Let''s get one thing out of the way right up front. At its core, e-business is still a business. Putting an e in front of your company name doesn''t exempt you from the basic rules of business. To be a successful industrial equipment manufacturer, you still have to design and produce a quality product, ship it in a timely fashion to the right location, invoice correctly, and offer first class support after the sale. Plus, you have to make a fair profit. Break any of those rules and you fail as an e-business just as surely as you fail as a business. It doesn''t matter if you design a lousy product using the latest Internet engineering collaboration tools; it''s still a lousy product. It doesn''t matter if you take orders via a flashy online storefront, if you don''t deliver it on time; it''s still late. It doesn''t matter if you offer sophisticated online troubleshooting tools if your customer still can''t get your product to work correctly.
Internet technologies cut design time and boost on-time delivery
Make no mistake, I''m a big believer in leveraging the power of the Internet to help revolutionize your business. I''ve seen industrial equipment manufacturers use collaborative engineering tools to cut design time by as much as 75%. I''ve seen companies boost on-time delivery levels to 99% and cut inventory by 25%. They''ve also optimized factory throughput, improved equipment reliability, and opened new market opportunities. These are the kinds of dramatic improvements that separate you from the pack in a very competitive, extremely mature market. These are the kinds of improvements that can drive double-digit growth, while your competitors struggle just to stay even with last year.
But none of these improvements are possible without shoring up the foundation of your business. All the razzle-dazzle Internet technology is no substitute for getting the fundamentals right. The proper role of the new Internet technologies is to build on the solid foundation you''ve already established.
Examples of putting new technology on a rocky foundation litter the business landscape. Who can forget all the stories over the holiday season about business-to-consumer companies taking orders over the Internet and then failing to ship in a timely fashion? Failing to deliver a stuffed panda to a child at Christmas certainly isn''t good for business. But in the industrial equipment market, the stakes are much higher. Imagine trying to explain to your best customer that their conveyor system will be three weeks late because your CNC drilling machine was down for scheduled maintenance. Worse, can you imagine explaining that a clerk transposed a number while keying an order into your business system -- an order for valves that was correctly entered on your Web storefront? Think it can''t happen? Analysts estimate that between 60 and 80% of all orders taken through Web stores are then rekeyed into the manufacturer''s order entry system.
Re-keying online orders can be costly
This scenario is replayed thousands of times a day around the world, because there is a gap between the e-commerce front end and the critical backbone systems of the enterprise. Call this a crack in your business foundation -- one that can cost you time, money, and customers. Many industrial equipment manufacturers have found that implementing new e-commerce technologies has exposed even deeper cracks in the business foundation. You''ve probably heard a warehouse manager say, "I know what it says in the system, but let me check the shelf." That''s a crack in the foundation. The first step in building an effective e-business starts with filling in these cracks. You will need to implement appropriate e-business technologies on a solid foundation that combines robust backbone systems and industry-best processes.
Look for manufacturing-specific backbone systems
Make no mistake, all systems are not created equal. Look for a backbone system that delivers robust manufacturing functionality. If your vendor wants to focus on AP, AR, and HR instead of BOM and MES, you''ve probably got the wrong vendor. You also need a high degree of openness in your transaction system, if you''re to operate successfully in a dynamic e-business environment. Your solution must have the flexibility to link easily with corporate-level financial applications, plant-level execution systems, and a host of homegrown and third-party applications at multiple supplier locations.
Key to operating in your real-world environment is a backbone system with an emphasis on the foundation -- not on the way it looks. Look for consistency in the underlying data model. Look at the business logic. Look for componentization and extensive application programming interfaces (APIs). These are the hallmarks of a backbone solution designed to meet your changing business requirements.
Once you''ve implemented your e-business foundation, you''re ready to begin leveraging the power of the Internet to boost revenues, shorten product design cycles, improve asset utilization, and drive down costs.
E-marketplaces can cut costs and increase revenues
One of the most highly touted areas for driving down costs and boosting revenues is the e-marketplace -- a digital bazaar linking multiple buyers and sellers. While many of the new marketplaces are little more than press releases at this point, some are gaining what analysts call ''traction.''
E-marketplaces offer buyers substantial savings on both direct and indirect materials as a result of online auctions. Analysts and market makers say savings generally range from two to 25%, depending on the product and the market. From the supplier perspective, the lure of an e-marketplace stems from exposure to hundreds and thousands of potential new buyers. But participation in these online auctions isn''t for everyone. The dynamic, rapidly changing nature of these auctions favors those industrial equipment manufacturers that have real-time access to data about inventory, pricing, and available-to-promise capability.
