Advanced ManufacturingJuly 00

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A CLIFFORD/ ELLIOT LTD. PUBLICATION VOLUME 2 NUMBER 4 J ULY 2000

ANADA POST CANADIAN PUBLICATIONS MAIL PRODUCTSALES AGREEMENT1460668

TOM ORROWS IDEAS AT WORK TODAY

LEAN AND E-COM M ERCE s CELLULAR M ANUFACTURING s M ES SOFTWARE

TOM ORROW S IDEAS AT WORK TODAYA CLIFFORD/ ELLIOT LTD. PUBLICATION VOLUME 2 NUMBER 4 J ULY 2000

Com put ers are useless.They can only give you answ ers. Pablo Picasso

Com put ers are useless.They can only give you answ ers. Pablo Picasso

INTERNET FOR INDUSTRYINTERNET FOR INDUSTRYSPECIA L REPORT

LEAN AND E-COM M ERCE s CELLULAR M ANUFACTURING s M ES SOFTWARE


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www.advancedmanufacturing.com2 JULY 2000 ADVANCED MANUFACTURING

J U L Y 2 0 0 0 V O L U M E 2 N U M B E R 4

C O N T E N T S

pag e 68

pag e 25

EDITORS NOTE

FRO NT

C O LU M N S

FEEDBACK

NEWSWIRE

WORLD WATCH

CELLULAR M ANUFACTURING

4 THE NOTHINGBUT NET ISSUE

M anufacturers are poised to harness

the power of the Internet

6 READERS RESPONDE-commerce editorial strikes nerve

8 THIS JUST IN...s Advanced M anufacturing wins award!

s Auto industry stars shine at gala banquet

sWhat s a C ovisint anyway?

10 GLOBAL INNOVATIONs G lobal Internet use snapshot

s Europe unveils new e-commerce rules

s Japan tries to join new economy

s M anufacturers test link ed info systems

17 BRING YOUR DEPARTM ENTSBACK INTO THE FOLD

Treat your process departments as in-house vendors

and watch your lean initiative take flight

COVER ILLUSTRATION BY ED SCHNURR

pa g e 10 pa g e 17


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ADVANCED MANUFACTURING JULY 2000 3

RESEARCH REPORT

SPECIAL REPORT

ADVANCED THINKING 22 PICASSOS PREMISEInternet guru Jim Carroll explains

why computers will always fail us.

25 INDUSTRY CONNECTSEverything you need to know about

how to wire your manufacturing

operations to the Internet, and why

you ought to. We cant tell youeverything here, so turn to page 25

to check out the contents page

for our 26-page special report.

54 SCALABLE FLEXIBLEMANUFACTURINGOur special series by Chuck

Anderson concludes in this issue.

59 E CHANGEFOR THE BETTER FORMANUFACTURERSPart four in our six-part series on

harnessing information technologyto help you run a lean enterprise.

Gail Petersen looks at how e-

commerce can be a positive force.

B A C K

F E AT U R E S

SOFTWARE REPORT

INFORMATION TECHNOLOGY

PARTING SHOT

65 MES SOFTWAREs Camstars InSite for Windows

68 NO EASY SHORTCUTSON JOURNEY TO LEANDr. Thomas Jackson, CEO of

Productivity Inc., takes aim at

managers who think e-commerce

might be the quick fix solution to

implement lean manufacturing.

Wrong again, he says.

page 22

INTERNET FOR INDUSTRYINTERNET FOR INDUSTRYSPECIAL REPORT


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E D I T O R S N O T E

EDITOR/PUBLISHERTodd [email protected]

EDITORIAL DIRECTORJackie [email protected]

ASSOCIATE EDITORSLee [email protected]

Scott Buryc/o [email protected]

Paul [email protected]

CONTRIBUTORSEd BelitskyDavid Berger

PRESIDENTGeorge F.W. Clifford

ART DIRECTIONIan Phillips

WEBSITE COORDINATOR(www.advancedmanufacturing.com)Stacey [email protected]

NATIONAL SALES MANAGERAlistair [email protected]

DISTRICT SALES MANAGERSJulie Clifford

[email protected] [email protected]

David [email protected]

PRODUCTION MANAGERChristine Zulawski

PRODUCTION COORDINATORNancy [email protected]

EDITORIAL PRODUCTIONCOORDINATORNicole Diemert

CIRCULATION MANAGERJanice Armbrust

[email protected]

Advanced Manufacturing ispublished six times yearly byClifford/Elliot Ltd., 209-3228 SouthService Road., Burlington, Ontario,L7N 3H8. Telephone (905) 634-

2100. Fax 1-800-268-7977. Advertising inquiries should bemade to the above address. Issue dates for 2000 areJanuary, March, May, July, September and November.Yearly subscription rates: Canada $100 plus GST*, U.S.$150. Others $250. Single copy prices: Canada $30, U.S.

$45. Canada Post Canadian Publications Mail ProductSales Agreement 1460668. International Standard SerialNumber (ISSN) 1481-8354.Advanced Manufacturingassumes no responsibility for the validity of the claims initems reported. *Goods & Services Tax Registration

Number R101006989. PRINTED IN CANADA

The nothingbut Net issue

I

nside this magazine, you might find what you need to chart your companys online future.

Really, I mean it. This isnt just sarcastic e-hype that was last issues editorial. It willtake some time to digest, youll have to navigate through a 10 chapter maze of material, youll

need to learn new language (ok, jargon) and youll have to search for stuff that applies to yourcompany. But its here somewhere. Our writers and researchers have done a thorough job.

And if you dont find it in the print version, its likely on our website (www.advancedmanu-facturing.com). Weve loaded it with Internet and manufacturing-related reports, presentations,graphics and charts, and hot links to the best of the Web for manufacturers loads of stuff thatwe just couldnt fit into the print version. But why do you need all this?

Barring a meltdown in the global communications system, the Web is your future. Although theInternet is really only a better way to move bits of information from one device to another, con-sider how much its changed our world. And its only just starting.

In the near future, wed like to deliver our magazine to your desk, your desktop, your palmtop,your cellphone, your car, to the machines on your factory floor, and to the new wireless deviceyoull soon carry with you everywhere. That is, once such a device is invented and perfected. Maybe

your company will be the one to do it. These examples only show how these new communicationstools are transforming the publishing industry. What about your industry?

One recent survey by the National Association of Manufacturers found that 68 percent of man-ufacturers werent integrating Web-based e-commerce strategies into their operations. Thats notsurprising. Some manufacturing professionals are adopting a wait-and-see approach, and arentkeen to spend money without knowing theyll get some back. That will soon change.

Manufacturers who search the Internet for accurate, unbiased and valuable information mayalso be frustrated by what they come up with. One problem is that many website creators treat alltheir visitors as buyers, eager to part with their money. But this e-commerce click-and-order modelrepresents only a tiny fraction of what the Internet can do for manufacturers.

If the Internet is really all about the me in media, as professor Julian Sher teaches in his In-ternet training sessions (www.journalismnet.com), then that puts users in control, and they will de-mand the information and services that they want in the format that they want them in.

Thats where manufacturers are way ahead of most industries. They are used to responding to cus-

tomer demand, customizing their goods for their clients, and being agile enough to shift gears on thefly. Thats why manufacturers will be able to rapidly integrate the strategic advantages that improvedcommunications technologies and thats really all they are can bring to their businesses.

So, in our efforts to be interactive and responsive, I encourage you to use this special report, down-load our research reports, pass them along, and if you found it helpful or not send us an email.Or, better yet, mail us a hand-written letter. Im starting to forget what those look like. sAsM

A CLIFFORD / ELLIOT LTD. PUBLICATION VOLUME 2, ISSUE 4 JULY 2000

P

From the publishers of

Plant Engineering and Maintenance

C


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E-world lacks vision

In response to your editorsnote in the May 2000 issue ofAdvanced Manufacturing,Combat e-mania fever with

common sense Id like to say:My thoughts exactly!

There are too many dotcomcompanies out there, and themarketplace is getting too con-gested. Too many companiesarent focused and lack vision.

I shiver thinking that some-day I might be working for oneof these types of companies.Getting hitched by dotcoms willbe the very last thing Ill be in.

So, now that consolida-tion is starting in a big way, I

say: what a waste of moneyand effort.Associate Prof. Leong Mun Chak

Business & Advanced Technology Centre

Kuala Lumpur, Malaysia

[email protected]

B2B has bright future

says website exec

I recently read your editorsnote, Combat e-mania feverwith common sense.

I agree with your statementthat for every winning idea,

there are dozens of really badideas, hatched by people per-fectly willing to waste yourtime to make themselves anickel. Today, more thanever, people do not knowwhat they are getting online.

You also wrote: Its fun towatch them squirm when youask a pointed question aboutthe merits of their idea.

