Previously, we looked at the question of "what type of company are we?" We began with a frequently asked question that stems from the various surveys and directories compiled by APICS—The Performance Advantage. At the end of those directories, readers often find the following fields: Suitable for: 1) job shop; 2) repetitive; 3) aerospace/defense; 4) food processing/food industries; 5) medical applications/hospitals; 6) mixed mode (combination of job shop, cellular, process, repetitive); 7) drug industry; 8) automotive; 9) process.

We began by focusing on categories 1, 2, 6 and 9. These can be best described as pertaining to the manufacturing context. That is, our interest is in the manufacturing process and its underlying structure and inherent traits. As we demonstrated in the last column, these four categories are assessed along the dimensions of volume, variety, nature of flows and equipment type. However, we did not really address categories 3, 4, 5, 7 and 8. These categories are fundamentally different in that they refer to the industrial context.


Understanding the industrial context
The industrial context involves requirements and constraints placed on firms operating in these industries. Typically, these constraints and requirements reflect practices such as:

• Order release and scheduling: In some industries, firms are required to handle certain types of order releases. For example, in the automotive industry, the Big Three have developed a certain type of order release system that everyone is expected to accommodate.

• Lot and batch tracking: In other industries, such as drug and medical, lot and batch tracking is very critical. Firms are expected to be able to identify a specific item in terms of the specific production batches and order lots.

• Information storage: Again, in some industries (specifically those that are either regulated or that work with governmental agencies and groups), a requirement for detailed and specific data storage, management and retrieval is present. These requirements must be satisfied by the software package selected for this environment.

• Electric and/or communication interfaces: Some industries must handle or accommodate certain types of communication and/or electronic interfaces. For example, the ability to accommodate electronic data interchange (EDI) or bar coding are two common examples of technologies that must be accommodated. It is well known in the automotive industry that suppliers who wish to deal with the major manufacturers must be EDI-compliant.

• Inventory tracking and control: In some industries, such as food and beverage, we must pay a great deal of attention to the tracking and management of inventory with the goal of reducing or eliminating the problem of spoilage or pilferage. Some items may have a great deal of value on the street. This point was brought home to us during a presentation for the National Association of Purchasing Management chapter located in Kalamazoo, Mich. Before his speech, the presenter was talking with one of the purchasers, who happened to work at a large pharmaceutical company. He mentioned the various hurdles that he had to go through because of a catalyst he was using to test the quality of a certain drug. He mentioned that the process required between five to 10 pounds of this substance. Before he could get the product, he had to sign out for it and have the substance checked before he could dispose of it. All of this for 10 pounds of "speed" (the street name for the drug).

These are some, but not all of the dimensions of industrial context.


Understanding the impact of industrial context
This discussion brings us to an interesting question — "So What?" Why is it important that we recognize the industrial context as a separate dimension? The reason for breaking out the industrial context is that this dimension can and does operate independently of the manufacturing context. As a result, it is possible to have a firm operating in the automotive industry (the industrial context) needing software that can meet the needs of this context. It is also possible for that same firm to have multiple manufacturing contexts (e.g., job shop, repetitive or process). The result is a matrix with industrial context on one dimension and manufacturing context on the other.

With this information, we can now see that the task of selecting the "right" software is slightly more complex than we had thought before. To pick the "right" software, we must pick the software package that has features consistent with both our manufacturing context and our industrial context. The two dimensions must be jointly considered.

However, in many cases we can downplay the importance of the industrial context. There are instances in which the industrial context is not as important. The industrial context issue is important when dealing with situations pertaining to the industries previously listed (i.e., aerospace/defense, food processing/food, medical applications/hospitals, drug and automotive). However, outside of these industries, the manufacturing context becomes the dominant one.

Next column, we will look at the question of when is a cost savings not a cost savings.

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