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Manufacturing IT Success

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CIOL Bureau
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IT consumption in the manufacturing industry has shown a turnaround since last year and the impetus continued unabated in 2004-05. Obviously, it could not match the whopping 40% growth achieved last year, but even FY 2004-05 witnessed a reasonable 22% growth.

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Pegged at Rs 3,969 crore, manufacturing accounted for nearly 10% of the domestic IT market; that makes it, along with BFSI, telecom and government the four pillars that propped up the domestic IT industry in 2004-05. Improving supply chain efficiencies, trimming time to market with PLM, and reducing inventories were on the palette of most large manufacturers during the year.

publive-imagePerhaps the maximum IT deployment in manufacturing happened in enterprise applications. ERP was the most common implementation, with SAP seemingly developing a large fan following among most companies.

This was followed by supply chain automation-more and more SCM solutions were deployed and integrated with ERP while e-sourcing or e-procurement too grew both in volumes and revenues. Obviously, the time involved in designing was a crucial component of the manufacturing cycle time-large scale deployment of PLM/PDM solutions definitely helped here. Last but not the least, RFID finally made its entry into manufacturing, immediately having an impact in improving inventory management.

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Reduced Product Life Cycles: Growth was recorded in both discrete as well as process manufacturing-many discrete manufacturing companies eyed exports to boost their toplines. These export-oriented companies supplied automotive components and machinery to global OEMs. Faster time-to-market and reduced product lifecycles were putting pressure on discrete manufacturers to connect with the product development and manufacturing processes of global OEMs. Enterprise applications have helped discrete manufacturers plan, monitor and rapidly develop components for the export market.

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Maximum IT deployment in manufacturing happened in enterprise applications

Investments in PLM solutions helped manufacturers reduce product design cycle time by enabling collaboration in real-time. PLM brought about a complete transformation in some heavy manufacturing outfits such as Larsen and Toubro's LTM Business Unit at Chennai, BHEL in Hardwar and BEL in Bangalore.

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The LTM business manufactures heavy engineering equipment used for tyre manufacturing, and exports its products to Italy, Argentina, Brazil, Spain, Syria and Britain. With the adoption of a PLM solution called Wrench, the company has been able to reduce its design cycle time and introduce variations in its designs in real-time.

BEL Bangalore has been able to reduce the average time for approving engineering designs from 40 days to just six. The approval time for a change request or proposal for drawing has shrunk from 60 days to 20. The other value of a PLM solution for BEL was that requests for printing documents and drawings are now made online.

The upsurge of global outsourcing to the Indian auto component industry in FY 2004-05 showed that overseas buyers are now looking at India for its high-quality design and production at a lower cost. At the same time, smaller Indian auto component manufacturers needed to scale up their manufacturing capabilities before they could procure new business and meet the demands of global OEMs. Both enterprise applications as well as CAD, CAM and PLM solutions played a significant role in this process. Enterprise applications have helped discrete manufacturers plan, monitor and rapidly develop components for the export market.

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There are plenty of instances to bolster this trend: enterprise applications helped discrete manufacturing companies such as Triveni Turbine to better monitor its production projects and calculate the cost incurred for new product development (NPD). The company, which manufactures turbines for the power sector, many of them for the export market in Indonesia, Pakistan, Bangladesh, Venezuela, Austria and Britain, was able to analyze the complete execution cost of a project before it commenced. Discrete manufacturing firms also used CAD-CAM tools to simulate their product designs and speed up manufacturing.

Sansera Engineering used AutoCAD and Wrench to build sample products and present the same to its customers like Yamaha in Indonesia, Brazil and Italy. Yuken India, exporting hydraulic pumps and valves to Japan, Taiwan, Britain and Spain, also leveraged the power of CAD-CAM and trimmed design cycles. With these tools it was able to analyze customer feedback and field complaint data to build improvements into its new designs. The company has digitized all its existing designs, and is now planning to move to 3D design software, namely, Pro/Engineer from PTC.

