Your customers will force you to e-collaborate

There is bad news for small and medium-sized enterprises (SMEs) that think they can hide from Internet-based collaboration. Some day a telephone call from one of your biggest customers will force you to either turn on an electronic sixpence or lose that customer’s business. Ask Shirley Woolley, development director of Birmingham automotive supplier Frederick Woolley (FWL). FWL does presswork and makes welded assemblies and cable harnesses, attachments and other parts. FWL’s two West Midlands sites employ 150 – two years ago the number was more than 230 – and produce a turnover of £10.5 million. “Six months ago,” says Woolley, “we were happily using the fax – we had ‘fax appeal’. We knew this e-business was coming, and that we weren’t going to be able to resist it, but every SME will at one time in their lives have followed fashion to find it ugly – and very expensive. We weren’t ready to rush into anything. We are brilliant engineers. We make exquisite metalwork. And that is our business.” Then, says Woolley, one of FWL’s 20 key customers, a Tier One automotive supplier, phoned to say it intended to cut its supplier base from 1,300 to 600. “They said, ‘Next week you must send two engineers overnight to Germany to pick up a password’.” FWL does a lot of business in Europe but thinks carefully before buying air tickets. It doesn’t keep surplus engineers either. Woolley calls this “the first sift”, a “heinous” test which meant that, if you didn’t get on the plane, you were off the list. But the collaborative roller-coaster still picked up speed: the day after the engineers came back, FWL was “bidding on-line to keep our own work”. FWL does not claim to be a collaborative product commerce (CPC – web-based PDM (product data management)) leader. Warwick Manufacturing Group’s (WMG’s) definition is that CPC takes “the form of web-based portals that access, manage and deliver relevant product information from new and heritage product information repositories to myriad users throughout the enterprise that need to participate in acitvities related to product development.” FWL isn’t using Covisint or any other portal, but Woolley says the state FWL has already reached is “Covisint-in-waiting”. Portals apart, FWL’s experience shows how CPC or product lifecycle management (PLM) – the term ERP software developer SAP prefers – is creeping up fast even on SMEs. In part, SAP and other vendors have had to move quickly towards the collaborative model. In the view of WMG’s Peter Rayson: “One of the things that broke the mould of SAP and Oracle, these monolithic environments, was this whole concept of ‘federation’ that came out of the web, which said, ‘there is a way of linking different information sets together without writing big IT projects and programs’.” It will happen to you But it’s a mistake to write CPC off as the IT industry’s response to the lethal combination of XML and the Internet! Rayson believes the movement is user-driven. SAP’s Paul Eggleton agrees, adding that the drivers are the automotive and aerospace sectors and high-tech companies, some of whose product life cycles are as short as six months. “Collaboration is about shrinking innovation time, the time from first design to product launch,” Eggleton says. “If you’re relying on the post to send through a drawing so you can mark it up and send it back, you’re not going to get the speed of development that you require in that industry.” But where do beginners start, and what does it cost? WMG helped FWL gear up: “It isn’t these hugely expensive systems that they require,” says Rayson. “For an outlay of a few hundred pounds, we got [FWL] on line doing really collaborative commerce, including video conferencing and all the rest of it very quickly. You’re not faced with budgets of millions to do this.” And the same techniques can be scaled up right to companies making warships, he says. Even large companies find collaboration difficult, he concedes, but the reasons have little to do with technology: “If you look at companies like Rolls-Royce, Airbus and Ford they suffer from internal intertia.” They’re not alone. Says Woolley: “Looking back we realise we employed progress prevention managers, who were saying, ‘No, we don’t need that, we’re an SME. It’s not going to touch us’.” Despite them, when the customer call came, FWL had already taken three very important steps. First, supply chain partnerships: in the mid-1990s FWL set up a network now 10 companies strong to bring its suppliers together and help them reach the quality, cost and delivery performance of the best. FWL’s supply-chain efforts won last year’s Kelly’s award in purchase and supply to add to last year’s DTI ‘Inside UK’ SME of the year award. FWL also works with the local college, Walsall College of Art and Technology (Walcat). FWL sends