Sure, there are some Web

creators that change theirbusiness models like seasonalfashions, but there are othersthat have staked a claim in theindustry and arent budging.The manufacturing industry in

particular is reaching such acritical mass of buyers andsellers that an open, Web-based community or market-place is required for efficientsupply chain management.

The manufacturing mar-ketplace model should bebased on an open integratedmarket that benefits both buy-ers and sellers. Open market-places offer equal access toboth buyers and sellers, a larg-er, more expansive selection of

suppliers, and a shorter imple-mentation cycle.

B2B exchanges will be fac-i n g multiple challenges in thenear future due to the increas-ing speed at which new mar-ketplaces are joining the ranksin the manufacturing industry.If any one company will sur-vive the undeniable shakeout inthe industry, they must effec-tively differentiate themselves,either through partnering withthe competition or generating

traffic while moving towardsprofitability.

In my opinion, Manufac-turing.Net is the only integrat-ed B2B e-marketplace thatdelivers an end-to-end com-prehensive solution. Our web-site provides more than400,000 pages of editorialcontent from leading industrypublications including Cahn-ers manufacturing publica-tions, it receives more thanone million page visits a

month, boasts 220,000 regis-tered users and more than 360advertisers. It reaches morethan 77,000 subscribersmonthly with newsletters thatdeliver proprietary content,making it one of the most pop-ular B-to-B portals. sAsMJohn Sateja

Senior Vice President

Manufacturing.net

www.manufacturing.net

6 JULY 2000 ADVANCED MANUFACTURING

F E E D B A C K


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T R A D I N G E X C H A N G E

Superexchange but not

so super name

Covisint.

Kind of grabby isnt it? Well,

not exactly, but thats the name of

the new high-powered online au-

tomotive trading exchange.

(www.covisint.com) Reaction to

the name was mixed at best, with

some observers calling the name

downright awful.Like it or not, its a name youll

be hearing a lot about, and one

well be writing about. The Co is

supposed to reflect communica-

tion, collaboration and connectivi-

ty. The vis represents vision and

This just in

visibility, and the int represents

integration and the international

scope of the exchange.

But if you want to do business

with General Motors, Ford, Daim-

lerChrysler, and Renault/Nissan,

its a name youll soon have to

warm up to. For now, the websiteis just a marketing vehicle, but

they have put together some

handy features like links to arti-

cles about the exchange, and a

comprehensive frequently asked

questions (FAQ) page.

The marketing material at the

website attempts to explain the

Covisint vision: The purpose of the

joint venture i s to c reate an inte-

grated supply chain for the world-

wide automotive industry. The

exchange will provide procure-

ment, supply chain, and product-development functionality......

Covisint will address your entire

business, link you to the entire in-

dustry, and provide a foundation

to accelerate you into operating at

Internet speed.

N E W S W I R E

Auto industry stars shine

at black-tie gala

Auto industry heavyweights dusted

off their best suits and gathered in

Toronto in June for a gala event to

raise awareness of Canadas skills

shortages and to raise money to do

something about it.

The 1,100 in attendance raised

more than $1.75 million dollars forthe Yves Landry Technological Edu-

cation Endowment Fund. Landry,

the late president of Chrysler Cana-

da, was an advocate of the virtues of

technical trades careers, and the

need for Canadians to work togeth-

er to address skills shortages.

The awards program will ac-

knowledge outstanding organiza-

tions and individuals in indust ry,

government and education that

promote technological educational

at all levels of the education system.

For more information, or tonominate a worthy candidate for an

award, you can visit the website:

(www.ylandryfund.org).

S K I L L S S P O T L I G H T

Above: The automotive industry honoured its bright stars during a

gala event to raise money for a new skills training fund.


7/61

Magazine nets first

editorial award

Since its only our first year of publi-

cation, youll forgive us for using this

space to boast proudly that A d-

vanced Manufacturing won its first

editorial achievement award, and

was picked as a finalist for two more.

In a competition open to all

North American non-welding busi-ness magazines,Advanced Manufac-

t u r i n g won the prestigious Silver

Quill award from the American

A W A R D W I N N E R


Welding Society. The article Robot-

ic lines keep shipbuilder afloat by

associate editor Paul Challen, de-

tailed the innovative use of robotics

at the Port Weller Dry Docks in St.

Catherines, Ontario. You can read

the August 1999 article by visiting

our website archives. For his efforts,

we flew Challen to Chicago where

he was presented with a plaque and

honoured at an awards banquet.We also finished in the top 10 in

two categories in the Kenneth R.

Wilson business press awards. sAsM

Auto industry in transition

A new survey by the consulting

firm PricewaterhouseCoopers pre-dicts a radical overhaul in the busi-

ness models for the automotive

industry in 2000.

The survey,Automotive Sector:

Insights says this overhaul will result

from automakers coping with the

challenges of overcapacity, e-com-

merce, growth and improving share-

holder value. It also explores the

merger and acquisition activities.

For information, visit (www.pw-

cglobal.com/insights/auto).

Above: Associate editor Paul Challen accepts the Silver Quill edito-

rial achievement award from AWS president Robert Teuscher.

Ask@OracleMobile, a free wireless

service that instantly allows any two-

way wireless messaging device to ac-

cess Internet content without

requiring a browser.

For now, the service is limited to

information such as stock quotes,

driving directions, flight informa-tion, UPS tracking, weather and

other similar services that are ac-

cessed from OracleMobiles wireless

portal www.oraclemobile.com. To

use the service, wireless messaging

device users send an email to

[email protected] using key-words such as stocks or flights

in the messages subject or body.

The company plans to add new

services in the coming months, but

didnt yet mention any plans for

manufacturing-specific services.

R E S E A R C H R E P O R T

W I R E L E S S W E B

Reach out and buzz someone

Soon, there wont be anywhere left

on the planet where someone cant

beep, buzz or email you. And that

suits software giant Oracle just fine.

In June, OracleMobile unveiled


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Global Internet use snapshot

www.advancedmanufacturing.com

W O R L D W I R E D W A T C H

W I R E D W O R L D

European Union countries are gen-

erating 17 billion Euros in e-com-

merce and experts predict it could

reach as high as 340 billion by 2003.

So its member countries dont miss

this opportunity, the European Par-

liament set out a new legal structure

to ensure access to Internet informa-

tion and to guarantee the free

movement of services throughout

the European Union.

The new law forces EU mem-

bers to remove any prohibitions or

restrictions on the use of electronic

contracts and to apply national

laws to electronic services. For

business and consumers alike to

benefit fully from the directive as

soon as possible, I will pay particu-

lar attention to ensuring member

states implement the directive in

national legislation correctly and

on time, says Frits Bolkstein, the

EUs Internal Market Commissioner.

Source: Internet Works, www.iwks.com

Europes E laws too slow,

says researcher

A doctoral researcher at the Univer-

sity of Warwick School of Law has

only reserved praise for the Euro-

pean Unions overdue directive on e-

commerce .

I think it is positive that the EU

has agreed to a legal

framework for e-com-

merce, a framework

which I think may be-

come something of a

world standard given

the fact that the EU is

the largest single

market in the world

and still growing,

says John Dickie, au-

thor of the 1999

book, Internet and Electronic Com-

merce Law in the EU.

Dickies enthusiasm is bridled be-

cause of technical concerns about

whether the cross-border dispute

resolution processes are in place to

solve the problems that will arise.

In his book, Dickie is more than

cautious. He claims the EU legal

processes are too time consuming

when compared to the pace of

change in the marketplace.

Dickie claims that once laws are

adopted, the enforcement mecha-

nisms are slow. He cites the case of a

1995 directive on the protection of

personal data that has not been fully

implemented by nine of the fifteen

member states.

He also criticizes the number

and complexity of instruments ap-

plicable to e-commerce, suggesting

a Code or series of Codes would

help to make the law more under-

standable.

Legislators unveil newrules for e-commerce

E U R O P E

ABOVE: Enforcement mechanisms for e-commerce legislation are

too slow in the EU, says researcher John Dickie.

RUSSIASix percent of Russians have access

to the Internet, according to

www.monitoring.ru.

CHINA

Internet analysts IDC report

that 36% of Chinese businesses

are evaluating e-commerce.

CANADA & USANorth Americans contin-

ue to be the online global

leaders with the highest

Internet use rates.

COLOMBIA

Experts predict 700,000

Colombians could be online

this year. Web use is slowed

by poor telephone service

and low PC penetration.

SOUTH AFRICA

Corporate Internetusers increased from

700,000 in 1998 to

one million in 1999.

EUROPEForrester Research predicts

up to 1,000 e-marketplaces

will emerge this year but

that only one in 20 will

succeed.

MIDDLE EASTInternet use in the

Gulf Cooperation

Council, accounts

for 60 percent of

Arab Internet use

despite making up

less than 12 percent

of population.

