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Collaborative Manufacturing Management (CMM) is a new way of organiz-

ing and managing manufacturing enterprises, requiring a focus on new ways
of leveraging both partnerships and technologies to compete. This means
knitting together internal manufacturing and business processes, and con-
necting them seamlessly and in synchrony with external business processes.
Sharing information throughout the enterprise is more important than ever,
but Business Process Management (BPM) is becoming the critical functional-
ity for competing in the emerging collaborative value network environment.

Collaborative Manufacturing Management is defined as “the practice of

managing by controlling the key business and manufacturing processes of a
manufacturing enterprise in the context of its value net-
&ROODERUDWLYH0DQXIDFWXULQJ
works. CMM builds upon a collaborative infrastructure,
BPM services, and real-time strategic business management
tools, together with critical applications, production systems,
and enterprise information, to maximize the responsiveness,
flexibility, and profitability of the manufacturing enterprise,
together with the overall effectiveness of the value net-
works.”
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EXVLQHVVDQGPDQXIDFWXULQJSURFHVVHV
RIDPDQXIDFWXULQJHQWHUSULVHLQWKH
FRQWH[WRILWVYDOXHQHWZRUNV

This is a response to important shifts in the overall value proposition of

manufacturing companies. Global competition and downward pressure on
prices have led manufacturers to recognize their position within a Value
Network. They have begun to optimize processes for overall enterprise-wide
effectiveness rather than individual plant efficiency; and many are moving
from isolated business processes to distributed, synchronized BPM.

Many manufacturers have been building out their systems, incorporating

Customer Relationship Management (CRM), Advanced Planning and Sched-
uling (APS), Supply Chain Management (SCM), e-Procurement, and
Logistics systems. Some have begun replacing aged automation systems
with new Collaborative Automation System (CAS) components. Many have
also experimented with Portals and Exchanges. The leaders incorporate real-
time business intelligence, analysis, and decision support tools for top man-
agement. CMM is a new strategy that focuses on facilitating and managing
business processes first, and the supporting systems second.

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The Internet has proven to be a paradigm-shifting disruptive technology, but

much of the impact has yet to be felt. Software suppliers are just coming to
grips with the implications for bounding, delivering, and supporting their
applications. Next-generation applications will not only share information,
they will operate in the context of a broader business process workflow. This
in not a new idea for many factory floor or plant systems, but it is a radical
departure for traditionally passive, transaction-based business systems.

2
Manufacturers need not wait. Affordable, practical CM technologies and
solutions are available today. Those who doubt it need only look to electron-
ics manufacturers, who have pioneered the use of some of these technologies
to become the most agile among their competitors.

In these times, it is important to pay attention to return on in-

5HDOWLPHSURFHVVFRQWUROLVQRWD
vestment. Because CMM involves multiple solutions and
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SODQWV\VWHPVEXWLWLVDUDGLFDO
multiple suppliers, manufacturers will want to work out detailed
GHSDUWXUHIRUWUDGLWLRQDOO\SDVVLYH ROI for each piece of the CMM investment. Most suppliers will
WUDQVDFWLRQEDVHGEXVLQHVV offer a hard dollar value proposition that manufacturers can fac-
V\VWHPV tor into their assessments. CMM can improve response to
changing market conditions, streamline product introductions,
improve asset utilization, increase or maintain market share, reduce inven-
tory, and reduce cycle times. All these improvements are important
contributors to profitability, competitive advantage, and shareholder value.

7KH&000RGHO

The evolution of collaborative value networks requires that manufacturers

visualize the relationships among plant and enterprise applications, markets,
value chains, and manufacturing nodes in order to understand the context
for planning and implementing collaborative manufacturing systems. A col-
laborative manufacturing network consists of spheres or manufacturing
nodes connected by material, information, and process flows. The nodal
sphere encompasses three axes: Enterprise, Value Chain, and Lifecycle.
Above the central plane or disc are business functions. Below it, are produc-
tion functions. These functions, now performed using a number of manual
processes and legacy applications, will be supported by collaborative com-
ponents capable of orchestrating the designated functions in concert with the

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business goals of the node and the competitive dynamics of the value chains
in which the node or enterprise participates.

Today, this globe is populated with standalone applications that a manufac-

turer chooses to install and support. These new and legacy systems are
sometimes knit together by mes-
Business (QWHUSULVH$[LV
saging and workflow-based EAI
t
systems to optimize enterprise or
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performance. Outside the do-
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main of the nodal manufacturing
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sphere, Internet-based collabora- Buy-Side
Buy-Side
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tion options are growing in $36
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power and functionality. Ex- Suppliers FXUH */6
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product lifecycle support options Production

emerge for collaborative product

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design and support via the Web.

