HANNOVER, GERMANY — The promise that integrated technology will tie together shop floor, development, and enterprises will never materialize unless manufacturers make concurrent cultural and process changes.
That message resonated this week at Manufacturing Executive magazine’s Manufacturing Executive Leadership Forum here at the Hannover Fair, where top decision makers from L’Oréal, race car specialist McLaren Electronic Systems, and “lean” prize-winning German-Japanese joint venture Freudenberg-NOK articulated their visions and strategies for excellence. Analysts from CIMdata, Cambashi, Manufacturing Insights, and others also weighed in with intermittently contentious and harmonic insights on what works in the pursuit of excellence and what does not.
But almost everyone agreed that the most sophisticated technologies for integrating automation, PLM, ERP, and MES systems will flop if companies don’t make requisite organizational changes — which often come with considerable pain.
“Don’t start any such project without a bodyguard,” quipped Jacques Playe, CIO of operations for French cosmetics powerhouse L’Oréal, during one of the featured presentations at the three-day event. Playe has been leading a massive technology integration project that ties SAP ERP software into Apriso MES software on the factory floor, across factories in Europe and the Americas that churn out brands including Garnier, Giorgio Armani, Lancôme, Matrix, Redkin, and Ralph Lauren.
“Cultural issues are clearly the big impediment to any integration project,” said Julie Fraser, president of research firm Cambashi Inc., the U.S. operation of Cambridge, England-based Cambashi Ltd.
In a related twist, McLaren Electronic Systems Managing Director Peter von Manen said that one trick to innovating successfully is to know when to avoid innovative practices. “You also have to know when it’s the right time to be conservative,” he said during one of MELF’s “fireside chats.” Von Manen seems to know when to hit the brakes; earlier this week, McLaren won the U.K.’s prestigious Queen’s Award for Enterprise in Innovation.
Ed Miller, president of research firm CIMdata, noted in a keynote presentation, “Innovating Out of a Bad Economy,” that as companies think about innovation, they should be first thinking about new processes. While very few companies can realistically expect to create “category killer” products, he said, they can refresh their organizational processes in a creative manner.
That’s what L’Oréal has done in its quest to make products, like shampoo, of exactly the same quality whether a plant is in Europe, Brazil, or North America. But a variety of cultural issues, including convincing factory managers in Germany and Italy to abide by the same practices and to alter processes, have thrown up hurdles that Playe and L’Oréal have crossed.
“It’s very difficult for a French and Latin company like L’Oréal to be sure everybody is aligned in the same methodology and the same core system,” Playe said. “The bigger part of the project wasn’t architecture or machinery; it was around change management,” he added. “You have to fight with some plant managers, some technical directors, some country directors.”
He also advised manufacturers to put a high-level executive sponsor — Playe’s “bodyguard” — behind broad integration projects. At L’Oréal, Executive Vice President of Operations Jean-Philippe Blanpain backed Playe in the integration project. In an unusual cultural twist, Blanpain plucked Playe from the ranks of plant manager to become CIO in charge of the project, even though Playe did not have a technology background. Blanpain “was convinced that in order to lead an IT organization, we don’t need an IT guy, because IT is only processes and you have to know the business process in order to put them in the system.”
In a separate presentation, Freudenberg-NOK Global Quality Manager Carlos Eduardo DaSilva echoed that theme. “Nothing happens if ‘the man’ doesn’t want it to happen,” he said. To help steep employees in common practices, Freudenberg-NOK since the early 1990s has trained staff up and down the corporate ladder in traditional disciplines such as lean thinking and its Kaizen ways, as well in Six Sigma. During that time, “70,000 people participated in Kaizen training,” DaSilva said. The company is a former winner of the Shingo Prize for Operational Excellence.
In one of the forum’s more heated panels, “Strategies for Operational Excellence,” Paul Christodoulou, senior industry fellow at the University of Cambridge’s Institute of Manufacturing, suggested that after lean’s long run over the last couple of decades, it might be time for other principles to take the spotlight. Among them, Christodoulou recommended that manufacturers develop “global manufacturing networks” in which they switch production around the world in an agile manner that responds to market and geopolitical realities.
Pierfrancesco Manenti, EMEA research director for Manufacturing Insights, saw more room for continuing lean principles. He noted that in a newly released operational excellence poll by Manufacturing Executive/IDC Manufacturing Insights, survey respondents still rated “lean” high on their list of priorities.
But he agreed with Christodoulou that manufacturers have to reconsider where to set up plant operations. In a principle he calls “profitable proximity,” he said companies should make goods near the markets they serve, which helps in many ways, including reducing transportation costs and environmental damage. But while Christodoulou predicted that global manufacturing networks will reduce outsourcing, Capgemini Consulting Vice President Gunnar Ebner predicted a growth market for outsourcing, although he said it will be concentrated in non-core manufacturing processes.
Most agreed that cultural concerns, in their many permutations, should drive change projects. This was implied in the ME poll results, as only 30% of manufacturers said IT will play the lead role in their operational excellence initiatives, and 20% said “IT will play no role whatsoever.”
Mike James, managing director of MES consulting and implementation firm ATS International, whose customers include Rolls Royce, Sony, and Carlsberg, noted that cultural barriers come in many forms, not the least of which is language differences within a company. To an engineer, he said, “real time” means just that. “But to a managing director, ‘real time’ is about a week,” he deadpanned. Those differences are compounded as integration projects cross country boundaries. Reflecting on a Carlsberg MES project that spans 15 breweries in 13 countries, he said, “What was really important was building a consensus prior to starting the implementation.”
Sounds like a job for the UN. Or for Barack Obama.