You Say You Want A Revolution?

Smart Manufacturing is heralded to be the next industrial revolution; will small manufacturers benefit?

 I was recently doing some pre-work for a potential client – a smaller local manufacturer with less than 250 employees – when I noticed a machine operator holding a sheet of paper (a work order, I was told) and typing information into the performance management system. Curious, I asked why one digital system didn’t just share the information with the other digital system rather than the inefficiency of printing it out from one system, handling the paperwork, and then re-entering the information into the other system. After all, it is the 21^st century and systems have been known to talk with other systems. I wasn’t surprised by the answer – they hadn’t really thought about it. The ERP and the performance management system each had represented major steps forward for this business, and they hadn’t considered how these two systems might work together.

My next step was to speak with the performance management software provider to find out how we might enable communication between the client’s ERP and their software to allow more efficient workflow. This provider caters to small-to-medium manufacturing organizations, and their response was such data exchanges were not possible with their software. Theirs is very much a point solution, and their client base was not asking for such capabilities. This is an interesting conundrum: Smart Manufacturing is all about the connected enterprise, yet smaller manufacturers (who comprise over 95% of the marketplace) are not demanding the capabilities from their system providers which make Smart Manufacturing possible!

Wise Up, Grow Up, Power Up

I can’t fault the solution providers; they will always give their customers what they ask for. Solution providers are aware of industry trends, but if features have no market demand they have no economic incentive to include those features in their products. It is up to manufacturing organizations themselves to stay abreast of the changing technology and how they might leverage it to their own competitive advantage. Fortunately there are industry organizations which can help with this; one example is MESA International. In regards to Smart Manufacturing, MESA has a soon-to-be released white paper entitled “Smart Manufacturing Demystified – The Landscape Explained”. This paper was authored by industry thought leaders from companies such as Rockwell Automation, IBM, ATS Global, PTC, iBASEt, Plex Systems, and Efficient Plant, and will help manufacturers of any size familiarize themselves with the concepts of Smart Manufacturing. Smaller manufacturers especially need to take advantage of this information and incorporate it into their strategic planning. Then they will be better informed when selecting system software, or when pressing the suppliers of their existing systems for new capabilities.

Organizations of any size go through a system maturation process – some even do it intentionally. MESA has modeled this as a four-stage growth sequence. At the initial stage, an organization exhibits application-centric thinking: every problem needs its own application as part of the solution. This has led to a proliferation of three & four letter acronym solutions built around common industry problem sets. Do you have an MES? How about a PLM? CMMS? EMI? SPC? QMS? At the next stage in the maturation process, organizations begin to realize there are commonalities between these applications, and begin implementing data governance and master data; they are demonstrating data-centric thinking. Then comes a realization that these applications cross organizational boundaries, and would be more valuable if their capabilities could be combined in different ways via an enterprise service bus. This stage promotes interface-centric thinking. At the apex of the maturation sequence is process-centric thinking; the confluence of systems and services to facilitate end-to-end process workflow. Studies at MIT’s Center for Information Systems Research have shown that organizations moving from the initial stage to the second stage reduce IT costs by 15%. Organizations which mature from the second to third stage save an additional 10%. But something interesting happens to organizations which grow into the fourth stage: IT spending increases because those companies are finding a significant increase in ROI and effectiveness. Smaller organizations often are not staffed to direct this maturation process, which means it occurs more slowly. Many have yet to transition from application-centric thought processes.

Another of the problems smaller manufacturers face is a lack of leverage when it comes to industry solutions. Let’s face it, a company with 20 employees just doesn’t have the same clout as one with 20,000. It can be hard for a small organization to get the attention of the providers. As in the case of my potential client, just one customer asking for features which allow better enterprise integration will not be enough for the solution provider to invest in making the changes. Two forces will motivate solution providers: the threat of clients switching to different suppliers and the ability to go after new market prospects. For small manufacturers, switching costs for existing point solutions are very likely high enough to preclude a serious threat to the supplier. A small niche manufacturing entity also is unlikely to influence a provider’s roadmap because of a narrow market, blunting that force as well. A third force is required: user groups. User groups have long been a staple of large software houses such as SAP, Microsoft, Autodesk, PTC, and Oracle. These groups collaborate with the solution providers to help map the future state of their products. Small manufacturers who wish to have a larger voice in the direction their technology investments take should participate in user groups. If such a group does not exist, it is easy enough to create one via social media (meetup.com, for example).

If small-to-medium sized manufacturers wish to benefit from the coming Smart Manufacturing revolution, they need to wise up by taking advantage of the information available in the manufacturing community, grow up intentionally through a directed maturation process, and power up through collaboration with technology users who have common interests.