Auto Industry Boosts Enterprise Apps: Not only auto ancillaries and engineering companies, even auto majors like Maruti, Mahindra, Tata Motors, TVS Motors, Hero Honda and Bajaj Auto have been extensive adopters of IT. SAP deployment has been one of the most visible trends-Hero Honda was a SAP star site, Mahindra, one of the world's largest SAP implementation on Win NT, and Bajaj Auto, the first full scale implementation of mySAP in India.

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The other noticeable trend has been the automation of the supply chain, a crucial ingredient for not only the auto sector, but most in manufacturing, since it deals with a myriad of suppliers and dealers and seamless integration with the ERP. In SCM too SAP led the way with Maruti being a notable differentiator with its i2 solution.

Most importantly, nearly each and every manufacturer went for Product Lifecycle Management (PLM) and Product Development Management (PDM) solutions in conjunction with tools like IDEA and CATIA-this has substantially reduced the cycle time and cost involved in design and implementation. Product life cycle management involved the use of software like CAD, CAM, CAE - used to design models during the development of products in the manufacturing industry. This is not IT, but use of IT by mechanical and electrical engineers to design their products.

Indian vendors like Geometric divided the opportunity into two areas. The first was in the area of software development for product life cycle management, global sales of which were close to $8 bn. The other was on capitalizing on opportunity for using PLMG software for engineering and design services-an opportunity as big as $80 bn, about $20 bn of which was identified as suited for outsourcing. Other than outsourcing, few global manufacturing organizations like Honeywell, Cummins and GE even set up their captive centers in India, leading to large scale IT consumption.

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Supply Chain Automation Benefits Procurement: E-sourcing was another trend gradually catching up in the manufacturing sector. It helped companies reorganize the purchase function and support aggregated buying across business units with the aid of Internet-based tools or B2C Internet portals. Being Internet-based, more global suppliers participated compared to the traditional strategic sourcing process.

The cycle time reduction occurred mostly due to a shortening of time spent negotiating, and expedited information gathering, and faster communication channels among buyers and sellers. The key to successfully implementing an e-sourcing initiative was to implement it for procurement of high-value commodities in a few pilot projects. Once the first phase was successfully implemented, the RFQs (Request For Quotations) were fine-tuned.

Some leading e-sourcing product vendors to emerge during the year were Ariba, Synise and India Markets. E-sourcing caught up in India big time during the year with many successful implementations. For example, Dabur saved Rs 2.5 crore with six reverse auction deals.

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Tata Motors saved Rs 22 crore on transactions of Rs 362 crore, while the Kirloskar group saved Rs seven crore through reverse auctions worth Rs 50 crore. But probably the biggest success story was Crompton Greaves-it not only saved more than Rs 60 crore through reverse auctions, its CFO personally admitted that e-sourcing was one of the most important factors that helped the company from liquidation.

This was also the year when RFID finally came into the mainstream, particularly amongst garment manufacturers. Madura Garments deployed RFID across its warehouses. This was planned for the whole of its sales field force, which operated from A class cities including all the major metros. The initiative also linked eight factories on the outskirts of Bangalore, while also linking cities such as Pune and Bangalore. It initially conducted a pilot with 15,000 RFID tags at one of its retail outlets in Bangalore. Pantaloon Retail started using an RFID writer and reader at its factory in Tarapur. The warehouse located on the same premises is using two readers. RFID scanning through 1000 tags permitted Pantaloon to update its inventory at one go and also released people who were scanning the merchandise.

Storage also got some attention in manufacturing but this was limited to backup devices such as tape drives and autoloaders. There was no pressing need for networked storage and many have not even consolidated their storage infrastructure. There were exceptions, however, with the likes of LG Electronics, L&T Hazira, Jindal Vijaynagar Steel and Kodak having planned their storage requirements and moved to networked storage, deploying FC-SANs, business continuity and disaster recovery solutions. When it comes to server OS, Windows 2000 ruled the roost followed by Window NT and Windows 2003. Proprietary Unix, Linux and Solaris are also used by many manufacturers. Jindal Vijaynagar Steel is using Red Hat Linux Enterprise Version 7.3 for its mail server. The use of Linux has helped it reduce the incidence of virus attacks.

© Source: Dataquest