World Internet Use (Millions)

World Total : 304.36 million

AUSTRALIA

Privacy fears are slowing e-

commerce. In a recent survey,

25% of firms report not offer-

ing secure, encrypted

payment methods.


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J A P A N

Trying to plug intothe new economyGrowth in Internet start-ups in thelast year indicate that Japan might fi-

nally be turning a corner on the new

economy.

A report by the Asian Technolo-

gy Information Program says that

new models for Internet-related

business are rare and tend to be re-

stricted to a few areas even though

interesting opportunities exist for in-

vestors. One factor limiting the

growth of Japans Internet economy,

is the limited network infrastructure,

(the majority of consumers still use

ordinary dial-up access.) Variousbroadband services like ADSL (Asyn-

chronous Digital Subscriber Line) and

FWA (Fixed Wireless Access).have

only become available in the past

year. Still, fixed lines for corporate

access are priced lower than in North

America.

Diffusion of computing and net-

working devices has been slower in

Japan than in the United States,

Canada and the Nordic countries but

is comparable to that in other Euro-

pean nations. A survey conducted by

the Japan System User Association

found that expenditures are likely to

grow by 43 percent during 2000.

Internet users tend to be young

and use the Internet for entertain-

ment rather than for professional

services or information services.

Differences in corporate culture

could account for the lag. The report

claims that the most important dif-

ference in economic organization

between Japan and the United

States is corporate governance and

the way corporations interact with

shareholders and the financial sec-

tor. Several companies have re-formed their boards of directors and

have hired outside directors, but

most large companies in Japan con-

tinue to be dominated by internal

managers rather than relying upon

the markets to provide corporate

control. This was once considered a

strength of Japans investment dri-

ven manufacturing companies, but

might well be a disadvantage in the

Internet economy.

Japanese venture capitalists have

tended to act like banks, concerned

about loans rather than equity in-

vestments. Still, there are positive

signs. While large companies are

coming to terms with the impact of

the information and Internet econo-

my, both the central government

and local governments have been

shifting attention towards SMEs and

technology-based start-ups.

Surveys by the Organization for

Economic Cooperation Develop-

ment (OECD), found that the

growth of the Internet is directly re-

lated to deregulatory measures. Re-

cent changes to the registration

procedures for service providers in

Japan has resulted in an explosion in

ISPs and ASPs.

S W I T Z E R L A N D

Online collaborationfor machine builderWhen youve got 10 differentengineers located at differentsites, building machines with2,000-5,000 parts, you wel-come any new tool to help or-ganize your manufacturingprocesses. Gretag Imaging of

Switzerland manufacturescomplex photo finishing andimaging labs and found thatthe journey from designthrough manufacture and as-sembly was arduous.

To make things easier,Gretag recently selected En-ovia Solutions to manage thedesign and development of its

products. The company pur-chased 40 EnoviaVPM seats,120 Enovia Portal licensesand consulting services andtraining.

EnoviaVPM will look afterthe design, manufacture, andassembly of the thousands ofparts required for Gretags

mini-lab and central photofinishing labs.

The collaborative engineer-ing capabilities of the Enovi-aVPM, with the ability toexchange real-time datathroughout the organization,

is expected to improve thetransition from components tofinished lab. The goal is a per-fect mechanical fit the firsttime the machine is assembled.

Enovia Portal will also givenon-engineering teams accessto data. These e-business ca-pabilities will allow designersto share graphical product in-

formation in real time withpurchasing, inspection, andproduction. Enovia Portfoliois a set of e-business solutionsthat electronically manages allaspects of the product lifecycle. Enovia and Catia aredeveloped by Dassault Sys-temes of France.

ABOVE: A Swiss machine builder uses advanced software to man-

age the thousands of parts needed to build its imaging machines.


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A new National ElectronicsManufacturing Initiative(NEMI) will help OEMs link

their factory information sys-tems with their suppliers.

The Virtual Factory Infor-mation Interchange Project(VFIIP) will work to definestandards that will shorten thetime and reduce the cost re-quired to establish and main-tain information exchangepartnerships across the manu-facturing supply Web. Thiscollaborative effort boastsfounding members Agile Soft-ware, Celestica, GenRad,

Georgia Institute of Technolo-gy, Intel, Lucent Technologies,the National Institute of Stan-dards and Technology (NIST),NetFish Technologies, NortelNetworks, Solectron, and Uni-versal Instruments.

As OEMs continue to out-source an increasing breadthof production processes totheir network of suppliers, en-terprise relationships are nolonger one-to-one or even one-to-many, says Barbara Gold-

stein, co-chair of the project.Instead, they are complex, dis-tributed relationships in whichmany strategic partners,downstream suppliers and cus-tomers need to collaborate andshare data to compete effec-tively. The serious lack ofstandards for information inte-gration among cross-companyand inter-company systems iscomplex and can limit any po-

tential efficiency gains, saysGoldstein.

The VFIIP builds on the

work of NEMIs plug and playfactory project which focussedon interoperability on the plantfloor by developing standards-based architectures and com-munication protocols. VFIIPextends interoperability fromwithin an enterprise to infor-mation systems distributedacross business partners. It willaddress the bi-directional ex-change of information betweenOEMs and Electronic Manu-facturing Services (EMS)

providers for board and final

assembly, centering on the ex-change of technical engineeringand manufacturing data with-

out including procurementsupply chain interactions.

GenRad, a partner in bothprojects recently announcedthat its products use severalWeb-based technologies de-veloped by the plug and play

project, including a distrib-uted object-oriented publishand subscribe messaging ar-

chitecture based on industry-standard eXtensible Mark-upLanguage (XML) messages,and the development of virtu-al machine technology tomonitor factory performanceover the Internet.

Manufacturers test new linked info systems


High level product life cycle

Poor Internet infrastructure is ham-

pering the rebound for Asian coun-

tries recovering from the 1997

economic crisis that saw currencies

devalued by 20 to 80 percent, ac-

cording to a recent study.

While much of the population

is still waiting for a dial tone, there

are some who are looking at non-

traditional telecom products such

as mobile and Internet services.

Foreign investors are only now

starting to re-enter the market,

and are interested in funding the

development of infrastructure.

Theyve already started to invest in

projects in some countries such as

Malaysia, but resistance to foreign

investment remains in many coun-

tries like Thailand, Vietnam, China,

and India.

The study also found that many

operators are also reluctant to ex-

plore broadband services rather

than the narrowband telephone

services, further hampering growth

efforts in the region.

Some regions such as Hong

Kong and Singapore have an effi-

cient information highway infra-

structure, while other countries like

India have a higher growth in mo-

bile phones. This may mean wire-

less services become increasingly

important to satisfy demands for

Internet access.

Asia as a whole has a higher

penetration of television sets than

personal computers which could

lead to Internet and online service

delivery through this medium. Dig-

ital television is considered a better

fit for the type of community-

based society found in many Asian

countries.

The study is written up in three

separate volume and looks at all

the Asian countries.

You can find more detailed in-

formation about the region in the

6th edition, three-volume research

report Information Highways and

Telecommunications in Asia - 2000.

Published by Paul Budde Commu-

nication, you can find an abstract

and details for purchase by visiting

the website: www.budde.com.

Infrastructure neededto support Internet

A S I A

U N I T E D S T A T E S


11/61

UNITED STATES

The Internet

and manufacturing

The technologies to conduct busi-

ness-to-business (B2B) and business--

to-consumer (B2C) transactions are

complex. Photonics East 2000 In-

ternet-Based Manufacturing will ad-

dress some of these complexities.

Sponsored by the International Soci-

ety For Optical Engineering (SPIE),

the conference is a forum for soft-

ware and manufacturing engineersto discuss the different aspects of

systems integration and process con-

trol to achieve open systems models

across networks.

For e-commerce success, integra-

tion of everything from internal

business systems to process level

control systems must be accom-

plished. Networking issues include

security, reliability, authentication,

and firewalls. Integration issues in-

clude interoperability, communica-

tion, and distributed resources.

Managing issues include informa-

tion communication and negotia-

tion/bid processes. The conference

is being held in Boston, 5-8 Novem-

ber 2000. For more information go

to www.spie.org and click on Pho-

tonics East.

Simplifying for productivity

The Association for Manufacturing

Excellence is bringing a lot of busi-

ness to Boston these days. When

the AME holds i ts Photonics East

program, featuring lean tech-

niques and e-business insights,

theyll also hold their S p e e d

Through Simplicity conference in

Boston from November 6-10.

Conference presentations in-

clude case studies of lean manufac-

turing in a variety of business

contexts. Tours are scheduled for

several sites. Guests visiting Toyota

Parts Distribution will see bench-

mark distribution practices. Polaroid

will show high-speed automation as-

sembly and capacitor manufacturerAerovox will demonstrate the turn-

around it achieved using lean tech-

niques. Visitors at Jostens Jewelry

will find an operation that moved

from Mexico to the U.S. to remain

competitive. You can register online

by going to www.ame.org - click on

Boston 2000. You can also get a

brochure by emailing [email protected]

or phoning (847) 520-3282 ext. 223.

