Industrial manufacturing has faced tremendous changes during the last 25 years driven by technological innovations, globalization, altered consumer patterns, and structural demographic and social changes. Customer markets have evolved from local to regional and from regional to global. The demand from the different markets extends from basics to the refined, straining the complexity of the consolidated offering. Dependency on subsuppliers has increased exponentially, and geographical complexity, for both suppliers and customers, has become a major challenge to manage. A gain in production costs has often been offset by increased logistics (and financial) costs. Longer lead times have resulted in declining customer service levels. And inefficiencies in these networks of collaborating partners (the value network) escalate the amount of capital tied up in assets from end-to-end.
Probably more than any other sector, industrial manufacturing has invested in the global rollout of enterprise resource planning (ERP) systems as a way of facilitating the flow of important business information between the functions within the organization. This was an improvement, but it later became clear that the need for end-to-end control of information, of cross-enterprise business logic, and of the assets spread throughout the value network (that is, among the participating business partners outside of the organization) cannot be achieved by utilizing ERP systems.
Because many segments of the industrial manufacturing sector are in a mature state, consolidation through merger and acquisitions to ensure a dominant global market share and specialization have both contributed to the momentous increase in business complexity. Inflated expectations of creating shareholder value by capitalizing on synergies between the existing and acquired entities increase pressure on top management. The focus on core business and the outsourcing of nonstrategic activities has been one method of dealing with this challenge, but this multiplies both the complexity and the non-transparency of the end-to-end business processes.
The environmental aspects of manufacturing are rapidly becoming a burgeoning cost item, and they also contribute to complexity and to requirements for end-to-end governance, visibility, and accountability across the entire Value Network.
Global markets’ recent shock of instability and unpredictability has revealed the non-sustainable nature of traditional methods of managing the dynamic complexity of modern industrial manufacturing companies.
A new paradigm for managing the extended company is urgently needed – eBuilder calls this paradigm Cloud Processes for the value network. And we can deliver it. Click Cloud Process and Value Network for more detailed explanations.
IT ImprovementsReduce Costs for IT-operations
Most IT organizations have invested heavily in building an enterprise-wide IT infrastructure and ERP functionality. The focus has been on technical implementation, carried out by the business’s own IT organization or outsourced to IT consultants.
The historical trend has been to try to reuse more and more of existing investments and resources and to limit the company’s own investment to what is unique within the company to create competitiveness. This can be seen in the evolution from mainframes to client servers, to the PC, to the browser; and from in-house developed code to standard applications. So far, most projects show a limited ability to leverage external assets and investments. This results in long lead times for implementation, unpredictably high costs, and a focus on cost reduction. In most cases, this results in the IT organization lagging behind in projects that add immediate business value and instead being forced to focus on reducing costs in managing the infrastructure.
Cloud Processes for the value network give the IT organization an opportunity to implement a strategy for seamlessly integrating all external business parties (the value network), a strategy that complements the existing ERP and IT infrastructure investment while extending the enterprise-wide business processes into the value network. In the short term, this lowers IT costs and enhances the value of existing investments because the Cloud Processes generate a clear and visible business value within a short period of time.
The Cloud Process implementation is completely different from traditional implementation. A Community Edition Cloud Process implementation consists of two main activities: Connect to Cloud and operation. The Connect to Cloud project consists of three parts: configuration of the customer-unique business rules, integration of the relevant internal systems, and the addition of unique business partners that are not already connected in eBuilder’s existing business process network. This usually takes less than 15 weeks. Then the operation of the best-practice Cloud Process starts. Payment for the operation is done on a transactional basis. ROI has been achieved in less than six months for the majority of all the projects eBuilder has implemented.
The key to this favorable ROI is the degree of reuse. eBuilder Cloud Processes for the value network reuse all the 10 main resources of the Cloud Process implemented in our Accelerator SOA technology environment. They also reuse the seamless integration of the 10 different areas and the supervision and control services that ensure availability, quality in the information content (information entropy), and technical functionality. Because many customers share the cost of developing and maintaining this generic platform, the cost to the individual user is dramatically lower than the cost of implementing such a platform on an individual basis.
eBuilder’s Cloud paradigm enables a whole new way of using IT, where IT becomes the business, and computers execute the business logic and the basic administration tasks that previously were based on human interaction. It also enables the IT organization to leverage joint infrastructure to address the challenges associated with creating efficiency in the Value Network and to participate in the realm of business development.
Take the case of the industrial manufacturing company that adds value in an overall, end-to-end value-added process. With traditional methods, it has a financially-draining and resource-draining task ahead of it in participating efficiently and effectively both inbound and outbound in the global business process. The cost of a traditional implementation of the required integrations for an industrial manufacturing company that participates in a global added-value process are prohibitive. In many cases, the cost versus the benefits cannot be justified.
Connect, for example, your existing ERP environment on a “need to collaborate” basis to eBuilder’s business process network. The business process network already contains thousands of integrations to global trading partners. eBuilder’s best-practice Cloud Processes for the value network are an effective and quickly implemented way of creating an immediate and measurable business benefit delivered by the IT organization.