Importance of ‘e-manufacturing’ rising sharply, says Benchmark Research

The importance of e-business technologies – whether under that name or not – to manufacturing businesses is set to at least double in the foreseeable future, according to specialist manufacturing market research organisation Benchmark Research. Across the major departments, users are anticipating projects that will hugely increase the uptake of web technologies in the near future – both for internal and external use. And they are expecting much more of their business, and their relations with suppliers and customers, to depend on that investment during 2002. This despite the current slowdown in spending and early doubts over ROI (return on investment) – see MCS, November/December 2001, page 5. These are among top line findings now that Benchmark has completed the second phase of its massive survey of e-business and supply chain management in UK manufacturing (December 2001), the most comprehensive investigation yet. The firm conducted interviews of 1,000 IT managers, 240 sales and marketing professional, 240 production managers, 240 procurement heads and 120 design managers from August to November. Says Paul Watts, Benchmark’s research manager: “In all areas, manufacturers’ business leaders are now seeing aspects of e-business as very important looking forward – much more so than a year ago.” Sales heads, for example, say e-business will be much more important to them than before for exchanging design data with customers, sharing scheduling data with customers and providing better after-market service. Indeed, they are three times as likely to use web technologies for accessing customers systems to check schedules as they were one year ago. And Benchmark finds procurement professionals saying much the same – targeting web IT on reducing order transaction costs, getting supplier catalogues electronically and again, sharing schedule data (up from around 15% till now, to 44% looking ahead). These managers are also four times as convinced of web IT for enabling suppliers to see online stock levels and collaborative trading and joint planning with key suppliers. Meanwhile, on the factory floor, production managers say they are twice as enthusiastic about investing in e-business for sharing scheduling data with customers and suppliers and improving workflow in scheduling as they have been to date. They’re also keen on investing in collaborative trading exchanges with key customers. And the picture in design is comparable, with 50% more design managers saying they see investment in ‘e’ as important for sharing design data in the future, even more looking to on-line working for everything from concurrent design working to project management and sign-off, with collaborative design three times more likely to happen than hitherto. The findings show a huge apparent increase in understanding and expectation – the only area of doubt being in public on-line trading communities. Here, Benchmark finds 76% of manufacturers with no plans to get involved – and of those already up and running, 77% with no ROI so far, although 2% reported 90%-plus improvements. None of this means it’s happening in a very big way just yet. Watts says the findings show 24% of firms have software to sell products and services on line, and of those 71% are selling less than 5% on-line. Further, problems remaining include lack of automation and seamless integration – resulting in data rekeying into ERP systems, and difficulties with getting product details into electronic catalogues – with 54% finding this moderately to very difficult. And that analysis is common across all the business and manufacturing functions. Nevertheless, a staggering 40% of companies now say they have software to procure products and services online – and the split between direct (bill of materials) and indirect (MRO and consumables) buying is almost even. But it’s clear it remains early days yet – with savings so far from online buying averaging at around 4.5% -- and half saying they’ve had none at all yet. It’s clear we’re on the steeper part of the bell curve of ‘e’ adoption, with production managers just as keen on their internal improvements and expecting to see greater benefit in the future, although not necessarily perceiving their projects as e-business. Watts observes that many who, for example, are using browsers to access quality or health and safety information, “simply forget that that’s being driven by their investments in intranets and web technologies.” This year’s Benchmark research was sponsored by the DTI as well as Ariba, EDS PLM Solutions (formerly UGS), First Index, Frontstep, Glovia, Izodia, K3, McGuffie Brunton, Microsoft, Oracle, PA consulting, Ramesys, Rockwell, Sage and SSI.