Spoilt for choice?

In today’s competitive world, the market is demanding greater choice, higher quality and better value for money. In order to respond to these increasing pressures, manufacturing firms are being forced to re-evaluate their business processes, from design through to production. Furthermore, with the emergence of the Internet and on-line ordering and procurement, individuals now want to be seen and treated as individuals and many are prepared to pay for this. Customers are better educated and informed, and are willing to make their own decisions. The famous quote from Henry Ford, leader of the mass production revolution in the 1920s, “customers can have what colour they want as long as its black” no longer holds true for manufacturing companies. During the last 15 years, choice has become an important ingredient of a customer’s purchasing decision. Within this timeframe, the number of automobile models has increased from 140 to 260; the selection of soft drinks from 20 to 90. The US market alone offers consumers 3000 brands of beer, 50 brands of bottled water and 340 types of breakfast cereal! So how are manufacturers coping? The answer lies in adopting a mass customisation approach to manufacturing, coupled with an appropriate IT and e-business strategy. Professor Sweeney of the Cranfield School of Management describes a mass customiser as, “one who produces products consisting of independent modules that can be assembled into different forms of the product easily and inexpensively…and provide a customisation capability which can quickly deliver the finished, customised goods to meet a specific customer order.” Instead of traditional mass production approaches to design and manufacturing, organisations are now moving towards a modular approach to product development in which products are broken down into distinct sub-systems or sub-assemblies. Design teams, and even suppliers, are being given complete responsibility for designing and building these sub-assemblies. UK manufacturers are already adopting the mass customisation approach. Lucy Switchgear, based in Oxford, is reaping great rewards by using the power of the Internet. The company designs and manufactures medium voltage switchgear for use with transformers, fuses and circuit breakers. Although the Lucy Switchgear group has manufacturing and assembly sites in Dubai, India and South Africa, the Oxford site is where the majority of the design work is carried out. Christopher Venning, Group Technical Manager at the Oxford site, explains the events which led to the introduction of a web solution. “In 1989, the Oxford site was using Unigraphics CAD software. In 1991, we introduced a PDM system, and today we are using an Intranet browser based solution from Unigraphics called iMAN. The browser allows remote design teams to search and download CAD drawings, locate works orders, and search for Bills of Material (BOM). More importantly, it allows us to collaborate and share information with any of our manufacturing and assembly sites around the globe.” The decision to implement an Intranet browser solution was part of a “models and options” approach which the company wishes to adopt. This approach aims to split the many different switchgear assemblies into “core” and “non-core” groups. Venning explains further. “Those that fall under the core assemblies group are more tightly controlled and are usually made-to-stock. Whereas the non-core assemblies tend to represent the customer options group [different transformer, fuse or circuit breaker arrangements]. The fact that the design team no longer have to keep re-engineering drawings each team a customer orders something, means that the design function is much more efficient, and lead times have been reduced significantly.” The actual Unigraphics iMAN software (data management implementation) took about six months to complete and cost around £180,000. “This included installing a new Oracle server and rolling out Windows NT Explorer to about 170 different machines around the company. The staff using the software had to be trained since their familiarity with browsers was minimal,” says Venning. The Oxford plant was selected as the first stage of a project roll-out programme, which will eventually cover all the other Lucy Switchgear global sites. As Venning continues. “There are two main objectives of the project at Oxford – the first is to clean up all the existing design data and to establish business rules and best practice procedures. The second is to use the implementation here as a clone for all other Lucy sites.” So what are the benefits? Venning believes that not all the benefits can be measured. “Product lead times have decreased significantly, and our sales and marketing staff can confidently quote deliveries to customers whilst on the road.” But there are also many soft benefits to take into account. As a result of the iMAN implementation, Lucy has benefited from less design re-work, better communication between global sites, design staff can now transfer work to each other more easily (since they are all working to best practice procedures), and everyone feels confident that they are looking at 100% accurate data on the system. As for the future, the company aims to roll out a scheduling solution for its manufacturing sites, plus purchasing and sales solutions. As well as internal or Intranet-based solutions, many manufacturers are inviting customers to order customised products directly over the web. Dale Barrington, product development director for SSI, a vendor in this field, warns manufacturing of the potential dangers of mass customisation. “If you don’t structure your processes and supporting infrastructure correctly, you will find that you are disappointing rather than delighting your customers or that your costs have rocketed out of control.” Barrington continues. “Manufacturing must be de-coupled and customisation postponed until the very latest time possible in the supply chain. In addition, manufacturers need to invest in IT systems which can cope with this. That means open, configurable, adaptable systems.” “Traditional MRP systems cannot cope with the demands of mass customisation,” Barrington continues. “Mass customisation demands that your sales staff can access on-line, real-time information about all the possible product options, so that they can discuss them with the client.” Many manufacturers have already attempted to create on-line ordering and procurement solutions for their customers. Some have been successful, others haven’t. The Internet is littered with examples. Take the PC manufacturers Dell and Gateway. They have set up websites that allow customers to pick and choose various PC configurations, giving them pricing and lead times at the end of the process. Similarly, automotive manufacturers such as Ford and Volkswagen also provide similar services for their customers. This market is not just limited to consumer goods though. In Germany, housebuilders Streif AG are using their website to draw up proposals. Customers click through a selection process, choosing the style, size and shape of their house and adding on extra features as appropriate. At the end of this process, they can see a 3D model of the house, complete with furniture and can view automatically generated 2D cross sections. They even get an incentive to buy on-line – a reduction of 20% of the price! But where should manufacturers start? According to Ralph Seeley of Cambashi, manufacturers are sometimes providing the customer with too many options. “The more choice you give somebody on a website, the more complex the technology behind the site needs to be. Some website product configurators are unnecessarily complex, and do not always reflect peoples’ wants.” So the first message is “keep it as simple as possible”. The next point is to ensure that your front-end system (the web-based product configurator tool) integrates with the rest of your IT systems within the manufacturing plant. Clearly, if you have a highly configurable product portfolio you can only manufacture it successfully with support from a production management system which is at least as configurable. This means that a manufacturer’s ERP system must be capable of cooperating and co-existing with other IT systems such as advanced planning and scheduling systems, shop floor data capture systems, supply chain management systems, and the financial and human resource software. If these systems cannot share and relay information to each other quickly, then how can a customer on the website receive a meaningful price and lead time within seconds? The most successful Internet sites seem to rely on a simple-to-use product configurator, which, as the customer chooses various options, automatically generates a BOM for every order. Lead times for each part number and work centre resource then need to be checked, and delivery dates for the completed products returned within seconds. At the same time, product costs and prices need to be calculated and displayed. This means that the manufacturer’s ERP system must be capable of handling the entry and processing of complex orders fast enough for cost and delivery dates to be fed back to sales staff almost immediately. Competition in manufacturing industry in the next decade will be focussed on flexibility and responsiveness to satisfy dynamic changes of global markets. A major part of manufacturing will gradually shift from mass production to the manufacturing of semi-customised or customised products to meet these increasingly diverse customer demands. Manufacturers therefore have to be ready and armed in order to survive. This means having a flexible, agile, decoupled manufacturing facility, with open and configurable IT systems, and a sensible e-business strategy to communicate and interact with customers and suppliers.