“To innovate or not to be”― that should be the question. These days we often see CIO’s with a cost cutting agenda as a primary goal. Should the CIO be relegated to a penny-pinching job or viewed as an architect in the company’s future growth?
Manufacturing companies are facing a major change in the business marketplace. The emergence of global markets, rapid technology changes, and better informed and more demanding customers have rewritten the rules of manufacturing. Achieving and sustaining a competitive edge today requires that manufacturing companies use information strategically to turn the new rules of the market to their advantage.
To innovate or cut cost? Can we afford to keep IT in cost-cutting mode much longer? Many manufacturing companies don’t think so. As an indicator, we are not seeing the 15%-20% declines in technology purchases that we saw during the 2001-2002 downturn. Instead we are only seeing 2%-4% declines because some companies are looking at their technology investments more strategically. A survey performed by Managing Automation for 2009 spending revealed that even though companies have tighter budgets this year, they are still spending on strategic technology to improve productivity and enable new capacity and new markets.
Many manufacturers are realizing that they cannot survive tied down by paper intensive processes in their supply chains and their shop floors. Paper-based processes that prevent quick upgrades to the product line and prevent real-time visibility of status and issues. Manufacturers tied down by slow old processes will not be able to compete in the new marketplace.
Technology solutions are available and maturing, but the CIO needs to embrace a new role in the company. The CIO must learn about the processes required to manage processes in the supply chain and the manufacturing shop floors. These are areas that have not been traditionally supported by enterprise IT departments.
To innovate or standardize? To customize or integrate? Do we use best-of-breed solutions or try to implement a solution with a broad footprint? Some CIO’s might favor taking the easy path and focus on one ERP vendor to provide a complete solution for their enterprise. However, we often see companies spending much more creating custom extensions to their ERP systems, and ending up with less functionality than if they would have integrated a COTS solution in the first place. Just because a solution works for the Accounting department, does not mean that it works for the shop floor and the supply chain. It is vital to spend time understanding what competencies will enable the company’s business plan and what different solutions are being used in industry and by competitors.
It is often difficult for the internal IT department to resist the urge to be creative and develop their own custom solutions. If the IT department has a history of developing custom solutions, it would be prudent to hire a neutral third party consultant to evaluate alternate solutions available commercially, like MES and MOM systems.
To optimize or centralize? Many CIOs have been cutting cost by standardizing and centralizing IT solutions for the corporation. However, these strategies might not work for the manufacturing shop floors that need to sustain 24x7 up time, provide good response performance, and not slow down the production line. It is common to install local shop floor systems with high availability platforms and integrate these to centralized ERP systems.
The IT department must work through this change of agenda and must help the company invest wisely. Efficient manufacturing and supply chain processes can be an effective competitive weapon. The CIO must be an architect and must invest in best-of-breed technology that will provide change agility, best quality, great customer support, and enable increased capacity to handle future demands.