s what foils fulfilment.”
Lotus’ e-business marketing manager Gary Bacon puts people first: “There’s been a lot of noise about e-business… It’s been first generation stuff. Now it’s about e-marketplaces and communities. So the first thing to do is to find a way of allowing people to share information – news, chat rooms, trading places and so on. We’re pushing the slogan: ‘Community Drives Commerce’ – business working with each other.”
Atkinson goes back to basics: “Ask yourself, ‘What are my processes? What is my manufacturing strategy? What must I do? What must I know?’ For example, if mass customisation is what you have to do then it’s only possible if you aggregate all the business intelligence in one place, within a data warehouse that you can query for manufacturing planning, business planning, CRM and the rest. Then you’ve got a single view of your customers and the processes that support what you’re building.
“Maybe it’s shopfloor data collection first because I don’t know where I am in my manufacturing cycle. So look at the [packaged] IT available that meets the standards requirement (XML for messaging and CORBA for application integration), and second see if it can do the job – if not throw it out.” He concludes: “First audit what you’ve got – the different ERP systems, shopfloor data collection, scheduling systems etc – and see what can be linked by a central hub.”
Nugent agrees, only adding: “The key to IT strategy is the architecture, the alignment of systems and their data requirements with the business processes – and clean data.” And he emphasises the implications for system interoperability and “reductions in the discontinuities between functional departments where problems, delays, waste and costs currently occur.” ERP, he says, is not a prerequisite now. “It’s not that I don’t think enterprise systems add value, but you need very stable businesses for them to work.”
Hanson fields some practical advice. “For my clients I recommend a four box model. On the top left there’s the quick wins, like moving EDI to the Internet – because you establish confidence, get tangible business benefits. Then top right is organic growth: for example, new routes to market, embedding technology in your own products, making your distributors more exciting to do business with.
“Bottom left: is cost reduction, like e-procurement, supply chain optimisation, advanced planning and scheduling and component standardisation. And bottom right is building investor confidence: saying ‘yes of course we’re getting into e-business,’ and building better HR, knowledge sharing. They all fail the ROI test, but you have to do them because they’re strategic.
“You also have to learn how to dis-invest. In e-business not everything will work out for you, so you may get to pilot stage and have to say ‘no’, truncate the project. You have to be prepared to light some fires and then consciously put some of them out. It’s not like the old ways where you spend two years doing the justification, the project runs and nothing stops it. Things change too quickly” And their aren’t route maps to follow.
So far so good. Finally, what about the specifics of new technologies, platforms themselves and the thorny issue of outsourcing and application service providers (ASPs)? Each is a subject meriting special attention and you will find more throughout this issue, but these IT framework vendors – and for that matter the enterprise system vendors I spoke to – share very similar views.
On new technology, and in particular wireless/mobile (Bluetooth, G3 and the rest), we can expect better, faster, more accessible information movement wherever we are. Burgum, for example, expects to see interactive messages pushed to managers and machine operators alike. “We’re going to stay connected on mobile business systems: just like cell phones – by a virtual network.”
As for platforms and infrastructure, it’s yesterday’s concern. As Sun’s Atkinson puts it, “of course it must support whatever you want to use. It must be wide open and able to connect seamlessly with other systems… There is no excuse any more for a piece of software not to communicate with another piece of software.”
Microsoft’s Burgum is alone in saying: “The application platform is not irrelevant.” He would, wouldn’t he, but he insists: “What you’re looking for is something that’s sustainable and reliable but also familiar and easy to use.” And just as important, he continues, “being able to choose the best of the applications.” Microsoft, he gently reminds us, “gives you absolute choice of application.”
And ‘Manufacturing.net’, launched towards the end of last year “is a key infrastructure moving forward, providing web services and software as a service. It’s about harvesting information from business and manufacturing processes into a personalised portal.” And his point is that choosing the right infrastructure makes communication at all levels “a lot more achievable and a lot less expensive”.
As for ASPs, it’s an open verdict right now. As Atkinson says: “You’ve got to think ‘What do I do best? Do I want to run big data centres myself? Am I spending more money than I need to, and distracting myself? Should I instead be optimising the use of the new technology to improve my business?’.” He cites General Motors internal systems and software which is run with a “bunch of business analysts. The board decides on the thing it wants to do, with support from the analysts, and they then translate the requirements and outsource to manage the business needs and the service level agreements.”
Conclusions? Popkin’s Nugent warns: “The business strategy that’s logical on Friday 1st December could be modified an awful lot on Monday 4th.Get the architecture right,” he says, “and you can add and delete whatever you require.”
And finally IBM’s Hanson says: “The web revolution means hugely wider and more informed collaboration… You can think of it as a 21 pin plug which you can use for anything… This is a time for re-invention. The days of executives trading on will power are going; now they need to trade on creativity – they need different instincts, different skills. This is the biggest business discontinuity in my working life.