Like many innovations that have swept through the industrialised nations, the Internet represents both a threat and an opportunity to manufacturers.
The threat is that it gives customers – be they consumers or other businesses further down the supply chain – greater freedom than ever to search the world for alternative sources of supply.
But the opportunity is even greater. Manufacturing businesses able to harness the power of the web are making huge gains in efficiency, both by reducing the friction inside their own business and by binding suppliers more tightly into the supply chain. Traditionally, the factory floor has been isolated, decoupled from the supply chain and the rest of the manufacturing enterprise to protect it from the risks of erratic supplies and fluctuations in customer demand.
This is however inefficient and inflexible, and leaves the production and maintenance departments financially unaccountable when shareholders are demanding increased Return on Net Assets (RONA) and higher profitability.
It also ignores the essential drivers that differentiate the companies that are succeeding in today’s Internet-driven e-conomy: Flexibility and response to customer demand, and reduced time to market for products.
Even though the first wave of dot.coms has faltered, the second wave is forming. The next wave (and those that survive the first) all know one basic truth: e-business does not work without a world-class supply chain driven by world-class producers.
The survivors of the current industrial revolution that is e-business will be lowest cost producers who make precisely what customers want. That means making to order, and going beyond just-in-time manufacturing to adopt collaborative e-manufacturing approaches.
Collaboration means companies and their supply chain partners must function as a single, optimised entity, not a set of divisions or departments. In almost every industry, these tightly integrated supply chains are emerging.
A pre-requisite of such a model in the integration of the shop floor with the top floor where management decisions are made, and on one level, e-manufacturing does just that.
But it is a concept much greater than the sum of its parts. It covers 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.
The best news for manufacturers is what e-manufacturing is not. First, It is not an all-or-nothing proposition. Second, It is not something that requires a complete redesign of a plant floor. Chances are most manufacturers already have some of the building blocks in place.
Manufacturing industry is facing simultaneous pressure for growth and improved bottom-line performance. Fortunately, the e-manufacturing technologies exist today that allow manufacturers to meet and exceed these sometimes contradictory expectations.