Information Technology for Manufacturing: 
            Reducing Costs and Expanding Capabilities  

      By John Clemons, Mark Cubine, and Kevin Ake, with Bruce Lilly 
 
      St. Lucie Press, 2003 
 
 

Veins of gold run throughout manufacturing plants.  Take a good map, gather up the right tools, follow some tried and true methods, and this gold can be yours.  This book is both the detailed map and the manual which extensively describes all of the tools and methods you will need.  The gold comes in the form of lower costs and valuable new capabilities. Cutting-edge information technology provides the tools, and the methods come from our firsthand observations of what works and what doesn’t.  Drawing upon our many years of experience in this field, we can show you exactly where the gold lies and we can explain to you precisely how to go about mining it.  In a nutshell, that is the purpose of this book. 

Simply stated, the premise of everything that follows is that the intelligent use of manufacturing information technology brings a solid and substantial return on the investment made.  Skeptics may ask why this gold hasn’t been mined already, and that’s an entirely valid question.  In fact, many companies have mined this gold, and that’s how we know it can be done.  But it’s not easy to do, and that’s why so many other companies still have not done it.  It’s difficult for a variety of reasons, and to explain them we must look at the history of information technology in manufacturing companies. 

In Chapter 1, we look at the tremendous amount of change that has occurred in the industry in recent decades.  Not only has manufacturing changed immensely, but the rate of change today is faster than ever and it continues to accelerate.  The result is that some segments of manufacturing are essentially extinct in North America and many others have witnessed a radical transformation of their business models. 

When you survey the change in manufacturing, a few major themes emerge: 

• Consumers and retailers have more power than ever, which forces manufacturing companies to develop higher and higher levels of flexibility and responsiveness.
• Quality and safety failures have gained the potential to be absolutely devastating, so more and more resources are spent ensuring that such calamities are avoided.
• Regulatory compliance is another area where the risk faced by companies has increased dramatically, and the trend is toward more intrusive and more intensive governmental oversight.
• Consolidations and mergers have skyrocketed, and the pressure keeps mounting to show cost and efficiency improvements as a result.
• The supply chain has tightened, forcing companies to develop increasingly collaborative and complex relationships with vendors and suppliers.

Although computer technology is only a few decades old, a lot of ground has been covered in that time, and we explore this history in Chapter 2.  In manufacturing companies, the use of computers developed along two independent paths.  This happened because computers were being used both by plant engineering and corporate management, and the visions, goals, priorities, and approaches of the two groups were vastly different. 

At first, the two groups worked independently of each other in peaceful coexistence.  However, as the technology grew more sophisticated, its use by each group expanded and conflicts arose over vision, strategy, and tactics.  Engineers attempted to create a unified concept of how a manufacturing company could integrate IT into every level of the organization, but ultimately these attempts failed.  In the end, the corporate side asserted control over all aspects of IT throughout the organization. 

This development had serious consequences which go to the heart of this book.  In too many cases, the strategies developed by people at the corporate level neglected to address the IT needs of the plant.  Ideas about using IT to improve the way the plant operates were largely ignored. Although the ideas were ignored and continue to be ignored all too often, computer technology has continued to become more sophisticated.  This is why we say that there’s gold in manufacturing plants.  Opportunities abound for the intelligent use of IT in the plant. 

These opportunities have been ignored because people making the decisions at the corporate level about the use of IT have been focused on other areas.  The most prominent evidence of this is the way budgets have been dominated by massive, corporate-wide software systems known as Enterprise Resource Planning systems.  This trend started in the 1990’s, and it was accompanied by the Y2K fears and the dot-com mania at the end of the decade.  All of these combined to create an environment in which very little attention was given to finding better ways of using IT in manufacturing plants. 

Where does all of this leave us today?  Chapter 3 provides answers to that question.  Enterprise Resource Planning (ERP) takes center stage here because it not only was wildly successful at revolutionizing the way companies manage their business, it also had some serious negative consequences for manufacturing plants.  In the case of ERP, the problems for the plant go beyond simply causing a diversion of IT resources.  In many situations, ERP’s reach into the plant actually made matters worse. 

This happened because ERP was designed from the perspective of how corporations can be run more efficiently, not from the perspective of how plants can be run more efficiently.  This clash of perspectives is the same one that existed at the start of the computer era.  The gulf that developed between the vision of the plant engineers and the vision of the corporate IT department has left a damaging legacy that haunts us still.   ERP failed to help plants because it failed to acknowledge essential elements of the manufacturing process.  It didn’t understand that the amount of materials needed to produce a product can vary; it didn’t understand that scheduling must be dynamic, not static; and it didn’t understand that quality, instead of always being black or white, can be a matter of degree. 

