Foreword: How Wall Street Evolved The E-Manufacturing Mindset

I. History
Build to stock, front-office standards, and the "necessary evil" of maintenance

II. Emergence of the Internet in Manufacturing
The customer rules with an iron mouse click; thus, the enterprise evolves and converges

III. e-Manufacturing: A Strategy to Take the Friction Out of The Enterprise
Seamless connectivity, information transparency, and examples of where some have started in their own enterprises

IV. No Manufacturer Is Too Small
The roadmap for an e-manufacturing strategy

V. Conclusion

Bibliography

Once upon a time, the plant floor was isolated from the rest of the enterprise -- operating autonomously and out of sight from the rest of the company and, in particular, from the scrutiny of a company's shareholders.

No more. Plant floor, meet Wall Street.

Companies today -- including old-line manufacturers -- are driven by shareholders and financial analysts to improve bottom-line performance. Market validations, like meeting or exceeding earnings forecasts and the return on net assets (RONA), are the hair-triggers that, if met, can send company stock soaring -- or tank it by double digits.

For today's manufacturing company, what matters most is not only growing sales. It's how efficiently a company can operate as an organization. And chief financial officers (CFOs) have found the religion of operational excellence. Whether it's Lean, Six Sigma, or any variety of homegrown initiative, successful companies today leave no stone unturned to squeeze the excess. By cutting the "fat," streamlining internal processes, and leveraging technologies like the Internet, a company can overall be better, faster, and cheaper than the competition -- and maintain the confidence of Wall Street pundits and investors.

Traditionally, the plant was the life-blood of every manufacturing enterprise, the place where value was created. Of course this remains the case today, even in this world of crazy "dot-com" valuations. But as industries consolidate and restructure, some companies are choosing to remain as the "producers" of goods while others are positioning themselves downstream in the supply chain to be the "marketers" of those same goods. In almost every industry, tightly integrated supply chain models, such as those popularized by Dell Computer and its extensive web of suppliers, are emerging. In these new models, connection of the plant floor to the broader supply chain is essential, and information access is more critical than ever. The Internet and e-commerce have simply accelerated this trend.

The borders are lifting within the enterprise -- all areas from planning to logistics fall under scrutiny for cost savings. And while companies scramble to meet consumer demands for e-commerce channels, manufacturers at times are finding themselves in uncharted waters -- trying to make sense of the maintenance, repair, and operations (MRO) organization, and understanding the true capacity of the plant floor, as well as how to make it more efficient.

The days are gone when the plant operated autonomously from the overall enterprise --with good reason. We've all heard the adage, "Knowledge is power." How true for today's manufacturer. In fact, the most strategic advantage of any organization today is information -- even more so, the right data to help make informed business decisions. Whether the challenge is faster time-to-market, improved process yield, non-stop operations, or tighter supply chain coupling, information is the key.

The plant floor is the starting point for greater information connectivity. Computer-based plant floor controls for manufacturing machinery, material handling systems, and related equipment generate a wealth of information about productivity, product design, quality, and delivery. And a contemporary automation architecture is the key to unleashing this information in a cost-effective manner.

But this is only where the plant floor possibilities begin. A company today can now have a single, complete set of operational capabilities including rapid plant design and deployment, real-time ERP connectivity, comprehensive asset management (of people, products, and processes), and a seamless coupling to the entire supply chain via the Web. That's what e-manufacturing really is.

The industry has made e-manufacturing the "buzz du jour" to define everything from simple Web servers on the plant floor to extensive supply chain strategies. But what the market has yet to do is help manufacturers understand what e-manufacturing really is -- a concept much greater than the sum of its parts -- or how to deploy it in a practical, incremental manner.

Here is a popular, basic definition: "The core of [an] e-manufacturing strategy is the technology roadmap for information transparency between the customer, manufacturing operations, and suppliers. An e-manufacturing strategy takes e-business processes, such as build-to-order or reliability-centered maintenanc,e and generates guidelines for implementing plant systems. The e-manufacturing strategy takes the e-business and manufacturing strategies and creates a roadmap for system development and implementation in the plant." (AMR Research, August 2000).

So what qualifies an automation supplier to provide such a guide to e-manufacturing? We know from experience that four key competencies are required for an e-manufacturing strategy: an integrated plant floor automation architecture; seamless connections to the enterprise systems enabled through software and services; comprehensive asset management and reliability-centered maintenance; and tailored e-business strategies for supply chain efficiencies.

In this era of outsourcing, manufacturers are asking us to ensure their own critical information transparency among customers, manufacturing operations, and suppliers. Complete Automation is Rockwell Automation's compass for e-manufacturing. We have the knowledge, the technology, the expertise, and the partnerships to help guide manufacturers down this path. And industry experts such as AMR Research have praised our approach: "Rockwell Automation has taken the lead in showing startup dot-com companies how to manage their channel while still providing valuable online e-procurement services. Now, with its e-commerce initiative well under way, Rockwell is positioning itself as a significant force in helping manufacturing companies lay the foundation for e-manufacturing. "(AMR Research, June 2000)

Why should you be interested in e-manufacturing? Over the past several months, we've studied the musings and writings of industry-leading analysts and media who have shared their viewpoints on where manufacturing is headed. All agree that the e-manufacturing term is much like the phrase "e-business." One day, the "e" will be so common it's no longer needed. It will be manufacturing as usual.