ARC’s CMM Model defines the requirements for an information system that
addresses the key elements of collaborative manufacturing outlined above.
The model also recognizes the need to support internal and out-sourced exe-
cution of all enterprise activities by defining solutions for different functional
units and for an extended enterprise or supply chain.

6HYHQ&005HTXLUHPHQWV

Manufacturers need a vision of how collaborative manufacturing is develop-

ing, where it will go, and how all the pieces fit together. But it is equally
important to understand what solutions are available today and the seven
collaborative manufacturing functions.

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There are two imperatives for the plant floor: Surface more information for
sharing with other audiences, and make production systems more responsive
and flexible. To be competitive, manufacturers must raise the visibility of

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manufacturing information in order to optimize performance, enhance re-

sponsiveness, and manage costs. Increasingly, purchasing decisions will be
influenced by the quality of available information about orders in produc-
tion. The winners will be those who leverage manufacturing data not only to
continuously improve their own operations, but also to enhance their infor-
mation sharing with customers and suppliers.

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Collaboration must be embraced on the plant floor in four key dimensions:
with suppliers, with customers and channels, with product design partners,
and with production equipment support providers. Look to suppliers to in-
creasingly provide Web-enabled, collaborative software and production
equipment to support each dimension. Over time, manufacturing systems
will be able to participate in an environment where they operate collabora-
tively with markets.

6XUIDFHDQG6KDUH,QIRUPDWLRQ
$QDO\VLV The concurrent trends toward increasingly so-
,QWHUSUHW'DWDDQG&RPH

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phisticated devices on the plant floor and more
demands for both manufacturing flexibility and
0HDVXUHPHQW &RQWURO information visibility driven by the increased
$FTXLUH'DWD 7DNH$FWLRQ
competition are driving an approach to collabora-
tive manufacturing where the collection,
dissemination, and analysis of information about
production operations is recognized to be strate-
6XSSOLHUV &XVWRPHUV gically as important, if not more important, than
the physical products produced
5HDOWLPH%XVLQHVV3URFHVV&RQWURO
Control is the foundation for collaborative manu-
facturing and is a critical component of an effective collaborative manufac-
turing infrastructure. The key here is making the right information available,
along with the appropriate management tools, throughout all levels of the
organization, as well as customers and suppliers in such a way as to rein-
force, enhance, and optimize business processes.

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Today, plants can utilize Supply Chain Management (SCM) and Procure-
ment systems to improve their upstream supply chain performance, or they
can participate in buy-side exchanges or procurement portals. Collaborative
manufacturers can leverage this information in real-time to distribute work

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throughout the production network in response to actual demand, rather

than forecasts, thereby gaining the competitive edge.

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DQG%XVLQHVV%RXQGDULHV 6\QFKURQL]HEXVLQHVVSURFHVVHVZLWK
PDQXIDFWXULQJSURFHVVHV
An important aspect of the industrial software marketplace evo-
2SWLPL]HWKHVXSSO\VLGHYDOXHFKDLQ
lution is the dimension of control, or automating business
processes to meet economic targets given variable inputs or sce- $XWRPDWHEXVLQHVVDQGSURGXFWLRQ
SURFHVVHVDFURVVGHSDUWPHQWDODQG
narios. As powerful, connected computing devices become
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pervasive and exchanges change the dynamics of buying and sell-
*HQHUDWHYDOXHE\HPSRZHULQJSHR
ing, the foundation is being laid to change the fundamental SOHDQGPHDVXULQJUHVXOWV
paradigm from one of providing data or information visibility to
,PSOHPHQWFROODERUDWLYHGHVLJQDQG
human decision makers, to one of providing the benefits of real HQJLQHHULQJ
automation and business process control. First movers can expect
/LQNRSHUDWLRQVZLWKFXVWRPHUV
to realize significant competitive advantage by capitalizing on the
(PSOR\FROODERUDWLYHPDLQWHQDQFH
agility and responsiveness of adaptive business process control,
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and these will be manufacturers with vision and innate cultural
7KH6HYHQ'LPHQVLRQVRI
adaptability. &ROODERUDWLYH0DQXIDFWXULQJ

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Web-based tools such as Portals allow collaborative manufacturing managers
to visualize information from a variety of systems throughout the enterprise
and interpret the results in conjunction with established performance met-
rics.

