May 16th, 2009

Automation 2.0

Posted by Kevin O'Marah @ 7:55 am

Categories: Enterprise Architecture, Supply Chain

Tags: Automation, Nosbusch, Manufacturing, AMR Research

Yesterday the AMR team met with Rockwell Automation’s senior leadership group including CEO Keith Nosbusch to spend an entire day digging into the trends and challenges in today’s manufacturing automation market.  Nosbusch is a graduate of University of Wisconsin’s electrical and computer engineering program, and a 35 year veteran of the automation industry.  As the father of Logix, which is Rockwell’s integrated control platform for manufacturing automation, Nosbusch deserves credit for a pretty big chunk of our national productivity miracle over the past few decades.  Despite these stellar credentials, my impression of Nosbusch was of a guy who is humble, level-headed, and yet surprisingly visionary.  My Badger friends may reluctantly admit that these are typical traits of a UW grad. 

So what’s the deal with Automation 2.0?

That’s my shorthand name for a wave of manufacturing investment that I believe is fast approaching on the horizon and will radically improve the capital, labor, and energy efficiency of all kinds of large scale manufacturing.  Having worked closely for years with vendors whose products are supposed to improve the global supply chain, I think Rockwell and their kin have something to offer that stands to trump most of what the ERP, SCM, CRM and other alphabet soup tech-vendors have given us.  The key is smarter, more flexible, more adaptible production equipment enabled with a stack of IT that will connect work centers within plants to all manner of input streams and output streams. 

It sounds familiar enough, and of course, lacks some of the glamour of fancy optimization or snazzy web services, but in practice this technology layer is ready for a breakthrough.  The hint I saw yesterday was in an 18 month old alliance with Dassault Systemes to do integrated product and manufacturing process design.  This notion, which is certainly understood by rival Siemens who went so far as buy UGS for its PLM and factory simulation capabilities, promises not just better plants, but better supply networks.  In isolation, design for manufacture and factory simulation are cool enough.  In conjunction with a platform that integrates ever smarter machinery with business flows outside of the plant and outside of the company, the idea can deliver multiplicative impact.

During our meeting the comment was made that manufacturing jobs may be going away, but the ones that remain are becoming very brain intensive.  Amen.  The whole idea of automation is to eliminate repetitive human labor with capital, and in the process, deliver more precision, repeatability, and control.  In an ideal world (post Automation 2.0) there will no longer be any dehumanizing, rote, pure labor jobs in manufacturing.  These will all be handled safely and efficiently by machines, leaving people to design new products, find and serve customers, and make business decisions trading off production and sourcing locations in sync with optimal balances of material prices, energy costs, and market proximity. 

What astonishes me still is the relative lack of excitement about this whole movement.  Admittedly, my colleagues at AMR (Roddy Martin, Simon Jacobson, Bill Polk, and PLM genius Mike Burkett) know alot more about this than I do, but I still wonder; why does it seem so amazing to me, and yet so mundane to others in the world of supply chain technology?  I started with a profile of Rockwell CEO Nosbusch to make a point about humility, and while I admire it, I feel compelled to give this guy some kudos for what has been done so far and a push to keep the good work going. 

Automation 2.0 can revolutionize manufacturing worldwide, and in the process free our children to pursue careers based on brains, not brawn.  Keep it up Keith.

May 1st, 2009

Atoms or electrons: How does Hasbro make money?

Posted by AMR Research @ 8:45 am

Categories: Intellectual Property, Supply Chain

Tags: Supply Chain, Hasbro Inc., Supply Chain Management (SCM), Enterprise Software, Software, AMR Research

The global supply chain reaches all the way from Rhode Island to China and back.  Tonka trucks, GI Joe action figures and my Little Pony are all real products sold to real kids.  People who obsess about “good manufacturing jobs” fret about how nothing is made in the USA anymore, and toys like these were among the first to move offshore.  The question however, is where does the money get made?  Thousands of Chinese toy factories have closed since the recession started and millions of workers are now cooling their heels back home. 

Meanwhile, Hasbro just announced a deal with Discovery Communications to launch a children’s channel and is prepared to put $425M into the effort.  They also have a film coming out based on GI Joe from Paramount and video game deals with Electronic Arts that have increased sales of Monopoly by 40% in recent years.  Ralph Nader’s lobbying group is whining that the Discovery deal amounts to “nothing more than a scheme to deliver programme-length advertisements over television”.  Imagine how they must hate the GI Joe movie or the sinister addictiveness of online Scrabble!

The thing is, value happens when someone plays.  Whether they do so by watching TV or a movie or by gaming on their iPhone, the outcome is the same - pleasure for the consumer.  Hasbro isn’t just trying to get us to load up on stuff - they are trying to engage our sense of humor, curiosity, or competition.  Credit the creative geniuses of Pawtucket to understand this while also recognizing that technology and the global supply chain means alot more than track-and-trace IT systems.  The digital supply chain, which moves electrons is faster, cheaper, and for some products better, than the physical supply chain built to ship atoms.  AMR’s spring supply chain conference is all about this and its almost sold out.  I guess the supply chain folks see it coming.

