BY LANCE GORDON, FROST & SULLIVAN

A new era of pragmatism With the start of the millennium, industry observers have witnessed not only the bursting of the once bullish e-commerce B2C (Business-to-Consumer) start-up bubble, but also have seen the demise of many B2B (Business-to-Business) initiates. A new era of pragmatism has descended upon the supply chain market, and answers to questions of "what went wrong" are finally being found. If there was one big mistake with the general movement of industry at the start of the e-business decade, it was where B2B was aggressively reaching beyond the walls of the enterprise to automate the supply cycle.

The push to Internet-enable the e-procurement process to sell-side and buy-side extremes gave an imbalance to the supply chain automation equation. The internal systems information on the operations side of manufacturing remained trapped, with real-time access to mission-critical data about factory floor performance remaining relatively unavailable to the enterprise, suppliers, customers and others within the data-critical envelope. Where real-time process automation data reporting remained crippled, factory floor operations remained isolated. Decision-makers had no content to drive critical sell-side automated business processes. Disparate sources of data within the manufacturing environment such as available-to-promise or capable-to-promise was not available. Plant automation systems, data historians, manufacturing execution systems (MES), product data management systems (PDM) and demand planning and production scheduling would have to be given new priorities if they were to adequately provide for decision support management.

The great industrial surge to information-enable devices

The promise of increased efficiency, which predicates the rapid growth of B2B, has basically 'hit the wall' both technologically and economically, as decreased spending momentum, the questioned durability of alliances and fluctuating market valuations impact the world investment community. Alignment in the investment community has been more toward enabling technologies and away from content. The great industrial surge to information-enable most devices in the manufacturing environment have broken the mold of limited, once isolated automation technologies.

Self-contained systems are swiftly being replaced in an accelerated, e-Darwinian process, by interoperative, networkable, standards-based technologies. These technologies capture and export manufacturing data into the databases of manufacturing information technology directors (MITDs), Oracle, SAP and SQL database managers, as well as ERP/SCM (Enterprise Resource Planning / Supply Chain Management) applications managers. The B2B and e-commerce functionality and web sites are front-end systems. There is a point beyond which they cannot reach. F2B or Factory-to Business is the heretofore 'missing' segment in support of manufacturing execution systems (MES) that enable enterprise supply chain applications and strategies.

Envisioning the plantcentric viewpoint

The industrially-applied Internet is the last untapped bastion for obtaining a completely connected enterprise - suppliers are connected, vendors are connected, ERPs are connected and industrial sites are connected. But the industry still tends to focus IT in the office arena, i.e. sales and marketing, financials. Up until now the industry has ignored the factory floor, which is where the bulk of enterprise capital expenditures happen and where productivity yields the most significant results.

E-commerce has focused on systems that shorten the sales cycle and reduce marketing and sales ramp-up time as well as enhance the customer experience. However, the plantcentric point of view is practically invisible, especially within the B2B market. The existing infrastructures of industry generally aren't in the line of vision or haven't been until now. Companies are in the process of remarkably re-engineering the way they are doing manufacturing. And, as this accelerated technological environment persists, the stage is set for continued and unbridled change.

Everything that was accomplished in the 1990s in terms of just-in-time (JIT) manufacturing and reducing the number of suppliers, and going to long lead times, has not just changed. It has quickly evolved into exactly the opposite regarding what happens on the Web. The Holy Grail of the Web is the "available-to-promise" (ATP) date. When something is ordered over the Web, the expectation is that you get it in a couple of days - not months.

Internet meets smart machinery

The manufacturer's Internet has now met smart machinery on the factory floor, existing within a massive infrastructure that supports production and engineering along with the vital strategic aspects of marketing, sales and installation/service. This no longer looks like or feels like B2B. The factory floor cannot be dealt with using the same parameters required of B2B. The Customer Relations Management (CRM) and Sales Force Automation (SFA) personnel heavily entrenched in B2B don't know what the inside of a factory looks like, never mind how to deal with the complexities and promise of new plantcentric technologies. Well, if it's not B2B, then what is it? The answer is F2B (Factory-to-Business).