,PSOHPHQW&ROODERUDWLYH'HVLJQDQG(QJLQHHULQJ
Designing new products and their manufacturing processes is collaborative
in nature, and new Internet-based tools are emerging to support these activi-
ties. As manufacturers react to the broader emerging collaborative
environment, these systems will be crucial to their ability to compete by pro-
viding quick and effective responses to demand for new products.

For discrete manufacturers, this must include the management and collabo-
ration of specification and product development information (PDM), as well
as the design and collaboration on manufacturing processes across multiple
specialized nodal manufacturers. Collaboration systems must support as-
sembly sequence planning, constraint-based design, distributed process
planning and layout, work instructions development, routing and operations
times, performance analysis, and optimization. In addition, they must be
integrated with plant business systems.

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$5&6WUDWHJLHV‡2FWREHU

After the initial product and process design and documentation, collabora-
tive systems must support ramp to volume, local process optimization,
change management, and manufacturing improvement projects such as
throughput reduction, cost reduction, and automation. Hybrid process
manufacturers have an analogous situation in the development and deploy-
ment of recipes and manufacturing processes. Collaborative solutions for
these chemical, food, and pharmaceutical plants should support recipe-
related business processes in R&D, manufacturing, and marketing. They also
should ensure consistent recipe maintenance across enterprise boundaries.

/LQN2SHUDWLRQVZLWK&XVWRPHUV
The concept of collaborating with intermediaries or customers has been
around for a long time – witness the establishment of EDI and Vendor Man-
aged Inventory (VMI). In the emerging collaborative environment, close
collaboration among nodal manufacturers raises cooperation and interaction
to a new level. It now becomes not only possible, but necessary to transmit
real-time information in two directions among these nodes. Production in-
formation on quality, materials availability, and production status must flow
downstream to customers, while information on orders,
7KHHVVHQFHRIFROODERUDWLRQLVWKHDELOLW\ inventory levels, specifications, and change orders flows
IRULQGLYLGXDOSODQWVWRV\QFKURQL]HWKHLU
upstream.
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The essence of collaboration is the ability for individual
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plants to synchronize their work in real-time based on ac-
WKHSURGXFWLRQOHYHOLQDKLJKO\
GLVWULEXWHGPDQQHU cepted orders and to coordinate the production and
delivery of component materials at the production level in
a highly distributed manner. Orders may be scheduled, produced, and de-
livered from a tightly integrated and coordinated value chain. This requires
sharing of detailed, current production information throughout the value
chain, as well as throughout the enterprise. For example, brand managers
armed with better information about production can begin their marketing
campaigns before the inventory appears in the warehouse. Demand for
components and services for the implementation of a customer order is sent
to other plants or companies within the value network and then handled ap-
propriately. At each node in the value chain, the work can be done in-house,
outsourced to another node in the network, or purchased outside the net-
work. This approach adds a high degree of confidence to Available To
Promise (ATP) quotations because it reflects the actual committed produc-
tion schedule based on real orders.

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(QDEOH&ROODERUDWLYH0DLQWHQDQFHDQG0DQXIDFWXULQJ6XSSRUW
Manufacturers will compete by making production and delivery commit-
ments to their collaborating network partners and customers. In order to
allow for the possibility of production equipment failures or downtime, they
can either push out the delivery schedule to provide a margin for error, or
implement an EAM system that is closely integrated with production man-
agement and Plant Asset Management systems. By using the latter
approach, equipment health can be integrated into the production commit-
ment generation and can be reflected in customer satisfaction.

Another important collaboration area is with plant equipment suppliers.

They may offer remote monitoring and maintenance of plant equipment via
the Internet. It can take the form of a Remote Maintenance Portal or monitor-
ing of provided equipment with embedded Internet access. When
production equipment is connected to the Internet in this way, the embedded
intelligence can be gathered, published, and visualized over the Web. With
the right interface, remote users can then monitor the equipment, supply
consumables, and support or provide diagnostics and maintenance.

&00,QIUDVWUXFWXUH

Collaborative Manufacturing Management builds upon a collaborative infra-

structure, business process management services, and real-time strategic
business management tools, together with critical applications, production
systems, and enterprise information, to maximize the responsiveness, flexi-
bility, and profitability of the manufacturing enterprise. Most large
manufacturers have begun to put in place at least some of the components
required for CMM, and by following the CMM model and documentation
they can complete the journey.

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Critical enterprise data and information can be found distributed around the
enterprise in a multitude of Applications, Databases, Internet, Wireless, Em-
bedded, PDA, Barcode, RF, and other devices and systems. What is needed
is a way to have the information available to people or systems that need it,
when and where they need it. This implies a deep understanding of the con-
text – or business processes – behind the request. In other words, business
process requirements determine information requirements. These processes

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in turn must be synchronized in multiple dimensions, across organizational

and enterprise boundaries.

