Impact of Ecommerce on Global Manufacturing

1. Impact of Ecommerce on Global Manufacturing Dr Hamid Jahankhani School of Computing and Technology

2. Overview • The aim of this presentation initially is to review e-manufacturing and to explain the needs of business strategies for complete integration of all business elements by referring to a global manufacturing company, BMW’s MINI case study. • This presentation then refers to the strategic decision making that any Small and Medium size Enterprises (SME) should make to adopt a technology platform for a new project. The reference is made to an on ongoing development to provide an integrated business information and e-commerce system for a manufacturing company.

3. Introduction • Brief history of electronic commerce • E-commerce and Internet technologies have enabled companies to shift their manufacturing operations from the traditional factory integration philosophy to a supply chain-based e-factory philosophy • Ecommerce has transformed companies from a local factory focus to a global enterprise and business focus and changing the nature of manufacturing • E-manufacturing is a system methodology that enables the manufacturing operations to successfully integrate with the functional objectives of an enterprise through the use of the Internet and wireless technologies

4. Distributed Multiple Product Development Projects (DMPDPs) • The distributed, collaborative, and adaptive planning and control approach for DMPDPs, is a representative project environment in a modern e-enterprises • Consider a car manufacturing company having four technical centres in four countries. Every technical centre has multiple functional divisions internally and the functionality of each technical centre is not mutually exclusive among the four technical centres. On the basis of the company's platform line-up, four basic car programs are being carried out simultaneously (projects a, b, c and d). Each car platform has major-change projects once every 4 years and minor-change projects in between, meaning that a new project starts every 6 months.

5. Distributed Multiple Product Development Projects (DMPDPs)(Source Lee Y. and Kumara S. R. T., 2003)

6. E-manufacturing • These days’ large-scale distributed projects are very common to see. • High marketplace competition has forced the modern enterprises to compress their product development lead-time • Projects have also become ever distributed due to economic reasons • under these conditions traditional project management techniques cannot provide the required functionality to react effectively to the changes and to support collaborative project management processes in distributed project environments • The e-manufacturing concept is developed to meet the requirements for the complete integration of all business processes and systems such as e-procurement, Supply Chain Management (SCM), Customer Relations Management (CRM), and Enterprise Resource Planning (ERP).

7. MINI (BMW) case • The BMW production history dates back to 1923. The era of globalisation begins in 1992 at Spartanburg, South Carolina, where BMW setup its first complete manufacturing plant outside Germany • The strategy behind the scene was “the production follows the market” • Though plans, BMW have projected a production level of 50,000 vehicles per year in the initial stages, 2002 production exceeded 120,000 cars • The BMW groups use ecommerce strategies to use effective business explore the market. • The BMW Group sees ecommerce as both a challenge and an opportunity for the entire Company • The strategic significance of Ecommerce lies in the greater process orientation and networking of current structures and processes, with a clear focus on the customer.

8. MINI (BMW) case • The primary focus is not on cost reduction, but rather on benefits, flexibility and quality and customer satisfaction • The vehicles of the MINI brand have allowed the BMW Group to broaden its product range • The marketing strategy carried out by BMW, to identifying customer groups (Target Markets) and tailoring its product offerings, prices, distribution, promotional efforts and services towards that particular market segment • Through continuous process optimisation, the product has been developed through to the series of stages in only 30 months • The BMW Groups production network is characterised by agility, the ability to respond quickly and flexibly within a changing framework

9. MINI (BMW) case • The BMW group introduced an online ordering system in 1998 which gives dealers the option of showing customers their desired car on the screen and confirming the delivery date on the spot • The time frame when the vehicle can be built with the desired fitting is fixed in few seconds and the place in the production process is immediately reserved and the manufacturing logistic department informed • There are more then 10³² variant which is more than billion with the product range of BMW group • The BMW group has optimised internal processes to such a level that changes according to the customer wishes regarding engine capacity, colour upholstery can be accommodated up to ten working days before the start of the production without effecting the delivery date.

10. MINI (BMW) case • The Assembly takes place on location with according to the BMW global quality standards. • Currently, the BMW Group production network is made up of 15 plants and 8 assembly facilities worldwide. Particular abilities of the network are the common supply of systems and components as well as a high standard of productivity and agility. • Therefore, BMW, utilises the internet as an integral tool for developing superior customer relations, through providing an environment inclusive, both to existing and potential customers, through expressing views and providing feedback on product development

11. Remapping manufacturing with . NET Technologies • In June 2000, Microsoft announced its .NET initiative, a broad new vision for embracing the Internet and the Web in the development, engineering and use of software • One key aspect of the .NET strategy is its independence from a specific language or platform. • .NET enables Web-based applications to be distributed to consumer electronic devices, such as mobile phones, Handheld PC’s and persona1 digital organizers, as well as to desktop computers • .NET is also a set of standards, and an operating platform, to enable different applications and organisations to communicate over the Internet, using industry-agreed protocols such as Simple Object Access Protocol (SOAP).

12. Integrating ERP with External Applications • The local manufacturing company use Syspro solution for its ERP system • Like most small-medium size enterprises (SMEs), this company’s IT infrastructure is based on Microsoft technology and most (if not all) of the software used by the company is either Microsoft software or other Windows-based software • Being a small company with a Microsoft-centric IT infrastructure, this organisation fits the profile of a typical .NET adopter

13. Conclusions • Those companies which have decided to take a lead have taken an evolutionary approach towards e-commerce adoption. • Ecommerce has transformed companies from a local factory focus to a global enterprise and business focus and changing the nature of manufacturing • Every SME goes through the strategic decision making when they adopt a technology platform for a new project. The decision making becomes more difficult when attempting to integrate business information and e-commerce system through an ERP system. • Consumers of ERP systems are demanding solutions that can be easily integrated with Web applications in order to provide such services as e-commerce to customers and browser-based access to remote workers.