Converging on Convergence, Part Two

October 28, 2011 - 0 Comments

We recently co-hosted a Voice of the Customer (VoC) event where we had several End User manufacturing customers as well as Machine Builders and Systems Integrators present. My new series on Machine Builders will start next week, but I wanted to capture a few thoughts and ask for opinions.

We’ve been working along on an assumption that many End User manufacturing customers are reducing their engineering staff and working under cost pressures as well as time pressure. We presumed that they are relegating or subcontracting a lot of the work that would typically be done in house back to machine builders or systems integrators. This clearly has impact on the business model of a machine builder, considering up front design, integration, installation, support and retrofitting.

We heard a mixed reaction from the customers present and I found a bit of it surprising. One automotive supplier insists that they control the entire process, to the point of purchasing the control (and other component) equipment for the OEM and having it delivered to them. They feel that by maintaining this strict control they maintain their quality and productivity. If an OEM balks at that, they don’t get the order.

From another industrial manufacturer we heard that they require their OEM to own the machine until it is delivered and integrated – the OEM purchases everything but lives with a Service Level Agreement. Once they hand over the keys, so to speak, the manufacturer owns the equipment and assumes all responsibility for operation. The OEM of course continues to work as needed under contract.

From another group of manufacturers (that tend more to Consumer Packaged Goods) we heard acknowledgement that they know OEMs need to replicate their machines on a standard basis, else charge a significant up charge in both price and delivery. Those end users (and machine builders) felt they were buying technology, not just a machine.

There was considerable discussion about specification control, Service Level Agreements, and how to deliver the most value for the cost. It should be no surprise we didn’t reach a unanimous decision. The one thing that was clear was there is no universal solution. Another point was that there IS a need for Secure Remote Access, but it needs to be usable by the users, not just the engineers. Clearly there is a huge divide between IT and the plant, let alone the individual machine builder. Each wants to control in their own way. But to be successful in this new Global economy where buyers change sources for a penny (or a yuan) IT and the Plant need to work together.

As the Internet of Things (as described by my friend Paul Didier) takes more and more center stage, there will be much more that Cisco can provide to the machine builder. We’ll be talking more on this, and we’ll be exhibiting at Automation Fair in Chicago on November 16 and 17. We hope to see you there!

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