It is not practical to amass all of this data in a central

6WUDWHJLF location, and in many cases, this may be counter-
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material handling equipment. As the production
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are enabled, manufacturers will be able to collabo-
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rate more effectively.

$SSOLFDWLRQV
Applications are at the core of any information system, and this remains true
in the collaborative manufacturing model. However, all applications in a
collaborative system must be “collaboration-enabled.” This affects the way
in which applications manage data and how they support integration within
the overall system. Even new, fully integrated, ERP solutions may need up-
grading to enable proactive collaboration. This is recognized by most ERP
companies, and has become the focus for new developments for Web-
enabled, open products and new architectures such as SAP’s MySAP.com
and i2’s TradeMatrix.

Information sharing is basic to collaboration. Information in a collaborative

environment must, therefore, be open for convenient access by all authorized
users and by other collaboration-enabled applications across the extended
enterprise or supply chain. Collaboration-enabled applications, therefore,
utilize open access methods for maintaining and accessing information they
are responsible for. Since the Internet will be a primary platform for com-
munication in the collaborative manufacturing world, information must be
made accessible through simple browser interfaces to support all levels of
collaboration that will occur in manufacturing.

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Collaboration-enabled applications must assume that user access will occur

via browser interfaces. This enables collaboration across a broad range of
users who may have little or
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no local application support.
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manufacturing systems. /RJLVWLFV7UDQVSRUWDWLRQ:DUHKRXVH0JPW
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Manufacturers need to provide executive management with tools to set tar-
gets, measure performance, and formulate strategy. Leading manufacturers
incorporate real-time business intelligence, analytics, and decision support
tools for top management, and employ activity-based costing and manage-
ment, Balanced Scorecard, or similar tools designed to influence disparate
divisions, plants, groups and members of the enterprise to act together as a
team.

The next generation of Strategic Enterprise Management tools will provide

for planning, creating, managing, and optimizing the enterprise in the con-
text of its “value networks,” where intimate partners cooperate to pursue
specific business opportunities.

These tools will incorporate advanced business modeling capabilities and

will allow managers to leverage technical capabilities in a strategic way to
create competitive advantage for the value network, as well as individual
companies within the network.

Inherent in these tools will be the creation and enforcement of business terms
and relationships among the partners.

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Four main areas must be addressed when considering an infrastructure to
support CMM. The infrastructure must support connectivity within the enter-
prise and among various sites, departments, and locations; external

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connectivity to partners and customers; equipment connec-

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tivity, and visibility of necessary information to users
throughout all levels of the enterprise. Internal connec-
tivity may be implemented with Application Servers,
Messaging, Host Integration, Web Services, and the like.
External connectivity may be implemented with private
exchanges, public exchanges, portals, and traditional tech-
nologies. Visibility can be effectively implemented using
Portals.

Collaborative manufacturers are beginning to embrace the use of Portals and

Exchanges. Many have some deployed and more planned. In many ways,
the distinction between portals and exchanges is fuzzy, but there is a funda-
mental difference: Portals are oriented toward connecting systems with
people, where exchanges primarily connect systems with systems, or busi-
nesses to businesses.

Portals and exchanges provide ubiquitous connectivity. That role is solidify-

ing as applications and application suites of all kinds begin to provide
standard interfaces for portals and exchanges.

Considering the benefits of collaboration, rapid enablement of seamless inte-

gration with new partners will become a major challenge for system
architects. Addressing each new integration need as another point-to-point
connection will overwhelm even the best development team and will frus-
trate the company’s improve-
Business
ment programs. Considering
t
6WUDWHJLF or this, ARC believes that an in-
(QWHUSULVH upp
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frastructure approach to
integration is a basic element
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of the collaborative manufac-
turing management system.
Customers
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The Business Process Man-
agement approach replaces
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point-to-point integration with
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able point-to-framework
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approach. By using portals,
markets, and BPM systems,
 manufacturers can achieve a

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high level of flexibility in connecting to multiple applications, and the con-

nectivity becomes less of a hurdle when it comes time to replace or add
systems. This approach extends the lifecycle of your collaborative manufac-
turing strategy and makes it sufficiently dynamic to respond to future
changes.

