Are Your Customers and Vendors in Sync With You?
Business processes are changing significantly
as increased global outsourcing replaces the traditional practice of
designing and manufacturing products in-house.
Many companies are outsourcing as much as 80 percent of their design and manufacturing processes to concentrate on their core competencies; however, communication among the multiple partners and suppliers is complex and often inefficient.
Companies realize that the key to increasing market share and sustaining a competitive advantage in a highly competitive, global environment is to continually find more innovative ways to develop their products. Thus, outsourcing different aspects of the product development process to outside companies that specialize in those areas and that can do it cheaper makes economic sense. Accordingly, leading manufacturers worldwide are moving toward a value network model to enhance the efficiency of their product design and manufacturing process.
Dramatic technology changes also are contributing to the change to a multi-tiered, extended enterprise or a value network. These changes include the widespread availability of Web infrastructures; the maturity of distributed component architectures such as Java 2 Enterprise Edition (J2EE); and enterprise tools that increase procurement efficiencies related to direct and indirect goods.
Value Nets
In the traditional model, the product design chain and supply chain are linear (see Figure 1).
Companies produce products and features that they believe customers
want, project how much they will buy, then buy supplies to build
products based on their projections. Customers, then, must settle for
what is available.
Tools used in each stage of the design/supply process can increase the efficiency of that stage, but not the efficiency of the overall process. The chain is sequential, rigid and slow, and transferring collaborative knowledge to the next stage is cumbersome and difficult.
A value net (see Figure 2) is a dynamic, high-performance network of customer/ supplier partnerships and information flow. The focus of the value net is to deliver "value" to the customer by building products based on the customer's choice of features and specifications. This information is then transferred to all of the supply partners. However, transferring collaborative knowledge across a multi-tiered network of manufacturers, suppliers and vendors worldwide becomes even more challenging than in the traditional de-sign/supply chain.
Challenges
Collaboration across company boundaries in a multi-tiered, extended
enterprise is fundamentally different than among members within a
single company. Within a company, collaboration can be centrally
administered, with users and their roles well defined and understood.
The environment is homogenous because the tools used (CAD, CAE or ERP,
etc.) are typically standardized throughout the company. In addition,
relationships among departments or divisions are generally static, with
a well-defined chain of command.
Contrast this with collaboration across multiple, diverse companies in an extended, global enterprise. In such a structure, no one company can centrally administer access to project information or data. Also, roles of the various supply companies within the enterprise can vary. For example, a tier-two supplier in an automotive supply chain also could be a direct supplier to the OEM on some projects.
Even more challenging is that multi-tiered value networks are a heterogeneous environment. Standardization of tools or processes cannot be mandated by the OEM for all suppliers in the enterprise because lower-tiered vendors usually support more than one OEM.
And finally, relationships among companies could be strategic (long-term) or opportunistic (short-term). Some relationships could involve a specific project or product and may last only for the duration of the project.
The traditional methods of communication have become outmoded and inadequate in the vastly different environment of a multi-tiered, extended global enterprise. Product data management (PDM), manufacturing resource planning (MRP) and enterprise resource planning (ERP) were solutions developed to aid the diverse communication needs of this unique type of business environment. But these structured solutions with revision control tools, built on a vault with check-in/check-out functions, are often too inflexible for the ad hoc, unstructured collaboration that takes place among supply-chain partners in a value net. Ad hoc collaboration grows organically and instantaneously, and solutions need to support this.
The current Web-based collaboration solutions are typically implemented as project-specific pages, with access-controlled folders, which require a project or program manager to maintain the website and to control access permission. These structured solutions work well for static data management, but they are not designed for ad hoc, unstructured workflows and real-time problem solving.
Project managers cannot function effectively as a clearinghouse for communication between diverse companies and suppliers or for the dynamic data exchange among various project coordinators and numerous team members. If project members must go through a project manager or system administrator to gain access to their project information, log jams occur that discourage the use of the system.
Centralized, structured solutions, such as PDM systems, do not address the unique needs of value net collaboration. New buzz words such as collaborative product commerce have not changed the underlying approach that these solutions have used for years - a central vault for file check-in/check-out. Besides providing a Web-based front end, the decade-old client/ server architectures have not changed to keep pace with the new Web realities of open, standards-based architectures.
A New Approach
Addressing the distinctive needs of value net collaboration now calls for a new approach, which must have:
- Decentralized, distributed Web-native architecture;
- A secure, peer-to-peer environment that mimics the way users work;
- A horizontal, collaboration solution that is easy to use and easy to train the needs of all stakeholders - not just engineering;
- A seamless integration with enterprise information silos - such as PDM and ERP; and,
- A comprehensive, best-of-breed solution that addresses customer workflows.