If you're a plant manager or engineer, understanding the true meaning of e-manufacturing can help you understand how your highly sophisticated control systems can seamlessly connect with the rest of the enterprise -- helping you lower costs, increase efficiencies and productivity, and ensure the highest quality for your produced goods.

If you're a manufacturing manager, knowing more about e-manufacturing will give you a clearer direction about bringing the benefits of the Internet to your operations for transparency, responsiveness, and efficiencies, regardless of the number of facilities you have around the world.

If you're a CFO or IT manager, e-manufacturing insights will help you understand the wealth and opportunities you can unlock within your plant floor operations. And how today's information enabled automation technology easily connects with the rest of your enterprise -- sharing data anywhere in the world that helps you make more informed business decisions.

And, if you're an investor, e-manufacturing awareness will help you better realize the fascinating strategies leading manufacturers are implementing to squeeze excess, expand global reach, and bring more to the bottom line.

The best news for manufacturers today is what e-manufacturing is not. One, it's not an all-or-nothing proposition. Second, it's not something that requires a complete redesign of a plant floor. Chances are, any manufacturer today -- regardless of size -- has certain elements in place for a good starting point. Bottom line, it's a way of thinking about deriving operational excellence out of an organization, and leveraging the Internet to achieve results. And regardless of where an organization begins on the road to an e-manufacturing strategy -- be it through the supply chain, plant floor integration or asset management -- Making Sense of e-Manufacturing will serve as a definitive guide.

Plant floor, meet the world. The future for manufacturing has never been more exciting.

Technology isn't new to manufacturing. Like any other part of a bricks and mortar operation, technology has thrived both on the plant floor and in the front office for decades.

Highly sophisticated combinations of relays and switches, programmable controllers, drives and sensors, and local area networks have long operated the lines, conveyors, and machinery required to manufacture goods. Visit any factory floor today, and you'll find technology driving a plant's motion, drive, process, and discrete operations.

Over the last decade, the evolution of manufacturing technology has included the introduction of "contemporary" information technologies, such as the PC and open standards on the factory floor, networking with concerns such as the scramble to ensure "Y2K readiness." During that time, manufacturers evolved the application of information technology from relatively passive data collection and reporting roles to core control and diagnostics applications.

So information technology isn't new to the plant floor. It takes its natural place in the course of business; information technology is never the cure-all solution for any business process. Rather, it's yet another tool that enables the solution.

Still, the ways manufacturing organizations have utilized information technology exemplifies the vast separation the plant floor has suffered (or enjoyed, depending on who you ask) from the rest of the corporate enterprise. In short, the gap between the plant floor and the front office has only recently been fully realized.

The Plant Floor: Build to Stock the Highest Quality End Products

The plant floor has historically been viewed as an "island" in isolation from other elements within the supply chain and the organization itself. In fact, great care has traditionally been taken to couple the plant floor only loosely with manufacturing operations to avoid the risks of supplier shortages and demand fluctuations from customers, or even network outages. The ebb and flow of consumer demand was not the primary concern of the typical plant floor engineer. The managers of the corporation were often preoccupied with the commercial concerns of sales and marketing. The subsequent role of the plant floor was to manufacture a quality product -- be it an automobile, a bottle of beer, or a semiconductor -- and make sure it was in stock and ready for sale.

Plant engineers focused their time and talents within the walls of the factory floor, mainly to optimize production within a given process, improve yield, heighten product quality, and increase productivity. The focus, then, was to look at the flow of raw materials into the production process, and ensure that consistently high-quality goods were available in stock at all times. Speed, efficiency, flexibility, productivity, cost savings, yield, and productivity around a given element of the plant were of utmost importance, but rarely was a broader view of these parameters taken (i.e. beyond the plant walls to the broader supply chain).

And although the technology employed to achieve these high levels of quality and productivity created an immense amount of information about that little corner of the enterprise, rarely was it effectively consolidated and communicated for use in the rest of the enterprise. Traditionally, that information remained within the walls of the factory floor, primarily used to drive the local behavior of that plant. In some cases, manufacturing execution systems (MES) were deployed to provide a higher-level view of production. But these systems were often too monolithic to deploy and inflexible to operate to be truly effective. Information remained locked up in the plant, inventory piled up, and companies lived with the inherent inefficiencies of plants isolated from their supply chains.

Meanwhile, in the Front Office

The Enterprise Resource Planning (ERP) system has become the financial backbone for many corporations. But these systems were originally intended to be something much more encompassing of an enterprise, structured around a top-down master scheduling system for all tasks and operations throughout the company.

ERP systems, specifically, have brought marked efficiencies to closing a company's financial books every month and tracking human resources. Where they have been less than successful, however, has been in integrating with the plant system. ERP systems have had a tendency to assume plant floor operations have infinite capacity, not adequately planning around variables such as maintenance or unpredicted shutdowns, or that suppliers are always on time, not acknowledging that both supply and demand can be highly variable. Because of these limitations, most companies either haven't made the investment, or have under-invested, to tightly couple plant floor manufacturing directly with the ERP system. Thus, one of the greatest challenges facing the true effectiveness of enterprise level systems has been the ability to couple it to the realities of the plant floor -- in other words, linking the "shop floor to the top floor."

Assets, Supply, and the "Necessary Evil" of Maintenance

People, products, and processes make up the manufacturing assets of any organization. And asset management maximizes the return on those assets in a manufacturing environment.

