Manufacturers see survival in top- to shop-floor systems

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Manufacturers see survival in top- to shop-floor systems

UK manufacturing is in recession - it's official. The Office for National Statistics has recorded two successive quarters of falling output, which means that the dreaded "r" word is here.

But what is the effect on the IT departments of manufacturing companies? Is recession and cutback a threat, as IT departments are scaled back along with the rest of the business, or is this the time to redouble the kind of "top floor to shop-floor" IT projects that have been lauded as offering a huge boost to manufacturing productivity?

If recent IT recruitment figures are anything to go by, manufacturers' demands for IT professionals have been steady over the last two quarters. Last week's SSP/Computer Weekly Quarterly Survey of Appointment Data showed a decrease of only 3% in IT recruitment in the sector year on year. Admittedly the number of jobs this figure refers to is far fewer compared to the financial sector, but it does indicate some stability.

Anecdotal evidence in recent months indicates that the world's top-tier manufacturing giants are spending a great deal on IT projects. Primarily, these systems involve linking management on the top floor to the shop-floor to improve the responsiveness between the manufacturing systems, procurement and support networks, as well as infrastructure projects aimed at linking formerly disparate country-based systems.

For example, Nissan's Sunderland plant recently won the accolade of most productive car plant in Europe with a comprehensive IT system that links shop-floor to procurement department to suppliers, achieving near build-to-order capability.

Ford is in the process of linking all of its facilities worldwide via its e-hub project; Volvo has centralised IT support globally on a common network; and BP is consolidating its global server infrastructure into three "megacentre hubs".

So, can IT investment actually help manufacturers weather recession?

Laurent Lachal, an analyst specialising in manufacturing software and systems with Ovum, thinks so.

"Recession is an economy-wide phenomenon so we can't expect IT to insulate a business against it, but sensible IT strategies can help a company live through it and be ready to bounce back when trading conditions improve," he said.

Lachal stressed that IT is simply a tool and that managing the project is the key. He warned that implementations can actually worsen performance in the short term.

"There is always a blip after software goes online as user training comes up to speed and performance issues are solved - often meaning performance is lower than that achieved by the old system for a while," said Lachal.

Lachal considers the take-up of e-manufacturing systems on the shop-floor and inter-enterprise relations for procurement is generally lagging in the UK, although it does seem that IT spending is continuing apace.

In fact, it may be that manufacturers - at least the ones that have money to spend - are being forced to invest in IT as a matter of survival. "Firms are bound to invest to keep pace with rivals," said Lachal.

In this climate Lachal advised having the right strategy for your business. "Manufacturers need to assess where they are now and where they want to get to. The question is to make the right level of investment and that varies across sub-sectors of the manufacturing industry," he said.

Good advice for those that have the luxury to follow it. However, there are many in UK manufacturing that

cannot. Many of the firms in this sector are small- and medium-sized businesses, such as the myriad of component suppliers far down the supply chain and too cash-strapped to communicate by any other means than the fax machine.

For many in this "hidden" part of the sector, IT investment could save jobs, if only there was cash to invest.

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This was first published in August 2001

 

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