Who will be the winners in the battle to have the most efficient production operation that is both lowest cost but also maximises a company’s ability to compete in it’s marketplace with innovation and flexibility? This is the biggest question on all manufacturing CEO’s minds. Do I outsource, do I move my operations to low cost countries or do I embark on developing so called Worlds Class production techniques in the current environment?

To become winners in this global game, company’s often embark on grand journeys to transform their manufacturing unit through Lean and Six Sigma techniques as though it is a mix of the Holy Grail and a pilgrimage to the Promised Land without actually delivering the goods to the bottom line. (Excuse the imagery and the pun.) Large impressive heavyweight consultants are brought in, everyone is enthused, lots of activity is kicked off, large documents and grand plans are written and then bottom line results are expected. When this does not come questions are asked. All to often it all ends in failure, disillusionment and frustration.

Why? What are the returns on all this investment and time? What have we been doing and where has been our focus? Where did we go wrong? Why are we so internally focused? In the cold light of day the real measurement will be returns on capital, competitive advantage and are we on course to achieve our mission? These are the questions the board and the shareholders will be asking!

The answer is that the end game will be won through "Connectivity". That is to say, the winners will be those that connect the total production value chain. Efficiencies will be significantly increased when all parts of the value chain are connected and co-ordinated with each other. Linking and connecting with all parts of that production chain will include automatic response mechanisms from information that come from elsewhere in the value chain. Sharing information and becoming connected real time across the extended enterprise is essential if your organisation is to become one of the winners.

Many enterprises focus on efficiency improvements internally and forget the external parts of the production engine, they do not effectively pass on information nor do they pass on the learning’s to all parts of the production value chain. Overall Equipment Effectiveness (OEE) calculated on a cell or even a line is one thing, but the efficiencies and savings that can be made across the whole enterprise and the extended enterprise can be many times greater.

One of the greatest missed opportunities is not to measure data in your internal process that could be utilised elsewhere in the production value chain. This may be something that is valuable for the supply chain or it may be something that is value to the demand chain where the greater savings may be made.

Continuous improvement is a journey, which can be implemented gradually or quickly so that the rate of culture change and acceleration of improvement can often be the difference between success and failure or even the very survival of a business.

Connecting the full production value chain is no small task. It helps to break this down into three parts which is the Inside which is all of the internal activity from shop floor and all departments and processes (the whole of your company), the Supply Side which is all suppliers, sub-contractors and supply chain players and activities, and the Market Side which connects with the demand chain and customers as if it were a single enterprise. This extended enterprise is what we call the "Connected Enterprise". Connectivity improves information flow and teamwork across the production value chain. Hence we are able to reduce waste and cost whilst at the same time increase flexibility, responsiveness, speed to market and innovation throughout the total value chain.

Here we connect the OEE of a cell to the OEE of a production line and then connect this core to all the processes and support functions. This would include your scheduling, investment planning cycles, production planning, enterprise resource planning (ERP), maintenance and inventory management processes.

Here we are connecting into our supply partners to provide real time information on the production line requirements to enhance "Just In Time" approaches to cut down waste. This will help reduce stocks by not having to over order to cope with peaks and troughs and thereby controlling inventory levels releasing cash into the business.

The name of the game here is to have a better handle on the fluctuations in demand to accelerate time to order, to react quicker to increases in demand and successful lines. This flexibility to market needs will reduce over production and missed opportunities when production lags behind the market demand.

All these elements help to accelerate the maturity of the culture and behaviour of all the players in the production efficiency cycle.

Connectivity can be built up piece by piece because one piece is not connected there are still improvements and cost savings to be achieved if just parts are implemented effectively. This fits the journey of continuous improvement but gives a goal to the set of activities within a continuous improvement program.

However it is only when the whole of the production value chain moves in unison that maximum value is achieved. This then moves competition on to a new level where instead of competing directly with companies, you compete with them and their value chains. Competition becomes a team thing with competing value chains. The speed and effectiveness of each partner in the total value chain will determine how successful the overall value chain will be among competing value chains.

Connectivity brings two distinct strategic advantages. Firstly you will be able to move quicker down the continuous improvement process than your competitors reducing costs faster and becoming more competitive on price the second is that you can get closer to your marketplace become flexible to market changes and create an innovation gap with your competition.

Dawn Gibbins CEO of Flexicrete says "The key to success is to get closer to your customer, to innovate, be creative and align your whole production capability behind those customer needs."

This is the biggest opportunity of all because 70%- 95% of many organisations’ product cost, lead-time, design, supply chain planning, and manufacturing are outside of its four walls. The biggest wastes occur at the hand offs between each player in the chain, the more hand offs, the greater the likelihood of waste and therefore more importance the principle of "Connectivity."

However, it does require deployment and integration of various improvement methodologies and systems to the broader nature of process improvement.

It can also requires migrating beyond ERP to other enabling technologies such as Collaborative Forecasting, Planning, Customer Relationship Management (CRM), Supply Chain Management (SCM), Collaborative Product Development, and other Internet-based applications. Many organisations are years into implementation, but for industry as a whole it is the new frontier of improvement – A frontier with order of- magnitude opportunities and larger benefits than any single improvement initiative that preceded it. Manufacturing is no longer a competitive weapon, the total value stream is more important. Many blue chip organisations have already discovered the power of the Lean Extended Enterprise even though they might not call it that exact name.

There are very distinct trends with respect to lean. First, many organisations

are well on their way to integrating lean vertically - Implementing lean beyond

the production floor to the high impact soft process areas. Many others are integrating lean horizontally beyond the four walls to get at the highly leverageable total value stream opportunities. Others recognize the importance of integrating lean laterally – Through empowered people and teams, through cultural transformation, and through the integration of Kaizen, Lean, Six Sigma, ERP, and other enabling technologies.

Moving from one generation of lean to the next generation requires a broader toolbox of improvement methodologies and a higher focus on the soft business processes supported with appropriate enabling technology.

Many larger organisations are promoting Lean process improvement,

but the Connected Enterprise will a pre-requisite for the future survival of businesses. Shrinking mismatches between supply and demand and collaborating in real time are everyday occurrences for Ford, Dell, GE, Harley Davidson, Unilever and hundreds of other organisations. The future of many rests on their ability to build nimble processes that enable them to hook into these rapidly emerging value streams, or be left in the dust.