April 28th, 2009

China and IP: the piper will get paid

Posted by Kevin O'Marah @ 9:21 am

Categories: Intellectual Property, Supply Chain, Supply Chain Risk

Tags: China, Brand, Industry, IP, Branding, Piracy, Supply Chain Management (SCM), Network Technology, Networking, Marketing

As everyone knows, and as our quarterly supply chain risk data proves, China is a den of thieves as far as IP is concerned.  Today’s New York Times has a lengthy and prominent article on brand piracy in Shenzhen’s cell phone industry.  The practice of making and selling black market phones is so rampant that 20% of all those sold in China are thought to be knockoffs.  The explanation of how this happens is candidly offered by a sales manager at Triquint Semiconductor who makes components for the industry:

“Five years ago there were no counterfeit phones.  You needed a design house.  You needed software guys.  You needed hardware design.  But now a company with five guys can do it.  Within 100 miles of here you can find all your suppliers.”

What has bugged me is the audacity and criminality of the Government who happily looks the other way as expensively developed technologies, industrial designs, and brands are flat out stolen.  One Vassar professor is even quoted in the story spinning this scandal as a virtue:

“Chinese grass-roots companies are actually very innovative.  Its not so much technology as how they form supply chains and how rapidly they react to new trends”.  Charming - reminds me of Napster as seen through the eyes of the music industry, or the go-getters out cutting down teak trees in Malaysia.  There is a reason we call it piracy.

But rest easy, poetic justice is coming to the rescue.  Remember the $1Trillion or so of dollar denominated debt held by the Chinese?  Well, after we print the trillion extra dollars it will take to undo our credit-sparked economic crisis those debts will be alot less expensive (to us) in real terms.  Think of it as a $500 billion bill being stuck on Beijing to pay us back for all the money that should have been made by Microsoft, Apple, Paramount, and Nike for their IP. 

The Piper will be paid.

April 23rd, 2009

Process Readiness: Are you ready to run a Marathon?

Posted by AMR Research @ 12:05 pm

Categories: ERP, Enterprise Applications, Supply Chain

Tags: Business Process, Training, Workforce Management, Training And Certification, Operational Planning, Human Resources, Business Operations, AMR Research

April 19 is Patriot’s Day in Boston.  The reenactment of the Shot Heard Round the World on Lexington Green, the parades, the Red Sox—maybe I’ll pop over to Hopkinton and run the 26 miles of the Boston Marathon.  I think not – I’ve never run more than three miles in my life!.  The real marathoners have been training on dark mornings since January getting in shape and spent years trying to qualify for a number.

 

So why do some executives think they can heard everyone into a conference room and direct the squabbling business units and departments to quickly improve business results?  Like any other high performance endeavor, this takes years of developing skills, capabilities, and organizational effectiveness.  Try to take a short cut and you may fall and be trampled miles before Heartbreak Hill.  You assess a business units readiness before rolling out the ERP system and likewise to succeed at global process improvement you need to assess your process readiness.

 

On a recent teleconference, a member of AMR Research’s SAP Peer Forum described their journey to what they called “process excellence.”  The global pharmaceutical company is subject strict regulatory requirements and President of Supply Chain was concerned that widely varied business processes across sites were not only inefficient, but exposed the company to significant compliance risk.  Over the next few years it established the three critical pillars of process readiness:

 

• Clear Goals and Process Governance – The top leader set the goal for globally harmonized business processes for efficiency, compliance, and ease of moving personnel between sites.  A process governance organization was built to drive consensus on common processes, define globally consistent metrics, direct IT projects to enhance processes, and strive for continuous improvement.
• Holistic View of the Process – Limiting the view of the process to ERP or a Six Sigma project is a recipe for underperformance.  Workers need every aspect of a process they deal with to be consistent.  The company coordinates the activity of many groups to ensure consistency of process across its multiple IT systems, manual activities, training materials, job classifications, and performance metrics.
• Business Repository and Tools – Maintaining this consistency across dozens of processes and communicating them to tens of thousands of global employees is impossible with simple documents.  Instead, the documents are brought together in a repository and a rich five layer process model links them.  Analytical tools are used to assess the impact of proposed changes and a process portal to make the process overview and training available globally.

 

The company is using IDS Scheer’s ARIS as the tool to support its process readiness efforts.  It is synchronizing it with Solution Manager on its SAP systems and linking training materials and its business intelligence systems in as well.  Similar tools exist in the Oracle E-business Suite, with the vendor reselling ARIS as Business Process Analyst (BPA) and building automated links between BPA and its Tutor process documentation and UPK training system. 

