Panel of thought leaders see pains, gains in manufacturing enterprise IT

As 2007 comes to a close, Manufacturing Business Technology turned to some of those it knows best in the vendor community to get an idea of what may lie ahead in the ongoing convergence of manufacturing systems and information technology. Based on a recovery in capital goods investment and increased exports, by 2006, 14 of 22 U.


As 2007 comes to a close, Manufacturing Business Technology turned to some of those it knows best in the vendor community to get an idea of what may lie ahead in the ongoing convergence of manufacturing systems and information technology.

Based on a recovery in capital goods investment and increased exports, by 2006, 14 of 22 U.S. manufacturing sectors surpassed pre-2001 recession production levels, according to the National Association of Manufacturers (NAM).

From 2003 to 2006, NAM says, manufacturing output grew at a 5-percent rate. Most strikingly, productivity gain grew 4 percent annually, for a total of 22 percent since the recession.

Information technology (IT) is today recognized as the most important factor contributing to that productivity growth. This undeniable connection between growing IT use and productivity growth goes a long way toward explaining why companies are again seeking opportunities to use IT as a competitive differentiator.

What was the No. 1 trend impacting use of information technology in manufacturing and supply chain in 2007?

Vivek Bapat, head, SAP solutions marketing–product, supply, manufacturing, and RFID: The investments manufacturers and others have made in SCM [supply chain management] and CRM [customer relationship management] succeeded in giving them keener insight to true demand signals. That's one reason connections between the enterprise and plant operations are increasingly important. After many years in which the possibilities of closer connections were discussed, more companies are taking real steps.

More important, however, is forging single business processes across information silos and across applications. This is where the power of an integrated system comes in. We're seeing this driven not just by traditional concerns bearing on streamlined operations, but for things like compliance, capturing the genealogy of a product and tracking that throughout its life—across enterprises, and across supply chains.

Jim Henderson, Apriso Corp.:

You can’t plan your way out of the challenge of remaining adaptive to market, demand, and supplier changes.

Jim Henderson, president and CEO, Apriso Corp.: In 2007, we saw growing interdependencies between production and supply chain. Conversations with leading manufacturers no longer include one without the other; they want to optimize both. One technology enabler has been expanded use of business process-oriented architectures that allow business processes across locations and applications.

Charles Johnson, WW managing director of manufacturing industry solutions, Microsoft: The No. 1 trend impacting IT use is the need to compete and win in a global marketplace that operates 24 hours a day. This market is characterized by extremely diverse and very trendy consumer preferences. Its products are no longer sold only in brick-and-mortar stores. Manufacturers must support a multichannel retail experience, and in many cases, a direct-to-consumer experience.

This requires effective, real-time demand planning, along with the operational capabilities to support a broad range of products. It also requires acceleration of both innovative products and business processes.

Chris Kelley, VP of partner and platform marketing, Siemens PLM Software: There is a fundamental shift occurring in the use of enterprise and supply chain systems. It is increasingly acceptable and expected that enterprise functionality be delivered as a service, or a combination of a service and traditional application. This is especially true for critical, distributed applications involving workflows or services spanning multiple companies. The resulting application, workflow, and business process is not actually “owned” by any one company, and that in itself is a distinct advantage.

Kai Trepte, John Galt Solutions:

As more and more companies move to modern ERP systems, the amount of data interchange between systems has increased dramatically.

Kai Trepte, VP, John Galt Solutions: As more and more companies move to modern ERP systems, the amount of data interchange between different systems and corporations has increased dramatically. This trend will continue and grow as more solutions providers offer their software as a service, and as systems become more open.

What is the biggest challenge U.S. manufacturing industries face as we near the second decade of the 21st century?

Bapat: One big challenge manufacturers face is balancing quality versus cost. This question impacts how things are built here in the U.S., but also whether trends toward outsourcing to developing countries will continue. After that, environmental concerns are coming increasingly to the fore, and the role that technology will play in supporting green manufacturing is one that will play out over the next several years.

Carol Ferrari, VP of marketing and inside sales, Firepond: Margin erosion and cost containment in relationship to innovation is the biggest challenge manufacturers face, given globalization and cheap labor markets that make developed economies uncompetitive when it comes to commodity products.

Chris Kelley, Siemens PLM Software:

PLM won’t be SaaS-based anytime soon, but we continue to look at it for support of basic collaboration and user involvement in product development.

Kelley: This one I'd be happy to wax poetic on. Manufacturers face demand for more “personalized” products, while at the same time being pushed to increase scale to drive down costs. The only way to solve this dilemma is to enlist direct involvement of users in product creation.