Proactive planning around assets has historically been fragmented, at best. Assets have been assumed as a necessary evil by many manufacturers -- a cost center that generally didn't receive a lot of treatment other than the basics needed in order to meet production demands. Other parts of the business looked at plant operations as unavoidable costs, especially in terms of assets. And the assumptions of infinite capacity brought on by ERP master schedules further impeded the efficient management of those assets. At the same time, however, a plant floor operation more concerned with product quality and less with operational efficiencies didn't place heavy emphasis on asset management, either. The focus, rather, was on meeting production goals.

The management of assets on the plant floor requires tight coupling with the broader supply chain. The flow of primary materials into the factory, management of inventory and stock for maintenance and supply, and delivery of finished goods to distributors and customers has been complex and fragmented. For each entry and exit point, a custom supply strategy managed the flow of that particular good in or out of the plant. Rarely were the supply chains in lock-step with each other, or with the overall enterprise.

It's also important to note that despite infinite assumptions, plants themselves aren't utopian. With machines and lines running in some cases up to 24 hours a day, seven days a week, they're prone to wear, tear, and breakdowns. Any shutdowns to a production line are expensive; an average loss for a discrete manufacturer can run around $1,200/hour. And with the lack of asset management programs or supply chain efficiencies, precious hours can pass from the time a machine breaks down to the time a replacement part arrives for servicing.

Not that plant floor employees didn't take care of their machines -- traditionally, plant engineers would schedule preventive maintenance on their lines to catch problems before they occurred. The difficulty in doing such maintenance on a particular line was, again, the time required for the maintenance. And when production demands for the plant floor were high, it was hard to justify the time to stop for a system check. The "if it ain't broke, don't fix it" mentality ruled the plant floor.

So in a historical context, information technology arrived on the plant floor, bringing the potential for high levels of quality to finished goods and improved process yield, but all optimized within the four walls of the plant. At the same time, little was being done to leverage plant floor data for enterprise-level decisions. Furthermore, management of assets and supply was fragmented. Maintenance was mostly reactive, production was build to stock, and processes were optimized for long production runs with little need to change quickly.

Then, in the late 1990s, two phenomena emerged that shook the old ways of running plants to their foundations: one, the Internet as a commerce tool and technology enabler; and two, a very, very fickle consumer.

"The customer rules" is a traditional misnomer in business that has existed with the underlying assumption that consumers will buy what they are told they can't live without. In the past, the average consumer would tolerate an inundation of commercials and marketing techniques. Warehouses were stocked with high quality goods ready to go. In other words, optimize yield and have products ready and waiting for the buyers.

But the consumer has changed over the past 20 years and is no longer as easily swayed by sales pitches or propaganda. Instead, today the customer really does rule -- and with an iron hand controlling a mouse. The current consumer mindset is one of control, and it's enabled by the power of the Internet as a buying tool and information source: "I can order something the way I want -- via the Internet, in a store, or some other way. I can request my own features for that product, and I expect it to be delivered when I need it. If not, then I'll go somewhere else to get what I need."

The Internet enables the average consumer to shop more aggressively and select from wider options. And this means that manufacturers can't assume that the products sitting in stock will meet the need of a fickle consumer.

The ability to shop online has been the catalyst for the economic eruption of e-business. Companies have scrambled to create e-based channels to interact and sell goods to consumers. And the pressure from Wall Street for traditional manufacturing companies to sit up and take notice of the Internet has further intensified the race to sell online to consumers.

Even today as the first wave of dot.com mania has started to crumble, the second wave is forming. Gone is the carefree approach of setting up a Website and watching as orders pour in (or don't pour in). The next wave of e-business ventures (and those smart enough to survive the first wave) all know one basic truth: e-business does not work without a world-class supply chain coupled to world-class producers.

Still, the simplicity and ease of Internet technologies has truly evolved the way business is done. It has actually been a natural progression from where business stood five years ago. But it also means that business moves faster than ever; and a manufacturer that can't satisfy the wants and needs of today's consumer will have difficulty effectively competing and maintaininf the confidence of employees, customers -- and Wall Street.

The Canadian research firm, Vector Concepts, conducted a June 2000 survey of senior-level management within North American mid-sized "to-order" manufacturers of automotive equipment, transportation, machinery, and instrumentation. The survey covered such areas as primary business issues, e-commerce, engineering change, and customer/supplier concerns. Some 60% of those surveyed said that improving productivity on the plant floor was the most important issue facing them. Within this group, about half are looking for ways to shorten workflow process implementation changes. Only 15% of this group said they have systems that currently can customize workflow processes for special orders. The majority said they believe they are losing business opportunities because of this, and some one-third plan to invest in new technologies to accomplish improved workflow customization in the next year.

The good news is that manufacturers can aggressively compete in the marketplace -- and they will find opportunities do so within the fragmented plant floor, monolithic ERP systems, and the need for effective management of assets, maintenance, and the supply chain. Bottom line, the collaborative nature of e-business provides an exciting opportunity for control engineers, IT professionals, and business planners (ARC Advisory Group, Aug. 2000).

The Internet Has Converged the Plant Floor, Enterprise, and Supply Chain

Tiered supply chains and contract manufacturing are forcing companies to manage the factory and the product in the context of a virtual or extended enterprise, requiring Internet-enabled applications (AMR, January 2000). Today, most manufacturers have sound financial systems in place, and they're starting to add the right links to integrate with plant floor operations.

