Manufacturing
The Microsoft Edge for Midsize Manufacturers
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Executive Summary
Like their larger counterparts, midsize manufacturers have a pressing need to optimize business processes across their extended supply chain to be more responsive to customer and market needs in the global economy. Increasing pressure to deliver more innovative products, improve operational productivity and respond faster to competitors weigh heavily on midsize manufacturers today. So, too, does the need to comply with a rising tide of customer, partner and industry mandates.
But unlike the largest companies, midsize manufacturers must meet these challenges with fewer resources in terms of IT investments and staff. They need solutions that will deliver real business advantage fast and that maximize their return on investment (ROI).
Making thoughtful investments in supply chain management (SCM) applications will pay off by readying midsize manufacturers to use a demand-driven, rather than supply-driven, model, says Bill Swanton, vice president at AMR Research Inc., a Boston market research firm. AMR says demand-driven supply networks (DDSNs) are the wave of the future for manufacturers. "SCM applications are an important part of transitioning to a demand-driven model."
Top 10 Supply Chain Investments for 2005
Percentage of 199 executives at manufacturing companies indicating which investment was their top priority:
| Investment Category | Percentage |
Supply chain visibility and event management | 19% |
Demand forecasting | 19% |
Data warehousing, business intelligence and analytics | 10% |
Sales and operations planning | 8% |
RFID | 6% |
Contract management/coordination | 5% |
ERP | 5% |
Strategic sourcing | 4% |
Product lifecycle management | 4% |
Financial systems/general ledger and cost forecasting | 3% |
Source: AMR Research Inc., 2005
The Microsoft Application Platform Advantage
Microsoft offers a comprehensive application platform that enables manufacturers to deliver faster results, make better decisions, and run their critical systems. These products, services and best practices are tightly integrated, eliminating the need to cobble together a solution and freeing the organization to focus on their business problems.
The Microsoft application platform delivers significant benefits over comparative products from other vendors: A trusted foundation for business, the Microsoft application platform is integrated by design, enabling end users, IT professionals and development organizations to make better decisions and obtain faster results. This empowers midsize manufacturers to compete effectively in today's global marketplace. Because software partners with expertise in the manufacturing space have chosen to build their solutions on the Microsoft application platform, their customers can take advantage of powerful technologies such as Microsoft BizTalk Server, Microsoft SQL Server,Microsoft SharePoint Portal Server, and Microsoft Visual Studio.
Microsoft software is specifically optimized to help manufacturers achieve peak performance (see Microsoft's Peak Performance Initiative). For example, the extensive support of XML and Web services in the platform and the use of BizTalk Server empower manufacturers to achieve their business goals without abandoning prior investments in automation systems, production processes and other specialized systems.
Utilizing these capabilities with the collaboration services provided by products like SharePoint Portal Server makes it easy for manufacturers to share data within the enterprise and collaborate with vendors and partners across their supply chains.
Microsoft's adherence to open industry standards and manufacturing-specific standards such as OPC, S-99, radio frequency identification (RFID), RosettaNet and UCCNet provide manufacturers with a flexible architecture that supports their existing ERP and CRM and other control systems. And the Microsoft Dynamics (formerly Microsoft Business Solutions) series of business applications - comprised of CRM, Axapta, Great Plains and Navision - can further help midsize manufacturers gain a competitive edge by responding quickly to new and changing demands. With the power of the Microsoft platform behind them, ERP solutions like these make information transparent from the shop floor to the back office.
The Business Value of BizTalk Server
Designed to help companies efficiently and effectively connect systems, employees and trading partners, Microsoft BizTalk Server is well suited for midsize manufacturers reaching outside the four walls of their enterprise for a quick return on their integration investment. Traditionally, midsize manufacturers viewed B2B integration solely as a means to regulatory compliance or a way to meet a larger business partner's requirements, according to Microsoft's Steve Martin, director of product management for BizTalk Server. "Historically companies in this space have talked about B2B integration in terms of regulatory compliance. Or they needed to integrate with their larger partners as part of the cost of doing business with them," says Martin.
Today, the spotlight is on business objectives midsize manufacturers can achieve affordably thanks to enterprise-class B2B information integration. These include increased organizational productivity, the ability to make better decisions and enhanced operational excellence.
