The hard work of integrating the factory floor with the rest of the enterprise appears to be getting harder.
Still-evolving technologies and a perceived lack of standards around them are factors in the almost glacial pace of integration between factory floor devices and systems and higher-level business systems. But a more influential factor is downright human: People, organizational structures, and lines of responsibility have combined to erect a formidable barrier on the road to the interconnected manufacturing company of the 21st century.
Nevertheless, it is a road that manufacturers are intent on traveling to an operational and management junction where customers are more satisfied, downtime is reduced, and products are built and delivered to market with greater speed and efficiency.
These are among the key findings in MA's latest reader poll on integration, its fourth since 2001. The survey examines the pace, scope, and issues surrounding the integration in U.S. manufacturing companies of factory floor devices with higher-level systems, including business computer systems and applications such as enterprise resource planning software. More than 350 MA readers weighed in on the state of integration in their companies, their business and technology goals, and the barriers they face in accomplishing the work.
Last year, poll respondents reported modest progress in moving data from the plant floor to other systems. This year, that relatively slow pace appears to have gotten even slower. The percentage of respondents this year indicating that they have begun to integrate but still face substantial work actually rose 1% from the 43% of respondents saying so last year (Chart 1). Those indicating this year that they have completed their integration activities amounted to only 7% of the respondent base, a hair above the 5% who said so last year.
What these data suggest is that manufacturers may not only be spinning their wheels on the increasingly steep and complex road to integration, but that they may actually be losing ground, at least in terms of time. When asked again this year when they expected the integration work to be completed in their companies, respondents once again assumed an optimistic posture, with a solid majority, 59%, saying they expected to be done within three years (Chart 2). Last year, respondents said pretty much the same thing, suggesting that progress has been slow.
Moreover, poll takers paint a somewhat similar picture with regard to the percentage of their factory floor devices and systems that are connected. This year, 28% of respondents -- statistically the same number as in 2005 -- say that 30% or more of their factory floor systems are integrated (Chart 3). The number of respondents who have achieved integration of 11%-30% of these systems remained relatively unchanged from 2005, but there has been substantial movement at the low end. This year, 24% of respondents said they had integrated up to 5% of the floor systems, compared with 13% last year, and another 14% said they had linked 6%-10%, compared with 10% of the group last year. This means that more companies have gotten started with the work over the past year and are seeing some early wins.
There also has been some fairly dramatic progress in the development of respondents' blueprints for connecting systems. This year, the number of companies saying they are integrating their distributed control systems or programmable logic controllers directly to ERP systems doubled to 15% of respondents, from only 7% last year (Chart 5). And the percentage of respondents saying that connection would be interdicted by a manufacturing execution system also grew, to 34%, from 24% in 2005.
Yet manufacturers appear to be running into some real roadblocks as they move up the integration curve, and the difficulties have been something of a surprise. When asked how their expectations of the integration work compared to the reality of the work itself, 49% of the group said the work was harder than they had thought it would be (Chart 6). Only about 5% of the respondents said the work ended up being easier than they had anticipated.
The eye-opener here -- what some may describe as a blinding flash of the obvious -- is what respondents point to as the key problems. When asked to rate the intensity of hindrances ranging from people issues to money concerns, a solid majority of readers, 54%, placed a "high" rating on people and organizational barriers (Chart 4). In descending order, budget issues, other priorities, and a lack of technology standards were cited by respondents as additional key challenges.
But what's most interesting about the people and organizational finding comes from another, related question, whose results may not be so obvious. When asked who was charged with primary responsibility for integration work in their companies, respondents overwhelmingly indicated that responsibility has been delegated internally, rather than to outside consultants or technology vendors (Chart 9). The problem, however, is that in a vast majority of companies the responsibility does not appear to be effectively delegated.
Less than one-third, 29%, indicated that management has placed responsibility for integration efforts with a combined IT/automation team. Nearly 40% of respondents delegate the responsibility to either a solo IT or a solo automation team. Automation and ERP suppliers aren't even on the radar screen.
What this finding suggests is that a cause long championed by this magazine -- the bringing together of IT and automation teams to work on the integration of the manufacturing enterprise -- is not happening as quickly or as widely as necessary. Operational executives, whom the poll identifies as the most influential constituency in manufacturers' integration efforts -- even higher than "C" level executives -- need to do a better job of bringing together IT and automation teams, which share roughly the same influence in the integration activities of their companies.
The net result of this organizational problem, the poll indicates, is that a majority of the respondents are doing something that is not in their best interests -- they are delaying projects (Chart 7). Fifty-two percent of the poll takers say their companies are reacting to the challenges by putting integration on hold.
An underlying factor in this reaction may be that respondents simply have not been able to make the connection, in hard terms, between integration activities and business performance. The poll shows that manufacturers do indeed place weight on a variety of business and technology goals associated with integration, but the numbers reflect a rather uniform interest level among such factors as improved customer satisfaction, reduced downtime, the ability to share information, and the opportunity to better rationalize system portfolios (Chart 8). There is no single factor that breaks out of the pack as the primary integration driver.
As a result, respondents are delaying projects. This kind of reaction may give them some breathing room to sort through their internal problems, work out the people issues, and get on with the important work of weaving together the systems in their companies. But they shouldn't delay too long. The global market waits for no company.