A Packaged Solution

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A Packaged Solution
Off-the-shelf software will fuel manufacturers' reengineering efforts

By Doug Bartholomew
Issue date: Sept. 18,1995

wens Corning Fiberglas Corp. has launched an ambitious program to double its size--and information technology is vital to the plan. "Technology is what will help us to re-engineer our primary global processes," says Mike Radcliff, VP and chief information officer at the $3.4 billion maker of fiberglass products in Toledo, Ohio.

Owens Corning is just one of many manufacturers that are tightening ties to suppliers and customers while cutting the time they need to develop products. To support that effort, the fiberglass maker is in the midst of a two-year program, called Advantage 2000, to reengineer and replace its technology infrastructure. "We have about 200 different systems throughout the company, most of which were built based on the old ways of doing things," Radcliff says.

Advantage 2000 will substitute a single integrated packaged system for existing homegrown applications. The company expects to emerge with fewer than 10 systems.

U.S. manufacturers over the past two years have begun a mass migration to package software, leaving behind the custom solutions they formerly preferred. "The large integrated software vendors are dominating today's $3 billion mar ket for enterprise resource planning software," says Tony Friscia, president of Advanced Manufacturing Research, a Boston research group.

Owens Corning, for example, is installing SAP's R/3 client-server program to handle its order fulfillment, manufacturing, inventory, distribution, and financial accounting operations. "The goal is to manage our orders and our capacity on a global basis," says CIO Radcliff. Especially favored by manufacturers are the large integrated suites of business applications such as those offered by Dun & Bradstreet Software, Oracle, PeopleSoft, and SAP. Manufacturers are eager to cut information systems costs by reducing the time and effort required to build new systems. "In the last couple of years manufacturers have come to realize that it makes more sense to buy software packages than to build them all themselves," says Dan Baumgartner, partner and manufacturing consultant in the Chicago office of Grant Thornton LLP. But not all packaged alternatives are integrated. For sp ecific functions, such as distribution planning and production scheduling, Owens Corning plans to use more specialized software from developers such as Manugistics Inc. in Rockville, Md., and Numetrix Inc. in Norwalk, Conn.

Most manufacturers take special pains to preserve homegrown systems that they believe will give them an edge over competitors. "The trend toward packaged software allows IS to focus on the competitive stuff that you can't buy off the shelf," consultant Baumgartner says. In Owens Corning's case, the homegrown technology that monitors the fiberglass manufacturing process "is what makes us unique," says Radcliff. "We invented much of the technology ourselves."

For PPG Industries in Pittsburgh, a $7 billion manufacturer of window and auto glass, the prized system offering a competitive edge is its Lynx network for connecting its production systems with customers, insurance companies, and installer/distributors. "We wanted to improve our level of intimacy with the customer, and this sys tem goes a long way toward accomplishing that," asserts David Smith, VP for information technology at PPG.

Lynx Links
Lynx, put into use last January, connects PPG to auto insurers and a network of thousands of glass installers, which, in turn, deal with the customer who needs a replacement windshield or window.

Lynx runs on a Sequent server with an Ingres relational database. PPG's users, including a staff of about two dozen customer service representatives, use Pentium-based PCs connected to Lynx via a Novell NetWare LAN to monitor customer orders, which come in via electronic data interchange (EDI) from insurance companies.

A customer's call to an insurance company sets off a chain of processes that culminates in glass being replaced within two days, depending on size and availability. "For the customers who purchase our glass, it's usually a one-call service," says Smith.

Two leading users of IT in the manufacturing sector are General Motors Corp. and Ford Motor Co. Setting the pace for $155 billion GM is its Cadillac Motor division. The group is one of the first of GM's operating units to take advantage of a companywide Customer Information Database (GMCID) to do more specialized marketing to current and former Cadillac owners.

The goal of Cadillac's database project is to help the division boost sales by pinpointing potential customers' needs. "Having better, more updated information on owners allows you to do more data analysis and gives better decision support," says Steve Flynn, manager of relationship marketing at Cadillac's GM Tech Center in Warren, Mich.

EDS, GM's systems integration unit, brought together some two dozen data repositories containing information on Cadillac customers who purchased cars from 1985 to 1995. "Until recently, we didn't have that information in a central location where we could profile our customers," Flynn says. "We see a huge savings from having a more refined direct-mail operation for Cadillac."

The division's dealers access the GMC ID system through a toll-free telephone number to a central help desk. That staff, in turn, uses 486 PCs to access the GMCID repository, which is contained on a Sun Microsystems server. The division then sends the dealer either a diskette or printed labels of customers' names and addresses in their marketing area.

The repository is updated daily with new car sales records from dealers and GMC car leases.

At competitor Ford, the watchword is globalization. Ever since Alexander Trotman took over as chairman in January 1994 and launched Ford's global initiative, called Ford 2000, the company has embarked on a race to become a single global enterprise. IT plays a major role. "Globalization is what's driving everything at Ford, and IT is making things happen," says Bill Powers, executive director of information systems and CIO at the $128 billion automaker, No. 2 in the world behind GM.

A major task was to bring the 3,200-person systems staff into a single organization aligned according to functions, s uch as product development or marketing and sales, instead of by geographic regions.

Powers also has united Ford's far-flung systems that formerly ran separately in the three big operating divisions--U.S., Europe, and Australia. "The infrastructure of our IS should be as global as possible, the same way we're moving to standard platforms for our cars," says Powers.

Picking Up The Pace
Ford IS has developed a technology architecture blueprint that is now being circulated among both IS and business units. One of the goals of Ford 2000 is to reduce the time it takes to bring a new car to market from the current 37 months for a redesigned auto to about 24 months. Cars designed from the ground up with a new engine and chassis take about six years; under the Ford 2000 plan, that will be reduced to four years.

Another manufacturer seeking to break new ground in the use of IT is Minnesota Mining & Manufacturing in St. Paul, Minn. Rather than purchasing and installing traditional transact ion-based packaged software such as that from SAP or Oracle, 3M plans to use a new supply-chain management package from i2 Technologies of Dallas.

3M will use i2's Truly Integrated Planning System (Tips) with an eye to planning its material requirements, manufacturing, distribution, and transportation needs more efficiently. It also hopes to wring $1 billion in costs out of its supply chain in the process.

Today's manufacturers all want to reduce costs and boost efficiency. Their tool: packaged software.

(To view the Manufacturing chart in PDF format click here)

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