At a Glance: BizTalk Server B2B Benefits
| • | Shorter cycle times |
| • | Waste reduction through optimized processes |
| • | Reduced need to hold inventory |
| • | Increased innovation |
| • | Faster time to compliance |
| • | Compliance management |
| • | Better agility |
| • | Enhanced exception management |
| • | Improved visibility throughout value chain |
| • | Reduced process variability |
| • | Enhanced forecasting |
| • | Platform for repeatable communication with multiple trading partners |
Sources: Microsoft, industry analysts
A major advantage BizTalk Server offers midsize manufacturers is that once it is implemented, a flexible platform is in place for easy information exchange with other partners, no matter what application or platform they use "You're not deploying technology that is specific to one trading partner. BizTalk Server is generic enough that as there are other companies you want to do business with, you can use the same infrastructure," notes Martin.
Indeed, an independent consultant report declared that BizTalk Server is a "sensible choice" and rated it the highest scoring integration tool. BizTalk's "low overall cost and easy-to-use tools provide an easy ramp-up for your developers, and a fast deployment time for integration projects," according to "Market Scorecard: Integration," a report from Nucleus Research Inc., a research firm in Wellesley, Mass.
How BizTalk Server Stacks Up
The Market Scorecard compares integration vendors based on five product and vendor factors, with each factor graded on a scale of 1 to 5 (highest)
| Product | Deployment | Adoption | Support | Business Impact | Vendor |
Microsoft BizTalk Server | 5 | 5 | 5 | 5 | 4 |
BEA WebLogic Platform 8.1 | 5 | 5 | 4 | 3 | 4 |
IBM WebSphere 5 | 3 | 5 | 4 | 4 | 5 |
Sonic Business Integration Suite | 4 | 4 | 4 | 4 | 4 |
TIBCO BusinessWorks | 4 | 3 | 4 | 5 | 4 |
Source: Nucleus Research, 2004
BizTalk Server's tight integration with Visual Studio and other major server products in the Microsoft foundation, like SQL Server, further speeds return on investment and opens the door for many possible applications. "The Microsoft product architecture allows manufacturers to make the most of an integration strategy while using their existing assets," says Mark Smith, national integration practice manager, for Microsoft Certified Gold Partner Interlink Group Inc., in Englewood, Colo. "It's a consistent look and feel from an architecture perspective and it gives us the tools to be able to integrate with different applications and build processes and integration components that integrate with existing applications."
BizTalk Server's ability to track critical business processes is also significant to manufacturers. "For business users, you could track the entire lifecycle of a process," says Interlink Group's Smith. "They could go to a SharePoint site and get a dashboard view of the data. Or they could choose to receive an email a few times per day to see how that process is going. Different types of users, such as IT managers or finance managers, can subscribe to information about processes as they see fit."
Manage by Performance, Not Just Cost
One of the most important benefits BizTalk Server allows midsize manufacturers is the ability to manage suppliers based on overall performance rather than just cost. "Typically, a manufacturer chooses its suppliers based on cost. One supplier can supply the part X% cheaper than another supplier," says Smith. "What has been hidden to date is that it's not only the cost of the product that should be considered but the overall performance of that supplier," BizTalk Server puts quality and on-time delivery metrics in the hands of the decision makers. That information can also be published via SharePoint.
Integration between manufacturing, trading partners and third-party logistics providers in a supply chain is a critical success factor in a changing environment. BizTalk Server along with the rest of Microsoft platform products enables partners and suppliers of any size to integrate their operations. Microsoft is committed to helping its partners and their customers leverage their legacy investments and extend their capabilities to optimize supply chain performance, adds Martin.
Build vs. Buy in Manufacturing
Global midsize manufacturers are already heavy users of Microsoft technology, says Swanton of AMR. Microsoft Windows is their operating system of choice and Microsoft Office business productivity applications are the de facto standard in manufacturers' front office operations. Many midsize manufactures also rely on Microsoft Windows Mobile and Microsoft Windows XP Embedded operating systems in warehouse and plant floor applications.
With many manufacturers already familiar with the Microsoft software environment, there is less of a learning curve. This cuts training and development time and enables organizations to deliver business results faster. And because Microsoft software works together seamlessly with fewer integration headaches companies no longer have to cobble together their own point-to-point solutions. Incorporating a B2B integration platform into their existing Microsoft environments is much easier than attempting to build their own integration platform from scratch.
As always, gaining a real business advantage as quickly as possible is a key consideration. "Manufacturers will find these are familiar and easy-to-use tools that can be implemented quickly for maximum value," says Microsoft's Martin.
BizTalk Server is well positioned with midsize manufacturers, according to AMR's Swanton, because it can scale from a midsize company up to the biggest enterprises in the world. BizTalk Server enables midsize companies to use the technology enjoyed by the world's largest enterprises at a fraction of the cost while leveraging their existing technology investments.
