Henry Ford’s River Rouge Complex was testament to his belief that — to do things right— the Ford Motor Company would have to do them itself.
The Dearborn, Mich., facility opened in 1927, and included its own power plant, blast furnaces, steel and open hearth mills, glass plant, and railroad system. It was a shining example of old-school vertical integration, as the company produced everything it could on site, without suppliers.
Old-school vertical integration is long-gone, but a new version is rapidly emerging. Instead of physical consolidation under one roof and one owner, production can now be digitally consolidated using the Internet of Things.
Operational intelligence is pulled from all functions, processes, and pieces of equipment, and then shared in real time with suppliers and customers — aligning each step of the extended production process across multiple companies.
This information-based integration enables demand-based manufacturing, in which all industry allies are able to adapt to changing schedules in real time. This heightened transparency and visibility allows the supply chain to move in concert to improve:
- Delivery performance: Customers can change orders to match current needs, knowing the demand signal will be transferred seamlessly across multiple production workflows, without delaying delivery.
- Quality: Shared intelligence about defects can lead to better product designs, workflows, processes, tooling, and supplier components or materials — or improved customer specifications.
- Safety: Managers can monitor near-misses and safety violations in real-time, allowing them to revise processes, upgrade equipment, and improve training before injuries occur.
- Productivity: Executives can optimize global production portfolios to meet changing demand patterns, transferring orders among plants and revising logistics plans to ensure maximum profitability.
- Equipment reliability: Demand information is coordinated with predictive and preventive maintenance solutions to help make sure maintenance occurs before an equipment failure. Manufacturers avoid costly downtime and improve productivity.
- Supplier performance: Plant performance criteria are streamed to suppliers, alerting them to component or material quality issues, changing specifications, and inventory levels.
Real-time operational intelligence — integrated with technology solutions, such as manufacturing execution systems and ERP — can lead to unprecedented production control across companies. Add in business analytics, and executives across the supply chain can make better decisions — and bigger profits.
Isn’t it time your company tried digitally enabled, demand-based manufacturing?
Published April 9, 2018