And yet, it's a major hurdle to take the "fire hose" of data flowing from the shop floor to the top floor and through the supply chain, coordinating and collating it into usable information for analysis. Those who have been successful have used that critical information to drive up both productivity and flexibility improvements for manufacturing. They've used the information to implement programs that build to order; provide not just preventive, but predictive maintenance capabilities to avoid downtime; focus improvement program investments on areas that show maximum payback and, of course, use the Internet to connect upstream and downstream in the supply chain.

There is an interesting tension between the complexity of all supply chain issues for any organization and the simplicity needed to have maximum flexibility in the factory. And in the race to e-business, one cannot forget the plant floor -- electronic management of the factory and product is crucial to the e-business effort (AMR, January 2000).

Exceptional information technology thrives today on the factory floor, in the front office, and through the supply chain. And despite some limits of information transparency today via this technology, there is an excellent foundation in place for many manufacturers to adopt an e-manufacturing strategy.

But what does an e-manufacturing strategy look like? How does it work? Before this paper breaks out e-manufacturing into its primary competencies, a short story can help illustrate.

This is a story about a limit switch, which is nothing more than a regular on/off switch with an "arm" hanging on it. This limit switch sits on a conveyor line. Each time a box approaches on the line, it pushes the arm out of the way, and the switch goes "on." As the box passes by, the arm snaps back, and the switch goes "off."

This switch is embedded with intelligent technology and is plugged into a communications network on the plant floor. The switch is also wired back to a plant floor controller, which houses the production program for that conveyor line. The controller's program for that switch is to ask it a basic question: Are you "on" or "off"? And so each time a box hits the limit switch, a message shoots to the controller, which then sends an instruction to the conveyor line, telling the line which way to send each box. The box is quickly diverted in a assigned direction, and the limit switch snaps back, waiting for the next box to approach.

But the switch can provide far more information than "on" or "off." It can tell the controller and communications network that its arm is over-traveling or under-traveling -- moving too far in either direction when a box passes by. It can tell how fast the arm snaps back, or if it doesn't snap back at all. In any of these cases, there's a likelihood that something is starting to go wrong -- either with the switch or the conveyor line -- that could cause a future lag in production on the plant floor. The data exists -- it just hasn't traditionally been pulled from that limit switch.

With a predictive maintenance system in place, however, the data warning of the switch's problems can be driven directly into the plant's condition monitoring program -- well before the switch breaks. A work order for an engineer to assess the problem can be quickly created. The engineer can then place an online order for a supplier to deliver and install a new limit switch within 24 hours. At the same time, the program can also schedule a repair or replacement on that switch using information from the online plant schedule to determine the opportune time to access the machine. The new switch can be delivered by the supplier and installed before the first switch breaks down, with little more than a hiccup in the production line.

So how does this story relate to e-manufacturing? Traditionally, a manufacturer didn't get the warning information from something as seemingly nebulous as a limit switch. And considering the production demands on the plant, proactive scheduling of maintenance was a luxury. Largely reactive measures when a switch would break involved downtime of the line, a paper-based work order system, a varied stock of supplies to deal with the problem, and little, if any, connection to front office procurement. The end result was lost revenue from lost production.

e-Manufacturing, on the other hand, includes the ability to monitor plant floor assets and leverage the Internet to schedule maintenance and order supplies quickly and easily. It also provides the front office with a transparent view of the health and flow of its plant floor assets, helping to streamline supply and subsequent costs. In the end, it creates a highly integrated -- and highly flexible -- system that provides a complete view of the entire enterprise, up, down, and sideways.

Having an e-manufacturing strategy means that the company is e-business ready. But this extends beyond the ability to connect online with potential buyers of goods. Since price pressures won't go away, manufacturing plants will still be expected to deliver enhanced products at ever lower prices. To be e-business ready, a company's manufacturing enterprise must be able to build-to-order and maintain non-stop operations.

To achieve this, four competencies are required of any manufacturer:

Design -- the ability to rapidly deploy and reconfigure manufacturing production capacity based on demand for goods. Rapidly changing consumer demands are forcing companies to accelerate and streamline the design and deployment of production processes. Rapid new product introductions in response to changing market demand is a critical competitive advantage and a key to growth. Having a design competency that ensures new products are not only launched on time, but that those launches are cost effectively executed, is a key to translating top-line growth into bottom-line results.

Operate -- optimization of process yield and consistency throughout the enterprise. Plant productivity has always been a focus in manufacturing. As manufacturers consolidate through acquisitions and have new facilities to operate worldwide, they must further figure out how to get products made with consistent quality and efficiency at each manufacturing location. This is where initiatives like lean manufacturing drive out excess, achieving non-stop operations for maximum efficiency and throughput of production, and where techniques like Six Sigma reduce variability in processes to ensure peak quality.

Maintain -- efficient management of all company assets -- materials, processes, and employees -- to ensure non-stop operations and optimum asset productivity. Without such a solid, efficient foundation, it is not possible to withstand the rigors of this fast paced environment, where growth and profits are demanded simultaneously.

