A few weeks ago, IDC released their annual predictions for the manufacturing sector in 2012. I recently attended two IDC webinars, one focusing on manufacturing trends in EMEA and the other discussing general technology trends across the sector. Now there weren’t too many surprises in terms of where manufacturers should invest their money this year, from a production systems and IT infrastructures point of view. The key takeaway for me was the emergence of what IDC refers to as the Global Plant Floor, something I will discuss a bit later in this blog entry. Let me discuss some of the more general manufacturing related trends for 2012 that will lead to the introduction of the global plant floor.
According to IDC, today’s manufacturing companies should embrace three key attributes. Firstly they need to be customer centric whereby they are focused on customer fulfillment needs and open to market trends and opportunities. Secondly, manufacturers need to be agile so that they can quickly change tactical directions and reconfigure themselves to adapt to change. Finally, manufacturers need to be robust whereby they must be able to deal with increasing levels of complexity across the manufacturing supply chain. Now this last point is quite interesting as this is an area I discussed a couple of years ago (on the back of some research that GXS conducted with Cranfield University) and how B2B outsourcing can actually help companies manage complexity across their supply chains. At the time I highlighted three levels of complexity that can occur across a supply chain, regional, process and technology related. IDC identified a similar set of attributes, namely market, operational and IT complexity. So as you can see, two sets of attributes which effectively describe complexity across today’s manufacturing supply chains.
Changing consumer demand is impacting how manufacturers design their production lines and in 2012, IDC expects more manufacturers to move towards a capability of fulfilling customer needs rather than making sure production capacities are fulfilled. In essence this is describing how manufacturers are moving more towards a Build-to-Order capacity rather than a Build-to-Stock capacity. Build-to-Order requires a fundamental change in supply chain procurement especially as suppliers will be required to support Just-In-Time type production techniques.
Over the past 12 months alone, manufacturers have had to restructure their supply chains to take into account the impact of several natural disasters. The Japanese earthquake and Thai floods severely impacted the supply of components to several global manufacturing plants and in order to avoid a repeat of this in the future, manufacturers will need to restructure their supply chains. They have been very quick to establish dual sourcing strategies so that if a group of suppliers gets impacted by a disruption of some description then the manufacturer can easily switch to an alternative source for parts. In addition, manufacturers are starting to spread their manufacturing capacity to other regions of the world. This is so that they can share their production capacity across multiple plants rather than have a single plant service a global market, ie the introduction of smaller plants nearer to the expected customer demand.
For example Foxconn are looking to build a new plant in Brazil to manufacture Apple devices for the North American market, Nissan is building a new plant in Mexico to allow them to sell new cars into the North American market and Caterpillar decided to ‘re-shore’ production of their Bobcat excavators from a plant in Japan to a plant in North America. One further point is that in January this year, I saw more inward investment activity in the North American market than at any other time over the past six years since I joined GXS. This inward investment is to effectively support the development of a distributed production environment.
To support this expected growth and expansion of the manufacturing sector, IDC predicts that we will see the emergence of the Global Plant Floor, a way to “Design Anywhere, Build Anywhere, Sell Anywhere”. IDC predicts that manufacturers will need to create real-time intelligent value chains. This would be made up of Intelligent People, ie those people with the right information who rely on operational evidence and advanced collaboration tools which then allow them to make evidence based decisions in real time. This is combined with the Intelligent Value Chain where customer satisfaction depends on the ability to incorporate the information of trading partners and finally Intelligent Factories must be better integrated to the network of global operations and focus on customer fulfillment.
IDC predicts that there will be Four Forces of IT Technology that will help to manage these complex production environments and ultimately help to support the IT requirements of the Global Plant Floor. IDC predicts that Cloud Computing, Social Business Tools, Big Data/Analytics and Mobile Devices will all contribute towards improving how Global Plant Floors are operated. In fact I have blogged about each of these four areas over the past couple of years in their own right and how they could one day impact manufacturing operations. When combined together and implemented properly they stand to totally change the way in which manufacturing companies operate today. To review my previous blogs which discuss these four forces related to manufacturers, please click on the following links. Cloud Computing, Social Business, Big Data and Mobile Device.
When combined together these four forces will help to establish what IDC refers to as the Manufacturing Operations Architecture. I have summarised this by way of the diagram below but it is interesting to note that the architecture is very similar in nature to the three layer model that is used to describe a Cloud Computing based environment, namely Infrastructure-as-a-Service, Platform-as-a-Service and Software-as-a-Service.
So 2012 will be a crucial year for the manufacturing industry, a year when significant investment in IT infrastructures will need to be made in order to support global production processes and support ever changing customer fulfillment requirements. GXS is in a strong position to help manufacturers implement their Global Plant Floors as we can provide a number of cloud based B2B solutions to help address issues such as improving collaboration, visibility, on-boarding trading partners and ERP Integration to name but a few. I will explore these topics further in a future blog entry. Further information on IDC’s Top 10 predictions can be found on their Manufacturing Insights page, click here>>>
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[...] a truly global manufacturing footprint has recently been termed the Global Plant Floor by the industry analyst IDC. IDC says that for companies to implement a Global Plant Floor they [...]