F2B communications defined is factory floor networking platform deployment empowered by intelligent factory-to-business manufacturing strategies for monitoring and control, production, collaboration and available data broadcast for "available-to-promise." A significant amount of new technology is now available that is designed to improve the visualization of factory floor data.

F2B applications and capabilities

F2B electronic capabilities are essentially noncommercial and provide a level of intelligence not found in B2B sell-side or buy-side applications. Today, B2B exchanges only provide the platform "plumbing" for important factory-to-business collaboration - while F2B can connect applications to industry trading exchanges allowing participating companies to access and implement important data such as:

• Available-to-promise data
• Capable-to-promise data
• Demand planning and production scheduling
• Vendor managed inventory (VMI)
• Scheduling individual production lines
• Designing the flow of factory floor information to business networks

From B2B To F2B The evolution of systems and markets

Importantly, there is a fine line in strategic analysis between committing to on-line e-commerce strategies and retaining the parts of a bricks & mortar distribution channel that is still functioning profitably for many industries. For B2B to progress to F2B depends upon the evolution of systems and markets.

Even the people who are supplying the manufacturing execution systems (MES) or manufacturing supply chain applications really don't understand where the data comes from to begin with. It is with some amazement that control technology out in the marketplace today does not allow the enterprise to get information out of their machines. There are many instances in the electronics industry, for example, where those in strategic management are incredulous over the fact that they couldn't get data out of their machines to do any kind of reporting. The burning questions of capacity-to-yield are at the center of the problem.

The vulnerability of the organization to F2B change

It is in this undeveloped, practical, noncommercial environment that the glamour of online purchasing is being tarnished. In many ways this is history repeating itself. The ERP (Enterprise Resource Planning) promise to provide one system that will operate throughout the enterprise has not been fulfilled. Industry may have yet to experience a successful integration of ERP systems. Establishing and administering a simple accounting package is not tantamount to installing a company-wide enterprise resource planning network.

The realities of implementing ERP in back office and factory floor processes has, for many companies, hit the technological wall when it comes to the needs of the virtually-extended enterprise. The use and application of generic business processes may have been acceptable when the systems were implemented as lately as two years ago, but they do not perform at the level required by manufacturers today.

The technological challenges of building an electronic marketplace that works has impacted Business-to-Business firms and harshly affected the value of these firms on the marketplace. This has begun to trouble the investing community, which has seen the promises of increased efficiency in ERP and SCM arenas fall short of expectations. There is a growing need for the core Internet-enhanced processes of B2C and B2B to now contend with the remarkably complex and data heavy environments of the F2B industrial extranets and Intranets linking the corporate network.

The new F2B quantum

What is becoming apparent with the Web and the Internet in particular is that it is not just a "faster - better - cheaper" solution. This type of accelerated technology changes the whole infrastructure. Powerhouse market leaders such as Dell and Gateway computer manufacturers and other e-commerce pioneers such as Lands' End, recognize daunting changes that need to occur in the now emerging F2B manufacturing environment. When the enterprise is faced with the fact that one order in a million is very different than a million orders for one, as demanded from the Internet, the point is made clear. It is here that users are getting a million orders of one. These elements are quite unpredictable.

This is a problem for most manufacturers who have tried to reduce their costs by going to very predictable schedules. If 12,000 units were needed and the agreement was that they would be delivered at 1,000 a month, this would be acceptable under the past process environment. But, with e-commerce, that doesn't work when users don't know what the order quantity is. One may be 500 in one day and zero the next. E-business intensive manufacturing has to preplan and replan their factories on a daily basis. The new F2B quantum is the ability to get highly accurate and detailed information from the manufacturing environment on a real-time basis at a level unparalleled in history.

