Scaling and scoping for the unknown

Project management techniques and methodologies have matured over the years, helping manufacturers and others to plan and deploy IT systems in an orderly and coherent fashion. Such developments can also be applied to e-business and supply chain projects since there is considerable similarity between internal and external IT implementations. Yet digital business in all its forms brings with it an additional element of the unknown. And how well a manufacturing company prepares for the known and unknown factors goes a long way towards determining the success of its e-business initiatives. Essentially, scope is broader and more complex. Additional risks include exposing internal data to the outside world, or losing orders and transactions. Then again, timeliness of knowledge delivered to third parties has to be assured under fire. It’s all about the challenge of delivering a high quality, reliable, always-up, secure service. And with the increased scope and scale of e-manufacturing, companies have also to beware of controlling costs, planning carefully for, say, international deployment. Dexion, which makes warehouse racking and office shelving, is currently in the throes of implementing an extensive e-business project based on JD Edwards software. According to Herbert Schmauch, group IT director at Dexion, the first phase is due for completion in November this year. This will see its Dutch commercial division – serving offices, libraries and the like – becoming equipped with a system allowing orders to be configured on-line by customers, with immediate quotes provided. Few users will have the expertise to undertake this process alone, so Dexion staff will be able to perform configuration from the customer’s site. Subsequently, in 2002 Dexion will roll out broader e-business capability to its UK operation, where the industrial division and sales offices are located, with Scandinavia following soon after. Like most businesses, Dexion’s prime objectives in terms of project management are to lower IT costs, utilise existing investment and standardise business processes. It has four separate ERP systems currently active in different geographies, as a result of mergers. And Schmauch reveals that some projects, such as one based on Baan software, have not yielded satisfactory results. He also points out that in addition to the task of porting the information in all these systems onto the JD Edwards OneWorld platform, Dexion must also bind its business processes to a new methodology – and then replicate the exercise in every geography. Security has been a major focus, with the company contemplating how to open up its R&D and knowledge base to third parties – with the risk that rivals will get hold of information. While Schmauch accepts that his competition already has intelligence, he says the knowledge base still has to be protected from unauthorised access. So, without being specific, Schmauch says strong security mechanisms are being put in place. Ensuring the quality of data is another challenge, says Schmauch, due to the flood of information and the need to protect sensitive material. Information assurance in its broadest sense also means extracting and replicating key information for third parties. For Dexion, this means setting up a data warehouse for key ERP data, and making this available to the outside world. The Dexion decision here is to provide servers outside the corporate firewall in what is called the “demilitarised zone”. Apart from the benefit of doubled boundary protection for Dexion’s network, Schmauch also reckons it’s easier to keep information up-to-date internally and then publish content on external servers. Schmauch’s advice to companies launching e-business projects focuses on taking a professional approach to designing and equipping the all-important web front-end. “It is essential to have the right tools, hardware and security to get up and running – there is no point even starting without project planning and an assessment of the marketing requirements,” he says. Once this is achieved, the primary issue is to ensure that the right people get the right knowledge, he says. Another significant issue is planning for the cost of the project and not underestimating the outlay. In terms of the supply chain specifically, Schmauch advises companies to look deeply at where this might lead when the Internet is brought into the equation. Covering multiple cultures and geographies is another significant challenge that would be e-manufacturers need to seriously address. And there are downsides too. Even where a phased approach to deployment is decided on, each existing site will need to be redeployed if changes are allowed to business processes. To avoid losing focus in what Schmauch calls a moving target strategy – based on continuous incremental business improvements – it is important to freeze the project at some point. One company that seems to have cracked this is Sims Portex, part of the Smith Group, which seems to be slightly further ahead with its e-business project – claiming 25 live global accounts now operated only via the Internet against an initial target of only 10 accounts. Portex’s goal is to conduct 80% of its