Examples of this phenomenon of “social production” today in the IT industry include open-source initiatives like Linux and Apache. This is now extending beyond IT and making its way into manufacturing. It involves much more than just configured features and functions. For example, companies like Mazda are using FaceBook to engage interested parties in design challenges. Another example would be BMW, which redesigned the user interface of its iDrive system with the direct involvement of 300 “lead users” working with designers.

Doug Lawson, CEO, Incuity Software: Going forward, the manufacturing industries must manage three important things fundamentally at odds with one another, including needs as follows:

  • For greater compliance, driven by global warming.

  • For great agility, driven by consumer expectations and compressed supply chains.

  • For greater productivity, driven by increasing global competitiveness.

The challenge is not meeting each need, but rather balancing the three, given inherent conflicts: compliance works against agility; agility works against an optimized process and cost reduction—which in turn works against compliance. No manufacturer has the luxury of ignoring any of the three.

Michael Saucier, founder & CEO, Transpara Corp.: U.S. manufacturing companies have a hierarchical employee structure. Yet the very structure that facilitates organized behavior hinders leaders from capitalizing on employees' “ground-level” insight. Overcoming this dichotomy of organization is the biggest challenge facing U.S. manufacturing.

Michael Saucier, Transpara Corp.:
Case studies show that an organization’s cultural commonality binds its members in ways that can manifest in automatically coordinated behavior.

New “Enterprise 2.0” technologies can leverage contributions of large numbers of people to take advantage of The Wisdom of Crowds insight offered by author James Surowiecki. He shows that a diverse collection of individuals making a collective decision will deliver better results than any given individual or even expert making a decision in isolation. His theoretical and case study-based examples show that an organization's cultural commonality binds its members in ways that can manifest in automatically coordinated behavior.

The key is keeping the widest possible audience informed with near-real time data about all aspects of company performance, and keeping them informed regardless of their location. This includes not only those key performance indicators (KPI) that are reported monthly, but also high-frequency, operational KPIs that keep processes running smoothly. Assembling these KPIs for delivery to disparate locations and device types recently became far easier with Web-based tools for assembling “composite KPIs” from a variety of existing sources.

Rich Veague, CTO, IFS North America: One underrated challenge is the increasing demand to manage projects, instead of products or manufacturing processes. Systems and management philosophies that worked for four-wall manufacturing aren't adequate for the more complex businesses of the “project economy.” Shortened product life cycles combined with greater reliance on outsourced manufacturing and engineering means manufacturers must operate more like general contractors.

Will outsourcing of production to developing economies continue to grow, or is it reaching its limits—logistically or otherwise?

Pamela Lopker, QAD:

ERP and PLM will remain in-house for many years, while SaaS-based applications will augment these products in solution areas that will include CRM, HR, payroll, supply chain, and purchasing.

Pamela Lopker, president and founder, QAD: Outsourcing will continue to grow, but the manufacturing industries will figure out how to balance final assembly in consuming countries with component manufacturing in developing countries.

Lawson: Certain types of outsourcing already are slowing down. Simply moving production to where labor is cheapest is going to stop. Evidence shows it introduces new problems with respect to supply chain complexity and product quality. Moreover, labor costs inevitably go up in the areas outsourced to. You end up chasing your tail.

On the other hand, moving manufacturing to places where there is the greatest innovation and the smartest minds—places like India, the U.S., or Europe—will continue. Manufacturing also will move to be close to markets. I think we'll see a great deal of that, because shipping will be a higher-cost component.

Wikipedia says Software-as-a-Service (SaaS) is an application delivery model where a software vendor develops a Web-native software application and hosts and operates—either independently or through a third-party—the application for use by customers over the Internet. Customers do not pay for owning the software itself, but rather for using it.

Service-Oriented Architecture (SOA) is an architectural style that guides all aspects of creating and using business processes, packaged as services, throughout their life cycle; as well as defining and provisioning the IT infrastructure that allows different applications to exchange data and participate in business processes regardless of operating systems or programming languages underlying those applications.

In the next several years, will companies choose between basing their IT infrastructure on SaaS-based applications and committing to SOA?

Ferrari: A company can effectively leverage on-premise solutions using SOA, and deploy SaaS solutions in parallel. This will allow organizations to migrate their on-premise solutions to the SaaS model as needed. In addition, using SOA-based applications provides a foundation for SaaS scalability and flexibility within a multi-tenant environment. For example, SOA can help leverage disparate data sources that need to be integrated to a SaaS platform.

Henderson: Clearly there has been real growth of SaaS in 2007 as a means to cost-effectively deploy and manage distributed applications. But SaaS is a risky alternative, for example, for a production line running 24/7 with millions of dollars of raw materials and work-in-process at risk. Here, use of SOA and business process management will continue to expand, unifying distributed applications, processes, and locations so to operate as a collaborative, adaptive enterprise.

