4.4 Process innovation

Most activities in the manufacturing production process fit somewhere within one of the following business processes:

Research and development.
Design and engineering.
Purchasing and logistics.
Operations – manufacture/production.
Marketing.
Sales and order management.
Post sale service.
Product content and design.

Effective ICT systems enable these processes to be performed more efficiently and effectively and also more flexibly. Process innovation involves the review, revision, streamlining and improvement of procedures, systems and tasks to eliminate non-value adding activities and reduce the overall number of transactions or steps in a production process. It often involves instituting an entirely different way of doing things ( Davenport 1993). Examples of ICT enabled processes are listed in Figure 3.

Figure 3: ICT enabled processes

Process Category	Examples of ICT enabled processes
Research and development	ICT based modelling and analysis ICT based field trails and data collection Research coordination, development and management systems and collaboration Integrated research database Information distribution and dissemination
Design and engineering	ICT aided design and analysis ICT controlled modelling and prototyping Integrated engineering and design database Collaborative design Design for manufacture systems Integrated ICT systems coordinating design, manufacturing and sales ICT–based compliance testing
Purchasing and logistics	Integrated supplier ordering system Inventory storage and retrieval systems Third party shipment and location tracking systems
Operations – manufacture/production	Linkages to sales and design systems (built to order) Real time systems (custom configuration and order processing) Integrated materials ordering and inventory management system Robotics and cell controllers Diagnostic systems (maintenance and repairs) Quality and performance information Health and safety systems
Marketing	Customer relationship management and databases Point of sale systems tied to individual customer purchases Online sales and customer profiling Vendor managed inventory (VMI) systems Expert systems for data and trend analysis Statistical modelling of dynamic market environments
Sales and order management	Prospect tracking and management systems Sales force management systems Online/dialup product database (price, lead times, order variation, status checking) Web enabled ‘choosing engines’ that match products and services to customer needs Expert systems for configuration, shipping and pricing Sales analysis systems Customer, product and production databases
Post sale service	Online/dialup service and fault analysis Service personnel location monitoring and management Service diagnostic database Software upgrade
Product content and design	Enhanced functionality, control and operation Performance monitoring and management Data collection and integration Networking

Source: Based on Davenport, Thomas. 1993.

Many of these ICT enabled processes are used by companies consulted for this study. Whittley Marine, for example, makes extensive use of ICT embedded in stereolithography equipment used in the design and production testing of motor boats and marine vessels [8] . This technology replaces manual, more time consuming and less accurate techniques for the creation of moulds and shapes.

Whittley Marine

Whittley Marine is a Victorian manufacturer of marine pleasure craft. The manufacturing process is based on moulds for the range of fibreglass models. Moulds are re-used subject to the quality of the mould and the demand for the design.

Moulds are designed using sophisticated CAD systems and tested under computer simulated marine conditions. Scale models are generated using stereolithography technology – which provides for greater accuracy, less margin for error and faster results on new design parameters. This results in shorter design timelines and faster time to production of the mould.

As indicated earlier, process related ICT investments will not of themselves deliver an economic return. If nothing changes about the way work is done then the role of ICT is simply to automate an existing process, and the economic benefits are likely to be minimal ( Davenport 1993). The interviews provided evidence that successful introduction of ICT enabled production technologies has been accompanied by a fundamental redesign of business processes.

In the factory environment, ICT supplements and in many cases replaces the need for human direction and supervision. In the factory walk throughs undertaken for this study, the absence of production workers and supervisors on the factory floor was startling. Production management and control is enabled by supervisory control and data acquisition (SCADA) systems. In this way, ICT increases by a very substantial amount, the effective management span of control.

Arnott’s Biscuits

ICT has allowed Arnott’s to increase the scale of its plant and take advantage of economies of scale. It has also enabled the company to respond to demand for smaller and more customised orders. In 1985 Arnott’s Biscuits operated eight bakeries, located and managed on a ‘federal’ basis; now there are four. However, production facilities created for large scale production runs are not economic for small production runs and it is difficult for a large plant to operate using just in time (JIT) production techniques. To support operational flexibility, Arnott’s has retained a number of smaller production lines – in addition to its larger ones. ICT has allowed these smaller lines to cater for smaller niche and speciality product markets.

The detailed discussions with companies indicated that ICT allows for increased scale of machinery and higher production through-put. It also allows for a move away from batch manufacture to customised manufacture where each product on the assembly line can be tailored differently to accord with customer preferences.

In companies where marketing and distribution relies on a sales force, ICT has enabled innovation in the order fulfilment process: sales staff are able to digitally design, display and demonstrate a product’s features and functionality (Prowler Proof Doors, B&D Doors). These technologies allow for the customer to be involved in the design process, and for this process to link directly (and electronically) to ordering and through to manufacture.

ICT is also used extensively in the order fulfilment process. However, in only a few cases does an electronic design and order process by-pass sales consultants. The technology still relies on a sales consultant to close the deal. Customer driven design through to order and manufacture may actually make the role of the sales consultant even more important than it has been previously – in terms of interpreting and advising on what is actually desirable, feasible and practical. Motor vehicle manufacturers, for example, still prefer orders to come through dealerships.

Amcor Australasia

Amcor Australasia manufactures paper, plastic, metal and glass based packaging. The main driver for Amcor’s investment in ICT is to optimise supply chain logistics in a ‘mass customisation’ business environment. This is a demand-driven trend in which packaging products are made to order within the cost and lead-time targets normally associated with mass production. This requires close interactions with customers over packaging design.

Seventy five percent of ‘design to production’ work is now handled electronically. This includes a substantial degree of automation as key customers are able to specify what they want and then receive the new design electronically before finalising the order. In addition, substantial amounts of operational data are now generated by the packaging manufacturing machines, and then transferred to the company’s data management systems.

Until the late 1990s Amcor’s ICT focus was on the in-house development of made-to-order ICT applications. This tended to be driven by operational issues and technological opportunities. The emphasis has now shifted to a more strategically driven ‘whole-of-business’ focus. To meet this challenge, ICT operations are now outsourced – except for ICT strategy development, architecture and risk management which are still handled internally. All viable ICT investments must now demonstrate a better return on investment than could be earned on alternative corporate investments.

Moreover, in the monitoring, testing and diagnostic areas of manufacture – adjacent to factory floor operations – equipment is embedded with ICT allowing for greater coverage, accuracy and scope of information.

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Last modified: 5 February 2008, 10:31am