Alison Smith: Manufacturing operations Q4 wrap-up: Not the perfect storm we expected
By Alison Smith -- Manufacturing Business Technology, 11/1/2008 6:00:00 AM
We dubbed 2008 the “Year of the Perfect Storm” in January, but not with the economic climate in mind. As 2008 draws to a close, the troubled economy is just the storm manufacturers needed to catalyze broad business process reengineering initiatives and investments in supporting technologies and infrastructure.
Heading into 2009, we anticipate very high demand for software technologies that allow manufacturers to do more with less.
Companies will continue to invest in manufacturing operations, cashing in on the lull in business to retool and update outdated systems, and prepare for what will undoubtedly be a very different global business climate when recovery does come. We're already seeing heightened demand for manufacturing execution systems (MES); asset performance; manufacturing intelligence; factory scheduling; optimization; and a host of other tools that enable profitability analysis and intelligence.
Manufacturing 2.0: Are we there yet?
We kicked off 2008 with high hopes for emerging Manufacturing 2.0 applications, but possibilities offered by service-oriented architecture (SOA)-based composite applications, mobile interfaces, and manufacturing mash-ups are still beyond the “imagineering” capabilities of most organizations. In fact, we're only just starting to see accelerated uptake and broad multisite deployments of commercial MES products in the market.
We're not giving up on the Manufacturing 2.0 idea, however, and still have high expectations for SOA-based manufacturing platforms.
If anything, the current economic slowdown should light a fire as companies internalize the need to:
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Leverage legacy systems while introducing new high-value capabilities;
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Adapt existing systems to rapidly changing business processes;
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Provide new usability paradigms—like mobility—for more efficient utilization of a leaner skilled workforce; and
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Ease the onboarding process for new, less-experienced operations personnel.
Manufacturing SOA architectures and composite applications comprise a ready answer to this conundrum, and we expect to see global companies expand the bus-based manufacturing architectures they're already experimenting with. Service providers that can demonstrate a deep understanding of detailed manufacturing business processes as well as service-based architectures will do well in the upcoming year.
Cover your assets and mind your margins
Software investments that deliver optics into profitability by product, by line, by asset, and by SKU will be an easy sell in 2009. Manufacturers should be sufficiently sensitized to the impact of energy costs on margins—and should reevaluate portfolios, production assets, network design, and logistics accordingly.
Research indicates few companies have a firm grasp on the actual cost of making product—relying instead on allocation models built into their cost accounting systems. Heightened sensitivity to the importance of profitably is changing this mind-set, so stay tuned for conversations about “real-time” accounting methodologies that enable visibility into what's creating value for the business, and what's not.
In retrospect, 2008 didn't bring the perfect storm we expected, but maybe it's the perfect storm after all.
