e Manufacturing - e nabling the Manufacturing Enterprise

1. Ed BiancarelliDirector Manufacturing & Supply Chain SystemsRaytheon Consulting & System Integration, Inc. eManufacturing - enabling the Manufacturing Enterprise

2. No Longer a Debate …… The Internet Changes everything! Technology is driving successful Supply Chains

3. But what does the Internet Change? • Sustains downward price pressure • Complete market visibility • Auctions • Delivery expectations • At the speed of thought • Value through service & convenience • Definition of a competitor • Virtual company • Working the Supply Chain • Supplier relationships • Value content • Collaboration

4. Internet Key business drivers: 4 driving principles of an Internet-based supply chain • Total connectivity with the business community is the end goal • Velocity is the unit of measure for performance • Flexibility = opportunity • Service sets you apart from the competition

5. e- Procurement benefits Traditional/Manual Internet Procurement Price of materials 5% to 10% and services ---- reduction Purchase and fulfillment cycles 7.3 days 2 days Administration costs per order requisition $107 $30 Inventory ---- 25% to 50% reduction* *Average inventory costs for sites that recognized inventory reductions at time of survey Source: Aberdeen Group, June 1999

6. e-Commerce “The use of internet-based methods to conduct Supply Chain and Business transactions.” Examples Trading exchanges Portals Supplier facing platforms Customer facing applications

7. e-Business “e-Business is the use of Internet-related technologies to transform key business processes & enhance businessrelationships.” “e-Business is integrating internal processes with customers, suppliers, partners, government and other external constituents to make interactions faster, better and cheaper.”

8. e-Business Collaborative planning with suppliers Design collaboration Customer order process MRO parts inventory Tiered supply webs Examples

9. e-Business e-Business facilitates accurate delivery promises, enables overnight order fulfillment and allows real-time, self service information ...…... all of which require very tightly integrated business and manufacturing processes. e-Businessis not a storefront….It’s about integrating a company’s resources to deliver products and services faster and at lower costs.

10. SCOR Model Source Make Source Deliver Make Deliver Source Deliver Make

11. Most Supply Chains consist of many “threads” which make up a network, or “chain of chains” Multiple Production Operations within a Business Multiple Suppliers Multiple Customers

12. Process Level 3 - Make-to-stock • (P) Production Plan • (D) Deliver Replen. Signal • (M)Make Replen. Signal • (M) (S) Inventory M1.1 M1.2 M1.3 M1.4 M1.5 M1.6 Schedule Manufacturing Activities Issue Material Manufacture and Test Package Stage Product Release Product to Deliver • Scheduled Output (D) (P) • Make Replenish Signal (S) (M) • Inventory (P) (D) (M) • Inventory (D) (P)

13. e-Manufacturing “The use of electronic methods, especially the Internet, to transform the way manufacturing sources, builds and delivers products and interacts with its customers.”

14. Why e-Manufacturing ? Manufacturing is thelargest single value added component(30% - 75%) of total sales value: Source: U.S. Dept of Commerce

15. Enterprise Business Drivers Revenue growth Better margins Satisfied customers Market intelligence

16. Manufacturing Business drivers Improving core metrics • Execution • Costs • Reliability • Responsiveness Manufacturing’s Mantra : “To make and deliver the right product at the right time to the right place at the right price”

17. Why e-Manufacturing ? “I already have web order entry so what else is needed?”…… taking the order is only the first step, fulfilling that order efficiently and meeting customers’ expectations while making money are paramount to survival.

18. Why e-Manufacturing ? “I have a Supply Chain group whose job it is to worry about order fulfillment.”…… Yes, but…customer order fulfillment is about supplying products, and product generation still consists of partners and suppliers, work orders and manufacturing execution.

19. e-Manufacturing • What does my operation need to do to get ready to be successful in e-Manufacturing? • How do I take advantageof e-Manufacturing ?

20. e-Manufacturing • Make sure you have “execution excellence”! • Be in sync with your Supply Chain Strategy. • Have experience using core Internet technologies. ... Then, use e-Business were it fits!

21. e-Manufacturing Execution Excellence • Agile, reliable suppliers • Real Time Dynamic Planning • Accurate Order Promising (CTP/ATP) • Exact Order Fulfillment • Tight Control on Inventories • High Customer Service Focus • Reduced Operating costs • Short Cycle Times • Reliable Production Processes

22. e-Manufacturing “A path to Execution Excellence (EE)” • Strategy, Technologies, Culture • Align core processes w/Enterprise • Planning & Execution Systems • Information is key • Processes, costs, orders • Infrastructure • Networks, firewalls, databases

23. e-Manufacturing BUSINESS Systems Business Requirements Fulfillment Systems Manufacturing Systems that work in weeks and days won’t cut it on a business that needs to run in hours!

24. Investments in Manufacturing Percent of Companies using Manufacturing Software

25. e-Manufacturing Execution Excellence • Automatic Identification Systems • A foundation technology • Bar code labels on raw materials • Bar code labels on finished goods • Tracking systems in plants

26. e-Manufacturing Execution Excellence • EAM (Enterprise Asset Management) • Efficient control of production assets • Insures high availability and reliability • Tightly integrated with execution and procurement systems

27. e-Manufacturing Execution Excellence • MES (Manufacturing Execution Systems) • The foundation for effective execution • Manages the production process • High visibility to events as they occur • On line, integrated

28. MES – Key enabler for e-Manufacturing • MES serves as a two-way window into the manufacturing process, by integrating and facilitating key information flows and commands between the factory floor and the enterprise …. and it’s customers and suppliers.