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Enterprise Integration has grown beyond its traditional role as “middleware”
to an advanced form of integration with a focus on implementing new and
enhanced business processes within the integration software.
The addition of process development and management tools $Q\FRQFHUQVDERXW-DYD
opened up the real possibility of automating and maintaining SHUIRUPDQFHKDYHEHHQODLGWRUHVW
business processes. Proven middleware technologies, such as E\EURDGDGRSWLRQDQGDSSOLFDWLRQ
message queues, message brokering, transformations, transac- WRVRPHRIWKHPRVWGHPDQGLQJ
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tion processing, and legacy integration, remain at the heart of
these systems. In some cases, field-proven modules are ex-
tended and leveraged by suppliers of general-purpose BPM products. Be-
cause these products generate separate integration use cases and are more
visible throughout the life cycle, they appear less technical and have a higher
perceived value.

Nevertheless, Enterprise Integration has always been and remains heavily

technical with difficult requirements such as portability, high security, high
performance, and high reliability. The Sun J2EE (Java 2 Enterprise Edition)
Platform, with Java component-based Applications Servers, has been
adopted widely by most Enterprise Integration software suppliers, providing
the consistency, portability, and reusability long sought by suppliers and IT
organizations. Any concerns about Java performance have been laid to rest
by broad adoption and application to some of the most demanding integra-
tion situations.

In much the same way that standard browsers let people access Web pages
from computers on different operating systems, a stack of protocols and lan-
guages (collectively called XML Web services) is essentially becoming an
Internet operating system that not only lets computers on different operating
systems share data, but also vastly simplifies application integration, pro-
vides access to the data in legacy systems, and offers new collaborative
business opportunities.

The eXtensible Markup Language (XML) enables the creation of platform-

independent business data. Like HTML, XML uses tags for self-description,

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but it uses them to describe the data format of a message. The Simple Object
Access Protocol (SOAP) is the messaging protocol for XML Web services. It
is basically a remote procedure call mechanism over HTTP for messages that
are encoded in XML. The Web Services Description Language (WSDL) pro-
vides grammar for specifying properties of an XML Web service such as
what it does, where it’s located, and how to invoke it. It provides a simple
way for service providers to describe the basic format of requests to their
own systems, regardless of such underlying protocols as SOAP. It is also a
key part of the Universal Description, Discovery, and Integration (UDDI) ini-
tiative to provide directories and descriptions of such XML Web services for
e-business. Essentially, UDDI is an XML Web services yellow pages.

With respect to internal connectivity and Collaborative Automation Systems,

a great deal of progress has been made, and continues to be made, toward
satisfying the support and synchronization requirements of CMM. Emerg-
ing capability is focused on optimizing the response of manufacturing assets
to production directives provided by appropriate CMM components. From a
functional perspective, Automation hierarchies are collapsing, information
barriers are dissolving, and architectures are becoming logical and concise.
From a logical perspective, manufacturing systems are adopting a common
communications backbone (Ethernet TCP/IP), work process-based messag-
ing, XML as a common language, and push transports. From an operational
perspective, the focus is on steady state effectiveness, state transitions to
support agility requirements, and closing operational loops with perform-
ance visibility and the use of hieratical scorecards. International standards
are the cornerstone in the evolution of Collaborative Automation Systems
and are responsible for a new clarity.

Managing multi-site production is a critical aspect of internal connectivity.

CMM systems must provide real-time visibility and business process control
across distributed manufacturing facilities, share real-time production data
with major suppliers and business partners, and provide customers with
real-time manufacturing information visibility as needed. In addition, they
provide for centrally managing manufacturing processes that may be dis-
tributed among physically remote plants.

In an efficient supply network, companies must be able to implement shared

business processes and data across organizational boundaries in a collabora-
tive way. This is, in many ways, the essence of the virtual supply chain or
virtual manufacturing. Conventionally, outsourcing a standalone production
operation increases risk. If the integration problem is ‘solved’ only at the

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business systems level, the plant manager rightly feels that he has no control
over this portion of production. But establishing a credible, reliable infra-
structure integrating such an outsourced group brings the risk level back to
neutral.

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Demand and supply coordination is fundamental to the efficient operation of

the supply network. In the typical approach, this is accomplished by sharing
and coordinating forecast information, and in some cases, raw sales data.
With a Demand-Pull approach, it becomes possible to work with both long-
range forecasts and true, demand-based production scheduling. The de-
mand/commitment process can ripple backward within one plant or
between production nodes resident in different plants or companies.

Synchronizing production among multiple plants requires real-time bi-

directional information sharing, including functionality for change manage-
ment, work allocation, tracking, information visibility, collaboration
management, and performance monitoring. These elements are typically
custom-built using tools and capabilities of BPA systems, but at least one
supplier, Camstar, has released many of these functional modules.