JAPANManufacturing matters

Usually in this space we tell you

about events that are about to hap-

pen not those that youve already

missed. But this one is too good to

let slip by. AsAdvanced Manufactur-

ing was going to press, noted author

Eamonn Fingleton was scheduled to

give a lecture on the Internet and

manufacturing in Tokyo for the

Asian Information Technology Pro-

gram (ATIP).

Fingleton says a strong manu-

facturing base is still an economical-

ly empowering strategy even in the

days of the new economy. During

the seminar, Why Manufacturing

Still Matters: the Limitations of the

New Economy, Fingleton was to

examine the power of the manufac-

turing sector to create a strong

economy..

Fingleton is a Tokyo-based au-

thor whose commentaries on Japan-

ese economics and business have

been featured in The Atlantic

Monthly, the New York Times and

the Harvard Business Review. His lat-

est book, In Praise of Hard Indus-

tries: Why Manufacturing, Not the

Information Economy, Is the Key to

Future Prosperity has been named

one of the ten best books of 1999 by

Amazon.com Business Editor Harry

C. Edwards. Fingletons book was

named one of the ten books that

matter by the Industry Standard. For

information about ATIP seminars

visit their website www.atip.or.jp.

Meetings of the mindsG L O B A L G A T H E R I N G S

Heres an overview of events your colleagues in other countries will be at-

tending, and what they might expect to learn about:


Internet helps speedrapid prototyping


The ability to design and produce consumer products quicklyand cheaply is an advantage that many industrialized countrieshave lost in recent years. To regain that advantage, manufac-turers are looking to the Internet.

The Tele-Manufacturing Facility (TMF) at The University ofCalifornia at San Diego and the San Diego Supercomputer Cen-ter are doing just that looking to enhance design and manu-facturing productivity using automated Rapid Prototyping (RP)capability on the Internet.

The ultimate goal of any RP process is to reduce the cost ofdesign and manufacturing when it gets to the expensive point inthe engineering design process. This would be represented bymovement to the upper right corner of the accompanying fig-ure. (See Figure 1)

At some point, some physical manufacturing and assemblyprototyping must be done. Researchers at the TMF want touse the Internet to make RP accessible as an analysis toolrather than a costly manufacturing function. The challenge isnot putting the RP hardware on the Internet, but making ituseful.

There are three major areas under development at the TMF

website in San Diego: creating a rapid prototyping testbed onthe Internet; Internet submission of parts; and researching algo-rithms that will automatically examine .stl geometry files look-ing for glitches. The effort to reduce the need forhuman-checking of RP files is critical. Right now, the industrystandard .stl files, feature no requirement for, nor any way torepresent, geometricor topological robustness. If an .stl file issent to an RP machine, there is no way to know it will make thepart as intended. The result could be a pile of costly junk.

Check out what is happening at the TMF by going to theirwebsite (www.sdsc.edu/tmf/). A live cam will take you to thevirtual heart of the operation.

Figure 1: As we move from left to right, the costs rise sharply.


12/61

The University of Warwick and Carnegie-Mellon University joined forces to

create a $40 million e2Business Management Centre to train middle man-

agers in the Internet and new communications technologies. The Centre

combines the manufacturing expertise of the Warwick Manufacturing

Group with Carnegies leadership in e-commerce.

The information revolution has the potential to produce a massive pro-

ductivity hike in traditional industries, says Professor Bhattacharya, Director

of the Warwick Manufacturing Group. Things that many in the IT industry

had promised sometime ago are now genuinely possible, says Bhat-

tacharya. They enable all phases of a products lifecycle to be designed

and planned from concept and definition to production, service, main-

tenance and retirement this is only feasible as an approach to product

and process lifecycle management by using Internet-based techniques.

The Centre expects to train 7,000 middle managers by 2001 with an

annual budget of 100 million pounds. sAsM

Middle managerstarget of new centre

U K / U S A



Its hard to keep up with Advanced Manufacturing Online(AMO). The company is a true e-manufacturing success story.Since its inception in 1995, the company has grown from 10employees to more than 200 worldwide. In recent months ithas won prestigious business awards in Singapore and HongKong, changed its name to ECnet, and moved headquarters.

In January, the company won top honours in the eStart-upcategory at the inaugural eAwards in Singapore. Organized by

ec.Think, a private sector e-commerce think tank, and Com-merceNew Singapore, the eAwards recognize companies thathave made significant contributions to Singapores e-economy.

In March AMO picked up three awards as Internet compa-

ny of the Year, Best B2B Internet Site, and Internet Visionaryof the Year at the Internet World Asia Industry Awards inHong Kong.

The company was founded in 1995 as the brainchild ofWong Toon King, chairman and CEO and Leong ChoongCheng, co-founder and vice president of business development.

ECnets supply chain management solution is a Web brows-er-based system that ties a manufacturer using an enterprise re-sources planning system together with suppliers, contractmanufacturers, distributors, third-party logistics providers, fi-nancial institutions, and other trading partners using differentsystems. ECnet also allows buyer-to-supplier transactions di-rectly through the two different ERP systems.

The company has developed the B2B marketplace with

more than 50 electronics manufacturers and about 1,100 oftheir trading partners, claiming that current combined transac-tions monthly are in excess of 120,000 purchase orders worthnearly a billion dollars.

Some of these customers include Matsushita, NationalSemiconductor, Philips, Seagate, and TSMC. Investors includeGoldman Sachs, Morgan Stanley, Doll Capital, 3i, AsiaticSilkRoute Holdings and others.

Award-winning websitespreads its wings

S I N G A P O R E

ABOVE: ECnet executives T.K. Wong, (left) and Nick Earle (right)

meet with Singapores Deputy Prime Minister Tony Tan, to cele-

brate the formal launch of ECnet.


Yahoo for robotsIf you are an Internet-junkie, youve probably discovered theYahoo clubs. Armed with a Yahoo ID and password, you canjoin any of the listed clubs in the Yahoo clubs directory or createyour own unlisted club. One such club is for a keen group ofrobot builders from around the world.

The Robotics Club of Yahoo, aka TRCY, boasts membersfrom the U.S., Canada, Australia, Portugal, Turkey, England,Finland, France, Mexico, and Argentina.

At the site youll find a parts finder, circuit schematics, designadvice, editorials and reports, a store front and tutorials onmotor basics, and online discussion groups.

TRCY is a perfect example of how virtual communities onthe Internet can provide a forum for information exchange lead-ing to the development of new ideas and technologies.


13/61

C E L L U L A R M A N U F A C T U R I N G


One of the biggest stumbling blocksto implementing lean or cellularmanufacturing is what to do with

your process departments. How do youintegrate your extrusion lines, stampingoperations, paint lines, etc., into the de-sired dedicated cellular manufacturingprocesses?

Its a tough nut to crack, becausemost companies have tradit ionallydeemed these processes as core compe-tencies. Companies have typically in-creased the size and sophistication of the

equipment in a drive to run larger batch-es more efficiently. So what do engineersand managers do with these so-calledmonuments when they finally realizethat running small batches scheduledthrough pull (or Just-In-Time) systemsmakes the most sense?

The textbook answer is to assess howproduction runs are scheduled by processline and realign those runs dedicatingcertain product families to certainprocess lines. In the real world, however,you may discover several problems withthis approach. Production quantities (or

line time) dont allow assignment by dis-crete process line. The finished partmight require several different variationsof the product and none of your existinglines are configured to make all the re-quired variations. All your products mustrun through the same piece of processequipment (i.e. paint lines).

Another valid approach is to treatyour process operations as in-house ven-dors to the assembly or finishing opera-tions. Make these new vendors operate as

a profit centre not a cost centre. Theymust also set a course for continuous im-provement. Eventually you may be able tointegrate the process lines into down-stream cells or product families based onnew technology and the potentially ex-pensive right-sizing of process equip-

ment. Because of the continuous improve-ment process, however, you might decideto leave the process department as a ven-dor.

What is an in-house vendor? With thisconcept, you reorganize a process depart-ment into a separate business unit which


Treat your process departments as in-house vendors

and watch your lean initiatives take flight

BY JOHN M. GROSS, P.E., AND KEN McINNIS

Bring all departmentsback into the fold


14/61

supplies its downstream customers withprocessed material. Essentially, you at-tempt to create a supplier to customer re-lationship. This relationship is thestrength of the lean thinking process.

