Collaborating for Global Advantage

Manufacturers have always built their competitive advantage by leveraging expertise and know-how in finding and dealing with suppliers.

Typically, manufacturers cultivate robust relationships with key suppliers, and understand what kind of pricing and availability concessions should be expected in any given set of circumstances. In turn, the suppliers reasonably expect to benefit from business the manufacturer wins with their help.

The Japanese kieretsu model takes this one step further, grouping suppliers up and down the value stream in a close working relationship, usually physically close together as well. Today, a globally distributed supply network can deploy technology to dramatically tilt the competitive balance in its favor when facing this traditional business model. In order to take advantage of this, manufacturers should use an Enterprise Operations Platform (EOP).

Networked nodes

A collaborative manufacturing network consists of nodes connected by material, information and process flows. Nodes may include transportation providers, distribution centers, retailers, contract manufacturers and other suppliers. In some cases, this network remains essentially fixed for periods of time, while in other cases, the network may come together in support of a specific market opportunity, then dissolve and reform.

While every node is unique, each node must deal with essentially the same fundamental processes. Every stage receives, stores and ships material. Labor is allocated and tracked. Machines and tools are deployed to manipulate or move the work. Value may be added to the work in production processes, or the work may be stored or moved. Equipment within each node must be maintained.

Other processes can and should transcend the nodal processes and exist in the network, or business-to-business dimension. Examples are Lean/Six Sigma, or regulatory traceability, tracking and quality requirements. With a Lean approach, forecasts can be used for planning purposes and contractual arrangements, and demand can drive the production rate and supplier delivery rates throughout the network.

Sonic boom

Manufacturers are feeling a “technology sonic boom” that is shaking things up. For example, Internet technology and Web services are now well understood technically and their uses for basic purposes are widely embraced. Some manufacturers have figured out how to use the new technology to change and improve their businesses, but one side effect of the sonic boom is that available, proven solutions remain largely unknown.

An emerging practice is that of driving greater collaboration among supply network partners in order to better compete in the marketplace. This potentially conveys a big advantage in the “Supply Network vs. Supply Network” competition. It is also reinvigorating the Lean community, who can now realistically extend demand/pull lean concepts throughout the entire value network.

Today’s supply networks are distributed around the globe. Manufacturers need a single information technology solution that can support all of their globally distributed operations. A global EOP solution provides the expected global calendars, multiple language user interfaces and multiple media format support, and goes a step further with the ability to ensure legal, regulatory and financial compliance in all of the appropriate markets.

In order to adapt to varying manufacturing types and industries, the EOP should be assembled from components or business objects. A workflow engine, business rules engine, and analytics engine should work together to automate, drive, and monitor operating processes throughout the enterprise network.

In order to meet corporate objectives for profitability, performance and compliance, manufacturers must drive their own supply network to their best advantage. Manufacturers need an EOP that can be created, deployed and managed at an enterprise level, while supporting individual nodal requirements for operational activities.

Greg Gorbach, ggorbach@arcweb.com, is director of collaborative manufacturing research for ARC Advisory Group.

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