Lawson: These two technologies are very closely related and support one another. Well-designed applications built on top of the service-oriented architecture lend themselves to being deployed as a service.

In coming years, will manufacturing enterprises come to be dominated by two type systems: product life-cycle management (PLM) and enterprise resources planning (ERP), with virtually all other systems being subsumed beneath them?

Henderson: While the leading PLM and ERP vendors would undoubtedly answer “yes” to this question, both an MES or operations-execution layer and an automation layer will continue to exist. There is an acute need for real-time manufacturing intelligence, and neither PLM nor ERP are able to deliver this.

Kelley: This is already happening and it makes good sense. These two systems line up with the fundamental strategies manufacturers can adopt: to be the low-cost provider, or to deliver differentiated products. In our view, ERP is based around reducing expense by means of integration and managed transactions. PLM also reduces costs through increased efficiency, but is more about increased revenue through innovation. While companies need both, we believe manufacturers will base their investments around which of these two is most important to them.

Lawson: If manufacturers are driven solely by the need to standardize, then the answer is “yes.” If the focus is on innovation, then the answer is “no,” and we'll see a swing back toward best-of-breed applications and highly manageable point solutions that share data and “talk” effectively with other point solutions. While there are powerful forces backing standardization, there also are powerful forces at play that make standardization unlikely.

Lopker: Yes and no: ERP and PLM will be in-house for many years, while SaaS-based applications will augment these products in solution areas that will include CRM, HR, payroll, supply chain, and purchasing. Moreover, it will take many years for MES, EAI tools, and BI to be consumed into ERP. During these same years, ERP will be moving to SaaS-based delivery. SaaS-based ERP vendors will leverage third-party SaaS products.

Today there is a “battle” for control of the customer. ERP vendors want to provide the entire system—and keep third-party components out. Customers will go with an end-to-end ERP product to avoid integration and multi-vendor issues. As ERP moves to SaaS, the vendors will be able to incorporate third-party solutions, and customers won't have to maintain integrations or deal with multiple vendors.

Will there be in the near future a healthy market for SaaS-based enterprise systems?

Kelley: PLM as a SaaS application is challenged by bandwidth concerns. We're talking here about much more than moving data related to transactions. Instead, we're working with complex data models and analysis results. PLM won't be SaaS-based anytime soon, but we continue to look at it for support of basic collaboration and the involvement of users in product development.

Rich Veague, IFS North America:

One underrated challenge is the increasing demand to manage projects, instead of products or manufacturing processes.

Veague: ERP systems are very large, with lots of back-end integrations, and will thus be SaaS-based later than other software. Examples seen so far cover a single process or module, not whole suites. Several verticals, like defense and utilities, have security restrictions limiting possibilities to run externally managed applications. However, IFS does see interest in “Intranet / extranet SaaS,” where a configured and integrated application is delivered as a service by a central IT organization to departments, suppliers, and contractors in the supply chain.

An example would be Lockheed Martin [LM] delivering a maintenance solution as a service to LM itself, LM subcontractors, the Department of Defense, and other parties involved in maintenance. In this respect, IFS' new user experience can be delivered as a service using Web deployment and standard Internet protocols. This enables delivery though existing infrastructure.

Why has “innovation” as a management concept aimed at improved performance gained such currency in recent months, with industry pundits and manufacturing executives alike?

Ferrari: Product innovation drives profitability. Manufacturers command 19-percent higher margins on average for newer products. Innovation has always been important, but now that manufacturers recognize that they can't cost-cut their way to profits, product innovation is seen as the key to top-line growth.

Charles Johnson, Microsoft:

Composite applications will support people performing specific roles, like demand planning, customer fulfillment, or managing new product launches.

Johnson: The No. 1 reason is the accelerated pace at which customer needs and preferences are changing. All companies are forced to get new, innovative products to market faster. At the same time, they must have business models that offer multiple touch-points for reaching customers.

The rise of online commerce has been both good and bad for manufacturers in this regard. Because people are more comfortable with the online purchasing experience, it's easier for companies to sell in this manner. But it also means customers are less concerned about the origin of a product. They do care about quality and how quickly a product can be delivered. Even large companies like P&G now sell certain products directly to consumers. Another area of innovation for manufacturers is incorporation of value-added services.

What was the most interesting or ingenious instance of innovation involving products or processes that you've seen in the last year?

Bapat: If you'll allow us to toot our own horn a little, I would say that SAP xMII, as a composition environment, is a great example of innovation. Packaged applications don't sufficiently address manufacturing complexities. xMII provides an innovation platform for SIs, ISVs, and users to rapidly create and scale new applications tailored to their environment, while still leveraging existing systems and applications. This is a fundamental breakthrough and a leading indicator of how manufacturing applications will be created and delivered in the future.