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Manufacturing asset coordination and control is the domain of the Collabora-
tive Automation System (CAS). Process Automation Systems and
Distributed Control Systems are the predecessors of the CAS. One of the ma-
jor obstacles was the disparate data
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defines the information flows between
control systems and CMM systems, and emerging standards from bodies
such as the Workflow Management Coalition or the Business Process Man-
agement Initiative will provide a standard-based approach to work process
management, both within and between manufacturing and business systems.

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Portal technology is another key element of the ARC Collaborative Manufac-
turing Model. As companies shift to collaborative manufacturing,
boundaries to information sharing will
decrease dramatically. Customers,
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Portals Exchanges across the complete enterprise and

(Systems to People, (Systems to
People to People)
Business Process Management Systems, B2B) value chain. These users will have
PLM
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Information overload will also be a significant concern in a collaborative

manufacturing system. Despite the use of automatic workflows that can deal
with process disturbances, users may receive more alerts and
([FKDQJHVZLOOEHDNH\HOHPHQWLQ
requests for information from collaborative partners, be they
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human or systems. Portals provide a convenient way to estab-
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flow and problem solving. Recognizing this benefit, many por- LQWRWKHZRUNIORZVRIWKH
tal suppliers provide role-based templates that organize user PDQXIDFWXULQJHQWHUSULVH
interfaces for efficiency while allowing personalization that can
address individual differences.

The best portals go beyond simply displaying data in one place, or assem-
bling collections of related data for Key Performance Indicator (KPI) displays
or other analysis, and allow users to verify facts, make and pursue the logical
connections, and to take immediate action. They integrate an enterprise’s
various digital assets and enable the user to easily navigate between these
assets. They support each user with an unlimited number of discoveries
driven by their situational needs.

Certain applications already have a strong internal mechanism for collaborat-

ing among distributed instances of the application. Portions of this internal
collaboration may be moving to Web-based solutions. Whether or not this is
the case, collaborative integration with these applications is likely to be most
effective at the system level, rather than replace the built-in collaboration.
The driver for system-level connectivity for these applications is the need to
add new, distributed business processes.

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Exchanges come in two flavors, public and private. Public exchanges, of
which there was much hype in the last couple years, can either be industry-
sponsored or funded through private equity firms. Industry-sponsored ex-
changes such as oil & gas exchange TradeRanger, airline exchange Cordiem,
food & beverage exchange Transora, or the automotive exchange Covisint
are focused on streamlining transaction processes and supply chains and
lower landed costs within the vertical for non-strategic goods. Successful
public exchanges that are equity financed are typically looking to streamline
transaction processes and lower landed costs of goods as well, but for more
generic products and services that run horizontal across a number of indus-
try sectors. Private exchanges offer secure connectivity between businesses
or systems providing a focal point for strategic collaboration between a

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manufacturer and its strategic partners. Exchanges in manufacturing will

take on many forms, and it will be the responsibility of tomorrow’s manufac-
turer to be prepared to participate in and amongst these various exchanges.

While there has been a significant amount of over-sell for these exchanges,
the fact remains that there are still numerous exchanges that are providing
significant value to the participants. The value proposition that the exchange
model offers, through the naturally dynamic and collaborative environment
that it creates, will lead to its continued growth in importance as a key ele-
ment in a collaborative manufacturer’s operation. ARC’s Col-
,QWHJUDWLRQZLWKSXEOLFH[FKDQJHV laborative Manufacturing Model, therefore, reflects the
ZLOOEHG\QDPLFDQGFROODERUDWLYH importance of interfacing to exchanges by making it one of the
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that exchanges are fully integrated into the workflows of the
manufacturing enterprise. This is particularly true in a collabo-
rative manufacturing environment that exploits outside resources in order to
gain efficiency and velocity in the supply of goods. In this vein, system ar-
chitects must anticipate supporting a variety of collaborative workflows
including such things as dynamic negotiations with multiple suppliers to
procure material and proactive status inquiries and status reports that sup-
port synchronized planning among suppliers, manufacturers, logistics
groups, and customers.

Exchanges must be recognized as external and internal elements of the col-

laborative manufacturing enterprise. Integration with external exchanges
will be dynamic as new exchanges are added and as existing integrated ex-
changes are deleted from the companies approved workflows. This process
is analogous to interfacing with different areas of the extended enterprise,
and a solid infrastructure will be vital in facilitating system modifications
driven by changes in the external exchanges.