29. e-Manufacturing Execution Excellence • SCE (Supply Chain Execution Systems): • Real time, dynamic • Integrated with Business and production systems • Synchronizes production with supply chain

30. e-Manufacturing Execution Excellence ERP FUNCTIONS (no e-Business) Planning Engineering Accounts Rec Order management EDI EDI Procurement Customer Service Suppliers Customers Production Distribution Shared Services

31. e-Manufacturing P o r t a l P o r t a l Collaborative CRM TradeExchange 3PL Contract Manuf Execution Excellence ERP FUNCTIONS (with e-Business) Engineering Planning Accounts Rec Order management Procurement Customer Service Suppliers Customers Production Distribution Shared Services

32. e-Manufacturing Execution Excellence • Information - real time, comprehensive and accessible Such as: • Manufacturing Database • Production Information desk • Enterprise Status Console

33. e-Manufacturing Enterprise

34. e-Manufacturing Production Enterprise

35. e-Manufacturing Production New Product Launch Enterprise

36. e-Manufacturing Production New Product Launch R&D Enterprise

37. e-Manufacturing Opportunities Product Schedule Customers Design Collaboration Inventory Status MRO Parts Design Collaboration Pre-own equipment sources Focus Groups Material Suppliers Consumer Feedback Capital Equipment Inventory Status Material, Package Supplier Inventory Status Suppliers Raw Material Available to promise Order status JIT Material Needs JIT Material Needs Engineering bid process VMI Material Specifications Outsourced Manufacturing Maint./Diagnostic Assistance Work force augmentation Service Providers Testing Providers Manufacturing IT / Helpdesk Package & Graphics Development ASPs ASPs Tendering Patent Search Engineering Data Technology knowledge base Process knowledge base Business Intelligence Process knowledge base Technology knowledge base Production New Product Launch R&D Enterprise

38. e-Manufacturing Opportunities Initiative Modify raw material procurement process How ? Reverse auctions Trading exchange e-price clubs Collaborative planning Benefits Lower labor and material costs, faster deliveries, sourcing flexibility

39. e-Manufacturing Opportunities Initiative Electronic management of products and orders How ? SCE MES Data delivery systems Benefits Speed, flexibility, lowered costs to meet e-business needs. Collaboration with suppliers (material schedule & delivery) and customers (products), ATP, order status, product specifications

40. e-Manufacturing Opportunities Initiative Outsource non-core activities (Bidding process, MRO, EAM, logistics, supplier/customer facing systems) How ? Application service providers Web-enabled applications hosting Benefits Conserve capital, lower implementation costs, richer set of functions, expandable across enterprise and out, facilitates tapping into expert resources when required

41. e-Manufacturing Opportunities Initiative New product introduction improvements How ? Collaborative development of materials Product design Packaging and packaging graphics Wider access to used equipment and labor markets Benefits Faster product rollouts Reduced coordination Improved flexibility for near launch changes

42. e-Manufacturing Opportunities Initiative Improve product development How ? Collaborative development with suppliers on materials, and customers on product design Access to knowledge bases in processes and technology Institute product lifecycle management Benefits Improved product design, reduced overall R&D costs Streamline overall product development, new product introduction and production ramp up

43. e-manufacturing Sites • MRO.com- PSDI’s Internet based requisition and online procurement for MRO buyers and suppliers • PlasticsNET.com- Resources and marketplace for buyers and suppliers in the plastics industry (31,000 SKUs) • ElectricNET.com- Resources and marketplace for buyers and suppliers in the electrical power industry • Plantautomation.com- Resources and marketplace for buyers and suppliers in the manufacturing automation industry • ElectronicsBIN.com- B2B alternative for disposing of surplus inventory in the electronics industry • Wirelessdesignonline.com- Resources and marketplace for buyers and suppliers in the communications industry • SupplierMarket.com- Marketplace for buyers and suppliers for manufactured direct materials

44. e-manufacturing Sites • Lassobucks.com- Marketplace for bartering good and services • Chematch.com- Marketplace for buyers and suppliers of standard bulk commodity chemicals • Yet2.com- Marketplace for buying, selling, licensing or trading technologies and know how • Toolingonline.com- Resources and marketplace for buyers and suppliers in the tooling industry • logisiticsonline.com- Resources and marketplace for buyers and suppliers in the logistics operations industry • e-Vis.com– Secure Internet collaboration application for storing, organizing, sharing data and applications and real-time collaboration

45. e-manufacturing Sites • Elcom.com- source for MRO buyers, buy, get quotes, find material sources • PurchasingCenter.com- remote hosted internet based eProcurement • Grainger.com- source of equipment, components, and supplies for commercial, industrial, contractor and institutional customers.MetalSite.comcommunity that allows users to buy, sell, get specs, connect with peers, or download industry information • Packagingnetwork.com- Resources and marketplace for buyers and suppliers in the packaging industry

46. e-Manufacturing • Get the Basics Right! • There are no pre-canned software solutions! • Success in e-Manufacturing depends on 1) understanding manufacturing’s role in the new enterprise 2) having experience in the technologies and software to be utilized. Conclusions

47. e-Manufacturing • Improving manufacturing excellence provides ROI • Pre-requisites for e-initiatives are; > Freeing up information on the factory floor > Connecting the “other half” of the enterprise to business systems • Benefits can be obtained from e-Manufacturing technologies and functions Conclusions

48. e-Manufacturing Conclusions • e-Business changes the rules. • Flexibility = opportunity • Information is a key enabler. • Critical manufacturing systems need to be fully integrated. • You must reliably execute, efficiently.

49. e-Manufacturing Ed_Biancarelli @raytheoncsi.com