Ferrari: The Apple iPhone is ingenious because it took something seen simply as a cell phone and turned it into an Internet-communication device. The navigation is common sense and not confined to the traditional ways people interact with a phone. It's simple, yet valuable.

Trepte: The Apple iPhone takes concepts that have been around for years and combines them in an easy-to-use package of services and features that people use every day with a simple interface.

Are manufacturers and supply chain executives happy with the IT and application systems they have today, or has the frustration level risen in stride with the complexity?

Johnson: I think few companies are completely satisfied. Typically, companies purchase applications to support a set of structured business processes, and those systems work for 80 percent of transactions. But for the 20 percent of the time that exceptions arise—things like unexpected parts shortages or spikes in demand in certain regions—companies need applications that support unstructured business processes.

Companies can use things like composite applications integrated with Microsoft Office, mobility devices, and even rights-management technology to create more flexible business processes. People get the information they need to make real-time business decisions without going into underlying business applications that may be unfamiliar or difficult to use.

Trepte: Frustration is decreasing as software providers simplify set-up and installation processes. One continuing area of frustration is that existing ERP systems are not flexible enough to adapt to new business conditions in a timely manner.

Doug Lawson, Incuity Software:

At every level, IT systems are becoming more difficult to manage. Even operating systems are less and less predictable in their behavior as a direct consequence of security considerations.

Lawson: The short answer is no, they're not happy. At every level, IT systems are becoming more difficult to manage. Even operating systems are less and less predictable in their behavior as a direct consequence of security considerations. Major vendor initiatives, whether it's the IBM-Sun-Oracle community or the Microsoft community, have focused on security at the expense of application robustness and reliability and system stability. Applications are harder to use because they're constantly being patched, changed, and locked down. Availability is declining, not increasing.

Will manufacturers overcome challenges involved in optimizing supply chains across multiple legal entities so as to reduce inventories and eliminate latencies—i.e., become demand-driven?

Bapat: More and more companies will imitate the Toyota model by producing goods or enacting final assembly as close as possible to where the product is consumed. This paradigm tends to be seen first in automotive industries and then electronics, but there is a good chance it also will encompass consumer goods, an industry that has tended to focus on centralized, automated production and logistics as a core capability.

However, supply chains and logistics in developing regions haven't advanced as much as their production capabilities. Does that mean companies will be more likely to stockpile inventories in these regions? Successful manufacturers will have to pay close attention to profitably managing distributed inventory, supporting short product life cycles, and increasing product variety while maintaining quality standards required for local markets.

Henderson: You can't really plan your way out of the challenge of remaining adaptive to market, demand, and supplier changes. Driving lean processes throughout your entire supply chain is a way to achieve sustainable competitive advantage.

Trepte: Users are demanding a single integrated view and contact structure for their suppliers. As vendors provide this ability, systems will be more integrated. We're already seeing this for larger customers.

Are users sold on the idea that productivity gains follow from multi-plant production execution? What are the limits on the ability to compare performance of plants building like things?

Lawson: Culturally, it's very difficult for people at dissimilar plants making the same thing to accept the idea that they can be compared directly to one another. However, if you're making the same or similar products at two different facilities, it's fair and reasonable to directly compare all the key performance indicators—including cost, quality, and production efficiencies. But we typically end up with software issues getting in the way.

Can anything break the hold of Microsoft Excel as the system of record for almost every functional area within the manufacturing enterprise?

Kelley: It's been noticed that after an upgrade of a PLM system, one of the first things tested is that the interface with Excel still works for importing and exporting data. Excel is just as important here as it is in other functional areas.

Saucier: The only real problem with the existing proliferation of Excel spreadsheets is that they are lost on “C” drives everywhere, available only to their creator and lying dormant most of the time. The real goal should be to repurpose this data and add value to existing investments rather than re-solving old problems over again. New Web-based composite engines like Transpara's Visual KPI allow Excel data to be leveraged as KPI attributes just like more common data sources like Microsoft SQL Server. Microsoft Office Sharepoint Server 2007 now allows companies to migrate existing spreadsheets—without recoding—to secure server locations where the results can be versioned and leveraged for new purposes.

No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Controller programming; Safety networks; Enclosure design; Power quality; Safety integrity levels; Increasing process efficiency
Additive manufacturing benefits; HMI and sensor tips; System integrator advice; Innovations from the industry
Robotic safety, collaboration, standards; DCS migration tips; IT/OT convergence; 2017 Control Engineering Salary and Career Survey
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This article collection contains several articles on how automation and controls are helping human-machine interface (HMI) hardware and software advance.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Automation Engineer; Wood Group
System Integrator; Cross Integrated Systems Group
Jose S. Vasquez, Jr.
Fire & Life Safety Engineer; Technip USA Inc.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me