Industry's Next Step Forward

The National Center for Manufacturing Sciences (NCMS) needs your help to provide valuable input as we develop a new collaborative innovation network that increases access to advanced computing tools for product design, engineering and manufacturing. These tools will enable businesses of all types to innovate faster, more competitively, and at lower cost. The touch point for these resources will be regional centers coordinating the required education, training and affordable access to shared high-performance modeling and simulation tools.

In order to attract the needed resources, we are conducting a survey of potential stakeholders in this collaborative model, and we have identified you as someone whose particular insight would be especially valuable. Our goal is to learn more about industry’s use of computing and information technology, and how to structure a model that addresses common needs of industry. Please follow this link to contribute to this ten minute survey. We greatly appreciate your willingness to provide feedback on an initiative that will help North American business and manufacturing compete more effectively on a global scale.

Greening the Supply Chain

IndustryWeek - Firms across the supply chain need to develop better coordination mechanisms and move away from arm's-length to longer-term relationships. Introducing environmental considerations to a firm's supply chain often can be a source of innovation and competitive advantage. It also can be a huge challenge, since tasks within a supply chain are interlinked. One sustainability initiative may have ripple effects not only within the firm, but also across firm boundaries and geography. In the following Q&A, Ravi Anupindi, program director of the Master of Supply Chain Management Program at the Ross School of Business at the University of Michigan, assesses the risks and benefits of greening a company's supply chain. Anupindi is a Michael R. and Mary Kay Hallman Fellow and associate professor of operations and management science at Ross.

Sensors Empower the "Internet of Things"

EDN (Conner) - The "Internet of Things" is the networked interconnection of objects-from the sophisticated to the mundane-through identifiers such as sensors, RFID (radio-frequency-identification) tags, and IP (Internet Protocol) addresses. Ford's Tool Link system, for example, builds sensors into vehicles, including the Ford Transit Connect, so that when the driver presses a button, the dashboard displays an inventory of all onboard tools. A similar system for homes would show you an inventory of all clothes that are supposedly in your suitcase or objects in your briefcase.

Combining the number of infrastructure sensors with the number of sensors in personal devices, such as cell phones, yields a round number of 1000 sensors per person that manufacturers will develop and deploy over the next 10 years. With a world population in the billions, this figure would translate to more than 1 trillion sensors. That many sensors collecting data implies a lot of data manipulation, which in turn implies a computing cloud-that is, the use of large numbers of computers, often over distributed data centers, to seamlessly process and store large amounts of data. At a typical data rate, 1 million sensors running 24 hours a day would require 50 hard disks running in parallel to capture the 20 petabytes of data these sensors would create in just six months. Companies that are already deep into cloud computing are jumping into the Internet of Things as a significant new business opportunity for their expertise. Two notable examples are IBM, with its Smarter Planet program, and Hewlett-Packard, with its CENSE (Central Nervous System for the Earth).

How Predictive Innovation will Change Manufacturing Forever

National Center for Manufacturing Sciences - NCMS is developing a national innovation network: a knowledge infrastructure which leverages the wealth of talent, ideas and facilities within our nation’s universities, national labs and industrial research centers so that we can innovate smarter, faster, and more predictably.

Focusing on advanced manufacturing, product design, and development, the network will consist of numerous public/private sector collaborations called Predictive Innovation Centers (PICs). These centers will leverage the resources of industry, government, and academia to accelerate our innovation pace in the 21st Century knowledge race. The PIC network, comprised of a handful of application specific, regional centers with the expertise to facilitate the collaboration, will bridge the gap between traditional manufacturing and 21st century predictive processes, enabling high speed collaboration, innovation, and commercialization.

Why Toyota Should Go Open Source

BusinessWeek (Jim Whitehurst, CEO Red Hat) - The software in Toyota's "black boxes" is like having a car with its hood welded shut. Red Hat CEO Jim Whitehurst calls for more openness in auto.