Larger, tier one collaborative manufacturers will also use private exchanges
internally to manage their own extended enterprise and supply chains. This
model, in fact, has become the chief strategy in many companies for imple-
menting collaborative manufacturing. In these cases, the private exchange
becomes a major collaborative hub providing infrastructure services for not
only the enterprise, but also the extended value chain of partners. Leading
companies are now beginning to act as application service providers by host-
ing an application within the private exchange. Such hosting enables their

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lower tier partners to actively collaborate with the channel master without
incurring the oft-times prohibitive costs of installing a given software solu-
tion that a channel master is using.

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Implementing Collaborative Manufacturing means building and implement-

ing business processes both internally (from deep within manufacturing
systems to deep within business systems) and externally, connecting partners
along a number of dimensions. Business Process Management is the driver
for integration, both among applications and between companies.

BPM synchronizes and binds all of

the collaborative entities together.
There are multiple dimensions or
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layers to Business Process Manage-

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change, Plant Systems, and Visibility 7LPH

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provide tools for SIs and implemen-
tation teams to use in deploying these systems. BPM applications are already
beginning to emerge. These are targeted, configurable solutions that make
certain kinds of business processes easy to implement. Supply Chain Process
Management, or SCPM, systems are examples of this.

Introducing portals and exchanges begins to make advanced collaboration

possible by leveraging the Internet to simplify the interconnection between
systems and users and between business entities. But manufacturers need to
add the infrastructure to support the complexities of implementing business
processes across organizational, geographical, and functional boundaries.
This requires the addition of workflow management, messaging, data trans-
lation, and connectors to new and legacy applications. Systems providing
these capabilities are referred to here as Business Process Management sys-

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tems. They are typically XML-based and offer app-to-app connectivity, as

well as app-to-portal or market connectivity. De facto standards for messag-
ing and data translation are emerging, with workflow standards trailing a bit
behind, but also underway. These systems tackle the problem of handling
the massive, asynchronous connections between the customer or supplier-
facing portals (or exchanges) and the manufacturers’ internal systems or ap-
plications.

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Business Process Management is accomplished using tools like Enterprise

Application Integration (EAI) systems and workflow engines. EAI can map
data between systems, apply business rules and logic, and access different
applications through a set of connectors that handle the data transformations.
This means that order information can be sequentially sent to various appli-
cations and modules throughout the enterprise - such as ERP, PLM, CRM,
and SCM - as an order progresses through the order fulfillment and manu-
facturing cycles.

Business Processes need to be quickly established, modified, or eliminated as

business partners and strategies change. This is further complicated by the

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fact that a B2B transaction typically consists of a number of business proc-

esses and sub-processes. For example, a purchase may involve processes
such as specification matching, establish-
ing quality standards and inspection
procedures, in-process manufacturing
data requirements, logistics, and insur-
ance requirements. In turn, these trigger
other processes as the order moves
through the fulfillment cycle. This trans-
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and delivering final products. For exam-
ple, poor logistics can thwart the best
efforts of production managers to in-
crease throughput, meet commitments,
and control costs. Design changes that
ignore manufacturing and procurement
constraints can likewise disrupt produc-
tion systems and create large delays in
bringing new products from the drawing
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reliable performance. Overlaying col-
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In recent years, many large discrete manufacturers have devoted significant

energies to achieving a lean enterprise. Typified by its emphasis on core
competencies, just-in-time (JIT) inventories, error-free production,
&ROODERUDWLYH and continuous removal of waste, a successful lean manufactur-
ing strategy turns on the ability to apply the right resources and
/HDQ
the right tools in an efficient and coordinated fashion. Collabora-
tive Manufacturing Management extends the concept of Lean
/HDQ
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esses and applying them across all of the elements that touch the
(QWHUSULVH value chain. As a competitive strategy that leverages new tech-
nologies, fosters collaboration with value network partners,
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creates electronically driven automated workflows, and promotes
focusing on core manufacturing competencies, CMM extends lean
&ROODERUDWLRQ([WHQGVWKH
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customers, and service providers.

A collaborative manufacturing strategy allows a Lean enterprise to achieve its

full potential by optimizing the value stream. The value stream describes the
total set of activities necessary to produce the product from design through
production, delivery, and product support. Development of a collaborative
enterprise, therefore, requires examining processes both inside and outside the
factory floor and optimizes the principles of a truly Lean enterprise.

