Intelligent Manufacturing € April € 1996 € Vol. 2 € No. 4

What's Your Internet Strategy?

A question that's being asked of manufacturers with increasing frequency is: What's your Internet strategy? And just as often as not, manufacturers have fired back a question of their own: Why do we need an Internet strategy?

If you believe the hype, the Internet -- especially its multimedia component, the World Wide Web -- will revolutionize the way people communicate, including the way industry does business. True enough, the Internet's potential is limited only by the imagination and the resources of those using it; but at its core, it simply represents a way of quickly transferring vast amounts of data electronically, whether within a company or enterprise (intranet) or to the world beyond.

To date, few companies have defined the role the Internet will play in their business and the amount of investment required to achieve payoffs from Internet usage. One of the first steps in leveraging the Internet for manufacturers and suppliers can be found in software designed to speed communications within the supply chain, thereby lowering inventories and on-target production.

Electronic Internet-based commerce is a spinoff of sorts from electronic data interchange (EDI). Like EDI, Internet commerce provides one-way communication, enabling organizations to send transaction messages to one another. But the openness, cost-effectiveness and speed of the Internet also lends itself to bi-directional communication, enabling organizations to communicate real-time in ways they could only do by phone before. In effect, manufacturers and other organizations will be able to interactively manage their demand chain electronically with tools, capabilities and standards their customers can afford and support.

Sounds good in theory, anyway. The technology under discussion is very new, and early adopters of any new technology must always be wary of being burnt by trying too much, too soon. Nevertheless, the time seems to be right to test the waters. Earlier this year we looked at an effort by systems integrator Technology Solutions (Chicago, Ill.) to introduce the concept of the electronic supply chain to its clients (see Intelligent Manufacturing, February 1996). A number of manufacturing software providers are now wholeheartedly embracing electronic commerce to the extent that they have new products available to help users chart their own Internet strategies.

American Software (Atlanta, Ga.), for instance, has developed an Internet-enabled solution called Supply Chain Planning, which has a number of uses across the supply chain. It can be used as a fast link between manufacturers and their local, regional and national distributors. Individual sales forecasts can be reviewed and translated into orders, allowing managers to quickly obtain sales and demand insights for individual projects or across the entire enterprise.

Distributors can learn about inventories, and manufacturers can learn about capacity of their parts suppliers as well as customer inventories. With software to enable this type of Internet communication, according to American Software, manufacturers can get a clearer picture of all factors affecting production instead of guessing about supply constraints and demand capacity. And this is made possible thanks to the Internet.

With product demand communicated instantaneously at every level of the supply chain, the Internet can substantially reduce the current inventory replenishment cycle. As soon as customer demand, even down to the item level, is recorded via the Internet, another set of raw materials can be replenished throughout the supply chain, without the additional end-to-end lead time.

Other applications include using the Internet within an organization in an intranet fashion. Outbound sales forces can directly input information concerning customers and consumption. Point-of-sale can be integrated more quickly into enterprise resource planning (ERP) activities or forecasting. Customers can add information about orders or promotion plans. Suppliers can communicate manufacturing constraints or changes in delivery schedules.

As a result, manufacturers can respond in a more agile manner to consumer demands. A supplier "early warning" system can prevent surprises on the production line, Just-In-Time manufacturing and delivery systems become easier to implement, and cycle times can be substantially compressed.

Despite the benefits, the Internet remains a great unknown. Security, effectiveness and management of the technology are issues that everyone is still struggling with. Consultants, of course, are popping up everywhere, offering to help navigate companies through the uncharted Internet waters. For its part, American Software has developed a model that can serve as a framework for all applications, integrations and information gathering. With this client/server-based model, a core application can run on a particular company's host, which can be accessed via the Internet by everyone who has a relationship with the company. Within any firm's supply chain environment, this means that all suppliers, distributors, shippers, retailers and even customers can input and extract information relevant to their needs, without having to install and maintain a particular application.

Another manufacturing software supplier, Industri-Matematik International (IMI) (Tarrytown, N.Y.), has introduced a product that enables manufacturers and distributors of high-volume, fast-moving goods to electronically communicate with their customers via the Internet. System ESS Order Tracker, an add-on software application for any Internet browser, allows manufacturers and distributors to provide external and internal customers with Internet access to their order fulfillment databases to determine the status of orders and make inquiries about those orders.

IMI's Internet strategy centers on enabling greater interaction between its clients and their customers, improving customer service while adding value to their trading partner relationships. Through its Internet Workbench, a series of Internet-enabled business functions within System ESS, IMI aims to enable manufacturers to conduct their business in real time. Their customers and sales organizations will be able to access mission-critical business information immediately from the corporate data repository.

IMI will provide full support for the Internet and intranet networks as a platform for accessing its System ESS demand chain management solution. The Internet will be both a platform for its client application and an integral part of IMI's electronic commerce offerings. This Internet support will enable IMI's clients to extend and enhance their current client/server and legacy computing systems via the Internet and intranet networks.

IMI believes Internet commerce will provide an advanced form of electronic commerce. Like EDI, Internet commerce can provide one-way communication, enabling organizations to send transaction messages to one another. But the openness, cost-effectiveness and speed of the Internet also lends itself to bi-directional communication, enabling organizations to communicate real-time in ways they could only do by phone before. This will enable organizations to interactively manage their demand chain, fulfilling the promise of EDI to manage trading partner relationships electronically, but with tools, capabilities and standards that all customers can afford and support.

With two years of experience in using EDI on the Internet in the education sector, Ted Annis, CEO of Supply Tech Inc. (Ann Arbor, Mich.), believes that industrial-strength EDI over the Internet is proven, and that the time is right for manufacturers to start using it. Annis explained that as more and more companies use the Internet to conduct industrial-strength EDI, a whole host of opportunities will start opening up. "The potential for Internet-based technology is impressive," he said. "EDI transmissions are paperless, require less labor, and reduce margin for error and double checking."

Supply Tech will enhance its EDI forms-based software module, STFORMS, so companies can offer customers the option of ordering goods electronically as they browse through catalogs set up as World Wide Web pages. This means that consumers will no longer have to fill out the traditional paper order forms or call the manufacturer once the decision to buy is made. Instead, consumers will use electronic order forms. The data place on the order forms will be translated into the standard EDI format, which can then be transmitted over the Internet directly into the retailer's EDI system.

Ultimately, it will be the users, rather than the Internet service providers and software vendors, who determine how important electronic commerce becomes to manufacturers. That being said, all current trends point to the Internet as having a tremendous impact on industry right up through the end of the century and beyond. Simply put, electronic commerce won't be a temporary fad -- it's here to stay.

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