Manufacturing: gone are the days of the 'black box'

Globally competitive: two little words that have literally transformed the world of manufacturing as we know it.

Mike Le Plastrier, EOH industry solutions director, explains that with the global stage as everyone's playground, economies of scale have never been more important: "For a manufacturer to succeed, it must guarantee flexibility of production and availability of products."

Le Plastrier says that anything can be a global product: "As this trend becomes more pervasive, South African manufacturers have to adapt accordingly. We've seen that our local manufacturers can do this - our motor car manufacturers and breweries have proved this."

And, with so many manufacturers to choose from, brand owners are starting to be more selective: "Global brands like Adidas and Nike have been outsourcing the manufacturing of all of their products for some time now, thereby increasing the demand for manufacturing specialists. This means our local industry players need to focus on becoming super-efficient; performing on an international level in terms of both price and quality."

Specialist manufacturing means significant things when it comes to the pricing of goods. This type of "contract" manufacturing means that the "little black box" approach of putting x in to get y out can no longer be used.

"For a brand like Nike, the raw material now equates purchasing a finished product - they dictate the price at which the product will be manufactured. If you can't make it for the price they want, they'll find someone else who will," says Le Plastrier. "This means all costs now hit manufacturers squarely on the bottom line."

He adds that this increased competition also means increased pressure in terms of adding huge value to the product - value that must be visible. This is where IT can make all the difference as it generally has to do with the method of manufacturing: how the company differentiates itself from other producers.

While most of us are familiar with the highly configurable ERP (enterprise resource planning) systems in place in the upper echelons of business, Le Plastrier explains that manufacturing IT is a completely different animal: "Manufacturers are typically dependant on HDI (Human Data Integrator) systems. As per its name, an HDI system relies on someone putting data into a spreadsheet from which the company can then generate reports or provide input to its ERP system.

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"HDI is thus naturally flawed as it is prone to human error and manipulation - you can essentially define the results you want to show and change what the data shows accordingly."

Because of the shortcomings of HDI and the drive towards global competitiveness, manufacturers have started to define manufacturing procedures: "Companies are now working towards MOMS (Manufacturing Operations Management Systems), so as to define the space between the business's ERP system and Shop Floor Automation (SFA)."

Le Plastrier explains that the disparity between information sitting in finance and that at shop floor level often leads to confusion: "Names and definitions change between these two departments. Quantities and dates are often subsequently affected, impacting on everything from the number of goods produced to raw materials used. Mapping these manufacturing processes to best standards has thus become more critical than ever."

By mapping out these standards, manufacturers develop definite guidelines for their processes, creating competitive advantage: "Communication between these departments creates visibility; because you can measure problems, you can now fix them."

How best to close these gaps? Through structured IT processes. "IT enables the redefining of systems. Where companies were typically using spreadsheet middleware before, they're now putting all of this into formal IT systems, meaning that there are far more rules as to how information is generated and recorded. Manufacturers are thus not reinventing the wheel, but rather putting a far more robust wheel in place instead.

Most importantly, in this 21st century, global best practices are emerging and being documented into standards such as ISA S95 (ISA: Instrumentation, Systems and Automation Society), which assist in defining how to integrate the disparate worlds of business logistics systems and the production environment."

Manufacturing Operations Management Systems and their integration into top floor ERP systems thus holds significant promise for local manufacturers. With South Africa already a strong participant in this regard in certain international sectors, we have proved that we have both the expertise and means to deliver on the promises of specialist manufacturing. And, as the local market continues booming thanks to 2010, there's no better time for astute manufacturers to invest more in improving their processes. In this way they'll guarantee themselves a place in the international arena, long after all the soccer fans have gone home.