Competing in an e-marketplace without such critical information can be a character-building experience. Just ask the company that won a major bid only to find that hitting the delivery date meant choosing between expediting the new order and bumping an important order for a long-time customer.
Manufacturers that look to grow their business through e-marketplaces increasingly discover why Internet-enabled collaborative commerce applications are mandatory. Day in and day out, these valuable tools help manufacturers optimize factory throughput and minimize inventory levels through better planning. During the heat of online auctions, these same tools provide quick answers to ''what if'' questions about plant capacity, supplier capacity, supply chain inventory levels, etc. This is the kind of information that spells the difference between making money and losing money in the emerging e-marketplace environment.
E-commerce sites build on backbone systems
While many manufacturers have posted informational websites, the market leaders are increasingly building e-commerce sites. These sites enable potential customers to log on, check pricing and availability for catalog items, configure make-to-order products, reserve production capacity, place orders, and check production status. If you''ve already invested the effort to implement a robust backbone system and get your supply chain into alignment, implementing an e-commerce solution isn''t as daunting as it would seem. You''re basically just plugging in a sophisticated order entry system at the front end.
Some industry experts view this as a golden opportunity to circumvent established distributor channels, but my advice is DON''T. In this complex, make-to-order environment, the real value of distributors isn''t in their catalogs and warehouses. The true value of the distributors lies in their people''s knowledge. Look for ways to support your channel partners and integrate them into your operation. Look beyond the sharing of demand, inventory, and production information. Market leaders often support their distributors by deploying sophisticated customer service knowledge bases via distributor websites.
Support distributor channels with Internet technologies
This service to your channel partners not only enhances the relationships, but it also adds real value to end customers. Now, customers have the ability to research their own customer service issues 24 hours a day. That''s particularly important for companies that don''t offer round-the-clock telephone product support. Greatly improved customer service levels, lower customer service costs, and closer ties with your distributor channels are among the main benefits of this type of Internet-enabled application.
Collaborative engineering cuts design time by up to 75%
One of the emerging trends in the industrial equipment arena is acceptance of Internet-enabled collaborative engineering tools. These tools have been shown to cut total design time by up to 75%, while increasing product quality. Collaborative engineering uses the Internet and workflow technology to speed the process of design, comment, and revision. Gone are the days when your engineers would swap prints with suppliers and customers in multiple different locations and wait patiently for feedback.
Now, your customers, suppliers and internal design team can view the designs online, with all relevant attachments, and quickly move the process along. Early adopters of collaborative engineering tools have also found that the quality of the design effort increases, by getting input from a broader cross section of organizations. For example, purchasing may suggest alternative specs that cut the price dramatically, while not impacting the functionality. Or, manufacturing might suggest a change that could slash production time.
After you''ve designed new products through collaborative engineering, sold them through web storefronts, and supported them with online knowledge bases, somebody has to keep them running at maximum efficiency. Increasingly, that somebody is you. Thanks to a new business arrangement called an interactive maintenance contract, industrial equipment manufacturers are getting more deeply involved in the maintenance of products throughout their life cycle. That''s good news for several key reasons.
Lifecycle maintenance boosts profitability
First, the profitability of maintenance, repair and overhaul (MRO) operations is typically two to four times as high as the original manufacturing. For companies seeking ways to grow revenues in no-growth markets, that''s very good news. Second, offering your customers long-term service agreements relieves them of a burden they''re often ill equipped to manage. At many customer sites, the same person who changes light bulbs is charged with maintaining highly specialized pumps, boring machines, and conveyor systems.
No one knows more about maintaining your products than you and your distributors. After all, you have access to the original design specifications, any changes implemented during the product run, all warranty claims, etc. Now, thanks to the Internet, you also have the tools to do a better job of monitoring and maintaining the equipment than ever before. Imagine a scenario where a built-in sensor monitors equipment vibration. When the sensor notes increased vibration levels, an alert goes over the Internet to your dispatch system. Using modern maintenance management systems, you can now dispatch distributor maintenance personnel with the right tools, spare parts and training to the customer site. These technicians log their findings into the maintenance record from the site, order replacement parts, and complete time and materials records for accurate billing. Sophisticated systems even optimize the dispatch of vehicle and personnel to minimize out-of-route travel and maximize the utilization of highly skilled personnel.
These are the kinds of real-world Internet technology applications that make this such an exciting period. Leading industrial equipment manufacturers are beginning to leverage the power of the Internet to boost customer service, drive down costs, and increase revenues. But you won''t realize the tremendous benefits of the new Internet tools if you build your business on anything less than the solid foundation of robust business systems and best-practices.