A reasonable corollary to Moore's Law is that the number of lines of computer source code in a typical product will double every two years. This is daunting for those who know software's dirty little secret: Software quality has improved little over the past 30 years...Unless we improve the fundamental quality of software development, the number of electronics-related defects in a typical product could double every two years.

Toyota's recent response to claims of unintended acceleration in its vehicles illustrates the potential pitfalls of today's technologically complex automobiles. Until its recent troubles, Toyota was the poster child for quality, having pioneered the use of kaizen principles of continuous improvement. Toyota embraced the teachings of quality guru Dr. W. Edwards Deming and instilled a collaborative culture of "see something, say something, and do something." It was one of the first companies to understand that quality did not stop at its corporate boundaries: Designs are shared across the supply chain, and everyone involved is encouraged to collaborate. With more eyes carefully examining all processes, inefficiencies in process and product defects are identified and eliminated quickly...

The software hidden in Toyota's black boxes is the equivalent to having a car with its hood welded shut. Deming taught the benefits and values of breaking down barriers, fostering collaboration, and openness to change. But proprietary software defeats all those concepts. It begs the customer to trust a software secret as more valuable and important than all the other principles of quality management.

Thinking About Open Design

BusinessWeek (Harwood and Simoes-Brown) - "Open-source software is one thing, but would you fly in an open-source aircraft?" The irony of this question is that, in fact, commercial aircraft are often made by an extended community of companies large and small. Indeed, it was Boeing that came up with the idea of X-teams—one of the fundamental stepping stones to open innovation and open design.

Based on the work we have been doing at 100%Open, a U.K.-based open-innovation agency, we believe that those organizations that embrace and default to "open" will be in the best position to innovate better, cheaper, and faster. So what are the most important issues facing executives looking to implement or adopt open-design principles? Here are three of them:

1. Creating Intellectual Property "Airlocks"
2. Structuring Interdependent Business Models
3. Fostering Collaborative Cultures and Mindsets

Virtuous Connections

strategy + business (Verity, McNally) - A fine-tuned supply chain is more than the sum of its parts. Ideally, each link improves the next.

Every supply chain is composed of a set of virtuous or vicious circles; deficiencies in one area cause or reinforce weaknesses in other parts of the chain. This notion, that a supply chain will fail to demonstrate significant and sustainable system-wide improvements from staggered initiatives, offers a new way of looking at a supply chain — as an integrated whole, not as a set of individualized and independent processes. To put it another way, a supply chain is deftly calibrated only to the extent that each part of the chain triggers a virtuous circle in the next.  Reposted from SupplyChainBrain

"Although West and his team implicitly understood the potential influence of the virtuous circle concept on supply chain performance, they nonetheless forecast gains based on expected, discrete improvements in each individual aspect of the supply chain and ignored their carryover impact on subsequent links. In fact, the gains were exponential. And those gains demonstrated clearly that connecting the silos within an organization — particularly within a sprawling structure like a multinational’s supply chain — can produce tipping points that drive efficiency and generate cost savings in parts of the network that at first appear to have little direct bearing on one another."

New directions at Toyota, Chrysler provide supplier relations best practices

Purchasing.com (Hannon) - With a new strategic partner and a new business plan set last year after it's emergence from bankruptcy, Chrysler is starting with a clean slate. And improved supplier relations is a key component of that turnaround strategy Chrysler outlined last November. The strategies Chrysler employed to improve supplier relations provide purchasing teams a very clear and direct benchmarking opportunity. The company's purchasing organization, under newly appointed CPO Dan Knott, has not only been developing and implementing its strategy but very visible in doing it. No secret, back-room supplier pressures, they say. Tried that, didn't work. Today, with Fiat's input, Chrysler is striving for deep and transparent relationships with its suppliers.  Via SupplyChainBrain

The exact factors and reasons that led to Toyota's massive recall and production shut-down earlier this year may be under dispute for decades to come (and are very much in dispute as of this writing). But for the purchasing function, the lesson in that story came from Toyota's steadfast support of its supplier under the worst conditions imaginable.

