A new era of manufacturing industry is coming up

Businesses have realised that to achieve true efficiency, enterprise systems have to talk to one anonther

The purpose of all manufacturing companies are, on the one hand, to create value to their stakeholders and, on the other to ensure customer delight by delivering the right product at the right time, and at the right price.

A world-class manufacturing company strives continually to deploy most efficiently all its resources, both physical and financial, with the goal of achieving competitive performance in the marketplace. 

In today’s context, a manufacturing company operates not as a vertically integrated monolithic entity, but as a collaborative entity, which aggregates value addition of numerous supplier partners, design partners, and service partners, among others. Therefore, it is necessary for all stakeholders to base all their business decisions on common real-time unified information.

A manufacturing company’s partners may be located in different countries and spread across the entire value domain. For instance, an automobile or consumer durable making company in one part of the world may source parts and assemblies from numerous suppliers located in different geographies and collaborate with niche design and engineering companies in some other countries, and market and service its products worldwide with the help of service partners.   

The manufacturing industry, which is complex and asset-intensive, has been continually evolving. Its initial challenge was in developing and engineering a product and making it. Then it entered an era of expansion resulting in creation of excess production capacities in many industrial segments such as automobile and steel. Competition intensified further.

In order to gain market share and competitiveness, the manufacturing companies, largely driven by the success of Japanese industrial companies, began to focus on improving business processes, adopted practices such as lean manufacturing, Kaizen, and total quality management.

They began to focus on the shop floor, where the actual value creation was taking place, and invested in automating the production machines and/ or manufacturing processes. Initially it was the use of discrete instruments and controllers, and then computer-based control systems such as programmable logic controllers (PLC), distributed control systems (DCS), and supervisory control and data acquisition systems (SCADA).

These systems gathered large amount of data, generated information and control outputs. Information technology emerged as the cornerstone on which these systems were built. The deployment of these automation systems that are information-intensive resulted in integrating most of the shopfloor production activities to achieve real-time operation.

Opening of one door leads to the opening of other doors. Manufacturing companies saw an opportunity to leverage the information technology which had immense data gathering, processing, and analysing capabilities to automate their business operations as well.

They identified numerous areas where there was scope to minimise costs, reduce time-to-market, improve performance, and achieve demand fulfillment, and the areas included inventory management, production planning and plant asset management, among others.

Initially, it all began with companies developing data processing software solutions to handle payrolls, accounting, inventory management, and such other corporate functions. Subsequently, companies began to implement standard software solutions such as enterprise resource planning (ERP), plant asset management (PAM) and supply chain management (SCM).

True, many of these were disparate systems and solutions, and they were not built to seamlessly communicate information with other systems. It can even be said that the perceived need initially was to isolate the real-time control systems from the transaction-based enterprise solutions.

It was a later recognition that true efficiencies can be achieved only if the enterprise systems can communicate information seamlessly with each other.

Attempts to integrate real-time plant control systems such as PLC with enterprise solutions such as ERP and others led to the implementation of computer integrated management (CIM) and machine to machine (M2M) integration. With customers wanting to exercise their choice, and companies gearing to meet their demands, manufacturing industry is entering a new era that demands mass customisation.

Companies realise that their success depends on their ability to evolve into truly real-time information-driven organisations so that production is demand-driven. Enterprise information cannot exist in silos and all decisions will have to be based on real-time unified data base.
Global companies are moving in this direction. Internet is an excellent platform to achieve connectivity among almost everything. Smart machines and equipment act as data and information sources and when they are internet- enabled they are called as Industrial Internet of Things (IIoT).

They can send and receive data and information. The mass of information available from these IIoT can be analysed using the data analytical tools to generate actionable information, which will propel manufacturing activities towards the desired objective of demand fulfillment.
(The writer is an independent industry analyst, columnist, and business consultant.)