Manufacturing: Start With The Best, Then Build On It

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Issue date: Sept. 9, 1996

hile the early 1990s will be remembered as the time when the manufacturing sector embraced integrated enterprise packages, the second half of the decade is shaping up as the time when the industry begins to leverage its multimillion-dollar investments in software that keeps track of core business activities. Many manufacturers are installing--or examining--either custom-built systems or bes t-of-breed, niche software to add functionality and provide companies with an important competitive edge.

"Manufacturing companies want to use SAP or Baan or PeopleSoft or Oracle as a core or backbone system," says Bruce Richardson, a VP at Advanced Manufacturing Research, a Boston researcher that specializes in IT analysis for the manufacturing sector. "Then they snap or bolt on other applications for special functionality."

Critical add-on functions include scheduling, electronic data interchange, product data management, laboratory management, shop-floor control, and supply-chain planning. "Where strategic advantage is not important, we will buy the software, not invent it," explains Bob Gilchrist, CIO and VP of IT at Corning Inc.

Corning, a $5.3 billion diversified maker of cookware, specialty glass, fiber optics, flat-panel displays, video tubes, and lenses, has long touted its patented process control systems as the crown jewel of its technology i nfrastructure. But the Corning, N.Y., manufacturer realizes that many core processes that run its business often are best handled with an enterprise applications package that is cheaper and more up-to-date than anything Corning can build on its own. "The advantage of buying systems is that you buy best practices," says Gilchrist. "You have no investment in development time. And you get new technological developments as upgrades come along."

But Corning, like many diversi-fied, large manufacturers, is creating a business process infrastructure that's really a hybrid of both off-the-shelf and build-it-yourself technol- ogies. "We'll buy the package, but anywhere we need a strategic advantage, if we need to build our own solutions, we will," explains Gilchrist. "We've invested heavily and successfully in our process control systems, which are all proprietary--and very good."

Last February, Corning became one of the first four beta users of PeopleSoft Inc.'s PeopleSoft Manufacturing system. Corning is wor king with the Pleasanton, Calif., software developer to modify the package to handle Corning's own manufacturing and supply-chain needs. Corning also will deploy PeopleSoft human resources and financials systems later this year.

But the enterprise system will have a best-of-breed add-on. The PeopleSoft manufacturing component will have at its core a sophisticated real-time scheduling and planning module from Red Pepper Software in San Mateo, Calif. Says Gilchrist, "This is a powerful planning and scheduling engine with a lot of capabilities."

Corning's PeopleSoft project is part of a three-year-old, companywide reengineering effort in which key business processes are being revamped. Corning's client-server platform runs on Digital Equipment's Alpha servers that now operate Digital's Open VMS operating system, but soon will be based on Microsoft Windows NT, "assuming it's robust enough to satisfy our requirements," Gilchrist says.

A key target of the reengineering effort was the company's IS organi zation. Corning dispersed its formerly centralized IS group among business units, with only a small central corporate team in charge of overall technology direction and functions such as E-mail, groupware, and other systems that are common to the various business units. "We simply put accountability for certain activities closer to the business users," Gilchrist explains.

Chrysler Corp. presents another case of mixing best-of-breed and packaged approaches. "I am a big believer that we don't have to create everything ourselves," says Sue Unger, Chrysler's CIO and executive director of information services. Chrysler in Auburn Hills, Mich., is installing PeopleSoft's human resources management system and is piloting Dun & Bradstreet Software's SmartStream Financial system.

But the $53 billion automaker's IS group, with a worldwide staff of 1,300, built its own factory information system to monitor problems on the factory floor. "If something is out of spec, the system lets us know," Unger says. "We'r e trying to automate processes so that we get things right on the factory floor from the beginning, to eliminate errors and improve quality."

Remote Surveillance
Chrysler also is using a corporate intranet to share graphics and video data. For instance, engineers can see all the components of a competitor's vehicle without making a visit to the company's competitive vehicle tear-down area. Engineers use Lotus Notes to share information on manufacturing and design processes needed to build new models. The company also uses the Catia computer-aided design package from IBM's Dessault Systemes division.

The automaker also has a massive object-oriented development effort under way, using Smalltalk to replace 12 mainframe payroll systems with a single client-server system. The company could have gone with an off-the-shelf payroll package, but as Unger explains, none fit its needs: "We can't find anything out there that can match what we are doing."

While Corning and Chrysler mix and match pr oprietary and packaged software, another manufacturer is focusing as much as possible on best-of-breed technology solutions. As part of a sweeping demand-management initiative, 3M Corp., the $16.1 billion producer of such diversified goods as Scotch tape, Scotchguard, and Post-It Notes, has taken the radical approach of dropping its manufacturing resource planning and enterprise resource planning (ERP) systems in favor of using real-time advanced planning and scheduling packages as its business infrastructure.

