Industry needs an IT revolution

Difficult economic conditions are encouraging global manufacturing businesses to make sure they maximise their use of IT. Antony...

Difficult economic conditions are encouraging global manufacturing businesses to make sure they maximise their use of IT. Antony Adshead reports

Last week at its forum in Dusseldorf manufacturing consultancy ARC described a future of "radical change" for the sector's use of IT in the next decade.

According to ARC, players in manufacturing will have to make great strides in how they capture, route and use information if they are to survive in an increasingly hostile economic environment.

Top-tier manufacturers represented at the event find obstacles such as entrenched silo-based cultures and spendthrift boards holding back the sector from entering the Internet age. In a keynote speech - with giants such as Nestle, BP Amoco, Shell, Dow Chemical, Novartis, Merck and Volvo in attendance - ARC founder and president Andy Chatha described a world in which manufacturing was becoming increasingly competitive because of its consolidation into a few global players.

Businesses have to make huge strides to achieve the holy grail of their sub-sectors - the 10-day car, the three-month plane, perfect order fulfilment for the food industry, quicker time to market for pharmaceuticals - and they need to harness the best that IT can offer, said Chatha.

"E-business is still internal in its focus, he said. "We need to see the walls between business partners torn down. There needs to be a move towards collaborative manufacturing where information flows freely."

He described how in the past two decades great strides had been made by IT in manufacturing. Enterprise resource planning (ERP) systems had taken care of the commercial side of the business while at plant level, automation systems had begun to capture, monitor and control the physical processes of manufacturing.

The problem, said Chatha, now lies in linking shopfloor and topfloor and giving visibility to supply chain partners. "We will see a lot more sensors embedded and there will be greater collaboration between machines - manufacturing is becoming too complex to be left to people. We will be able to know the status and health of machines and to lower costs by predictive maintenance and optimisation of assets," he said.

"In the supply chain we will move towards greater visibility where, for example with radio frequency indentification tags real-time visibility of materials in the supply chain will lower inventories," he said.

But while Chatha set out a vision of manufacturing excellence empowered by IT, obstacles still exist that prevent the industry making the best use of it.

Ralph Häfeli, head of global manufacturing IT for Swiss pharmaceuticals company Novartis, said that there seemed to be no urgency to implement information-based strategies.

"In our sector we see tanks and pipes as essential but not IT. If banking and finance had the same attitude to IT they would not exist - nearly everything they do is virtual. We have to gain the trust of the board by doing the everyday things well and then going to them and saying, 'What do you want to do with information', and relate it to the processes they understand," said Häfeli.

Novartis has made great strides in bringing IT to bear on its core business. It has been able to substantially reduce dependence on paper-based systems and linked plant level data to regional ERP systems.

This even includes some ability to remould business processes on the fly by using custom-built adapters and XML to link software at the information level rather than trying to tweak things at the application layer.

But how does ARC's vision of collaborative manufacturing and a fully visible product lifecycle fit with reality at Novartis?

"The technology exists to achieve these things but the problems are mostly cultural. When Novartis was created from the merger of Ciba and Sandoz in 1996 a silo-based working structure was put in place intentionally to maximise efficiency. Now it is a barrier to flows of information.

"If, say, a production department is optimising at the same time as its quality department but they are not talking to each other about the way processes affect them both you will not achieve full optimisation," said Häfeli.

So, while ARC's vision is one manufacturers need to move towards to survive, companies in the sector are slow to embrace the advantages IT can bring to the production of goods. If Häfeli's experience is typical it is because boards have to be convinced that IT can really revolutionise industry.

According to Häfeli, "IT can be a fantastic enabler to bring about better information flows in business but it is often underregarded," because there is no pressure to look at radical new methods, he said.

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