Consider that most of us tend to be

much tougher on our suppliers in termsof quality, cost and delivery. This newmentality leads us to question theamount of work-in-process (WIP), theamount of defective material received,and the lead times required to produce

certain products. Each product family ul-timately becomes a customer settingits own supply criteria, quality require-ments, etc. The in-house vendor has newmetrics focusing on things like per-unitcost, schedule attainment, WIP turns,and customer satisfaction. Additionally,the new metrics become the basis for em-

ployee evaluations and rewards.This whole concept runs counter to

the traditional manufacturing processmentality. The typical batch processmentality advocates processing the largebatches to optimize processing costs andto reduce set-ups. The downstream oper-ations then must deal with the results ofthese runs. The customer must store theWIP and deal with any residual qualityissues. Both are conditions we wouldnever allow our vendors to force upon us,yet we allow our own process depart-ments to do it every day.

The new vendor mentality forces theprocess department to assess their opera-tions and develop ways to better servetheir customers. Because everyone worksfor the same company, you can breakdown many of the traditional supplier tocustomer barriers sharing of data and


Figure 1: Typical implementation process flow



15/61

loss of proprietary technology.The lack of traditional barriers may

allow the plant to leapfrog into advancedsupply chain management concepts. Fulland open access to data on floor space,technical specifications, and forecast datacan allow in-house vendors to pursue in-novative scheduling and delivery systems.

The in-house vendor couldbecome responsible for as-needed production and de-livery of product to theirin-plant customer. The inhouse vendor could beginsupplying the productfamilies like vending com-panies supply cafeterias orMRO suppliers supplyparts storerooms. Openaccess to the data makesmany concepts more vi-able and less risky. If the plant has a con-

tinuous improvement mindset, thenexperimentation to reduce WIP andstreamline the ordering process may leadto some outstanding results.

The in-house vendor concept startsby forming an implementation team.The teams goal is to reorganize the

process department as a vendor. Theteam should start by characterizing theprocess, identifying opportunities, andidentifying required resources. The teamshould clearly define performance mea-sures and reward systems since these fac-tors have the largest impact onbehaviour. As the team progresses, they

should schedule periodic management

updates to avoid any surprises when theyunveil the final product. The teams finalproduct should be an implementationroadmap. (Figure 1 on page 18 shows asimplified process flow of activities.)

The team should also perform a makeor buy analysis. Does someone else perform

the same process at lower cost with thesame quality level? If so, then determinehow they do it. Use the other company as abenchmark for setting improvement goals.The other course of action, if we do notdeem this process a core competency, issubcontracting the work out to the lowercost vendor.

Use the information gathered to de-

velop a roadmap for implementing thevendor transformation. This roadmapneeds to address not only todays needsbut also how the department will look inthe future (1-3 years from now).

The roadmap should address requiredlayout changes and necessary equipment


The in-house vendor could begin supplying

the product families like vending companies

supply cafeterias or MRO suppliers supply

parts storerooms.


16/61

The team should also coordinate withfunctional managers on personnel, rawmaterials, order fulfillment, WIP levels,cost and available budget. If these re-views are taking place, then final coordi-nation will be straightforward with nosurprises. If in-process reviews have nottaken place, then the team should come

to the meeting prepared to take uppermanagement through the entire roadmapdevelopment process. Do not expect in-stant approval.

After management approval, gettingthe crucial buy-in from the process de-partment associates becomes the nexthurdle in the implementation process.The department associates need:s to understand the end game;s to be given the opportunity for input.(Many teams have found that the grizzledold veterans werent asleep at the switch they were never asked);

To avoid the chicken and egg dilemmaof when to talk to the associates, simplygain support from upper management dur-ing an in-process review to discuss the con-cepts with the associates. During associatediscussions, the team needs to be open tonew ideas and listen to any concerns.

There are two key points to remem-ber during the communication process:s most people hate or fear change, andfor many associates, youre tinkeringwith their identity;s choose your words carefully, be pre-pared, and expect some opposition.

To keep the buy-in process rollingalong, after communication meetings theteam needs to follow-up on the associateconcerns and shouldnt be afraid toadopt any good ideas that arise.

Once your plant makes the decision toimplement lean or cellular manufactur-ing, consider making your process de-partment(s) into in-house vendors whichserve the various product families.

Apply the same measures to this newin-house vendor as you would a conven-tional vendor. To start the transforma-tion process, charter a team to develop an

implementation roadmap. Use in-processreviews to ensure the final product meetseveryones expectations and dont forgetthe importance of obtaining buy-in fromdepartment associates. sAsM

John Gross is a business unit manager fora Missouri-based Tier 1 automotive sup-plier. You can reach him at (636) 239-5738 or by email at [email protected] McInnis is the plants materialsmanager.



replacements. Any plans for implement-ing lean manufacturing techniques, 5S,changeover time reduction, or Kanbanshould also be included in the roadmap.

Once the team completes theroadmap, then they need to identifyplant resources as well as outside re-sources (within your company or consul-

tants) required to implement theroadmap. Based on the roadmap, theteam should develop metrics (schedule

attainment, productivity, scrap and re-work rates, RTY, WIP turns, etc.) tomanage the new enterprise.

Then the team must coordinate andcommunicate their roadmap plan andstrategy to both upper management andthe process department associates. Be-fore coordinating the final plan with

upper management, the team shouldhold in-process reviews to verify agree-ment of the concept.


17/61

P

icassos statement presumes comput-

ers can actually give you answers.

Most of us who use the Internet to

ask questions get 1.2 million answers

each of which is irrelevant. But that isnt the

only problem with answers. Sometimes

things are stranger than they seem.

I once read a story about a sailing enthusi-

ast who wanted a custom licence plate. The

application form gave him three choices. He

wrote YACHTING as his first choice, and

SAILING as his second. If he couldnt get

those two, he didnt want a customized plate.

So in box # 3 he wrote, NO PLATE.

Then the licence bureau sent him a cus-

tom licence plate that read NO PLATE.

He kept it. Within a week, he got a sum-

mons for not having a vehicle properly reg-

istered. Soon, he got 3 or 4 summons a day.

After investigating, the computer jock-

eys at the licencing authority figured it out.

When police officers found any abandoned

vehicle, they would write up a ticket citing

NO PLATE as the reason. This informa-

tion was entered into a computer database.

A previously unknown logic pro b l e m

meant that the computer examined the in-

fraction, NO PLATE, queried its data-

base, and found the fellow who owned the

licence plate NO PLATE. Aha! That must

be the guilty party, the computer deduced.

This programming error helps illustrate

the most important thing that we have

learned about computers humans make

mistakes. Lots of them. Those of us who

write the code that drives the global mi-

c rochip express that fuels our connected

economy continue to make mistakes that

cause big problems.

Which means that yes, computers give us

answers. The problem is, quite often, we

cant be certain those answers are right. sAsM

Jim Carroll, FCA, is one of North Americas most sought afterspeakers about the Internet and the new economy. He has writ-ten more than 20 books including The Canadian InternetHandbook, and Light Bulbs to Yottabits: How to Profit byUnderstanding the Internet of the Future. You can order hisbooks via his website (www.jimcarroll.com/catalog.htm) andyou can reach him by email [email protected] .

A D V A N C E D T H I N K I N G

PicassosPablo Picasso wasnt impressed with computers, but you might expect Internet guru

Jim Carroll to disagree with him. But Carrolls essay proves that computers are as

smart as their programmers. Illustrator Ed Schnurr presents his visual interpretation.

22 JULY 2000 ADVANCED MANUFACTURING www.advancedmanufacturing.com

Picassos


18/61

premiseComputers are useless.They can only give you answers. Pablo Picassopremise


19/61


S P E C I A L R E P O R T

IndustryCONNECTSOur co mprehensive g uid e t ot he Int ernet fo r ma nufa ct urers


20/61

Top 10 reasons

w h y th e W eb

w i l l w i n o v er

manufacturers:

s I t w o r k s : p r o p er l y h a r -

nessed, its the w orlds best

product iv i ty boo st ing t ool .

Just using Web-based tools to

improve company-wide com-

m u n i c a t i o n s c a n m a k e a

major dif ference. Not con-

vinced? Shut down your com-

p an y e- m ai l f o r a day an d

w atch the chaos.

s Competent managers will re-

gain control of strategy: the

m an a ger s f r o m IT dep ar t -

ments will be politely elbowed

f r o m th e c o r po r a te bo a r d-

rooms, a nd w i l l be less in-

volved in strategy and more

involved in system administra-

tion and maintenance where

they can be most effective.

s To e or not to be: the big

fish w ill force their suppliers

to get online. Smaller suppliers

w ill have to provide the trans-

parency in their operat ions

needed for a fully integrated

m an u f ac tu r i n g p r o c ess t o

work effectively.

s T h e sm o o th r i de o f th e

Cadillac Internet: users will-

ing to cough up the dough

w i l l be ab le to buy h igher-

speed, higher reliability Inter-

net access. This will provide

the reliability and bandwidth

industry needs to effectively

run electronic enterprises.

s Si m p ler t ec h n o l o gy : th e

mysteries b ehind computer

code like H TM L, cold fusion,

java , shockw ave and XM L,

w ill be old hat, and end-users

w ill have access to simple In-

ternet access so f tware and

programs. Shop floors will be

out f i t ted wi th In ternet de-

v i c es th a t c o m e w i th p r e-

l o a d e d l i n k s t o w e b s i t e s

approved by t heir company s

management: suppliers, cus-

tomers, vendors, leading por-

ta ls and information sources

(and o f course to www.ad-

vancedmanufacturing.com).