A prevailing truth resonates loudly on this point. Those professio-nals closest to the work on the factory floor know best how to get things done. Manufacturing Information Directors, Oracle, SAP, and SQL database managers, as well as ERP/SCM (Enterprise Resource Planning / Supply Chain Management) applications managers have the answers. They will tell you if you ask them. The discovery of the missing link identified as F2B means that the questions are being asked and, for the first time, answers are available. Transparency into the manufacturing process can now be accessed through "open systems" technology and the power of the Intranet/Internet. Manufacturers have unlocked access to the information now being broadcast from production equipment. F2B is fast becoming the present element of competitive advantage and the key ingredient for end-to-end success in e-business.

How F2B helps B2B work

F2B is the "sensor-to-supply chain link" that includes manufacturing execution systems (MES) and human-machine-interface (HMI). And F2B applications include the configuration of factory automation systems for supervisory control and data acquisition, PC-based control, work-in-progress tracking, batch process management and a real-time relational database. Users benefit from Internet remote application viewing capabilities.

What has been missing is the realization that the provision and utilization of integrated industrial software suites that drive strategic, planning and operational decision-making based on real-time plant floor information is not B2B. And most firms with expert systems in B2B are neither capable nor willing (yet) to venture into areas where superior statistical process control and analysis capabilities require major attention.

The e-commerce community has focused their energies on processes for instant consumer sales activity. These front-end sales technologies, however, have a great dependency on calculating, in advance, the factory's capability to satisfy those orders on a real-time basis.

The missing link of the e-commerce promise has emerged in the last three or four years. Where catalogs have gone on-line and users can make purchases 24/7, in the critical strategic areas of data crunching of factory capabilities, performance levels of machinery are the missed fulfillment of the last part of that promise.

F2B data capability is the latchkey that opens the door to critical information on the factory floor. No one can predict what is going to happen today on a factory floor, let alone next week or next year. Management needs to have access to information from the factory floor when they need it, not when someone else thinks they need it. Gaining access to F2B information in the form that is needed is of paramount importance. Manufacturers may want data in a specialized, divergent form. And that's where each factory enterprise has its competitive advantage. Manufacturers need to be able to tailor the kinds of information they need, and obtain them at the exact critical moment where systems and outcomes hang in the balance.

Capacity-to-manufacture at the heart of F2B

The capacity-to-manufacture questions and solutions are at the heart of F2B and if you do have the capacity to manufacture, where is it? Is it in a plant in the United States? Or, is it in a plant in Singapore? The ability to respond "next day," not next year, which is what the Internet-enabled supply chain demands, is functional F2B. Knowing instantly where that capacity is and being able go build, is the competitive advantage of F2B.

Figure 1. shows the level of impact of F2B among a wide range of industries over the short and long term. Industries most highly impacted in the short term are:

• Automotive Manufacturing, Metals and Machinery
• Aerospace, Defense sectors Computers, Peripherals
• Processing Industries such as foods and medicines
• Motors, Drives, Components
• Paper and Printing Industries and Transportation are effected in the mid-term.

Figure 1. Impact of F2B on Dependent Markets (US), 2000-2006

Impacted Industry	1-2 Years	3-4 Years	5-7 Years
Industrial Marketplace: Metals, Machinery, Automotive Manufacturing	High	High	High
Computers & Electronics: Motor Drives, Peripherals and Components	High	High	High
Refineries and Petroleum Industry: Petroleum Products, Chemicals & Plastics	Low	Moderate	High
Metal Mining Industry: Metals, Coal, Nonmetallic Mineral Mining	Low	Moderate	Moderate
Foodstuffs; Pharmaceuticals	High	High	High
Utilities Market: Electric, Gas, Sanitary/Environmental Services	Low	Moderate	Moderate
Textiles/Apparel: Mill Products Wood, Paper Manufacturing & Printing	Low Moderate	Low Moderate	Moderate High
Aerospace & Defense Manufacturing	High	High	High
Transportation: Railroads, Motor Freight, Warehousing, Courier Services	Moderate	High	High
Source: Frost & Sullivan