A fulfillment execution system can move manufacturers toward a global plant floor (GPF) approach to the business in an increasingly dispersed market.
The ability to exploit and fulfill demand from multiple, global emerging markets is essential for manufacturers looking to drive revenue growth. However, this dispersed opportunity brings business challenges in the form of flickering and scattered demand, elongated supply chains, extended product ranges and configurations matching differentiated consumer bases, and uneven levels of quality and compliance.
To achieve excellence in customer fulfillment, manufacturers must ensure that their underlying global production environment becomes increasingly dynamic, supporting a varied product mix and responding quickly to market changes. Indeed, rapid reconfigurations of production operations are required to surf the wave of opportunity arising from both global and local markets.
In this context, manufacturing companies need to harmonize, supervise, and coordinate execution activities across both their own and their suppliers’ manufacturing operations, an approach IDC Manufacturing Insights associates with the global plant floor (GPF) concept from Wikinomics: How Mass Collaboration Changes Everything, by Don Tapscott and Anthony D. Williams. In IDC Manufacturing Insights’ practical view of the GPF, global operations are a unique virtual factory that consolidates different manufacturing plants in terms of resources, processes, and products (see "MES Strategies Part 1 -- Importance and Challenges of Real-time Manufacturing Execution”).
In 2010, the ability to achieve customer fulfillment excellence, supported internally by enterprise operational excellence, will become the new guiding principle for manufacturers (see "Achieving Operational Excellence Today to Take Advantage of the Expected Upturn").
Industry and technology trends are driving the convergence of supply chain and manufacturing execution investment into a single solution that IDC Manufacturing Insights calls the fulfillment execution system. An FES will be an essential enabler to take advantage of the expected upturn in 2010. The system provides singular, closed-loop management of inbound material, production capacity, and outbound order fulfillment across the entire network of manufacturing plants and along the supply chain — all calibrated as close to actual customer demand as possible.
Data gathered from plant floor devices and multiple business applications will be connected to corporate-level intelligent decisions support tools, creating visibility and intelligence on operational data in the context of business process workflows. An FES will enable a global plant floor approach by connecting multiple plants, suppliers, and customers. It will result in mitigated risk, speedier decision making, improved customer fulfillment rates, and increased confidence in operational performance.
The ability to identify a problem, isolate the root causes, understand the state of execution processes, and adopt corrective actions quickly is what will distinguish a successful FES implementation. Real-time operational data will be put into the context of business processes, and workflow will be defined by the information flow that transcends inbound material flow, manufacturing, and outbound product delivery.
No one software vendor can provide all of the requirements of an FES today; the FES market is actually a composite, drawing on factory automation, MES, supply chain, PLM, and ERP. Effective programs will have to be built around services-oriented architectures, which will enable FES to take into account the fast-changing business environment in which manufacturers operate: mergers and acquisitions, new suppliers, new markets, and supply chain disruptions. So, FES might be considered an open, functional space where capabilities can be dynamically added, refined, and changed on-demand without impacting other capabilities.
IDC Manufacturing Insights expects comprehensive FES projects to move up the priority list at major manufacturing companies and to draw substantial investment in 2010 and over the next five years. In fact, our most recent IT spending forecast is for worldwide growth for operations and manufacturing applications of 4.2% in 2010 compared with 2009, outpacing the expected 3.8% average IT spending for business applications.
Pierfrancesco Manenti is the EMEA director for IDC Manufacturing Insights.