 

Just like I’m not going to run a Marathon without a lot of training, you aren’t going to improve your processes without attaining process readiness.  Over several years of effort, our SAP Peer Forum member has attained the capability of quickly implementing process improvements.  Less focused competitor may soon fall far behind.

April 10th, 2009

Next big land rush: believe it or not, is knowledge management

Posted by Kevin O'Marah @ 8:11 am

Categories: ERP, Enterprise Architecture, Intellectual Property, Supply Chain, Supply Chain Applications

Tags: Supply Chain, Collaboration, Knowledge, IP, Entertainment, Supply Chain Management (SCM), Knowledge Management, Strategy, Network Technology, Networking

This sounds silly for anyone who has ever been involved in the typical hapless library exercise of a digital “knowledge management” initiative.  The lasting image for most of these efforts is of a black hole - everything goes in, nothing comes out.  But get ready for a change of tune.

The root of this is an exploding need among all players up and down the global supply chain to harness and leverage their intellectual property without giving up control or worse, having it hijacked and used against them.  An example is the kind of engineering intensive knowledge stored in the heads of thousands of soon-to-retire manufacturing process guys in the chemicals industry.  I talked to ExxonMobil about this and found they’re keen to solve it before the IP ends up sitting on a beach in Florida somewhere.  At the exact opposite end of the spectrum is the issue of managing IP for a company like Hasbro.  They have pure entertainment images that will manifest as profitable toys like Barbie, unless someone raids the files and dumps a load of cheap counterfeit knockoffs onto the market.

How do you capture, catalog, update, distribute, and otherwise collaborate on knowledge (i.e., IP) when it ranges from expertise to trademarks?  It turns out practically every technology vendor category has an answer for you.  Collaboration vendors from little guys like Jive to big guys like OpenText have a story.  B2B and EDI guys like Sterling Commerce, GXS, and Inovis are part of the puzzle.  PLM guys like Dassault, PTC or Siemens are certainly in the mix.  Digital Rights Management vendors have been thought of largely in terms of media and entertainment uses, but players like Adobe, EMC, and even Oracle (with its Stellent property) deserve a look on this front.  Plus the security vendors like Symantec, EMC and RSA need to be considered.  And finally, all the platform guys figure into the equation - IBM, Microsoft, and Oracle all appear across the board with “solutions” in each of these categories.

The net of it all is that manufacturers and retailers across sectors will absolutely need to handle the question of how IP works its way around the global supply chain.  One worry: letting Microsoft Sharepoint creep in as the defacto standard for management of IP in interenterprise collaboration.  Its so easy to set up and start using… it naturally links to your most familiar workspace, namely Excel, PowerPoint, and the rest of MSOffice.  But where is the control and scalability?  I’m not saying Microsoft can’t do it, just that renegade groups of employees doing it on their own will almost definitely end up making a mess, and possibly and expensive one.

Missing from the list of vendors with a solid pitch here is SAP.  The ERP backbone of choice for so many companies may have a stranglehold on transactions, but they lack punch when it comes to interenterprise collaboration, relying on partners like Seeburger and Crossgate.  This may seem a sideshow in Walldorf, but every industry is beginning to see the value of stuff that is presently flying around the digital supply chain, largely unsupervised.

I’d love to hear ideas on how best to map out a strategy for this problem.

April 6th, 2009

Sun and IBM Breaking Up: Who Wins?

Posted by Kevin O'Marah @ 10:00 am

Categories: Enterprise Architecture, Supply Chain

Tags: Sun Microsystems Inc., IBM Corp., Supply Chain Management (SCM), Programming Languages, Java, Enterprise Software, Software, Software Development, Software/Web Development, AMR Research

The news today about IBM and Sun possibly going separate ways leaves a door open for others to dodge what could have been a pretty blockbuster combination.  I remember back in late 90’s how cool Java was and what it meant for Sun.  Unfortunately, the heavily engineer-driven culture at Sun kept what could have been a dominant computing pioneer from realizing its potential.  IBM, meanwhile learned the lesson of having business process and financial discipline govern ideas to make sure they are realized.  Sun still has some brilliant engineers and IBM certainly has a handle on how to build an integrated global supply chain.  The coolness of Java, plus a $3B+ R&D organization, and a hub of talent in the vital San Francisco bay area makes Sun a plum for someone like IBM.

If the breakup holds who wins?  How about Hewlett Packard.  Not only is H-P a titan on the scale of IBM (actually bigger), it is also great at running an integrated global supply chain (see Tony Prophet of H-P explain what they do at our upcoming conference) and positioned to do alot with Java and the R&D pool by applying it to a huge range of consumer and business computing applications.  A similar argument can easily be made for Cisco Systems.

If cooler heads prevail the IBM-Sun combo will go ahead.  There wasn’t much keeping the two sides apart over the weekend and the logic of the deal for IBM includes a lot of potential benefit for IBM customers looking for better systems links - a solid stream of profit opportunity that Big Blue has to like.