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One of the initial advantages of a truly collaborative manufacturing envi-

ronment is that it provides a framework that effectively fosters and enables
implementation of the Lean environment across all components of factory
operations. As the benefits of Lean manufacturing are realized in specific
areas of the production process, the goal becomes the application of Lean
principles across the enterprise, leveraging the blossoming Lean mindset and
culture. Since a collaborative enterprise is inclusive of not only the manufac-
turing environment, but also pervades product development, supply chain,
customer support, and logistics, a collaborative infrastructure becomes essen-
tial to perpetuating a Lean enterprise.

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Leading process and discrete manufacturers have found ARC’s CMM model
to be useful in thinking through the issues involved in effectively deploying
the next generation of technologies, applications, and business process man-
agement tools. Presented here are some ideas for leveraging these tools to
develop a comprehensive vision, strategy, and technology plan to create a
more responsive, more effective, and more profitable organization.

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Many manufacturers are rapidly moving forward on multiple fronts, actively

implementing and testing a variety of applications and technologies that can
support CMM, if done properly. This has been a practical and necessary ap-
proach resulting from the advent of the disruptive technology of the Internet,
together with its impact on new and legacy applications and solution meth-
odologies. Quite commonly, this has resulted in overlaps, gaps, and
inadequate direction, any of which can reduce or eliminate the potential pay-
off from these initiatives. Manufacturers can counteract this effect by
instituting sound CMM practices, which create a framework for business
process management based on strategic corporate objectives.

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An important first step is gaining a thorough and deep understanding of
manufacturing’s evolution to Collaborative Value Networks and the role that
sound CMM can and should play in getting there. Within this context, each
manufacturer must identify its unique vision, looking out several years, and
specific strategies to achieve that vision. Clients can look to ARC for exper-
tise and boardroom-level support in developing the understanding,
articulating the vision, and creating supporting strategies and architectures.

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Using ARC’s CMM Model as a point of departure, existing applications, so-
lutions, and initiatives can be mapped in three-dimensional space and
analyzed for completeness, appropriateness, gaps, and overlaps. This be-

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comes the “as-is” baseline against which future plans are evaluated and de-
veloped. This can also facilitate benchmarking comparisons with other
manufacturers and industries.

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Because of the breadth of the solution and the immaturity of certain tech-
nologies, creation of a given manufacturer’s “Ideal” solution for CMM isn’t a
straightforward process. It involves thinking about interactions among all
areas within the enterprise, together with business processes that extend be-
yond enterprise boundaries. It necessitates the identification of certain key
trends and developments and projecting them forward to the appropriate
point in time. Manufacturers cannot afford to focus solely on IT trends and
forecasts at this critical juncture. Manufacturing and automation systems
themselves are evolving and, in some cases, leading the way. It is critical to
develop your specific ideal solution based on an understanding of both en-
terprise and plant-floor solution capabilities and trends, as well as the
mechanisms and techniques that will knit them together into controlled, syn-
chronized business processes.

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With expert guidance, manufacturers can begin to take concrete steps to
move from their current state toward their ideal solution. It is important to
pay attention to the seven dimensions of Collaborative Manufacturing when
doing so, but with an understanding of recent advances and trends. It is then
possible to validate existing and planned architectures, solutions, and tech-
nologies or to select appropriate replacements. Timing becomes critical
because certain components of the solution may be either more mature or
technically more suitable for supporting the ideal solution. Short-term
tradeoffs will inevitably be made, but the associated pain can be minimized
with careful planning and attention to detail.

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At this stage in the evolution to CMM solutions, suppliers who never crossed
paths are now offering competing solution components. Traditionally, en-
terprise-level suppliers expand toward the plant floor, while plant-floor
oriented suppliers expand upward. At the boundaries, how should you de-
cide between them? Feature/Function comparison? Domain Expertise?
Market power? Incumbent? Best Price? Often these are secondary considera-
tions, and the reality of internal politics drives the decision. It is very
important to solicit an independent evaluation, taking into account your

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manufacturing processes and plans, as well as desired business process im-

provements. Another critical success factor is establishing suitable metrics
for all key business processes, paying particular attention to ensuring closed-
loop control mechanisms will be put in place where possible, and along each
of the critical dimensions of the model.

Implementing Collaborative Manufacturing Management requires consider-

ing a number of CMM aspects, such as cultural impact and transition,
metrics, technology and architectural details, ROI, and project management.
ARC will continue to elaborate and report on these kinds of issues and on
developing and implementing a CMM strategy.

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• Manufacturers should leverage ARC’s tools and capabilities to develop

and implement a practical, and sound CMM plan.

• Read and understand ARC’s new publications in this area.

• Act now. The technology is at hand, and your traditional and new
competition is already moving in this direction.

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