R em o te l y h o s ted so f tw ar e

programs wi l l moni tor in-

ternal and external opera-

tions, reducing the need for

c o s t l y s o f t w a r e l i c e n s i n g

an d c o m p a t i b i li t y an d u p -

grade nightmares.

s Foiling the hackers: some

soon-to-be-hugely pro fita ble

company will develop Internet

security and privacy programs

and techniques that wil l al l


O V E R V I E W

P R E D I C T I O N S

M A N U F A C TU RI N G

B U Y I N G O N L I N E

S E L L I N G O N L I N E

S E C U R I T Y & P R I V A C Y

T I P S & T R A I N I N G

C Y B E R R O A D M A P

T E C H N O L O G Y

I N T E R N E T P R I M E R

Noturningback

by Todd Phillips

Even t ho ugh in t he In terne t w or ld t he f u ture a rrives

bef ore you can g rasp th e present , he re s our t a ke

on w hy the In te rne t is a bou t t o t r ansf orm m a nu f a ctu r ing .


21/61

but eliminate the major risks

that now exist and are slow ing

the Web s g r o w t h a m o n g

companies that jealously safe-

guard proprietary data.

s Information when you want

it, how you w ant it, w here you

want it: mobile Internet access

devices will allow manufactur-

ers, especially those in multi-

plant sett ings, to remain in

constant communication with

critical data when needed, as

needed. As Web use moves

from personal computers and

in to hand held por ta ble de-

vices, and devices attached di-

rectly to machinery, Web use

in industry will soar.

s M achines return phone calls:

machine-to-machine Internet

devices will be as routine andcommonplace as phones and

fax lines today. They will do

remote condition-based diag-

nostics, online corrections and

r ep a i r s , an d w i l l l ay th e

groundwork for more com-

plex and more complete au-

tomat ion systems.

s Time to market will contin-

ue to shrink: true online col-

l a b o r a t i o n o n m a j o r n e w

product d esign projects w ill

ease the need for global traveland finally allow corporations

access to a ll of their intellectu-

al resources without having to

fly them all into one city.

s Better products, smarter w eb-

site models: new and emerging

companies will recognize the

value of providing true value-

added services to manufactur-

ers and w ill create online goods

and services that are actually

helpful to manufacturers, who

will have no choice but to use

every available tool to remain

competitive.

s And the most important fac-

tor: middle and senior man-

ager s w h o r a n w o r l d-c l ass

manufacturing plants long be-

fore the Internet, will eventu-

ally b e replaced by the next

generat ion of engineers and

managers for whom using the

new communicat ions tech-

n o l o g i es a r e a s r o u t i n e as

clicking on the television or

tw isting off a b eer cap.


Whats insidePREDICTIONS

Editor Todd Phillips checks out w hat gurus, ana lysts, sooth sayers and visiona ries of all

kinds are saying abo ut how the Internet will evolve, and t he role that manufa cturers

w ill play in business-to -business e-comme rce.

29

M ANUFACTURING

So w hat can manuf acturers do o ver the Internet anyw ay? Plenty, says Dr. Richard

Mathieu, author of Manufa cturing and the Internet and a t eacher of MIS studies at

St. Louis University. In his report, he presents a strat egic overview of w hat leading

manufa cturers are now do ing online.

31

BUYING ONLINE

In this report, yo ull find w hat you need t o know about online purchasing, including on-

line a uctions, electronic data interchang e (EDI) and tra ding exchang es, by John Raskob,

senior manag er with De loitte &Touche consulting.

35

SELLING ONLINEBefore you o pen up your business to t he w orld, you had b ett er do a rea listic assessment

of whether your company is ready for e-business. Doug Ward, a senior manager with

Deloit te &Touche o ff ers his e-readine ss primer.

38

SECURITY AND PRIVACY

Who s watching you? Who s trying to hack their way into your companys systems?

What can you do to protect yourself and your company? Rene Hamel, a former RCMP

off icer who has ta ckled hackers, and w ho is now w ith KPMG Investigat ion and Security

Inc., presents a deta iled o verview of o nline security a nd privacy.

40

TIPS AND TRAINING

Before yo u launch your Netscape or Internet Explorer, youd bett er have a plan, oryo ull get ho pelessly lost. Veteran Internet expert, Jim Corlett, f rom Nott ingha m Trent

University in t he UK presents the best a rticle you ll read this year ab out ho w to search

the Web and g et t he results you need.

43

CYBER ROADM AP

So, where to ? We ll show you some of o ur favourite w ebsites, and w hy w e like them. If

y o u a r e l o o k i n g f o r a g o o d s t a r t i n g p o i n t , t h i s is it . Th i s i s a s a m p l e o f t h e

exhaustive list of reviewed sites that you can link to from our recently overhauled

website at www.advancedmanufacturing.com.

45

TECHNOLOGY

What will it t ake to get your operations hardwired to the Internet, and t o your suppli-

ers and customers? Why your new machines and production lines will have integrated

Internet capab ility and w hy your plant should be looking at adding the infrastructure

for w ireless communicat ions. Associate edito r Scot t Bury presents a d eta iled a nalysis.48

INTERNET PRIM ER

Our glossary of Internet a nd e-terms, e-expressions, and some ba sic Internet fa cts to g et

you up to Internet speed in no time.52

GET THE FULL STORY ONLINE AT OUR NEW AND IM PROVED WEBSITE

Weve overhauled our w ebsite , and f i lled i t w ith loads of new materia l ,

including all the articles in this special report, online exclusives, research

reports, and links to all the w ebsites in this report. Check it out !


22/61


sThe Giga Informat ion G roup

estimates tha t Int ernet com-

merce wil l save companies

$1.25 trillion by 2002, with

the U.S. accounting for half of

this amount. Giga calculates

tha t w ithin three years, Ameri-

can firms will gain a profit in-

crease o f betw een $360 to

$480 billion due to savings ac-

crued thr ough e-commerce.

G iga also says that annual cost

savings for U.S. firms will be

more than $600 billion every

year by 2002. Source: N ation-

al Assoc. of M anufacturers

s A poll finds tha t by 2001, 71

percent of corporate leaders

plan to extend their business

processes to eMarketplaces,

w here multiple sel lers and

buyers conduct commerce on-line. Sour ce: Fo rr ester Re-

search.

s B2B-based Internet com-

merce w ill reach $5.7 trillion

by 2004. Customers that do

n o t t ak e an aggr essi v e ap -

proach to B2B commerce will

lose customers and ultimately

fail. Source: AM R Research.

BEHIND THE NUM BERS

So, lets take a break from the

n u m ber s f o r a m i n u te an d

recap the significance of all ofthese prognostications.

I f t he In ternet i s such a

vital too l, and experts agree it

is to play an increasingly im-

por tant ro le in commerce,

w hy then are so few ma nufac-

turers capitalizing on Web op-

p o r tu n i t i es? A n a t i o n w i de

poll of American manufa ctur-

ers earlier this year found that

68 percent of those respond-

i n g sa i d th e i r c o m p an i es

werent using electronic com-

merce as a forum for business

transactions.

No one questions the im-

portance of B2B e-commerce,

yet relatively few manufactur-

ers are participating in i t ,

said Jerry Jasinowski , presi-

dent of the National Associa-

tion of Ma nufacturers. The

n ew N AM su r v ey sh o w s a

w ide dispar i ty betw een the

recognition by business that

the Internet is a vital new form

of commerce and the actual


Experts sa y Web w illt ra nsfo rm ind ust ryTheres no shortage of experts and consultants willing

to guess about how the Internet is going to evolveBY TODD PHILLIPS

O V E R V I E W


M A N U F A C T U R I N G



S E C U R I T Y & P R I V A C Y



T E C H N O L O G Y


So, a paragraph

earl ier , we tel l

you to forget the

numbers. Now,

we are about to bombard you

with a series of numbers that

will make your head spin. Are

you ready for some forecasts?

s A recent study by G artner-

Group estimates that B2B e-

commerce will skyrocket from

about $145 billion in 1999 to

$7.3 trillion in 2004, account-

ing for seven percent of a l l

g l o ba l s a l es t r an sac t i o n s .

Source: G artner G roup.

s G l o ba l e-c o m m er c e w i l l

reach $6.9 trillion in 2004,

capturing 8.6 percent of the

w o r l d s sa les o f good s and

services. Sour ce: For rester

Research

s One quarter of all business-

to-business purchases will be

made online by 2003, and w ill

be worth $2.8 trillion. Source:

Boston Consulting Group.

s Business-to-business e-com-

merce will dominate the busi-

ness-to-consumer side by a

factor of six, reaching $1.3

trillion by 2003. Sour ce: D e-

lo it te Research.

