This paper will be featured as a series of articles in this and future issues of SA Instrumentation and Control. Subjects to be covered include the evolution of the Wall Street e-manufacturing mindset, the history of e-manufacturing, the emergence of the Internet in manufacturing, e-manufacturing as a strategy to take the friction out of the enterprise, and how no manufacturer is too small to benefit.
How Wall Street evolved the e-manufacturing mindset
Once upon a time, the plant floor was isolated from the rest of the enterprise - operating autonomously and out of sight from the rest of the company and, in particular, from the scrutiny of a company's shareholders. No more. Plant floor - meet Wall Street.
Companies today - including old-line manufacturers - are driven by shareholders and financial analysts to improve bottom-line performance. Market validations, like meeting or exceeding earnings forecasts and the return on net assets (RONA), are the hair-triggers that, if met, can send company stock soaring - or tank it by double digits.
For today's manufacturing company, what matters most is not only growing sales. It's how efficiently a company can operate as an organisation. And chief financial officers (CFOs) have found the religion of operational excellence. Whether it is Lean, Six Sigma, or any variety of home grown initiative, successful companies today leave no stone unturned to squeeze the excess. By cutting the 'fat', streamlining internal processes, and making effective use of technologies like the Internet, a company can overall be better, faster, and cheaper than the competition - and maintain the confidence of stock exchange pundits and investors.
Traditionally, the plant was the life-blood of every manufacturing enterprise, the place where value was created. Of course this remains the case today, even in this world of crazy 'dot-com' valuations. But as industries consolidate and restructure, some companies are choosing to remain as the 'producers' of goods while others are positioning themselves downstream in the supply chain to be the 'marketers' of those same goods. In almost every industry, tightly integrated supply chain models, such as those popularised by Dell Computer and its extensive web of suppliers, are emerging. In these new models, connection of the plant floor to the broader supply chain is essential, and information access is more critical than ever. The Internet and e-commerce have simply accelerated this trend.
The borders are lifting within the enterprise - all areas from planning to logistics fall under scrutiny for cost savings. And while companies scramble to meet consumer demands for e-commerce channels, manufacturers are finding themselves in, at times, uncharted waters - trying to make sense of the maintenance, repair, and operations (MRO) organisation, and understanding the true capacity of the plant floor, as well as how to make it more efficient.
The days are gone when the plant operated autonomously from the overall enterprise - with good reason. We have all heard the adage, 'Knowledge is power'. How true for today's manufacturer. In fact, the most strategic advantage of any organisation today is information - even more so, the right data to help make informed business decisions. Whether the challenge is faster time-to-market, improved process yield, nonstop operations or tighter supply-chain coupling, information is the key. The plant floor is the starting point for greater information connectivity. Computer-based plant-floor controls for manufacturing machinery, material handling systems and related equipment generate a wealth of information about productivity, product design, quality and delivery. And a contemporary automation architecture is the key to unleashing this information in a cost-effective manner.
But this is only where the plant-floor possibilities begin. A company today can now have a single, complete set of operational capabilities including rapid plant design and deployment, realtime ERP connectivity, comprehensive asset management (of people, products, and processes) and a seamless coupling to the entire supply chain via the Web. That is what e-manufacturing really is. The industry has made e-manufacturing the way to define everything from simple Web servers on the plant floor to extensive supply chain strategies. But what the market has yet to do is help manufacturers understand what e-manufacturing really is - a concept much greater than the sum of its parts - or how to deploy it in a practical, incremental manner.
Here is a popular, basic definition:
"The core of [an] e-manufacturing strategy is the technology roadmap for information transparency between the customer, manufacturing operations, and suppliers. An e-manufacturing strategy takes e-business processes, such as build-to-order or reliability-centred maintenance and generates guidelines for implementing plant systems. The e-manufacturing strategy takes the e-business and manufacturing strategies and creates a roadmap for system development and implementation in the plant." (AMR Research, August 2000).
So what qualifies an automation supplier to provide such a guide to e-manufacturing? We know from experience that four key competencies are required for an e-manufacturing strategy: an integrated plant-floor automation seamless connections to the enterprise systems enabled through software and services; comprehensive asset management and reliability-centred maintenance; and tailored e-business strategies for supply-chain efficiencies. In this era of outsourcing, manufacturers are asking us to ensure their own critical information transparency between customers, manufacturing operations, and suppliers.
Complete automation is Rockwell Automation's compass for e-manufacturing. We have the knowledge, the technology, the expertise and the partnerships to help guide manufacturers down this path. And industry experts such as AMR Research have praised our approach: "Rockwell Automation has taken the lead in showing start-up dot-com companies how to manage their channel while still providing valuable online e-procurement services. Now, with its e-commerce initiative well under way, Rockwell is positioning itself as a significant force in helping manufacturing companies lay the foundation for e-manufacturing (AMR Research, June 2000)."
Why should you be interested in e-manufacturing?