Growing Interest in Supply Chain Management Applications
In a survey of 200 manufacturing organizations, the interest in supply chain management applications is growing. The table below outlines the percentage of interest by company size.
| Company Size | Percentage |
5,000 or more employees | 48% |
1,000-4,999 employees | 51% |
Less than 1,000 employees | 41% |
Source: AMR Research Inc., 2005
Prowell Taps BizTalk Server for Growth
Having a Microsoft foundation provided midsize paper manufacturer Prowell GmbH a solid platform for growth. To help automate supply chain processes and drive revenue growth, Prowell, a German paper product manufacturer, built a full-featured e-business portal and integration platform to connect both with the company's internal systems and the systems of trading partners. Prowell's solution -- called ebox -- is based on Microsoft BizTalk Server 2004 and uses a flexible hub-and-spoke integration model to provide the company and its trading partners with robust e-business capabilities and extended visibility into the supply chain. Those capabilities are helping Prowell and its thousands of customers, suppliers and other business partners to reduce process costs and sell more of their products and services.
Using BizTalk Server and other Microsoft platform products, Prowell built a solution that can connect all parties in its extended supply chain and automate the business transactions between those parties. eBox also provides deep visibility into those processes, which is helping the company uncover synergies throughout its supply chain and drive further efficiency gains. And by extending many of those same capabilities to its trading partners, Prowell is strengthening its relationships with those partners and increasing the growth of its business.
Technical Benefits of BizTalk Server
Built completely on the Microsoft .NET Framework and integrated with Microsoft Visual Studio, BizTalk Server includes native support for Web services. By supporting the open standards upon which Web services are built, BizTalk Server fills the critical management role of orchestrating Web services, controlling the flow and interaction among them and aggregating individual services into a larger composite solution. For midsize manufacturers requiring connected systems that span horizontal and vertical applications and infrastructure, BizTalk Server is equally well suited to work within the emerging world of standard Web services and with the large number of legacy applications already in place.
BizTalk Server's inherent flexibility is perhaps its greatest strength in the manufacturing sector. Thanks to a large and growing family of adapters and vertical accelerators, many of which are provided by Microsoft partners, customers have access to powerful and tailored solutions that allow them to connect to a multitude of applications and technologies. Each of these extensions can significantly reduce the time, effort and costs associated with development and deployment in a manufacturing setting.
For example, Microsoft recently added adapters for the most commonly used line of business applications to its forthcoming BizTalk Server 2006 (see white paper, "BizTalk Server 2006 Adapter Enhancements"). These will help customers connect more easily to third-party applications from Amdocs, JD Edwards, Oracle Corp., PeopleSoft, Siebel Systems Inc. and TIBCO Software Inc. Other adapters, such as the BizTalk Server Accelerator for RosettaNet, are focused on particular vertical industry needs. It provides high tech manufacturers with the tools and documentation needed to build and deploy RosettaNet-based business process management (BPM) solutions that seamlessly connect trading partners, systems and employees.
And when BizTalk Server is coupled to the growing number of enterprise applications that fall within the Microsoft Dynamics family, midsize manufacturers can receive the best payback in the shortest time possible. "The integration between Microsoft Business Solutions and BizTalk Server has been very consistent," says Interlink Group Smith, who as a systems integrator often helps manufacturing companies get the maximum benefit from both platforms.
About the Analysts
AMR Research
AMR Research provides analysis and actionable advice to more than 5,000 supply chain and technology executives worldwide to help them make better business investment decisions. The company's analysts focus on delivering independent research on both established and emerging technologies based on quantitative industry research.
Nucleus Research Inc.
Nucleus Research is a global provider of research and advisory services. The company takes a bottom-line, real-world approach to its research and delivers information based on case studies of actual deployments. By assessing hundreds of deployments every year, Nucleus Research analysts help clients with the ongoing technology information they need to make decisions that maximize the return from their technology investment.
Interlink
Founded in 1989, Interlink delivers technology solutions that reach every part of a business - from the infrastructure that keeps operations running efficiently and securely, to the front-end systems that interface with employees, customers, partners, and remote workers to connect them seamlessly with the business and with each other. These solutions keep businesses on the forefront of technology and help them to work better and smarter, to lower their costs and to improve their financial returns.
Lauren Gibbons Paul is a senior writer for Triangle Publishing Services Co. Inc. and has more than 15 years of experience as a writer and editor for leading business and technology publications, including eWEEK, CIO, Managing Automation and Network World. She has also done research assignments for a number of well-known analyst firms.
For More Information
The links below provide a more indepth look at how BizTalk Server supports supply chain.