Source: MANUFACTURING ENGINEERING HANDBOOK

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PRODUCT DEVELOPMENT
AND DESIGN

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 Source: MANUFACTURING ENGINEERING HANDBOOK

CHAPTER 1
E-MANUFACTURING
Todd Park
Athenahealth, Inc.
Waltham, Massachusetts

1.1 INTRODUCTION

In the past decade, so much ink has been spilled (not to mention blood and treasure) on the concepts
of e-business and e-manufacturing that it has been extraordinarily difficult to separate hope from
hype. If the early pronouncements from e-seers were to be believed, the Internet was destined to
become a force of nature that, within only a few years, would transform manufacturers and manu-
facturing processes beyond all recognition. Everyone—customers, suppliers, management, line
employees, machines, etc.—would be on-line, and fully integrated. It would be a grand alignment—
one that would convert a customer’s every e-whim into perfectly realized product, with all customer
communication and transactions handled via the web, products designed collaboratively with cus-
tomers on-line, all the right inputs delivered in exactly the right quantities at exactly the right mil-
lisecond (cued, of course, over the web), machines in production across the planet conversing with
each other in a web-enabled symphony of synchronization, and total process transparency of all shop
floors to the top floor, making managers omniscient gods of a brave new manufacturing universe.
These initial predictions now seem overly rosy at best, yet it is far too easy (and unfair) to dismiss
e-business and e-manufacturing as fads in the same category as buying pet food and barbeque grills over
the Internet. Gartner Group has estimated that as of 2001, only 1 percent of U.S. manufacturers had what
could be considered full-scale e-manufacturing implementations. By 2006, U.S. Dept. of Commerce has
estimated that almost half of the U.S. workforce will be employed by industries that are either major
producers or intensive users of information technology products and services. The most successful e-
companies, it turns out, have not been companies with “.com” emblazoned after their name, but, rather,
traditional powerhouses like Intel and General Electric, who have led the way on everything from sell-
ing goods and services over the web to Internet-enabled core manufacturing processes. Perhaps most
startlingly, the U.S. Bureau of Labor Statistics has projected that the rise of e-manufacturing could
potentially equal or even exceed the impact of steam and electricity on industrial productivity. The
Bureau recently concluded that the application of computers and early uses of the Internet in the sup-
ply chain had been responsible for a 3-percent point increase in annual U.S. manufacturing productiv-
ity growth, to 5 percent, during the 1973–1999 timeframe. The Bureau then projected that the rise of
e-manufacturing could build upon those gains by boosting productivity growth by another two per-
centage points to an astounding 7 percent per year.1 In fact, many analysts have pointed to e-manufac-
turing as the next true paradigm shift in manufacturing processes—albeit one that will take a long time
to fulfill, but one that will ultimately be so pervasive that the term “e-manufacturing” will eventually
become synonymous with manufacturing itself.
The purpose of this chapter is not to teach you everything there is to know about e-business and
e-manufacturing. The field is moving too rapidly for any published compendium of current technologies

1.3
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1.4 PRODUCT DEVELOPMENT AND DESIGN

and techniques to be valid for any relevant length of time. Rather, this chapter aims to introduce
you to the core notions of e-business, the core principles of e-manufacturing, and to give you a
simple operational and strategic framework which you can utilize to evaluate and pursue the appli-
cation of “e” to the manufacturing process.

1.2 WHAT IS E-MANUFACTURING?

As is common with new phenomena, there is currently a good deal of semantic confusion around the
words “e-business” and “e-manufacturing.” Let us therefore start with some simple working defini-
tions. “E-business” is defined most cogently and accurately as the application of the Internet to busi-
ness. Somewhat confusingly, “e-business” is sometimes characterized as synonymous with
“e-commerce,” which is more narrowly defined as the buying and selling of things on the Internet. In
my view, “e-commerce” is just one subset of “e-business”—and one, though it dominated e-business-
related headlines during the go-go nineties, will ultimately be one of the less important applications
of the Internet to business. Far more important than whether one can buy things on the Internet is the
question of whether the Internet, like electricity and other fundamental technologies, can actually
change (a) the fundamental customer value produced by business and (b) the efficiency via which that
value can be produced.
This is where “e-manufacturing” comes in. E-manufacturing can be most cogently and general-
ly described as the application of the Internet to manufacturing. Let us first say what it is not, for the
sake of analytical clarity: e-manufacturing as a discipline is not the same thing as production automa-
tion or the so-called “digital factory.” The application of computing technology to the factory floor
is its own phenomenon, and can be pursued wholly independently of any use of the Internet. That
being said, while e-manufacturing is not the same thing as production automation, it is perfectly
complementary to the idea of production automation—an additional strategy and approach that can
turbocharge the value produced by the application of technology to the factory. Business 2.0 has
memorably defined e-manufacturing as “the marriage of the digital factory and the Internet.”1 What,
then, are the dynamics of this marriage, and where specifically does it add value?