Synchronize -- tight coupling of a manufacturing operation into the greater supply chain, both upstream and downstream. This fourth competency is best achieved only after the other three competencies (Design, Operate, Maintain) are firmly in place. Only then is the plant truly ready to be fully coupled into an e-commerce-driven supply chain.

e-Manufacturing requires a new approach to manufacturing and distribution systems -- throughout the Design, Operate, Maintain, and Synchronize competencies. It is enabled through full integration between manufacturing control systems and enterprise applications using commercially developed, off-the-shelf information technologies. Moreover, an e-manufacturing strategy provides direct information exchanges between manufacturing and customer relationship management (CRM) systems and supply chain management systems (ARC Advisory Group, Aug. 2000). Finally, it requires a complementary set of process optimization methodologies, be it for designing, operating, maintaining, or synchronizing the manufacturing operation.

The limit switch story is just one simple example of an e-manufacturing strategy at work. At an even greater level, e-manufacturing is a necessary part of an e-business strategy for companies that manufacture a product line and transform their businesses into e-business enterprises (ARC Advisory Group, Aug. 2000).

How to Excel at Design, Operate, Maintain, and Synchronize

Manufacturers can achieve the promise of e-manufacturing through Design, Operate, Maintain, and Synchronize competencies that drive build-to-order processes and non-stop operations. Four enablers will speed any company toward reaping the benefits of e-manufacturing:

• Integrated control and information -- a contemporary, information-enabled automation architecture with associated integration management services;


• Manufacturing information management/seamless integration of business and production systems -- electronic management of products and orders on the manufacturing floor, bringing visibility to customers, partners, and the enterprise;


• Asset management and reliability-centered maintenance -- tools, methodologies, and services for increasing overall asset utilization while minimizing unplanned maintenance and unexpected downtime;


• e-Fulfillment and e-procurement solutions -- direct transfer of customer order details to manufacturing personnel and equipment, configuration options, as well as tight electronic connections to suppliers and partners to optimize inbound supply chain in the face of changing demand.

The following sections reveal how these four enablers bring optimum benefit to any manufacturer.

Working Together Seamlessly in a Typical Plant Environment

Quite often, plant floor engineers search to find "best-of-breed" components for particular control applications in the factory -- and then work to link the systems together. In the Internet era, however, automated control systems must better leverage commercial information technologies, including Microsoft operating systems and Ethernet networks, not only to integrate plant floor operations to work seamlessly throughout a typical plant environment, but also to make that control information transparent throughout the enterprise. These "open" technologies present a strategic advantage to address the control needs of the plant and the connectivity to achieve that transparency. They allow a manufacturer to rapidly deploy and reconfigure its own processes more quickly, thanks to an information-rich automation architecture.

An integrated plant floor architecture must address needs for multiple control disciplines, seamless communications, as well as information visualization throughout a varied factory operation. Examples are numerous. Multiple control functions in an automotive plant, for instance, require a diverse control solution. Automotive assembly mixes batch processes with discrete operations in paint and trim. Press and fabrication systems must have coordinated drive systems. And powertrain assembly must tightly integrate discrete and motion control.

The convergence of control disciplines continues to lead manufacturers toward integrated solutions that reduce integration costs and, ultimately, create greater plantwide productivity through a tightly integrated system. Design cycles are shortened, speeding the time to market of new goods. The benefits of the architecture itself are measurable; software training and programming time drop. The total integration of multiple control disciplines all but eliminates challenges in making systems work together. Flexibility also comes in an infinitely expandable communications system. No additional programming is needed to integrate networks.

Networks must deliver an efficient means to exchange data for precise control, while supporting non-critical systems and device configuration at start-up and during run time. Networks must also provide the critical link for collecting data at regular intervals for analysis. An integrated architecture benefits from a common set of advanced network services and interfaces optimized for real-time control, configuration, and collection of data, with seamless communications up and down the architecture, allowing access to any part of a system from any location.

The ability for a company to view plant information from anywhere in the world, and at any stage of production, completes an integrated architecture. A transparent view of the factory floor provides integration benefits like common user experience across the operator interface environment; configuration tools for open and embedded control applications; improved productivity through the ability to reuse technology throughout the plant; and overall reduced cycle costs related to training, upgrades, and maintenance. From a practical standpoint, this kind of integration extends usability around the globe. Information entered into the system once can be accessed by individuals throughout the enterprise -- from the machine operator or maintenance personnel on the factory floor to a manager viewing live production data via the Internet halfway around the world.

By migrating current factory floor control with commercial technologies, plant floor engineers hold a key card for an e-manufacturing strategy: A flexible exchange of the critical production data for the benefit of the greater enterprise.

Enabling the Link Between the Shop Floor and the Top Floor

Not to say that some attempts weren't made to connect the factory with the enterprise, but past efforts forced manufacturers to take an "all or nothing" approach. MES and ERP systems were intended to serve as liaison between the plant and the enterprise. These mid-level systems have always had great potential but were available only to those with the money, staff, and problems great enough to justify their implementation (AMR, January 2000). While many manufacturers invested in MES-type solutions, they often found the solutions did not truly fulfill their information integration needs. Similarly, although ERP systems are popular with large manufacturers, few are successfully linked to plant floor information systems.

Currently, a multitude of MES and ERP suppliers are working with manufacturers in an effort to integrate information throughout various parts of the enterprise. However, the crucial link between MES and ERP systems is hindered by the lack of integration between these systems and the information coming from and flowing to control systems on the plant floor.

