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Manufacturing in Uncertain Times: Flexibility is King

March 21, 2016

Over the last few years, there’s been an exciting upturn in the interest that large US and European corporations have had in the manufacturing industry. There have even been signs of “on shoring” manufacturing capabilities. There are lots of economic reasons why a change in heart has happened, not least the desire to better serve customers through faster deliveries, more customization and better quality. This transition has happened in parallel with the increasing interest in manufacturing technology in an IT world dominated by cloud computing, analytics and the Internet of Things (IoT).

Economic jitters

Unfortunately, signs of a reduction in confidence amongst manufacturers is growing; no one is quite sure what low commodity prices and a reduction in growth in emerging economies will do for manufacturing industries in the developed world. Now is a good time to reflect on what can be done to manufacturing information technology to position enterprises for growth. It can be argued that preparing for two diametrically opposed scenarios will involve very similar actions:

  • Continue to be prepared for more flexibility
  • Drive quality to an even higher level
  • Ensure that the customer is both king and emperor combined

Manufacturers need to plan to improve these fundamentals. A great deal of work is ongoing in the manufacturing IT world that will help and much of this can be described under the umbrella of the Industrial Internet of Things (IIoT) that provides a platform to allow connectivity, cloud, analytics and application development. This basis can then be extended to drive real improvements through programs such as Industry 4.0 and Smart Manufacturing.

Focusing on the achievable

Big investments require a lot of confidence. Many executives have heard the IIoT hype and have even taken small steps down that route. During uncertain times, executives look for safer steps to take while also improving service and delivery. 

At LNS Research, we believe that digital transformation needs to take a step-by-step approach to ensure that ROI is achieved and ineffective routes are cut off early. Many manufacturing companies wishing to better integrate their plants into their IT systems choose Manufacturing Operations Management (MOM), or sometimes called Manufacturing Execution Systems (MES), as the starting point for that integration. Our first diagram shows a traditional hierarchy, built on the ISA-95 standard for Manufacturing Operations Management, with these levels:  

  • 5  Corporate planning and strategy
  • 4  Business systems such as ERP, Supply Chain and CRM
  • 3  Manufacturing Operations Management
  • 2  Production control
  • 1  Sensors and actuators
  • 0  Equipment

For our discussion, the levels of interest are MOM, level 3 and business systems, level 4. Traditional MOM systems have typically had customized interfaces between levels 3 and 4; it is probably this interface that creates more flexibility issues than any other part of the system; as new functionality or new information is required, it is common to have to reprogram the communications between these layers.

Cloud MOM – get your information closer

A different approach can be seen in the second diagram, where the majority of MOM functionality has been moved into the cloud alongside the business systems. This allows much easier integration between levels 3 and 4, especially if you get both from one vendor. One advantage of tight integration between MOM and an ERP system (and supply chain, etc.) is more flexibility in, for example, manufacturing operations, customer relations, resource management, planning and scheduling. The cloud ERP solutions can span many factories and allow balancing of production when orders are weak.

In making the move from traditional manufacturing to an integrated architecture, people are the biggest keys to success. In most companies, information technology (IT) and operational technology (OT) people speak a different language. It is imperative to get them talking and to keep them believing that working together will produce better results than the traditional guarding of ownership of specific systems and technologies.

Looking to the future, but not too far

There is little doubt that IIoT platforms will, in the coming years, provide a basis for even more flexibility, quality and profitability in manufacturing enterprises. Our third picture shows our manufacturing plant in an IIoT world where mashup apps, information sharing with suppliers and customers and manufacturing flexibility will move to a new level.

However, today we are talking about a potentially difficult economic environment in the coming months. Manufacturers who want to use their IT and plant systems to hedge towards thriving through a downturn, need solutions today. Look at how your plant data can help your business processes in today’s environment. Consider the architecture of both your business and plant systems and make a plan to bring the IT and OT people together to make it happen. Investing now will not only help in the short term economic situation, but will also position you for growth when things are looking brighter.

About the Author

Andrew Hughes Principal Analyst at LNS Research

Andrew Hughes joined the LNS Research team in May of 2015 and is a Principal Analyst with his primary focus being research and analysis in the Manufacturing Operations Management (MOM) practice. Andrew has 30 years of experience in manufacturing IT, software research, sales and management across a broad spectrum of manufacturing industries.  Before joining LNS Research, Andrew was on sabbatical in Ethiopia.  Andrew has a BSc honours degree in Computer Science from York University.