Forg et t he num bers. It do esnt ma tte r w het her B2B e-com merce hits $5.7 billion or $7.3 billion

by 2003 or by 2010. Ana lysts and experts all use d ifferent met hod s to calculat e t heir projections.

But the o nly thing tha t is dea dly consistent is their belief th at the num bers are g oing up.

Fast.Tha t me an s mo re people spending more t ime online, and m ore mo ney. But som e surveys

show that manufacturers aren t leading-edge innovators eag er to a dopt a nd a dapt the Inter-

net . Tha t s a litt le surprising , because ot her surveys find tha t users like an d t rust ma nufa cturers

w ebsites. Perha ps it s just t oo much, too f ast. Ive seen mo re change in the last 12 mont hs than

in my previous 19 yea rs in t he ind ustry com bined . It s moving at e-speed, says Henry Ross, an

an alyst w ith Andersen Consulting . Well, heres w ha t experts predict is coming n ext.


23/61

application of that knowledge

by American industry.

T h e su r v ey f o u n d th a t

manufacturers are now using

the B2B e-commerce for:s 23 percent, new product in-

troductions;

s 17 percent, sho p for t he best

price;

s 17 percent, use in place of

EDI;

s 13 percent , R FP/RFQ /RFI ;

s 12 percent, buy intermediat e

mat erials, parts, sub-assem-

blies or shipping services;

s 10 percent, a rrange logistics;

s 7 percent, buy raw materials;

s 5 percent, integrate existing

supply chain.

To help speed things up a

bit, the association launched

it s own multi-million dollar

website portal, (www.manufac-

turingcentral.net )in March.

M ANUFACTURERS SITES

POPULAR DESTINATIONS

In June 2000, Forrester R e-

search (www. for res te r . com) re-

l eased i t s f i n d i n gs f r o m a

survey of 10,000 online con-

s u m e r s i n t h e U . S . a n d

Canada. Of interest to manu-

facturers in the report, The

Manufacturers Growth Spi-

ra l is that:

s Mo st o n l i n e bu yer s a r e

h o o k ed o n m an u f ac tu r ers websites. And the no-shows

those who arent now visiting

these sites soon w ill as they

become mo re exper ienced

Web users. The attraction is

consumers belief that manu-

facturers sites offer the best

product information the low-

est prices and helpful post-

purchase support.

s While pure-play Web retail-

ers and traditional brick-and-

mortar merchants fight over

online buyers w allet share, 80

percent of consumers who ve

made a purchase online have

found a nother place to shop

on the Internet: manufactur-

er s w ebsi tes (see the M ay

2000 Forrester Report Retail

& Media Data Overview ).

Online buyers who visi t

manufacturer sites also visit

o f t en . W eb sh o p p er s w h o

visit manufacturer sites dont

click on them by accident; 62

percent of the nearly 9,000

online buyers in Forrester's

survey who have ever visited

a manufacturers site say that

they do so regularly.

Forrester also found someevidence that manufacturers

are f inal ly expanding t heir

Web efforts. Manufacturers

w ho ve dipped their toes in the

w ater are ready to go for a

sw im. While 92 percent o f e-

commerce-enabled manufa c-

turers have met or exceeded

their sales expectations and

are planning to increase their

online activity, 68 percent of

manufacturers not yet selling

onl ine expect to be wi th in

three years.

CRYSTAL BALL GAZING

Heres an assortment of other

interesting forecasts and pre-

dictions that we came across

in our research.

s Pure play dotcom companies

will gradually peter out this

year and stock evaluations of

Net companies wil l balance

out. Source: I D C Research,

January 2000 .

s E-business technology has

a l r eady m ade o u t so u r c i n g

large modules to Tier 1 suppli-

ers possible. As Internet tech-

n o l o gy c o n t i n u es to m ak e

more demand data v is ible ,

more and larger modules willbe outsourced unt i l OEMs

stop manufacturing altogeth-

er . In i t i a l l y p o w er t r a i n s ,

which some OEMs look at as

a value-added component ,

w ill remain an O EM ma nufac-

tured module, for the first four

to five years. Within 5 to 10

years, even these components

wil l be outsourced. During

this 10-year tra nsition, O EMs

will continue to assemble the

modules into cars, but Tier 1suppliers will eventually take

over this role too. Source:

AM R Research.

s A new report by IDC shows

that the market for Internet

appliances devices designed

primarily to connect to the In-

ternet and to email is ex-

pected to soar to $18 billion

by 2004. Source: The I ndustry

Standard.

s A survey of American work-

ers found that 81 percent re-

ported using a computer in the

past month, and 68 percent

h av e ac c ess a t h o m e . O n e

third o f a l l wo rkers repor t

spending at least one hour a

day on the Internet at work.

Sour ce: Rut gers Un iversity &

the Univ. of Connecticut.

s The Internet economy by it-

self is now one of the world s

major economies. The $301

billion in annual revenue gen-

erated by Internet companies

now rivals the U.S. automotive




Worldwide Internet access forecast

Net-access devices (millions)

Net po pulation (millions)

Devices per surfer

14.2

13.9

1.02

237.1

239.5

0.98

755.5

602.4

1.25

1995 1999 2003

800

1995 1996 1997 1998 1999 2000 2001 2002 2003

600

400

200

N

etaccessdevices

(millions)

N

etpopulation

(millions)

800

600

400

200

Devices include a ll PCs and appliances accessing t he Internet .

1300

1200

1100

1000

900

800

700

600

500400

300

200

100

1998

Business to business

Business to consumer

8 43

1998

18109

1998

33

251

1998

52

499

1998

76

843

1998

108

1331

Amountinbillionsofdollars

Year

U.S. E-Commerce1998 2003

Figure 1: Online a ccess will surge fa ster w ith new access devices. Figure 2: Forrester Research s projections fo r U.S. e-comm erce.

INDUSTRYSTANDARD(WWW.THESTANDARD.COM)

Most online buyers a re ho oked o n ma nuf a cturers

w eb site s. The a tt ra ction is co nsumers belief th a t

ma nuf a cturer sites of fer the b est prod uct inf orma tion,

th e low est prices a nd helpfu l po st-purcha se suppo rt.


24/61

ADVANCED MANUFACTURING JULY 2000 31www.advancedmanufacturing.com

($350 billion) and telecommu-

nications ($270 billion) indus-

tries. Source: Univ. of Texas

Centr e fo r Research i n El ec-

tr onic Commerce.

s By 2006, almost half of the

U.S. workforce wil l be em-

ployed by industries that are

either major producers or in-

tensive users of information

technology products and ser-

v i c es . In n o v a t i o n h as i n -

creased demand for high paid

IT wo rkers, and w age gaps be-

tw een IT w orkers ($53,000)

a n d a l l o t h e r w o r k e r s

($30,000) continue to widen.

Source: The Emerging D igit al

Economy I I : U.S. D ep t . o f

Commerce.

s F r o m 1998 to 1999 , th e

number of Web users world-wide increased by 55 percent,

the number of Int ernet ho sts

rose by 46 percent, the num-

ber of Web servers rose by 128

percent, and the number of

new Web address registrations

rose by 147 percent.Source:

The I ndustry Standard.

s D e ll C o m p u t e r s o n l i n e

sales more than doubled dur-

ing 1998, rising to more than

$14 million per day, and ac-

counting for 25 percent of t hec o m p an y s to ta l revenues .

Sour ce: The Emerging D igital

Economy I I : U.S. D ep t . o f

Commerce.

s As many a s 28.2 mi l lion

people have persona lized a

webpage, more than 10 times

the number from two years

ago . Sour ce: Cyberdi alogue.

s Though the In ternet has

grown at an incredibly rapid

pace, an historical analysis by

I ndustr y Standardmagazine

found that television penetra-

tion grew at a faster rate and

radio just as quickly. Source:

The I ndustry Standard.

s With higher bandwidth In-

ternet access, real-time televi-

sion video and audio quality

presentat ions w ill be possible.

Sour ce: T he O nli ne Business-

to-Bu siness Indu str y: A ctiv-

M ED IA Research.

Ma nuf a ct urers shif tit int o hig h g ea rM anufacturers that only put corporate brochures online

are missing the point, and might miss the boat.BY DR. RICHARD G. MATHIEU, PH.D., SAINT LOUIS UNIVERSITY

O V E R V I E W





S EC U RI T Y & P RI V A C Y



T E C H N O L O G Y


T h e beau ty o f

the Internet is in

i ts s impl ic i ty .

The Internet is a

packet-switched network, de-

v e l o p ed i n th e 1960s , i n

which data is broken up into

pieces, addressed and num-

bered, and d irected by rout ers

to its destination.

