High-tech profits

In manufacturing and engineering, organisations are using technology to improve profits and increase efficiency. Computing looks at the significant trends for the next three years.

Joining up the enterprise

Enterprise resource planning (ERP) is applicable to almost all operations and has the potential to bring an organisation under joined-up control – and manufacturing companies are consequently keen to invest on planning systems.

ERP spending in Europe, the Middle East and Africa during 2005 totalled more than $2.7bn (£1.5bn), according to analyst Gartner. And the firm expects the market to grow by 5.6 per cent by 2010.

Hand tool manufacturer Carl Klammering International (CKI) recently overhauled its production planning and supply chain management with IBS software.

John Hollywood, IT manager at CKI, says the technology has reduced mistakes, made error tracking easier, and improved customer service.

‘We can use one click from an order line to track the shipment status on the carrier’s web site,’ he says. ‘This is used by our customer services co-ordinators.’

ERP’s wide application, however, is also a danger.

Denise Ganly, research director at Gartner, says organisations should not concentrate solely on technological aspects.

‘ERP is about people, not just technology, and organisations that ignore the people side run a risk of project failure,’ she says.

‘Above all, expect difficulties and be patient – ERP is more than a project, it is a lifestyle.’

Integration in three dimensions

The latest 3D computer aided design (Cad) software helps to improve the speed of product development through greater visibility and improved integration with ERP.

Stairlift manufacturer Stannah used to produce one or two platform lifts a week for transporting people in wheelchairs.

But Stannah Cad development engineer Martin Lee says 3D design software has r educed the design time from four days to half a day.

Lee is also enthusiastic about the new-found integration capabilities of the company’s Autodesk software.

‘Cad was something that used to happen in a different room. Now people are realising that the information that Cad generates can be used throughout the entire company,’ he says.

Cad is a significant element of the wider mechanical applications software market. According to analyst Gartner, the market will maintain low double- digit growth up to 2008, with an annual growth rate of 11.5 per cent in 2009.

But 3D system usage is not without its complications. ‘The main hurdle was helping to overcome people’s fears about how they were going to adapt to working in 3D,’ says Lee.

RFID threats and opportunities

Neil Macehiter, of analyst Macehiter Ward-Dutton, says radio frequency identification (RFID), could be applied in a number

of ways.

‘But it might not necessarily deliver new business opportunities,’ he says.

RFID has certainly taken a long time to reach the mainstream. Fewer than 30 per cent of organisations have had any kind of exposure to radio frequency, and most of that activity is confined to pilot projects, according to Gartner.

But the analyst also believes pallet-level RFID has high organisational value in the niche areas in which it has been used.

Terry McIntyre, corporate RFID project leader at delivery specialist TNT – whose pilot at the Ford F150 truck assembly plant in Michigan recently concluded – says logistics companies cannot be responsible for the slowdown of the assembly process.

‘We are using supply chain execution management with RFID. We pick up alerts along the supply chain that need to be actionable to prevent business interruption,’ says McIntyre.

Ford’s plant is laid out with an RFID wireless sensor grid that triangulates strategic locations. Sensors and tags feed into Tibco integration software.

‘As much as 10 to 15 per cent of inventory cost can be driven out of the supply chain. That translates into millions of dollars in saved cost,’ says McIntyre.

Despite the benefits, general take-up of RFID remains slow, and one reason is the tag cost, which is about $55 (£32), McIntyre hopes this will fall.

‘By the end of 2007, I expect to see the cost in single digits,’ he says.

But even with falling costs and improved understanding, Macehiter warns against rushing into implementations without thinking through the issues.

‘RFID is incredibly general in terms of how it can be applied. If you put together a specific solution without thinking about the big picture, you can lose the value of the technology,’ he says.

RFID is also likely to attract hackers. Research from Amsterdam’s Vrije University suggests RFID may be another route for malware that can be used to breach the company perimeter.

Disaster recovery

John Holden, senior research analyst at Butler Group, says most recent improvements in disaster recovery have been soft – developments have been concentrated on business processes and planning, rather than on technology.

‘Storage people have been bringing out various products, but data backup is not the total story,’ he says.

Critically, says Holden, organisations must understand their own company’s critical processes and the consequences of data loss or damage.

‘The tools to enable this to be translated into a business continuity plan are a business impact analysis and a risk assessment,’ he says.

Benefits from disaster recovery planning are illustrated by printer and scanner manufacturer Epson, whose sales and marketing department was hit by the recent Buncefield oil fire.

The department moved swiftly to a managed office – known as a business recovery centre – supplied by NDR.

About 150 workstations were initialised to Epson specification and a virtual private network link to the company’s office in Holland established with access to email and business systems.

‘Our detailed plan enabled us to assess the situation, contact all our staff with details of their working arrangements for the next day, and to reassure customers,’ said Epson inventory and planning manager Nick Harwood.