One outcome of the corporate focus on ERP systems to the exclusion of applications that center on plant functions is that Microsoft’s Excel and Access programs have become the most prevalent software packages in manufacturing plants today.  While there can be no question that these two programs are valuable office tools, their pervasive use for a variety of important manufacturing functions puts the entire situation in bold relief.  As useful as they may be in the office, such generic software tools are pathetic substitutes for the software products specifically designed for manufacturing companies.  If more attention had been paid to addressing the IT needs of the plant, Excel and Access would have far less presence there.  

Some people may argue that ERP’s failures in the plant pale in comparison to its benefits for the corporation overall.  We’ll let others settle that debate, but one thing no one dares to dispute is the fact that ERP cost a bundle.  Implementations started big and became gargantuan, as consulting fees increased exponentially and deadlines crept ever onward into the future. 

We bring this budgetary aspect of ERP into our discussion because it’s an important element of where things stand today.  There are great opportunities for using IT in the plant, but nothing will happen if your project doesn’t get funded.  It’s critical that you understand how the funding of IT projects has changed in ERP’s wake.  We’ve seen the end of the days of buying on faith, buying on the basis of vendors’ promises, or buying because it’s the hottest new trend.  Every IT project must be able to firmly demonstrate a definite payback, or the funds will not be forthcoming.  IT proposals are scrutinized like never before. 

The task of providing hard justification for projects leads us to the next essential question: Exactly where does all of this gold lie?  The specific answers to this question must be multi-faceted, because manufacturing itself is highly diverse.  The tools and methods used to mine the gold in a pharmaceutical plant are not the same as those used in an automotive plant.  Nevertheless, there are two fundamental ways that manufacturing companies can use IT to their advantage: to cut costs and to add valuable new capabilities.  Chapter 4 presents a thorough description of how this can be done. 

Time after time, we have seen companies attack their waste streams by using such IT applications as real-time data collection and analysis, supplier integration, and quality management, to name but a few.  As a result, they reap substantial reductions in labor costs, materials costs, and asset utilization costs.  Likewise, we have seen companies become more competitive by adding valuable new capabilities such as a broadened product line, sharply improved customer responsiveness, and better use of raw materials.  In addition to these, some companies have used IT to obtain dramatic improvements in regulatory compliance. 

It turns out that in most cases, companies find that they improve in more than one area at once.  The steps they take to improve a manufacturing process give them new capabilities while simultaneously reducing costs.  The reality is that, through the intelligent use of manufacturing IT, the savvy companies are saving millions of dollars, becoming much more competitive, and avoiding millions of dollars in fines from regulatory agencies.  The benefits are impressive. 

There may also be gold in your plants, waiting to be mined, but to get this gold out, you need the right tools.  Finding the right tools may be the most challenging task you face, and our description of the tools needed may be the most vital part of this book.  The reason finding the right software can be so difficult is that there is no single source of information about manufacturing IT as it exists today.  There is plenty of information available, but it’s fragmented and much of it comes from sources that have a vested interest in the decisions you make. 

In Chapter 5, we offer you an unbiased and comprehensive look at five major areas where IT systems can play a pivotal role in improving your company’s manufacturing processes.  These five areas and the corresponding IT systems are: 

• Manufacturing execution—Manufacturing Execution Systems (MES) 
• Product management—Product Lifecycle Management Systems (PLM) 
• Data collection and analysis—Decision Support Systems (DSS) 
• Planning and scheduling—Advanced Planning and Scheduling Systems (APS) 
• Maintenance management—Computerized Maintenance Management Systems (CMMS) 

To bring the message home, we devote all of Chapter 6 to stories showing how manufacturing companies have used these IT systems successfully.  This book is not just about theory.  There can be a real payback on manufacturing IT investments.  We have ample proof, and we present it to you here. 

But even if you can see the opportunities in your company and you have an understanding of the tools that are available, many daunting challenges still lie ahead.  Using information technology in manufacturing plants is difficult, make no mistake about it.  Making use of the best methods available is critical for success.  By observing scores of IT projects in all types of manufacturing plants, we’ve gained insights into the secrets of success. 

Above all else, understand that IT projects have a distinct lifecycle that goes through four stages: Strategy, Framework, Implementation, and Support.  Through an examination of these four stages in Chapters 7-10, plus some important warnings concerning pitfalls in Chapter 11, we lay bare our collective wisdom about bringing new information technology into manufacturing companies.  By following the methods we put forth, which have been put to the test time and time again, you can ensure that the IT projects at your company will be successful. 

The use of information technology has come a long way.  Today, the tools are there to do almost anything you can imagine wanting to do in a manufacturing plant.  Unfortunately, much of this potential goes untapped and the gold just sits there waiting to be mined.  If you think that the plants in your company could benefit from better use of IT systems, you’re probably right.  Read on, and see for yourself if the ideas and examples we present could help you mine some gold of your own.