1.3 WHERE, WHEN, AND HOW CAN MANUFACTURING

ENGINEERS APPLY E-MANUFACTURING?

There are literally hundreds of different frameworks that have been created and promulgated to
describe e-manufacturing and how and where it can be usefully applied. If one were to seek a com-
mon thread of collectively exhaustive truth that runs through all of these frameworks, it would be the
following: everyone agrees that e-manufacturing can impact both (a) the fundamental customer value
produced by the manufacturing process and (b) the core efficiency of that process itself (Fig. 1.1).

1.3.1 Impacting Customer Value

The business of manufacturing has always been a guessing game. What do customers want? So
therefore, what should we produce? One of the most profound implications of the Internet for man-
ufacturing is its potential ability to deliver upon an objective that has been a Holy Grail of sorts for
manufacturers since the beginning of manufacturing: build exactly what the customer wants, exact-
ly when the customer wants it. This concept has been clothed in many different terms: “collabora-
tive product commerce,” “collaborative product development,” “mass customization,” “adaptive
manufacturing,” “c-manufacturing,” “made-to-order manufacturing,” etc. All of these refer to the
same basic concept: utilizing the Internet, a customer (or salesperson or distributor representing the
customer) electronically communicates his or her preferences, up to and including jointly designing
the end product with the manufacturer. This specification is then delivered to the factory floor, where
the customer’s vision is made into reality.

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E-MANUFACTURING 1.5

FIGURE 1.1 e-business and e-manufacturing. (Courtesy of Rockwell Automation, Inc.)

The simplest and earliest examples of this “made-to-order” approach have been in the technology
industry, where companies like Dell have pioneered approaches such as allowing customers on their
websites to customize PCs they are ordering. These applications have been facilitated by the relative
simplicity of the end product, with a fairly limited number of parameters against which customers
express preferences, and where product components can be manufactured to an intermediate step,
with the manufacturing process being completed when the customer actually communicates a cus-
tomized product order.
However, the “made-to-order” approach is now being applied to far more complicated product
businesses. Perhaps the most famous example is Cutler-Hammer, a major manufacturer of panel
boards, motor control centers, and other complex assemblies. Cutler-Hammer has built and deployed
a proprietary system called Bid Manager, which allows customers from literally thousands of miles
away to easily configure custom designs of items as complicated as a motor control center—down
to the specific placement of switches, circuit breakers, etc.—with the assistance of a powerful rules
engine and alerts that ensure correct design. The design, once completed and transmitted by a cus-
tomer, is then processed by Bid Manager, which then, often within minutes of the transmittal of the
order, instructs machines and people on Cutler-Hammer factory floors to build the product the cus-
tomer wants. Cutler-Hammer has reported that it processes over 60,000 orders per year via Bid
Manager, and that this comprehensive e-manufacturing application has increased Cutler-Hammer’s
market share for configured products by 15 percent, sales of larger assemblies by 20 percent, pro-
ductivity by 35 percent, and had a dramatic impact on profitability and quality.1
While Bid Manager is an example of a proprietary software package, there are a rapidly expand-
ing number of generally available software tools and approaches available to help make customer
integration into manufacturing a reality, and utilizable by an ever-broadening range of manufactur-
ers. New technologies such as XML enable seamless integration of customer-facing, web-based e-
commerce, and product configuration applications with the software that powers “digital factories.”
The end result is to step closer and closer to the ideal of a “customer-driven” business where what
the customer wants is exactly what the customer gets, with unprecedented flexibility and speed.

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1.6 PRODUCT DEVELOPMENT AND DESIGN

1.3.2 Impacting Process Efficiency

The other side of e-manufacturing is the improvement of not only the level of precision of fulfill-
ment of customer wishes, but also the level of efficiency of manufacturing processes. For a histori-
cal viewpoint, it is useful to view e-manufacturing as the latest in a series of production process
paradigm shifts. From the era of Henry Ford through the mid-1970s, manufacturers focused on the
execution of mass production, and the principles of scale economies and cost efficiencies. From the
late 1970s through the 1980s, in the face of rising competition from high quality Japanese manufac-
turers, this focus, at least among U.S. manufacturers, was succeeded by a new one: total quality man-
agement (TQM) and its principles of quality measurement and improvement. As American
manufacturers leveled the quality playing field, the late 1980s and 1990s saw a new focus: the notion
of lean manufacturing—again, with the way led by the Japanese.2
Lean manufacturing and related concepts such as agile manufacturing and constraint manage-
ment aim to transform mass production into a more flexible and efficient set of processes. The fun-
damental notion of lean and agile manufacturing is to produce only what is required with minimal
finished goods inventory. Constraint management focuses on optimization of flow of materials
through bottlenecks. All of these approaches are dependent upon the ability to forecast future
demand and produce to that particular forecast.3
E-manufacturing enables a step change improvement with respect to lean manufacturing by
enabling a production operation that truly builds to what customers declare they want and when they
want it. While e-manufacturing certainly does not eliminate the need for forecasting, it does signif-
icantly narrow the gap between customer demand levels and production levels by bringing the rela-
tionship between the two into realtime: the customer asks for something, and the factory produces
it. (The current industry standard for “real-time make to order” is 24 h.) The development of such a
“pull” system3 is enabled by