product data files to Walcat which produces a rapid prototype model in resin, and returns it to FWL by post the next day. Second, skills development: several years ago FWL, supported by the British Open Learning Development Unit, set up a learning centre as part of a DTI initiative to allow its staff to train “out of the pressure cooker”. The centre, not the factory, was where FWL put its first Internet-linked PC – the day before it received the infamous phone call! FWL’s customers and suppliers as well as employees use the audio- and video-equipped centre – singly and in groups – and it’s now a revenue earner which has attracted national press attention. And third, the technology: FWL added money of its own to funding from the Autolean and Autoclear projects – part of the European Regional Development Fund-supported ‘Accelerate’ programme for West Midlands automotive suppliers – to set up Internet connections, web cameras and video conferencing. And it has introduced its suppliers to these projects. What’s more it cost “a few thousand” instead of the six figures some of the IT vendors wanted it to spend! True collaboration pays FWL shares everything – knowledge, skills, technology – with its supply chain. Woolley points out that SMEs survive on quality, cost and delivery: “When you find you are slipping you often find it’s your suppliers who are doing that to you – poor quality of materials, poor delivery, poor subcontract work and so forth.” Collaboration was no different: “Realising we had to move, the next thing was to get specific people on line in the factory: the engineers, purchasing people and so forth. So we did that a step at a time.” FWL also looked around its supply network at what other people were doing: “Some were going more quickly than we have, and others were travelling more slowly. We went round and looked at each other and said, ‘what can we do next? Where are we together?’.” So where is FWL now? “Suddenly, only six months on, I can stop using fossil fuel. I don’t have to get in the car and drive an hour to take a drawing to a toolmaker. We do that electronically. This morning we’ve been holding components up to the camera. We’ve looked at drawings, we’ve looked at quotations and we can both work on that document at the same time. We can put up a whiteboard and alter drawings on it. I’ve done that today. We had a toolmaker send us a digital photograph of a component and we were drawing on that component on screen together and talking simultaneously.” For Woolley, delivery is the most important element in the holy trinity. FWL doesn’t have any standard products, and everything it makes is the result of detailed collaboration with customers and suppliers. The average life of a car part is three years, and during that time the drawing for it is subject to alteration “by the day”, she points out, “either from us or from them. [But] you can’t hold up the kanban. You hold up Nissan and you’re fined £20,000 an hour – then you’re out. If we’re trying to alter the drawing by driving an hour there and an hour back, or we can do it on line, you tell me what’s the difference in speed? We can’t do this by fax – the definition’s never good enough.” But shaving days off prototyping and hours off driving to meetings doesn’t just cut delivery times. It saves money, which is important when, as she says, customers are seeking year-by-year reductions in component costs. Looking back, she says, “now we’re realising that everything we did was in real time. That really makes an impact on you. There is no delay, no post. I can go on that machine and do in 2.3 seconds what it took me two and a half hours to do before. It’s a very, very different way of managing.” And she reflects, “You have to look at what your business procedures are, and how the use of ICT (information and communications technology) is impacting on them internally and externally. And externally it’s about going up and down the supply chain.” Eggleton says collaboration offers a huge opportunity for SMEs: “If you’re a smaller specialist UK engineering company, whether you’re in automotive or aerospace and defence, this actually offers you an opportunity. Because if you’re competing on a commodity basis you’ll get six shades of whatever kicked out of you by someone from Taiwan or China. However, if your added value in the process is your engineering knowledge, your specialist materials knowledge and you can actually become part of the design and engineering process, that’s where your added value is.” The FWL lesson boils down to this. When the call came, FWL had already travelled much of the way. It was a technological novice, but had been developing its supply chain and skills since 1994. Woolley networks like mad in every forum she can find and grabs every grant going. When the time came to adopt some technology FWL was ready.