"We have a best-of-breed strategy," says Dave Drew, VP of IT for 3M. "We haven't chosen an enterprisewide applications suite. We have a complicated company, so it would be very difficult to implement such a system."

But implementing any new architecture is no small challenge. For one thing, 3M sells 50,000 products through a complex maze of distribution channels. "Our goal is to improve cycle time and reduce inventory in our system," Drew notes. The key, he says, is for divisions within the Minn eapolis manufacturer to more accurately forecast demand and shrink the amount of excess goods in its 100-plus supply and manufacturing facilities.

3M is using i2 Technologies' Rhythm 3.0 package, a constraint-based scheduling system, to manage how it replenishes supplies. The diversified manufacturer now has the system running in four U.S. plants, and plans to roll it out to more than two dozen facilities by year's end.

"Manufacturing applications must be more closely integrated with the supply chain and with the rest of the business than in the past," Drew explains. Plans call for links between 3M and its customers using either the Internet or the telephone through the constraint-based scheduling system. The idea: Let customers directly place their own orders instead of having to work through a salesperson or order-entry staffer.

Artificial Intelligence
Technology innovation in the manufacturing sector isn't limited to the use of packaged best-of-breed and niche software. Deere & Co., the $10.3 billion maker of heavy farm machinery and construction equipment in Moline, Ill., is simultaneously evaluating SAP as an ERP system provider and is applying artificial intelligence to its supply chain systems.

"Our sense is that there is enough complexity in the supply chain to use [artificial intelligence]," says Bill Fulkerson, an analyst for technology integration at the Moline plant. "You have to leverage intellectual capital any way you can, and one way is to forge alliances with the academic community."

Deere takes a unique approach when it comes to artificial intelligence. The company uses artificial life simulation and genetics research techniques modified to solve supply chain issues. These genetic algorithms model the process of how species reproduce. After posting an inquiry on the topic a few years ago on the Internet, Fulkerson got a response from Bolt Beranek & Newman Inc., which had used genetic algorithms to schedule work at a U.S. Navy laboratory. The engineers on t he project, who were forming their own company, Optimax Systems Corp. in Cambridge, Mass., to develop commercial AI applications, asked Deere to be the startup's first commercial client.

So Deere began using Optimax Systems' OptiFlex scheduling software at several plants early in 1995 to synchronize the flow of materials. The software literally "breeds" hundreds of thousands of schedules, each improved from the last. "The sequence of activities is very important," Fulkerson observes, adding that "this new system is one of the reasons we've been able to produce and meet our schedule more easily."

Deere uses OptiFlex at a row-crop machine manufacturing facility in Moline, where the company produces 84 different models in some 1.6 million combinations. Customer orders are downloaded to a 486 PC on the plant floor that operates OptiFlex software. With the aid of the AI software, workers at the heavy-machinery maker begin the process of bolting together a new row-crop planter.

Not all companies, of cou rse, will find solutions to business problems in academia or a defense laboratory. Most manufacturing concerns, in fact, want a quick payoff--something the larger enterprise resource planning and corporatewide systems sometimes cannot deliver.

"Clearly, manufacturers are searching for things that are going to quickly demonstrate a benefit to their business processes," says Rick Hahn, general manager at Cimlinc Inc., an Itasca, Ill., provider of software that knits together a variety of far-flung corporate data into a single, easy-to-use system.

In some cases, that fast payoff comes from simple platform migration and standardization. Stanley Tools, for instance, saved on operating costs through downsizing its hardware from IBM and Unisys mainframes to IBM AS/400 servers. Jim Gustafson, VP for IT at the $2.6 billion New Britain, Conn., tool maker, declines to say how much the company is spending. But he says that the joint rollout of AS/400s and SAP's R/3 client-server software "is the largest IT invest ment that Stanley has made."

In keeping with Stanley Tools' "perfect customer service" effort, Gustafson sought ways to consolidate 13 disparate systems and databases so employees could respond more swiftly to dealer needs and, ultimately, consumer demands. "We wanted to take costs out of the entire system while improving our response times," he says.

It was last October when Stanley decided to become a beta site for SAP and its R/3 software on the AS/400 platform. The first business unit went live with R/3 on the AS/400 in the spring. "We process over 20 million line-item orders for products each year, and we needed a platform that could handle that volume and complexity," Gustafson says.

Companies like Stanley--and 3M, Chrysler, Corning, and Deere--represent a cross-section of companies but a commonality of approach as the manufacturing sector looks to the next century. Like others, the five companies consolidate systems, re-engineer business processes, mix best-of-breed and packaged software--a nd push the frontiers of technology use in business.

A new Industrial Revolution rages on among the country's leading-edge manufacturers.

To view the IW 500 Manufacturing chart in PDF format click here

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