Over the past several months, we have studied the musings and writings of industry-leading analysts and media who have shared their viewpoints on where manufacturing is headed. All agree that the e-manufacturing term is much like the phrase, 'e-business'. One day, the 'e' will be so common it is no longer needed. It will be manufacturing as usual. If you are a plant manager or engineer, understanding the true meaning of e-manufacturing can help you understand how your highly sophisticated control systems can seamlessly connect with the rest of the enterprise - helping you lower costs, increase efficiencies and productivity, and ensure the highest quality for your produced goods. If you are a manufacturing manager, knowing more about e-manufacturing will give you a clearer direction about bringing the benefits of the Internet to your operations for transparency, responsiveness and efficiencies, regardless of the number of facilities you have around the world.
If you are a CFO or IT manager, e-manufacturing insights will help you understand the wealth and opportunities you can unlock within your plant floor operations. And how today's information enabled automation technology easily connects with the rest of your enterprise - sharing data anywhere in the world that helps you make more informed business decisions.
And, if you are an investor, e-manufacturing awareness will help you better realise the fascinating strategies leading manufacturers are implementing to squeeze excess, expand global reach, and bring more to the bottom line. The best news for manufacturers today is what e-manufacturing is not. One, it is not an all-or-nothing proposition. Second, it is not something that requires a complete redesign of a plant floor. Chances are any manufacturer today - regardless of size - has certain elements in place for a good starting point. Bottom-line, it is a way of thinking about deriving operational excellence out of an organisation, and utilising the Internet to achieve results. And regardless of where an organisation begins on the road to an e-manufacturing strategy - be it through the supply chain, plant-floor integration or asset management - Making sense of e-manufacturing will serve as a definitive guide.
History: build to stock, front office standards, and the 'necessary evil' of maintenance
Technology is not new to manufacturing. Like any other part of a bricks and mortar operation, technology has thrived both on the plant floor and in the front office for decades. Highly sophisticated combinations of relays and switches, programmable controllers, drives and sensors, and local area networks have long operated the lines, conveyors, and machinery required to manufacture goods. Visit any factory floor today, and you will find technology driving a plant's motion, drive, process and discrete operations.
Over the last decade, the evolution of manufacturing technology has included the introduction of 'contemporary' information technologies, such as the PC and open standards on the factory floor networking with concerns such as the scramble to ensure 'Y2K readiness'. During that time, manufacturers evolved the application of information technology from relatively passive data collection and reporting roles to core control and diagnostics applications.
So information technology is not new to the plant floor. It takes its natural place in the course of business; information technology is never the cure-all solution for any business process. Rather, it is yet another tool that enables the solution. Still, the ways manufacturing organizations have utilised information technology exemplifies the vast separation the plant floor has suffered (or enjoyed, depending on who you ask) from the rest of the corporate enterprise. In short, the gap between the plant floor and the front office has only recently been fully realised.
The plant floor: Build to stock the highest quality end products
The plant floor has historically been viewed as an 'island' in isolation of other elements within the supply chain and the organisation itself. In fact, great care has traditionally been taken to only loosely couple the plant floor with manufacturing operations to avoid the risks of supplier shortages and demand fluctuations from customers, or even network outages. The ebb and flow of consumer demand was not the primary concern of the typical plant floor engineer. The managers of the corporation were often pre-occupied with the commercial concerns of sales and marketing. The subsequent role of the plant floor was to manufacture a quality product - be it an automobile, a bottle of beer, or a semiconductor - and make sure it was in stock and ready for sale.
Plant engineers focused their time and talents within the walls of the factory floor, mainly to optimise production within a given process, improve yield, heighten product quality, and increase productivity. The focus, then, was to look at the flow of raw materials into the production process, and ensure consistently high-quality goods were available in stock at all times. Speed, efficiency, flexibility, productivity, cost savings, yield and productivity around a given element of the plant were of utmost importance, but rarely was a broader view of these parameters taken (ie beyond the plant walls to the broader supply chain). And the technology employed to achieve these high levels of quality and productivity created an immense amount of information about that little corner of the enterprise, rarely was it effectively consolidated and communicated for use in the rest of the enterprise. Traditionally, that information remained within the walls of the factory floor, primarily used to drive the local behaviour of that plant. In some cases, manufacturing execution systems (MES) were deployed to provide a higher-level view of production. But these systems were often too monolithic to deploy and inflexible to operate to be truly effective. Information remained locked up in the plant, inventory piled up, and companies lived with the inherent inefficiencies of plants isolated from their supply chains.
Meanwhile, in the front office... The Enterprise Resource Planning (ERP) system has become the financial backbone for many corporations. But these systems were originally intended to be something much more encompassing of an enterprise, structured around a top-down master scheduling system for all tasks and operations throughout the company. ERP systems, specifically, have brought marked efficiencies to closing a company's financial books every month and tracking human resources. Where they have been less-than-successful, however, has been in integrating with the plant system.
ERP systems have had a tendency to assume plant floor operations have infinite capacity, not adequately planning around variables such as maintenance or unpredicted shutdowns, or that suppliers are always on time, not acknowledging that both supply and demand can be highly variable. Because of these limitations, most companies either have not made the investment, or have under-invested, to tightly couple plant floor manufacturing directly with the ERP system. Thus, one of the greatest challenges facing the true effectiveness of enterprise level systems has been the ability to couple it to the realities of the plant floor - in other words, linking the 'shop floor to the top floor'.
To be continued...Part II
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