“Canadian manufacturers haven’t scratched the surface of what IT has to offer,” according to Jayson Myers, senior vice-president and chief economist for the Canadian Manufacturers & Exporters (CME).
Myers believes the application of IT has driven the progress that U.S. manufacturers have made in being competitive in the past 10 years. “And it is where we will see the biggest competitive gains in Canada over the next five years,” he added. “IT is the technology driving a revolution worldwide today. For companies looking at working closely through the global supply chain, IT is crucial,” he said recently.
Myers said companies applying IT are more cost- effective and more competitive since IT enables them to react rapidly. He said IT shrinks time and improves communication for modelling and simulation and initial prototyping. It also integrates engineers and after-sales service.
“It gives companies a tremendous degree of flexibility — a capability they wouldn’t otherwise have, from up front engineering to later servicing customers by monitoring the maintenance of equipment. It offers time compression by hooking up all processes — automating with more intelligent systems.
IT FOR CUSTOMER VALUE
“A lot of manufacturers have very sophisticated systems with fully automated programs. The next stage is to use IT for customer value,” he said.
Myers spoke with IT Focus following his presentation at Manufacturing Trends 2004 in Montreal in May. The event under the aegis of Quebec Manufacturers & Exporters, a CME division, addressed concerns Canadian manufacturers are facing regarding the competition from emerging countries, particularly China.
“Manufacturing is not just delivering products but is also the business of delivering high value service to customers,” Myers told the Quebec manufacturing audience.
“Value comes from the application of knowledge. “Time is the new currency,” he added, noting that global market differentiators include cost, quality, service, customization, flexibility and time.
The capability of technology in general is elevated by IT in terms of the ability to add value, he said. He compared “the old economy” with its manual labour and mechanized processes to “the new economy” where IT is used by, for example, the Alcan production systems and Frito-Lay in Quebec City. “The management of information is like a circulatory system in manufacturing — how it flows and how it is turned into an application.”
Myers sees the challenge ahead as creating task-specific applications of IT such as resource planning systems, plus bringing IT applications to an affordable level where they can be applied to tasks companies want done. He cited by way of example a good purchasing system versus a materials planning system. The challenge is simplicity and customized applications. He sees seamless communication, i.e. interoperability, as a challenge and a focus for IT developers over the next several years.
Another presenter, Glen Hodgson, vice-president and deputy chief economist with the Export Development Corporation (EDC), stressed that Mexico, China, India, Brazil and Russia represent to Canadian manufacturers not only the challenge of low-cost competition but also a growing export market. He says they comprise an estimated 500 million middle class consumers “looking to live the way we do.” He suggests a synchronized global recovery will create a great opportunity for manufacturers to diversify into new markets with high growth potential.
David Huether, chief economist for the U.S.-based National Association of Manufacturers (NAM) cited health care benefits and natural gas costs primarily, as well as regulations and taxes as making it difficult to compete with low cost producers.
He put into context the longest manufacturing employment decline in 50 years where three million jobs were lost while the rest of the economy created one million jobs. He noted that where six previous manufacturing recoveries averaged 14 per cent growth, this latest edged up one per cent, making it the slowest manufacturing recovery on record. He predicted a six per cent growth for U.S. manufacturers this year. He noted that about half the exports from the U.S. are used by developing countries to manufacture products while for some North American manufacturers, low cost imports help make them more competitive.
The IT benefit of time compression Myers alluded to is acute for the automotive industry. Today’s 42-month vehicle development is being condensed to 12 or 18 months, reported Eric Sandford, deputy director, Supply Chain Management Division, Delphi Automotive. He cited today’s norms of a 60-65 day order to delivery, excessive inventory and manual processes about to be replaced by a compressed order to delivery, greater asset efficiency, more integrated supply chain planning and electronic automation. Delphi has established a supplier portal to enhance supplier integration to better support customers’ expectations. “You will be left behind if you don’t do this,” the Troy, Mich.-based Sandford cautioned.
A unified transport and order management solution (OMS) marketed by Kuehne & Nagel International Inc. was described as helping companies be competitive by Montreal-based Richard Pr