2010: Year of Recovery for Manufacturers But Not Without Fundamental Changes

IndustryWeek (Bob Parker, IDC Manufacturing Insights) - This will be the year of 'optimization', not just 'management' but finding better ways to drive out waste and maximize productivity.

1. Companies will transform business models to better meet the needs of increasingly demanding customers.
2. IT Organizations will look for cost structures that are more variable as they assist in making technology a focal point of business strategies.
3. Manufacturing companies will begin the process of fundamentally rethinking their supply chain structures, evolving from a fixed-cost-driven supply network to a variable-cost-driven value network.
4. 'Dynamic Optimization' dominates capability investment to support redefining of the supply chain.
5. Manufacturers will look to better align innovation with business strategy.
6. Manufacturing companies will become more mature in their use of enterprise PLM applications.
7. Manufacturing companies will see factory assets as part of a fulfillment capabilities network.
8. Firms will create intelligent fulfillment capabilities networks.
9. Smart services and the need for persistent assets create the inflection point for RFID, sensors, and M2M.
10. Armed with metrics, manufacturers move from sustainability reporting to intelligence.

Also see 2009 Predictions

Vested Outsourcing: Game-changing Rules for Outsourcing

University of Tennessee (Vitasek) - Building stronger relationships and gaining greater value from your outsourcing relationships by moving from win-lose to win-win.

The Vested model derives its name from its hallmark collaborative approach, through which companies and their service providers gain a vested interest in each other’s success. What LEAN did for manufacturing that changed the business world in 1990, VESTED will do for outsourcing. Vested Outsourcing is a fundamental business model paradigm shift in the ways in which a company that outsource and their service providers do business.

Developed by Kate Vitasek in conjunction with the University of Tennessee, Vested Outsourcing is a new methodology by which companies that outsource and service providers can work together more effectively. They work collaboratively to develop a performance-based partnership in which both parties’ interests are aligned, and each become vested in each others’ success.

Tesla Motors: A Tale of Beauty and Pain

SupplyChainBrain (Bowman) - Evelyn Chiang, vice president of supply chain and enterprise resource development for Tesla Motors Inc., sketched a gripping story of vision, ambition and hard lessons through years of trial and error. Born in 2003, the company originally planned to outsource most of its production to Asia...

As with any high-tech start-up, the early years were focused on getting the technology right – “to enable an electric vehicle to compete with any vehicle on the road,” as Chiang said. Employees were mostly engineers; it wasn’t until 2006 that supply-chain and manufacturing personnel were brought in, “almost as an operational afterthought.”

Asia looked good, though, promising labor savings of up to 40 percent, so offshore manufacturing was the way to go. Tesla also turned to outsiders for the car’s design, hiring a firm that relied heavily on the Lotus Elise. For its part, Tesla focused on the powertrain engineering. That crazy quilt of choices was bound to lead to disaster. As Chiang put it: “The product wasn’t designed with cost, quality or manufacturability in mind.”

It was her job to ask the hard questions: How do you know you’re making a profit? What’s your margin? Scrutinizing the bill of materials, Chiang discovered that the cost of parts was more than the price of the car. She delivered the bad news to the company’s directors. “It was the first tine that I heard swearing at a board meeting.”

The Progress and Promise of Real Collaboration

SupplyChainBrain - Companies have made great strides in fostering collaboration with their trading partners, says Joseph Andraski, president and chief executive officer of Voluntary Interindustry Commerce Solutions (VICS). But there’s still work to be done, especially with regard to tearing down internal and external silos.CEOs today get measured on a number of metrics, including working capital, sales, and profit and loss. The deployment of CPFR has led to gains in all of those areas, Andraski claims.

Challenges remain. Companies still aren’t fully sharing critical supply and demand data, he says. Trust remains an issue within many organizations, especially those that aren’t accustomed to satisfying both internal and external customers. In addition, the growing popularity of outsourcing as a strategic tool has created the need to include third-party service providers in the collaborative effort.

