Manufacturing AUTOMATION

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AUTOMATION INSIGHTS – Selecting an automation systems integrator is about more than cost


June 15, 2009
By Chris Stergiou

Topics
Once upon a time, most plants had in-house machine design departments to develop new equipment. Alas, this is no longer the case as manufacturing doctrine is driven by a strategy of outsourcing non-core competencies. This “back to basics” approach means that in-house efforts are geared to product design and development and this has created a manufacturing process knowledge gap as in-house engineers are focused on production. As a consequence, many third party systems integrators (SI) have emerged to fill this gap. Manufacturing engineers specify equipment and maintenance has assumed some of the “hands on” deployment tasks.
 
 
Systems integrators are a fragmented group of companies that specialize by industry, geography, technology or may be generalists that integrate various technologies based on client specifications. By using SIs, we tend to lose the continuity that we once enjoyed with in-house groups and development inefficiencies are created, as process knowledge has to be “re-learned.” So, is there a way to have our cake and eat it too? Or, can we outsource machine design and still keep some of the process continuity benefits of an in-house group? The answer to both questions is yes.
 
 
Selecting the right SI is more critical to successful automation than the decision to automate itself. Unfortunately, sourcing this strategic resource is too often accomplished using the same criteria with which we buy commodities. The criteria used varies by company, but the main objective is to identify a supplier for the project at hand while minimizing the development risks. Since new equipment development has a direct impact on product launch, profitability and manufacturing success, you might consider selecting an SI a strategic decision and one that your company might leverage as a competitive advantage.
 
 
The first round of selection criteria includes experience in the industry; financial stability; facilities; personnel; references; price; delivery; after-deployment support; familiarity with a technology and other metrics with weighted values. Totaling the results yields a list of the candidates in numerical order, but too often this is as far as we go and No.1 is automatically awarded the project. However, you can go a bit further and leverage your practical choice into a strategic choice.
 
 
An important but not always obvious attribute doesn’t reveal itself in the spreadsheet analysis. That attribute seeks to answer the question, “Who is the best candidate to become our long term systems integrator partner?” Much like an HR interview, our goal here is to identify someone that can deliver the project at hand, but also to identify an SI that is willing to grow during that process into a partner, a strategic resource and a competitive advantage for future requirements. Those future requirements will call for increasing levels of process knowledge and the SI will increasingly become a source of new ideas and innovative possibilities for your process.
 
 
Invariably, new equipment development leads to innovative knowledge that is part of the equipment, but while you have paid for it, you can’t take it with you. The reason for this is simple. That new knowledge, apart from any patent, designs or other “hard” deliverables, is an accumulation of “soft” knowledge about your product and process that the systems integrator develops and simply keeps. In effect, you are leaving “value on the table” if you never work with this systems integrator again. And it’s a lost opportunity for both your company and the SI.
 
 
Therefore, our ideal SI candidate is the company that does well in our spreadsheet matrix — not necessarily No. 1 — and also offers longer term potential. Often this comes down to “chemistry” or a “feel,” but a good match is found when you are convinced that this particular SI can become a predictable source of solutions for you in exchange for your commitment to become a predictable source of business for them. Since the SI is usually relatively small, you are usually dealing with an owner or a senior manager and you need to reciprocate and have a suitable senior person from your team have this strategic conversation with him or her.
 
 
In summary, you are looking for the candidate who scores high on hard metrics but also, offered the opportunity, accepts the prospects of becoming your long term strategic partner.
 
Chris Stergiou (chris@cstergiou.com) is a manufacturing consultant with 25 years of experience. He provides custom automation and consulting services to clients, many of them Fortune 500 companies.