The Internet offers distinct

adv a n t ages o v er th e t r ad i -

tional telephone system for

computer-based communica-

tions. First , the phone net-

work i s a c i rcui t-swi tched

network where each commu-

nication requires a circuit to

be dedicated so lely to t hat

c o m m u n i c a t i o n . C i r c u i t -

switched netw orks were okay

for phone calls, but arent ef-

ficient when large amounts of

data are transmitted.

The World Wide Web has

allowed portable, platform-in-

dependent, and content-inde-

pendent a ppl ica t ions to be

created using the Internet. The

birth of the M osaic graphical

Web browser in 1993 allowed

a new type of client/server ar-

chitecture where thin, portable,

The Internet ha s forever chang ed t he w ay th at ma nufa cturing orga nizations do b usiness. The

Web s global access to people, data, software, documents and multimedia have allowed or-

ga nizations to shorten t he d evelopment cycle fo r new products, decrease the costs associated

w ith procur ing pa r t s f rom suppl iers, a nd achieve lead t ime reduct ions w hi le providing

personalized service and support . But achieving success on the Internet doesn t h a p p en

w ithout c lea r s t ra teg ic ob ject ives and a considerab le commitment o f resources. Manu-

fa cturing corpora tions involved in e-com merce must rethink the ir vision f or the fut ure, says

Richard Ma thieu , the aut hor o f M anufactur ing and th e Internet . His art icle o ffe rs an

overv iew of w ha t leading manufac tures a re doing onl ine .


25/61


universal client computers

were able to access server com-

puters.

The magic of the Web was

created b y the introduction of

four new technologies on top

of the existing Internet infra-

structure:

s graphical Web browsers;

s (the Hypertext Transfer Pro-

toco l (H TTP) remote proce-

dure call;

s H y p er t ex t M a r k u p L a n -

guage (HTML) tagged docu-

ments;

s the Uniform Resource Loca-

tor (URL) global naming con-

vention.

This relatively simple tech-

nology lets people effectively

construct interconnected webs

of hyper-l inked nodes that

mirror the distributed nature

of information.

Web technology isnt just a

w ay to publish electronic doc-

uments . I t i s a l so a way to

build networked applications

that allow internal and exter-

nal users to have ubiquitous

access to yo ur computers. The

implications of this are pro-

fo und. Web-ba sed client/serv-

er applications are now being

developed tha t int eractively

access data ba ses , p ic tures,

sounds and video. These inno-

v a t i o n s h a v e su bs t an t i a l l y

changed the capabilities and

competencies needed by

todays manufacturing orga-

nizations.

The Internet : a strat egic

tool for manufacturing

The In ternet a nd t he Web

have provided new strategic

opportunities for ma nufactur-

ing organizations.

Information technology is no

l o n ger an a f t e r th o u gh t i n

forming business strategy, but

must be used to break tradi-

tional barriers to business suc-

cess. The Internet is being used

to b reak geographic , t ime,

cost, and structural barriers.

The tough task for man-

agement is to align their busi-

ness strategies, processes, and

information t echnology a ppli-

cations. In manufacturing, the

efficient and effective man-

agement, manipulation, and

use of information is essential

t o e c o n o m i c v i t a l i t y a n d

growth. A competitive battle

is being played out against a

backdrop of companies seek-

ing to leverage the Web for

uses other than simply postinginformation.

The following three para-

d i g m s a r e d e s i g n e d a s a

s t ra t egic guide to h elp the

manufa cturing professional

focus on the real issues relat-

ed to manufacturing and the

Internet.

Paradigm1: Packaging in-

formation, providing a ccess to

information, a nd information

e-tools are becoming critical

d i f f e r en t i a to r s i n t h e c u s-tomers purchase decision of

manufactured products.

Each manufactured prod-

uct has an associated set of in-

f o r m a t i o n r e l a t e d t o t h a t

product. CAD drawings, in-

ventory levels , product io n

plans, spare parts catalogues,

assembly instructions, owners

manuals and the bill-of-mater-

ial are just some of the valu-

able information elements that

may be associated w ith a man-

ufactured product.

Ma nufacturing organiza-

tions are looking for ways to

r edu c e d i s t r i bu t i o n c o s t s ,

speed products to ma rket, and

to get the right products to the

right place at the right time,

pr ice and cost . To a chieve

these goals, enterprises are re-

thinking their relationships

with customers, retailers and

distributo rs. The more effi-

cient the relationships with

partners, the greater the com-

petitive edge these organiza-

tions w ill enjoy. The secret to

building this competitive ad-

vantage centres on providing

controlled access to the intel-

lectual property of t he organi-

zation.

Product information

for custom ers

Websites can be used for more

than simply advertising and

selling products to customers.

Custo mers often desire follow -

up support fo r their purchases.

For exa mple , B issel l , Inc . ,

(www.bissell.com) a manufactur-

er of vacuum cleaners, deep

cleaners a nd sweepers, sup-

ports their customers with on-

line user guides, a replacement

part catalogue, online product

registration, a nd a product a c-cessory catalog.

In the electronics indus-

try, AMP, a leading supplier

of electr ical and electronic

connectors and interconnec-

tion systems, uses its website

to support its customers, typ-

ically d esign engineers, in the

aerospace, automotive, com-

puter networking, consumer

goods, industrial, pow er util-

ities and telecommunications

industries.AMP (w w w . a m p . c o m ) con-

structed a custom da taba se

that enables information in a

product catalogue to be put

i n to a sea r c h ab l e f o r m . A

search engine ca lled StepSearch

creates each page on the fly,

based on the information the

c u s to m er i s l o o k i n g f o r .

Drawing specifications, prod-

uct availability, pricing infor-

mat ion , a compet i tor cross

r e f er e n ce d a t a b a s e , a n d a

technical g lossary a re a l so

provided to ass is t the cus-

tomer with the selection and

use of AM Ps products.

Information for suppliers

Herman Miller, Inc., (www.her-

manmiller.com) a multinational

provider of office furniture and

services, has developed a web-

based portal for suppliers

that helps users make fast, w ell-

informed business decisions and

eliminates multiple points of

contact. Herman Millers ex-

Figure 1: IBM s si te lets custom ers diagno se and solve problems.

Figure 2: Users can sea rch Kohler s online da ta w arehouse.



26/61

ADVANCED MANUFACTURING JULY 2000 33www.advancedmanufacturing.com

tranet, reduces production cycle

time and raises product quality

by providing suppliers with ac-

cess to receipt, quality, material

inventory, invoice and payment

information.

Product information

for distributors

Websites can also be used ef-

fectively to support an organi-

zations distributors. The Fruit

of the Looms Activewear di-

vision is a manufacturer of T-

shir ts , f leecew ear a nd kni t

sport shirts in the imprinted

sportsw ear market.

The Activewear website

(www. f ru i tac t ivewear . com ) sup-

ports their network of whole-

salers by a l lowing users ,

typically retailers, to locate spe-

cific products in stock using a

Product Locator . Whole-

salers are sorted by zipcode to

help find products located clos-

est to the user.

Inform ation-based services

It is reasonable to assume that

within a short period of time,

most major purchases will be

accompanied by some kind of

Internet-linked service.

Drew Rosen (1997) states

that what counts most is the

service actually built into the

product the wa y the product

is designed, delivered, billed

and bundled, explained and in-

stalled, repaired and renew ed.

The value-added customer ser-

vices associated with a manu-

factured product will typically

be information intensive. One

good example of this is the On-

Star (www.ons ta r . com) commu-

nications accessory that comes

as an a ddi t ional fea ture on

many G eneral M otors vehicles.

OnStar combines wireless

tec hn o l o gy w i th a t t en t i v e,

personal service to bring you

enhanced safety, security and

convenience. Using a G loba l

Positioning System, satellites

a r e ab l e t o l o c a te th e c u s-

tomers vehicle, diagnose the

engine, and control minor ve-

hicle operations.

In the computer industry,

IBM (w w w . i b m . c o m ) provides

product updat es online and

computers can be automatically

diagnosed and fixed.

Paradigm 2: Deploy pack-

aged enterprise softw are a ppli-

cations for data and process

standardization and integra-

tion. Deploy customized Web-

ba sed client/server applications

to suppor t s t r a tegic value-

added business processes. Re-

member that todays strategic

Internet application is tomor-

rows new feature in an enter-

prise softw are package.

According to a 1999 survey

by InformationWeek, manufac-

turing organiza tions are increas-

ing the share of revenue spent

on IT from two percent (1998)

to 2.5 percent (1999) and ex-

pect 25 percent of their revenue

to come from e-business.

Ma nufacturing companies

a r e dep l o y i n g i n f o r m at i o n

technologies to gain an edge

over competitors by reining in

costs, assuring quality prod-

ucts, guaranteeing quick prod-

uct delivery, and improv

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