business on e-trading by 2002, and to deliver quality product in quality time with its supply chain. The company produces single-use clinical devices and has a world-wide B2B operation called Easyorder, that’s been up for more than 12 months, again based on JD Edwards. Easyorder allows automatic order entry, and gives immediate confirmation. Nigel Parsons, e-business manager, reports that his implementation team has managed to significantly reduce the time taken to deploy in each country – with the version for Portugal taking only half a day. Working with a more mature JD Edwards implementation might have been a factor, since Parsons says no major re-engineering was required to its IT base. But he says the dividend was the result of earlier work to clean up the basic ERP data. Good point. A small amount of data tweaking has taken place, with some extra integration work to allow “intelligible information” to be extracted from Portex’s ERP. And as part of this project, Portex also had to tighten up its supply chain and physical ordering processes, although Parsons claims that the environment remained basically the same. One of the keys to success, he says, was the fact that Portex worked intensively with Smiths Benelux, one of its most IT-literate distributors, to ensure that the browser-based system was simple and user friendly enough for the rest of its supply chain. User logons, a firewall and order screening are all included within the security provisions. Parsons has some top tips for e-manufacturing. “Primarily, the system should be as simple as possible. It’s important to have a good implementation team that covers all aspects of the project.” For Portex, Parsons provided the senior management angle and covered issues related to business partners, while two other staff accounted for technical and commercial needs. Parsons also reckons it’s crucial to remember the target audience and gear the web site accordingly. “High quality information is an obvious necessity. Getting people up to speed about a project and its benefits is another useful activity, including the ‘sale’ of the project by word of mouth.” And the provision of good support after implementation is also vital, he says, with services like email to help problem resolution. It has to be said: you should expect your software vendor to help with all this. Geac’s (formerly JBA) Steve Rees, its CommerceConnect software manager, for example, sees many of the elements of an e-business solution as involving “just project management” for him – nothing out of the ordinary. Yet he also views an e-business implementation as more complex than, say, traditional ERP. Stepped Approach ERP, he notes, is based on a single ‘language’, whereas e-business often involves the integration of multiple machines and languages. So, simply, more can go wrong. In addition, the customers and third party suppliers are external to the core application – meaning that higher risks are incurred and systems failures can be damaging to the image of an e-business. So he agrees, risk management is more critical. Rees recommends a stepped approach to developing an e-business, deploying to a defined strategy over time. Most firms will not go straight for web ordering and purchasing and will trial instead with simple browser access at first. Automatic information exchange and full collaborative e-trading represent further stages of the journey. Even so, the timescales can be radically reduced compared to ERP. But the biggest fear among companies looking at – or plunging into – B2B trading is the loss of electronic orders, according to Rees. He says that an audit trail has to be created to mitigate the scariness. Checking that data matches across the system is a crucial preventative measure. Moving on to smaller manufacturers, software vendor Frontstep’s (formerly Symix) operations director Steve Kirk has similar views. He notes that SMEs have precious little tolerance for risk anyway – or for business process re-engineering! Best again therefore, to go for incremental steps, to get early ROI, as long as it’s based on a strategic road map with clear objectives. And Kirk also points out that SMEs need to be wary of their position in the supply chain – they rarely own it, he notes. To offset this, he suggests it’s best to deal with larger supply chain partners for the first three to six months before moving onto the rest once proficiency has been gained. Incidentally, he reminds readers that they will also have to move in a phased manner through the IT itself – from advanced planning and scheduling (APS) through to full web-based supply chain execution. And an additional word of caution: Kirk says that for many SMEs, there’s also the issue of having to shift from MRPII (if they have it) to ERP before they can even contemplate a web-based supply chain project. Only a short while ago in Internet time all the e-business gurus, vendors and analysts were issuing a dire warning – get your business online or face extinction. This knee-jerk reaction has since proven wrong. Yet it remains the case that manufacturing firms do need to reshape their traditional business processes and fit these to serve e-manufacturing – to obtain cost-savings, agility and so forth.