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General Motors: GM’s IT Network Drives Business Success with Cisco. Executive Perspectives Part 3

December 21, 2011 - 0 Comments

Check out this part 3 of our Executive Perspectives series. Here we follow on from Part 1: Executive Perspectives and AkzoNobel – Manufacturing Industry CIO/CXO Special – Part 1, and  Part 2: Executive Perspectives Part 2 – Toyota Streamlines Business with Cisco, and look at how another of Cisco’s customers in the automotive industry has partnered to gain real business benefits. The video about GM”s  IT Network Drives Business Success is on the Cisco News Site (click link here). The YouTube Video below is the fun Superbowl ad!

Here I talk about a case study prepared by Mainstay Partners LLC, an independent consulting firm, who interviewed with the manufacturer’s executives, IT executives and IT planning personnel. The case study looks at GM’s Cisco-based Plant Floor Controls Network (PFCN), and found out the following about what it is, what it does, how it help’s with General Motor’s Business challenges, and where GM goes from here.

As you all know, General Motors (GM) is one of the world’s iconic automakers, and GM continues to be a force to be reckoned with in the global auto industry. The company has sharpened its strategic focus in recent years and is now moving aggressively to seize high-growth opportunities in emerging markets such as Asia, and redoubling efforts to improve product quality and boost operating efficiencies to drive down costs.

To execute this strategy, GM embraced a globally unified business model that emphasized the deployment of highly standardized engineering and manufacturing platforms that could be easily implemented and supported in any market around the world.

This global, standards-based operating model would accelerate GM’s move into emerging markets and generate efficiencies and cost savings through the use of common infrastructure components and processes.

Among other initiatives designed to support the new unified operating model, GM invested in information technologies to more tightly integrate its manufacturing plants across the globe, control costs, and accelerate the introduction of new communications and collaboration applications. Key to this strategy was the implementation of a modern, standards based network architecture – called the Plant Floor Controls Network (PFCN) – at more than 150 GM manufacturing plants worldwide.

These are the savingsthat the Case Study quotes - more detail in the Case Study itself

Based on a single set of Cisco-based network designs and equipment, the PFCN solution replaced GM’s aging and heavily customized legacy networks that were becoming increasingly unreliable, as well as difficult and expensive to maintain. The move to the PFCN solution enabled GM to standardize the design of each plant network and establish a single engineering team that monitors and troubleshoots network operations globally. The result: network downtime has dropped by about 70%, leading to fewer unplanned work stoppages on the plant floor. Furthermore, GM now needs two-thirds fewer network engineers and analysts to support the same number of plants.

The standardized Cisco network design also helped GM rationalize and reduce its legacy inventory of network devices and spare parts, cutting inventory carrying costs by 70%. It also allowed GM tocreate cost-efficient “global applications” that can be rolled out to plants quickly, and to automate system-management tasks like upgrades and patches. As a result, GM now spends 30% less time managing plant software. According to a conservative analysis by Mainstay Partners, GM’s investment in the Cisco-based PFCN solution will generate a return on investment (ROI) of 166%.

1 The full range of benefits is illustrated in Figure 1 and include:

• $21.2 million in labor cost savings from more efficient deployment of network engineers

• $53.9 million in labor cost saving from more efficient deployment of network operations analysts

• $16.4 million one-time savings from faster, network setups at each plant

• $5.4 million cost reductions from leaner inventory management

• $76.3 million in lost unit profit contribution from higher network up-time

Want to know more about these numbers, how Mainstay came to these conclusions, and what’s in store for the future? Click on this text to go straight to the Case Study. But,  spoiler alert re the future, the new IP-based networks will enable GM to keep pace with new advances in plant-floor devices such as programmable logic controllers (PLCs), which increasingly incorporate IP technology.

In addition, PFCN will help GM integrate future communication applications that facilitate high-efficiency collaboration among its workforce while minimizing the risks associated with these deployments. Two really important areas. But there’s more. Check out the case study for more information by clicking here.

Some research and analysis for a General Motors case study was conducted by Mainstay Partners LLC, an independent consulting firm that has performed over 300 studies for leading information technology providers like Cisco. This case study was based on interviews with the retailer’s executives, IT executives and IT planning personnel, review of project planning documents, and searches of industry literature. ROI calculations use industry standard assumptions regarding the time value of money. Information contained in the publication has been obtained from sources considered reliable, but is not warranted by Mainstay Partners LLC.

Do you have these challenges? How are you solving them? Let me know!

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