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2/2/2005
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IT Predictions For Manufacturing In 2005

Industry analyst Bob Parker shares his top 10 predictions for IT in the manufacturing sector this year. Among them: compliance, lean manufacturing, supply-chain enhancements, and data synchronization.

Information technology has transformed much of the manufacturing industry, and its impact will only increase as more manufacturers update supply chains with proven applications, step up data-synchronization efforts, and use software to ensure compliance, industry analyst Bob Parker says. Surprisingly, one technology that manufacturers may rebuff is radio-frequency identification, he says.

Parker, VP of the newly launched Manufacturing Insights group at market-research and advisory firm IDC, recently shared with InformationWeek his predictions for manufacturing in 2005, which will be released in the Manufacturing Insights' first report this month.

Parker's top 10 predictions:

• Smart companies will combine lean-manufacturing techniques, Six Sigma or process-control measurement, and IT investment oversight to transform processes and provide common governance. "The CIO must serve as the custodian, the compliance czar, and the change agent," Parker says. For example, the CIO is the custodian of the base set of assets in IT, the compliance czar whom the company turns to with compliance issues such as the Sarbanes-Oxley Act, and the change agent who has the power to drive change, he says.

• There will be a renewed interest in supply-chain applications, and manufacturers will look at traditional application categories to create a solution. These categories include global manufacturing execution, supply-chain event management and visibility, and supplier-relationship management.

• Demand information management will emerge as a high priority. For example, synchronization of product data across the value chain will be a high priority in several industries, not just consumer goods, and interest in customer-relationship management will return.

• Companies will have to do more with less in their new product-development processes. A market will emerge for product-life-cycle-management analytics, led by product portfolio management.

• RFID hype will implode. Many retailers will focus on leveraging current technologies that will deliver immediate results. "What you'll see this year is Wal-Mart keeping a very stiff upper lip, but other retailers will begin to lose interest in RFID," Parker says. "Companies are getting fed up with the efficacy of the [RFID] technology and are concerned about next-generation standards coming out." Retailers will shift their resources to other initiatives and will invest in other technologies, such as wireless terminals, kiosks on the retail floor, and better tools for sales associates, to improve efficiencies at the store level, Parker says.

• Wall Street will begin to ask for more detailed numbers for sales activity in China, and products branded by Chinese manufacturers will begin to have an impact in certain markets in North America and Western Europe.

• The compliance burden will increase. Therefore, smart approaches will involve looking beyond just compliance and creating opportunities for cost management and higher-quality products.

• Lean Sigma enterprise initiatives will grow.

• IT spending will shift to projects that add business functions. Leading manufacturers will have more than 75% of their internal developers on new business-function projects.

• Vendors with specific point solutions will begin to talk about being compliant with SAP or Oracle applications. Hewlett-Packard, IBM, Microsoft, Oracle, and SAP are the key influencers in manufacturing and represent a significant portion of the IT budget in manufacturing, Parker says. "If you're not one of those vendors, it's going to be very important to have some sort of relationship with one of them if you want to sell into the manufacturing industry."

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