Thankfully, in the e-manufacturing era, opportunities exist to use modular, scalable applications that are easy to install and integrate with existing systems -- both on the plant floor and at MES and ERP levels. Driven by industry standards such as ISA's S95 and improved technology such as XML, it is now possible for end users to select the best of breed applications that fit their needs.

Complementing these applications should be a complete set of services that revolve around industry-specific integration knowledge, control level expertise, and an ongoing support infrastructure for necessary modifications and upgrades. Such services ensure that manufacturers receive the required support to integrate these new business systems to the manufacturing sectors of their enterprises in order to achieve the information transparency required to help meet the targeted return on investment.

By combining modular application software with industry-specific deployment services, it is possible to cost-effectively build and deploy tailored solutions. These "customized" solutions are now available for most industries and can be implemented successfully at a lower average cost than traditional monolithic solutions.

Covering Your Assets: Management and Maintenance

This paper's story about the limit switch on the conveyor line is a typical example of predictive maintenance as part of a comprehensive asset management program. The optimization of all assets within a manufacturing facility is the foundation of asset management. The definition of "assets" expands beyond the capital equipment installed in the facility to involve the evaluation of people and processes, in addition to products, to find areas for increased efficiencies and cost savings. Asset management is about more than just instrument calibration: it ensures that the people, and the procedures they use to solve plant floor issues, are equally optimized.

The marketplace drives the need for asset management, particularly where capacity and demand are both at an all-time high. And yet, the marketplace's various definitions of "asset management" often are not representative of the discipline. The tools used in asset management, such as computerized maintenance management systems (CMMS) or enterprise asset management (EAM) packages, are mistaken for the asset management program itself. They're only as effective as the processes in which they operate. Manufacturers who place faith in EAM software packages often do so without reengineering their processes. This negatively impacts the effectiveness of both the EAM package and the asset management program itself.

Beyond tools and software packages, oftentimes the best asset management solutions -- those with far-reaching results -- start with work on the facility's procedures and practices. The beauty of asset management is its customization to the manufacturer's processes; a supplier of asset management solutions can walk into any manufacturing facility -- process or discrete -- and identify areas for savings in their processes far easier than installing a software package and trying to make it work within the installed base.

Tools are part of a larger solution; on their own, however, they don't net tremendous success. In addition, today's asset data architectures have gaps that also limit the individual success of the tools. For example, asset utilization is difficult when CMMS software is not configured to integrate with the current controls environment. And many manufacturers fail to retain the CMMS and/or controls data for reliability investigations in their asset management programs. Oftentimes, asset management applications that do reach across a wide variety of devices within a plant are custom to the application.

An effective asset management program increases a facility's reliability and improves its maintainability. These drivers increase the plant's ability to produce at capacity. Driving a plant's reliability and maintainability requires one to optimize more than just the facility's capital equipment. Successful programs also involve human performance, optimizing the way preventative maintenance is implemented out in the facility. Other areas include reduced spares inventory and facility maintenance hours.

For the purpose of this paper, asset management will be reviewed in the context of MRO operations on the factory floor. Active management of MRO is an uncharted area for CFOs deciding to take control of an organization's total assets. This is compounded by the fact that asset management activities have historically not been of utmost importance for a manufacturing operation. However, asset management is critical for establishing and maintaining a streamlined enterprise that carries no excess in its operations.

Without adequate insight into the health of its plant floor assets, a manufacturer can lose valuable production time and resources. Predictive maintenance is a powerful tool in manufacturers' ongoing efforts to maintain and improve equipment performance and achieve the highest level of productivity from all plant assets.

Traditionally, predictive maintenance has been labor intensive and time consuming, relying on a variety of individuals to gather information from machines using handheld data collectors, review the data, and prepare recommendations. With action items in hand, a maintenance person would then go back to the machine and make the change -- sometimes weeks after the initial data collection. The information would rarely be shared within the organization. With manufacturers expanding to multiple sites around the globe, operating in remote locations, and in some cases lacking internal expertise to handle evaluations, it can be difficult to effectively capitalize on the benefits of traditional predictive maintenance.

However, the Internet has made accessing, analyzing, and reacting to information on plant floor and machine status worldwide more efficient and faster than ever. Internet-enabled asset management, through Web-based predictive maintenance, allows companies to monitor MRO processes worldwide and seek commonalities among sites to improve efficiencies. It reduces the need for any predictive maintenance expert to conduct on-site evaluations. Linking condition-based monitoring data and predictive maintenance as part of a total plant asset management program and integrated enterprise system helps lower overall operational costs and enhances return on assets.

As with the limit switch, there exists a great opportunity for organizations and their predictive maintenance experts to collect online information across the integrated architecture on the plant floor. This data can be integrated into the CMMS and shared within the organization to ultimately build a knowledge base about the production process and equipment for intuitive predictive and preventative maintenance.

Through the integration of real-time plant floor information with management-level business systems (ERP layer), manufacturers can realize a comprehensive MRO business solution that improves their overall plant efficiencies. This is yet another facet of a successful e-manufacturing strategy.

The e-Volution of the Supply Chain

For companies across the nation and around the world, e-business has become the "next big thing." And manufacturers are quickly learning that regardless of whether they have one facility or 300, they must understand the fundamentals of e-business -- namely, the value it brings to the efficiencies of a total supply chain.

