As 2007 dawns and manufacturers make their New Year's resolutions, the ring sounds slightly familiar: cut costs, increase manufacturing flexibility, and meet customer demands through product innovation.
But there's a distinct difference this time around, say industry analysts, as manufacturers now realize that throwing technology at one process or functional area isn't going to solve their big-picture problems. Organizationally, everything is interdependent; therefore, finding better ways for people to seamlessly share information -- regardless of department or function -- and standardizing processes globally are the priorities for manufacturers over the next 12 months.
Managing Automation contacted experts from AMR Research, ARC Advisory Group, and EDS to find out what manufacturers' priorities should be in 2007 and, while ERP, SCM, and manufacturing operations applications are the top three application investments planned for next year, the emphasis also is on technologies that enable tighter, cross-enterprise collaboration.
"Although we've been talking about this for awhile, we see collaboration going mainstream next year," said Andy Chatha, president of ARC Advisory Group, in an interview.
In recent years, enterprise application and automation vendors have rolled out portals as technology enablers for collaboration. But, Chatha says, it is the recent introduction of Microsoft Corp.'s Office 2007 and SharePoint 2007 that will help shift the collaboration into high gear. Once companies adopt these Microsoft technologies, the ability to collaborate will become embedded within the technology infrastructure of most companies, he said.
"Companies will also start adopting service-oriented architectures, which have some of the foundation for collaboration and interoperability," Chatha said.
According to EDS, a global technology services company, manufacturers are facing shrinking margins and unprecedented pressure to develop products in a fast-changing, global marketplace. As a result, they must learn to work smarter. The company predicts eight major trends will influence companies in 2007, including: globalization; market volatility; increasing customer demands; accelerated product innovation; outsourcing of non-core competencies; cost pressure; flexibility; and competition.
"While nothing is new here, what we are seeing is an intensification of each," said Ben Langlinais, client industry executive for EDS's Manufacturing Industry Group. "There's greater interdependency -- as companies struggle to move to the top in terms of competition, they are ratcheting it up [in terms of] how to apply technology to overcome some of these things."
For example, in order to accelerate product innovation, companies will have to digitize their product and process data. That will help them leverage that information throughout the company and across their supply base. Whether through the deployment of PLM or another application, they'll need "anything that allows them to reduce the complexity of how they manage product and process data and which allows them to better collaborate with their supply base and customers across the globe in order to build the right product with the right quality quicker than the competition," Langlinais said in an interview.
And that's where ARC's Chatha points to technologies such as master data management (MDM), as an important technology for many manufacturers in 2007.
"The MDM market is going to start taking off," he said. "The trend we are talking about is design, operate, maintain. A company needs to bring engineering, product development, and innovation closer to manufacturing."
MDM also will help with knowledge management as Baby Boomers begin to retire and take important intellectual property with them when they leave, Chatha said.
While all of these things are happening within the manufacturing organization, outside the four walls of the enterprise the emphasis will be on keeping customers happy. That is especially true within the industrial manufacturing sector, where product lifecycles are long and service often is a differentiator.
Whether it's a large enterprise with over $1 billion in revenue or a small business, the business issues for 2007 are the same. "They all say they want growth and operational excellence," said Jane Barrett, research director of industrial manufacturing at AMR Research. To many companies, operational excellence means "lean." And, according to an AMR study of initiatives that will influence IT investments in 2007, the application of lean manufacturing practices across the organization is the top priority.
While lean means different things to different companies, the emphasis on the concept indicates, generally, that manufacturers are after less waste and more efficiency. "What's more generally accepted is the understanding of eliminating waste or having a quicker changeover or more agile manufacturing," Barrett said.
EDS's Langlinais echoed that observation. "People see the word lean, and it has an empty meaning because it's been overused, misused, or people just don't understand it," he said. "What people do understand is cost pressure, efficiency, and eliminating waste."
The most important thing to understand is that there is no silver bullet, no secret sauce, Langlinais said. ERP, PLM, and MES include components that can help solve a portion of a company's problems, but they are not the total solution.
"We believe the answer lies in understanding all of the technologies and using them where they were designed to solve a problem," Langlinais said. "But, more importantly, ensuring they integrate and sit in an enterprise architecture that allows them to optimize how they work in concert together."
A more accurate reflection of where manufacturers need to focus in 2007 may be found in the number two priority in the AMR study, which is better utilization and analysis of data throughout the organization. Technology can help, but "the enablers are processes and people," Barrett noted.