Many companies remain stuck in a silo mentality, Andraski says. What’s needed is a rethinking of the way business is done, both inside and outside company walls, including a candid assessment of each partner’s strengths and weaknesses. Such an effort, he says, “is absolutely essential to a supply chain program.”

DOE and EPA Join States to Speed Progress on U.S. Energy Efficiency

EERE News - DOE and the U.S. Environmental Protection Agency (EPA) announced on February 2 the creation of the State Energy Efficiency (SEE) Action Network. This network will help states achieve maximum cost-effective energy efficiency improvements in homes, offices, commercial buildings, and industrial facilities by 2020. Through the network, member organizations will assist states with their energy efficiency initiatives, including residential efficiency programs, financing solutions, and improved availability of energy usage information.

Led by DOE and the EPA, the SEE Action Network will provide targeted technical assistance to states in order to reach national energy goals. The network will drive energy efficiency by using a broad set of goals from the National Action Plan for Energy Efficiency, a public-private initiative that began in 2005 to create a sustainable commitment through the collaborative efforts of gas and electric utilities, utility regulators, and other partner organizations. Its goals range from establishing state-of-the art billing systems about consumer energy use to developing strong energy efficiency policies at the state level.

Univ. of Wash. - Technology Transfer becomes the Center for Commercialization

University Week (Nick) - The UW Office of Technology Transfer is changing its name to the Center for Commercialization, or UWC4C, thus better reflecting what its leader sees as its expanded role at the University.

University Tech Transfer was largely created by the passage of the Bayh-Dole Act of 1980. Under the terms of that act, intellectual property coming out of federally funded research -- which previously had gone back to the federal government -- was allowed to remain with the research institution, provided the research institution followed certain rules. After it was passed, tech transfer offices sprang up at universities across the country to handle intellectual property and pursue licensing opportunities for it. Since 1980, however, the practice has continually evolved, and the UW office has been striving to find successful models for supporting researchers with their commercialization goals.

"We've also revamped our commercialization grant program, which we operate in conjunction with the Washington Research Foundation," Rhoads said. "We give out 15 to 20 $50,000 grants a year, but now we're including the assignment of a team to help any researcher who wins one." The team will include an entrepreneur-in-residence, a patent agent and an MBA student who helps to investigate market opportunities. Other advisers may be called in, depending on the nature of the work. "So to win a grant is now to be on a list of projects that we as an office are committed to working on," Rhoads said.

Paul D. Ericksen Joins Wisconsin MEP to Manage National DoD Supply Chain Initiative

Wisconsin MEP - Paul D. Ericksen has been named manager of the Manufacturing Extension Partnership (MEP) Supply Chain Advantage program, the Wisconsin Manufacturing Extension Partnership announced today.

In his new role, Ericksen will direct a national initiative to enhance the performance of small and midsize suppliers to large military contractors. Ericksen will work closely with suppliers, military contractors and officials with the Defense Logistics Agency of the U.S. Department of Defense (DoD) to develop and deploy uniform strategies to reduce costs and improve efficiency.

From Managing the Supply Chain to Orchestrating a Global Operating Network

IndustryWeek ( O'Keeffe, Vice President, Strategy & Marketing, Advanced Innovations) - Rather than 'managing' the supply chain, companies need to deftly 'orchestrate' its many interconnected resources and participants.

The classic concept of the supply chain is fast becoming obsolete. Chains tend to be cumbersome and over-engineered -- hardly the right metaphor for today's highly fluid, dispersed global marketplace. A far better image for the 21st century is a global operational web or network. And rather than 'managing' it, today's savvy business executives need to deftly 'orchestrate' its many interconnected resources and participants as they seek the optimal way to go to market.

Configuring and orchestrating a global operational network enables businesses to operate with speed and agility, accessing specialized design talent, manufacturing in remote low-cost environments, distributing with close-to-the-customer efficiency, getting to market faster with innovative products and services and, ultimately, limiting the need for building and maintaining a costly physical infrastructure.