Despite all the talk surrounding e-business, the electronic management of MRO supplies has been minimally discussed in the industry. In many organizations, MRO procurement has traditionally been viewed as dominated by tactical purchasing policies, including involved decision making, budget-limited procurement authority, and a complex and large supply base. Consequently, MRO procurement is often a poorly managed and non-value added activity -- yet U.S. firms spend as much as $1.4 trillion on MRO supplies and services each year. According to Grainger Consulting Services, that can account for up to 60% of total expenditures for an individual company.

Utilizing Internet-based procurement to manage MRO supplies provides an immense strategic advantage to the purchasing organization. The main reason that e-procurement is so appealing is that it streamlines the purchasing process and creates efficiencies.

According to Aberdeen Group, a technology research firm, processing an MRO purchase order using traditional, paper-based processes costs, on average, $107, with an average cycle time of 7.3 days from order to fulfillment. On the other hand, processing an order purchased via the Internet costs an average of $30 and reduces cycle time to two days. In essence, e-commerce helps manufacturers to:

• find and terminate non-competitive suppliers


• leverage purchasing scale across multiple buying locations


• lower cycle time


• reduce product, acquisition, and inventory costs


• cut down on the number of costly human touches.

In addition, e-procurement helps manufacturers electronically connect with their suppliers to make real-time decisions. For example, if a machine goes down at 8:00 p.m., a plant manager can search a supplier's Website to access information or order a part. Online suppliers create a whole new level of efficiency in purchasing because the plant manager won't have to wait until 8:00 a.m. for the supplier to open its doors and answer the phones.

For MRO buyers, Internet-based buying solutions offer the ability to improve efficiency of the entire MRO supply chain, not just the buying process. By reducing operating costs and inefficient manual processes, personnel can focus on more value-added strategic activities. Manufacturers can maximize the value of their people because the Internet enables complete automation of the purchasing process. And this, in turn, allows both manufacturers and suppliers to concentrate their human resources on far more strategic activities than processing transactions. Strategic activities can include: relationship building with strategically important suppliers, evaluation of outsourcing opportunities, and developing more powerful "total-cost-of-ownership" solutions on key purchased goods. In fact, this benefit -- the ability to shift purchasing resources from the business of processing transactions to more strategic activities -- is the most important long-term potential benefit of Internet-based procurement.

Clearly, for manufacturers, forming the right e-procurement relationships and implementing an e-procurement system is a strategic issue that requires management involvement. However, there are myriad e-procurement choices and models. Should manufacturers explore partnerships with their suppliers to conceive and execute an e-procurement strategy? Should they embrace online marketplaces? Or should they set up their own Web portal, such as a Website or service, with partnering companies? To compound the confusion, manufacturers must also deal with multiple supplier relationships and how those partnerships integrate into their own e-business strategies.

These days, manufacturers are feeling increased pressure to streamline their relationships with suppliers and seek out cost savings. In particular, companies that operate manufacturing plants in multiple locations are discovering that supply for those plants has become more costly. Plant managers and engineers know best a single facility's equipment specifications and capacity needs, as well as the value of local relationships, service, and support from the supplier and its distributors. In the end, the plant's management is responsible for meeting production goals and desired efficiencies in their operations.

At the same time, however, multiple plant operations can cause a nightmare for a company's procurement manager, who oversees purchasing for all facilities. While company procurement isn't making the call on an individual plant's equipment needs, it is responsible for overall management of contracts and pricing. If each plant is reaching its own pricing and supply agreements with suppliers, the procurement manager is left to manage and justify the financial transactions for all of the facilities.

The emergence of Internet technology has opened the door for suppliers to streamline contracts with companies and meet the needs of the local plant and the company's front office. For today's manufacturers, the plant engineers are considering the needs of the procurement managers, and vice-versa. An organization will not have a single source who will determine the procurement solutions themselves and the transactional process and delivery of those solutions and support. Engineers and procurement managers need to work together, particularly in procuring technically sophisticated equipment such as electrical supplies and automation systems.

For manufacturers, pursuing alliances with suppliers who have successful experiences implementing technology solutions is key to success in e-business. In addition, manufacturers and suppliers should have a sound understanding of each other's business, including an understanding of each other's needs and objectives. For manufacturers, suppliers form part of the unified enterprise; therefore, it is vitally important to take the time to select the right supplier and move forward together.

The four enabling competencies -- Design, Operate, Maintain, and Synchronize -- for a complete e-manufacturing strategy (integrated architecture, manufacturing information management, asset and reliability centered maintenance, and e-procurement) have several common characteristics. First, foundations are in place today for any of these best practices to occur, in nearly every manufacturing facility. Second, the Internet is a great facilitator of the technologies and processes needed to seamlessly link these enablers together. And third, these enablers don't have to happen all at once; a manufacturer can find a starting point that best suits its current business model, and build the strategy from within over time.

The single biggest roadblock to both optimization and collaboration for e-manufacturing is a lack of integration. Most plants still make-to-stock using in-house proprietary systems for plant floor control, which offer little information visibility. The survivors will be lowest cost producers that make precisely what customers want. That means making-to-order, going beyond just-in-time manufacturing, and adopting collaborative e-manufacturing approaches. Collaboration means companies and their supply chain partners must function as single, highly optimized entities, not a bunch of divisions or departments (ARC, June 2000).

