ELECTRONIC COMMERCE UPDATE

September/October€1996

Networked Business Objects:
The Future of Internet-Enabled Manufacturing?

The manufacturing community is providing the primary foundation for Internet-based commerce, according to a recent survey from Advanced Manufacturing Research (AMR) (www.advmfg.com), a Boston-based analysis and research firm.

According to the survey, more than 80% of manufacturers and manufacturing vendors/integrators are planning to use the Internet to link to customers and suppliers. This move toward electronic commerce is being driven by the development of Networked Business Objects (NBO) -- collaborative, flexible business process "objects" that automate and improve key parts of the manufacturing and supply-chain processes.

A trend identified by AMR, NBO refers to a series of internal and external business objects -- software components that support processes such as order entry, scheduling and purchasing -- that are linked via the Internet and have the ability to accomplish tasks automatically. Each business object is independent of the others, giving manufacturers the flexibility to change, add or remove objects without impacting other objects. The NBO approach also promises to free manufacturers from the typical problems associated with ERP (Enterprise Resource Planning) systems -- long implementations, lack of agility and high costs.

The groundwork for the shift toward NBO implementation can be found in AMR's survey results that show more than half of the companies surveyed provide company-wide Internet access, and 83% have established home pages on the World Wide Web. Many of these companies are already providing access to various NBO objects, such as pricing/availability data (19%), order entry (9%), and order status information (8%).


Transforming customer, vendor relationships
With more than 65% of those surveyed desiring Internet-enabled enterprise systems, most companies recognize that electronic customer interaction is the first step: 84% said that customers will connect to their business systems via the Internet. Eleven percent said this is taking place now, 40% said it will take place in 1997-98, while 26% slated it for 1999-2000. Only 3% said "after 2000" or "never." Similarly, suppliers are another key part of the NBO scenario. A majority of those surveyed (86%) said they will connect with their suppliers' business systems via the Internet.

"It's easy to imagine how NBO will improve the relationship between a manufacturer and its customers and suppliers," said AMR vice president Bruce Richardson, " but the benefits will also extend into the very core of a company. As NBO grows, it's going to help improve plant operations, warehouse management, multi-plant manufacturing, advanced planning and scheduling, to name just a few.

"Networked Business Objects have the potential to deliver the flexible process automation and supply chain integration that companies hoped they would get from ERP and EDI," said Richardson. "In fact, NBO is the result of manufacturers' frustration with monolithic ERP solutions, which can be inflexible, costly and difficult to implement. NBO frees companies from these single-vendor solutions, making it possible for them to bring in the specific business objects that work best for each particular task."


How NBO Works
NBO makes it easier for companies to collaborate with business partners, use new applications in tandem with legacy systems, deploy objects only when necessary, and quickly reconfigure and link process components using network-based groupware and workflow. By doing so, NBO is expected to introduce a host of new applications to the Internet, such as component and supplier management, order fulfillment, demand planning, transportation planning, field service and cooperative design engineering.

In an order entry/custom assembly example, for instance, NBO would make it possible for a customer to log on to a computer reseller's web-based catalog, configure their ideal computer, obtain price quotes and place orders -- all via the Internet. Other process objects might automatically check credit, determine purchasing requirements, research best prices and delivery, and place orders with an approved supplier for the proper motherboards and chipsets. This supplier may repeat the process to order components from a parts company.

A vital aspect of NBO lies in the fact that its success is not solely dependent upon a Webmaster. "NBO is not an Internet issue," said Richardson, "it's a business issue, and senior-level management need to understand the promise of NBO and how it can support their company's vision."

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