Here are seven success principles for effectively 'orchestrating' a global operational network:

1. Involving Partners Early
2. Transparency Via Technology
3. Networking Across the Network
4. Modeling for Momentum
5. Relationships Really Matter
6. An Adaptive Infrastructure
7. Global Product Lifecycle Management

Unstructured Collaboration is Key to Increased Innovation and Business Agility in 2010

IndustryWeek (Gude, Director, U.S. High Tech and Electronics Manufacturing Industry Solutions, Microsoft) - In 2010, manufacturers will adopt social collaboration tools as they look to integrate social computing tools and platforms into their business processes, linking internal communities and external communities.

The biggest challenge in 2010 and beyond, therefore, will be to integrate PLM, ERP, supply chain management and other structured, transactional frameworks with tools and processes that facilitate unstructured collaboration. By embedding unstructured collaboration tools such as unified communications, live meetings and online chat within these structured, transactional systems, manufacturers will be able to increase business agility through an array of benefits ranging from improved innovation to more rapid decision making and faster time-to-market.

Here are three areas where we will see online collaboration take off in the manufacturing sector in 2010.

Ideation - In today's economic environment, many companies are counting on being able to innovate their way out of the recession and they will look to increase their use of practical social collaboration tools to advance this process.

Customer Self-Service - Some forward-thinking companies have recognized that customers can actually help other customers and have fostered community interaction through social collaboration. This idea of "self-service" enables customers to discuss problems and reach solutions organically and more efficiently, while reducing customer service staff time.

Partner Self-Service - The "self-service" model can also be applied to the partner channel. High-tech manufacturers have been able to build tighter partner and retail channels, increasing revenues, brand preference and customer satisfaction through the development of such communities.

Companies Need More Collaboration Across Complex Partner Networks

SupplyChainBrain - Executives worldwide are struggling with the challenges of integration and collaboration across complex networks of business partners and customers in a more interdependent business world, according to a new study by the Business Performance Management (BPM) Forum and the Chief Marketing Officer (CMO) Council. The study finds that 21st Century business models have become increasingly dependent on partner networks to shape customer experiences, drive innovation processes and deliver products and services to global markets. Information systems and cross-company business processes, however, are strained to keep pace.

According to key findings in the research, executives appear to be well aware of the need for significant improvement:

• Some 68 percent of respondents indicate that business partners are essential to their companies’ go-to-market processes, customer experience and competitive position.
• More than half say their partner networks are becoming more global and complex.
• Yet, only 8 percent of executives believe their companies are highly effective in the way they integrate and optimize these business networks.

Boeing's Big Flight

Forbes (Oxford Analytica) - The maiden flight of Boeing's 787 presages good things for the aircraft maker.

Boeing's new 787 wide-body jetliner made its maiden flight on December 15. However, rollout of the aircraft has been dogged by a series of development delays, which will cost the company millions of dollars in compensation to customers. Getting the 787--Boeing's main new contender in the key high-margin wide-body market segment and a platform for several new technologies--back on track is vital to securing the company's future in its ferocious competition with Airbus.

The most significant question is whether Boeing can meet the exceptionally ambitious monthly production targets it has set for itself; if not, the company faces further program losses and may sacrifice its current competitive advantage over Airbus.

New EU Innovation Plan to Boost 'Creative Clusters'

EurActiv - Officials charged with drafting Europe's first 'innovation act' are looking at ways to boost creative clusters, which are seen as a driver of innovation and job creation...."Exchange of best practice is not enough. Networking is necessary but what we need is partnerships and business support services. We are developing better support systems for the innovative services industry."

A fundamental problem for creative industries, according to the EU official, is access to finance. While all start-ups have struggled to secure bank loans in recent times, this has proven to be a particular challenge for knowledge-based companies whose only capital is their creativity. Durvy said the EU executive would like to develop more public-private partnerships (PPPs) and to cooperate more with the EIF on finding ways to support the creative sector.