For manufacturers, the advantages of adopting an e-manufacturing strategy are real and timely. But entering the world of e-business for gains in operational efficiencies truly involves a fundamental evolution of a company's strategic direction and operations. Managers must approach e-business with care, yet with speed and decisiveness.

This can be a scary proposition for any manufacturer, particularly those that are feeling the pressures to be faster, better, and cheaper. But the ability of manufacturers to proactively consider the benefits of e-manufacturing, and look within for potential starting points, will likely provide a competitive edge as the pressure to implement e-business increases. And, considering the pace of the current economy, it no doubt will.

It would be ideal if a manufacturer could achieve an e-manufacturing environment overnight. Unfortunately, it doesn't work that way. Today, though, there are hundreds of examples of manufacturers starting down the road to e-manufacturing by focusing on one competency -- either through integrated architecture, shop-floor-to-top-floor information management, asset management, or supply chain efficiencies via e-procurement These companies carefully evaluated the need, implemented a working solution, measured the effectiveness, and then took on another competency in their enterprises.

Whether you're a plant engineer, manufacturing operations manager, procurement manager, CIO or CFO, there are common guides to follow when considering the potential investments and resulting benefits from an e-manufacturing approach.

1. Embrace the Internet. All parties in the company must recognize the organizational change required to adopt an e-manufacturing strategy -- and the greater influence of the Internet and of customer demand.

2. More than ever, engineers have an important place in decision-making process. Plant engineers bring expertise in plant floor processes, as well as the information available (and required) for seamless integration. Their plant floor experience and perspective will prove to be invaluable as e-manufacturing efforts proceed.

3. Build an internal team, and draw the company's roadmap for e-manufacturing. Draw from various departments and functions within the organization, and discuss the common and specialized benefits each would receive from information transparency. Each segment of the organization should have a vision for success reliant on information transparency.

4. Find a company leader to serve as champion. Whenever possible, secure the CEO as the e-manufacturing mouthpiece for the enterprise. If an e-business strategy is in place for the company, it's especially critical to be sure that e-manufacturing is a key element of that broader strategy. Thus, the e-commerce director or CIO is another good champion to enlist.

5. Take one step at a time on the roadmap. Don't attempt to do everything at once -- that is a lesson to be learned from the original ERP implementations. It took many years for plant floor, front office, and supply chain to evolve to where they are today; take a logical path to evolve them via e-manufacturing, and measure successes along the way. Focus on actions that have the highest immediate impact (i.e. the "80/20 rule").

6. Measure the success and failure of the roadmap. Put metrics in place to determine the real savings and efficiencies from a transparent enterprise.

7. Evaluate your traditional channels -- and listen to their needs. Analyze the ways the company works with customers, suppliers, distributors, and others to determine their effectiveness, and find ways to streamline relationships and processes.

8. Build on your existing foundations, and on your incremental successes along the way. An e-manufacturing strategy will help your organization embrace information transparency that will foster operational excellence, while not creating more work, major overhauls, or enormous investments. It won't happen all at once, but once you begin, your organization can build upon the successes until the full e-manufacturing approach is realized -- and the organization excels in its own Design, Operate, Maintain, and Synchronize competencies.

9. Get help from an expert.

For many manufacturers, gone are the days when manufacturers had the luxury of large engineering staffs devoted to programming, implementing, and integrating the control equipment used in the production process. Instead, the trend has been to identify and focus on strategic core competencies, and minimize or outsource activities that fall outside that defined realm (ARC, January 1999).

Consider the outsourcing trend in manufacturing. When competition and pressure for bottom-line performance are high, companies outsource basic production, manufacturing engineering, automation engineering, and other capabilities to suppliers that specialize in these competencies.

Due to outsourcing, the internal expertise that manufacturers have available to implement an e-manufacturing strategy may be greatly diminished. Summarily, outsourcing to a supplier to provide the planning, technology, services, and support for integrated architecture, manufacturing information management, asset and program management, and supply chain integration will prove to be worthwhile.

Think of all the wonderful things available via the Internet to the average human being in today's world. From online shopping and education to brokerage and travel services, consumers can purchase practically anything without leaving their home. All of these models defy "traditional" limits of business economics.

The same is true for manufacturing. True, the simultaneous pressure is for both growth and bottom-line performance. But the e-manufacturing technologies exist today that allow a manufacturer to proactively meet and exceed the sometimes contradictory expectations. e-Manufacturing will one day be manufacturing as usual. Today, though, those who take the time to evolve their enterprises will run business at its fullest much sooner.

"Rockwell Automation Services Fuel Daimler-Chrysler Speed-To-Market," ARC Advisory Group, December 1999.

"How and Why You Will Use e-Manufacturing Systems," AMR Research, Inc., January 2000.

"The Web Is Transforming Automation Systems Without Engineers Knowing It," AMR Research, Inc., January 2000.

"Collaborative e-Manufacturing: The Key to Survival," ARC Advisory Group, June 2000.

"E-manufacturing is clicking on," Material Handling Engineering, July 2000.

"An e-manufacturing strategy needs to be developed from the manufacturing strategy," AMR Research, Inc., August 2000.

"Factory automation suppliers offer integrated e-manufacturing solutions," ARC Advisory Group, August 2000.

"Survey of mid-sized manufacturers reveals workflow, e-commerce, and multi-currency are biggest challenges," Vector Concepts, Aug. 2000.