1. The implementation of the “digital factory”—i.e., the use of integrated information systems such
as Manufacturing Execution Software (MES) to coordinate production scheduling, quality,
SCADA/HMI systems for data collection and machine and operator interface control, mainte-
nance, and warehouse/inventory management.4
2. The connection of the “digital factory” not only to e-commerce and product design applications
that face the customer, as described earlier, but to (1) Enterprise Resource Planning (ERP) sys-
tems that need information from the factory to understand how to manage the flow of resources
within the enterprise to feed that factory and (2) to the external supply chain via Internet-based
communications tools that allow suppliers to understand what is required from them and where
and when to deliver it. These external supply chain connectivity applications may also contain an
auction or procurement exchange component, via which a manufacturer may electronically array
suppliers in competition with one another in order to get the best real-time deal.

The implementation of e-manufacturing infrastructure, if executed properly, can generate benefits

of 25 to 60 percent in inventory reduction, 30 to 45 percent in cycle time reduction, 17 to 55 percent
in WIP reduction, and 35 to 55 percent in paperwork reduction.4 While each implementation situa-
tion has its own specific dynamics, this is certainly the order of magnitude of targeted statistics for
which one should strive.

1.3.3 Where It All Comes Together: Information Synthesis and Transparency

While impacting customer value and process efficiency are the two primary axes of e-manufacturing
programs, the strategic level where e-manufacturing may ultimately have the most impact is in the
realm of information synthesis and understanding. If one properly structures one’s e-manufacturing
infrastructure, with an emphasis not only on automation and connectivity but also on reportability—
i.e., the systematic capture and organization in realtime of key workflow and operational data—
then a critical additional benefit can be realized from putting one’s customers, factory, and supply

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E-MANUFACTURING 1.7

chain on an interconnected electronic foundation: the fact that information from across this infra-
structure can be retrieved and synthesized electronically—and allow, for the first time, managers to
have visibility across the extended manufacturing enterprise. Reports from research houses such as
Forrester have repeatedly asserted that poor visibility into the shop floor, into the mind of the cus-
tomer, and into the state of the supply chain are the biggest problems facing manufacturing manage-
ment.5 E-manufacturing’s most important consequence may be the lifting of the fog of war that
currently clouds even advanced manufacturing operations that don’t have the benefit of comprehen-
sive, real-time information measurement and synthesis. One cannot manage what one cannot mea-
sure and see, and e-manufacturing—again, if implemented with reportability as well as connectivity
in mind—can help enormously with the ability to see across the manufacturing value chain.

1.4 WHAT IS THE FUTURE OF E-MANUFACTURING?

A realistic projection of the future of e-manufacturing would simultaneously take into account the
very real power of the innovations embodied in the e-manufacturing paradigm, while also noting the
fundamental difficulties of changing any manufacturing culture. While the good news is that
approaches and technologies have finally arrived that can help make e-manufacturing a reality, and
that companies across multiple industries have made enormous gains through e-manufacturing, it is
nevertheless the case that an e-manufacturing implementation remains an exercise in organizational
change as much as technological change—and organizational change is never easy. However, there
is much to be gained from careful analysis of one’s manufacturing enterprise, and applying the
frameworks of e-manufacturing to see where value can be produced. It is a concept that may have as
much impact on manufacturing value as the notions of mass production, TQM, and lean manufac-
turing have had, and it is certainly beneficial for every manufacturing engineer to be knowledgeable
about its fundamental principles and goals.

REFERENCES

1. Bylinsky, Gene. “The E-Factory Catches On,” Business 2.0, July 2001.
2. O’Brien, Kevin. “Value-Chain Report: Next-Generation Manufacturing,” Industry Week, September 10, 2001.
3. Tompkins, James. “E-Manufacturing: Made to Order,” IQ Magazine, July/August 2001.
4. Software Toolbox, Inc. and Unifi Technology Group. “Building the Infrastructure for e-Manufacturing.” 2000.
5. Manufacturing Deconstructed, Forrester Research, July 2000.

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