Managing Automation - June 2008 - (Page 22)

[ COVER STORY ] Manufacturing companies operating globally must stay on top of a rapidly changing environment of regulations, economics, quality issues, and other conditions. What do you see as the most important issues manufacturers need to track today? they’ve been up lately and most people expect it to stay up — that means your supply chain has to change a little bit from a modal mix perspective. Obviously, the packaging is a big issue. If you look at warehouses, there’s a lot of shrink-wrap and plastic going around on pallets as they go out the door. We have to start rethinking whether that’s going to be cost-effective in a [high-cost] oil situation. Then there’s just the cost of manufacturing itself. Since it’s energy-intensive, one has to worry about that. That’s been going on for the last two years, and I think people were expecting the oil prices to go down and they’re not seeing it go down. I suspect it probably won’t, in which case a short-term thing becomes a long-term thing, and now we have to make some changes in the supply chain around it. Are you seeing this increasingly dynamic global environment driving manufacturers to do even more outsourcing in their supply chains? DADMUN: We have a dashboard that looks at metrics in our foreign sites as well as our domestic manufacturing here in Huntsville [AL]. You really have to be on top of the changing environment. Things happen quickly and you really don’t have that much time to respond, especially with the lead times that customers are demanding which are tighter supply chain cycle times. You really need to make sure you’re on top of the metrics and that you understand from an event management point of view how quick something happens and how quick your response to that item is. In looking at the global supply chains, you have to make sure that your manufacturing and distribution sites have the closest and most efficient process to get [product] to the customer from manufacturing. Also, with the energy costs today, you have to make sure that your packaging, which may have been OK in past days to send something around the world, is much denser now. The weight cost — air versus boat versus truck versus intermodal — has to really be managed. There’s an awful lot of money right now in the freight transportation business that needs to be analyzed because it’s one of the key costs today. Larry, what are you seeing among the companies that you consult with and work with? Do you see the packaging and energy costs being at the top of their list of concerns right now? HANLEY: These complexities are really requiring our clients to look at things in a much different way. In some situations, I’m seeing my clients increasingly go to contract manufacturing, which, effectively, is outsourcing, where they know they need to have a product in a certain place at a certain time. They’ve concluded that the cost of doing that is [lower] with a third party than establishing a presence there. One of the points that we’re hearing a lot about is total cost of ownership It is a lot more than just what a product costs, especially with the rising energy costs. You add to that the logistic costs of getting it to the right place at the right time. In a global world, you factor in things like customs duties and taxes and quality issues and safety stock. We see the best companies trying to look at this very broadly as a total cost of ownership to try to understand what the right decisions are. What processes and systems do manufacturers need to have in place to be able to recognize that these changes are occurring in the global environment and react to them efficiently? LAPIDE: Yes, I really do. I’ve managed the launch of a project called 20-20 at MIT, where we’re looking at the future of supply chain and manufacturing and logistics. We’ve identified a variety of factors. The one that’s most prevalent on everybody’s minds today is energy cost — in particular, oil. And oil is really part of a lot of [the] supply chain if you think about it. Certainly in the transportation area, because diesel fuel is what drives a lot of the trucking, but also oil is used to drive ocean, air, etc. As oil prices change — and LAPIDE: Obviously, things like quality control need to be distributed, and you have to have systems in place to make sure that ma June 22 2008

Table of Contents Feed for the Digital Edition of Managing Automation - June 2008

Managing Automation - June 2008 Contents Take 1 SAP Cites Functionality, Cost Structure in Modified On-Demand Product Rollout Dassault Exec Predicts More PLM Consolidation The Blackberry Goes Native with SAP CRM QAD Brings MDM In-House with FullTilt Buy Power Experts Look to End Voltage Sags The Progressive Manufacturers Notes Cover Story: Playing the Globalization Game to Win Special Report Integration Transformation Industries Product Scan Advertiser Index Next

Managing Automation - June 2008

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