Resetting Manufacturing

ISA – September 9, 2009

 Welcome to the Reset
Economy

"I believe we are going through more than a cycle. The

global economy, and capitalism, will be “reset” in several
important ways. The interaction between government and
business will change forever. In a reset economy, the
government will be a regulator; and also an industry
policy champion, a financier, and a key partner […] I think
this environment presents an opportunity of a lifetime.
We get
- Jeff a chance to reset the core of GE and focus on
Immelt
what we do best."

© IDC Manufacturing Insights Page 2

 A Reset Agenda

 Prologue
 Recession
 Transformation
 Guidance

© IDC Manufacturing Insights Page 3

 Prologue: External Factors

 From Multi-National to
Truly Global
 Falling Transaction Costs
 Modular
Products/Modular Trade
 The Productivity Miracle
 Cost to Make versus Cost
to Move

© IDC Manufacturing Insights Page 4

The Good Times

It was great run..

 Strong Revenue Growth
 200+ Basis Points in Profit
 The Productivity Effect

 Consumer Sentiment over 80

 77 Months of Expansion
 Fueled by BRIC and easy credit

Source: Manufacturing Insights Global Performance Index

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 Recession: Rethinking Priorities

 Automotive industry
depression
 Housing
 Credit
 Consumer Confidence
 Durable Goods
 Capital Equipment
 Global

© IDC Manufacturing Insights Page 6

The Bad Times

And some continued concern..

 More Financial Issues
 Real Wages Stuck
 Consumer Confidence Low
 Real recovery in Auto sales
 Global Effects – WE, BRIC
 Manufacturing Activity Low

Source: Yahoo Finance and IDC, 2009

© IDC Manufacturing Insights Page 7

 The Leading Indicators

And some reason for hope..

Major liquidity injections

Cash for Clunkers
Emerging Markets
 Investment in R&D
 A pause that refreshes?
 Serving the “700’s”

© IDC Manufacturing Insights Page 8

 Near/Long Term Trends

Industry:
 Companies Will Exploit Existing Tangible and, Especially, Intangible
Assets to Ride Out the Financial Crisis and Prepare for Recovery
Supply Chain:
 Companies will “right size" their supply chains for Profitable
Proximity; standard corporate platforms will seek to configure,
calibrate, and control increasingly complex scenarios
Manufacturing:
 Effectively Managing Manufacturing Assets Has Become Something
of a Lost Art, But Companies Will Realize That It Can Be a Significant
Competitive Weapon

Source: IDC Manufacturing Insights Top 10 Predictions for 2009

© IDC Manufacturing Insights Page 9

 Reset of Manufacturing

 Following the Evolution from Mass Production to Personal

Production
 The Global Plant Floor Transition
 Virtual Joint Ventures and Flexible Factories

Wine Pod
River Rouge Tool & Die Shop
© IDC Manufacturing Insights Page 10
 Value Chain Reset
Engineering Oriented Asset Oriented
– Refining/Bulk Chemical
– Automotive
– Specialty Chemical
– Aerospace & Defense
– Metals
– Consumer Durables
– Pulp and Paper
– Farm, Construction, and Industrial
Machinery

Technology Oriented Brand Oriented

–Food & Beverage
–Semiconductor –Health & Beauty
–Consumer Electronics –Footwear / Apparel
–Contract Manufacturing
–Computing & Telecom –Household Goods

© IDC Manufacturing Insights Page 11

Linking Strategy to Execution

Strategic Innovation Growth Productivity

Goals

Strategic
Intelligent

Po
li c
Decision Tactical

y
In
fo
Models
rm Operational
at
io
n
Innovation Business Supply Chain
Collaboration Network(s) Network(s) Network(s)

Design Introduce Sustain

Execution Source Make Deliver

Attract Sell Serve

© IDC Manufacturing Insights Page 12

 Automatic Fulfillment Execution
State Management
Services – Complete Awareness Analysis Action
closed loop control

Intelligence Services –
Aggregates workflow
info for decision making

Workflow Services –
Transactional Schedule Quality Product Cost Asset
information flow

Agent Services –
Connects data to
workflow

Device Services –
Manages data Device Device Device Device
acquisition

© IDC Manufacturing Insights Page 13

 Collaborative Decision Environment

Business Networking Tools

Domain Configurations
Strategic
Decision Hierarchy

Tactical Advanced Analytic Engine

Operational
Semantic Information Repository

© IDC Manufacturing Insights Page 14

 A Closed Loop Decision Framework
Decision Key
Context Output

Portfolio Allocation of
Analysis Resources

Strategic

Policy
Scenario
Information
Resiliency to
Analysis Risk
Tactical
Value Optimized
Analysis Outcomes
Operational
Situational Execution
Analysis Consistency

© IDC Manufacturing Insights Page 15

Re-engineering Operations Management
Decision Key
Context Output

Network Design Allocation of

Resources

Strategic

Policy
Information
Advanced Resiliency to
Planning Risk
Tactical
Detail Optimized
Scheduling Outcomes
Operational
Sequencing, Execution
Warehouse Consistency
Picking, etc.

© IDC Manufacturing Insights Page 16

 Essential Guidance
Make it:

 Autonomic/Self Healing
 Integrated
– Across applications – inbound and outbound
– Up the stack – ERP, PLM, etc.

 Intelligent
 Flexible

© IDC Manufacturing Insights Page 17

 Questions

rparker@idc.com
Supporting Research
Worldwide Manufacturing 2009 Top Ten
Predictions
MES Strategies – The Importance of Real Time
Execution
Process Plant of the Future: Building on the Oil
and Gas Vision
The Discrete Assembly Plant of the Future
Planning and Deploying a Fulfillment Execution
System

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© IDC Manufacturing Insights Page 18