Integration for Manufacturing Industries
Manufacturing companies with complex supply, fulfillment or service logistics chains already understand the value of integration. When business processes and systems are seamlessly connected within the company and across the value chain, companies can shorten order lead times, reduce inventory levels, innovate faster, reduce time to market, adapt to change, increase customer satisfaction, etcetera.
Larger companies have indeed achieved seamless integration over the past 30 years, albeit with enormous capital investments in proprietary expensive business applications (like ERP), custom integration development and proprietary integration technology. Even though some of the benefits of integration have been achieved, there are now deep ‘lock-ins’ with expensive proprietary software and technology vendors and a rigidity.
Over the past ten years, two factors are further pushing the need for modern integration technology as a foundation that can handle ‘hybrid integration’ use cases. First factor is that cloud-based S-a-a-S solutions have changed the application landscape. These flexible pricing schemes allow companies of all sizes to adopt them. Second factor is that new technologies are introduced at a rapid pace. We see that Industrial Internet of Things (IIoT), Augmented Reality (AR), Artificial Intelligence (AI), digital printing, and blockchain can further optimize business models and business processes. To be able to uptake these technologies companies will more than ever require access to a solid integration platform to act as the glue between devices, equipment, systems, software applications, and technology solutions that live both on premise and in the cloud.
Examples of seamless integration
Tesla took a radical different approach to car distribution. No expensive car inventories at dealer lots, but instead cars are ‘configured-to-order’ via the Tesla mobile app without feeling the pressure of the car salesperson. Then after assembly the car is delivered to a location of choice. Arranging financing, scheduling service appointments, reviewing estimates, viewing bills can all be done via the app. This is a radical different customer experience, only possible via seamless integration that modern integration technology provides.
Boeing implemented ‘zero touch’ orders by fully automating the entire order and fulfillment process for aircraft spare parts. Boeing invested in modern integration technology and integrations with suppliers and customers across the value chain. They provide innovative and competitive business models and services like spares forecasting, spares exchange programs. They guarantee customer service levels for aircraft maintenance based on ‘flight hours’ agreements and with a pool of spare parts placed strategically across the globe.
Airlines for example can place orders in their own aircraft maintenance system or via a customer portal for any type of aircraft. These orders are automatically integrated via APIs and make their way to the correct ordering and fulfillment systems which source from the correct locations. All the required repair processing for the removed units, replenishment processing is fully automated and integrated in an end-to-end logistics flow.
Cisco integrates and plans across multiple tiers of the supply chain and has full visibility across various tiers and contact manufacturers. This allows them to quickly adjust to changes in demand and introduce new products extremely fast.
Affordable integration technology is now available
Until recently only larger companies were able to make the capital investments in expensive and proprietary integration technology. With the rise of open source, integration Platform-as-a-Service (such as Yenlo Connext Platform or YETI), and Integration-as-a-Service (like Connext Go!), the value of seamless integration is also available to small and midsize companies as well. At the same time, larger companies can now significantly reduce cost by replacing expensive and proprietary integration technologies, by using these modern integration platforms.
Solving the integration problem is not new.
Manufacturing in the 1990s
In the 1990s, Enterprise Resource Planning (ERP) systems enabled manufacturing companies to automate and integrate value streams (primarily) inside the organization. ERP systems allowed industries with complex supply chains and multiple tiers of suppliers.
ERP vendors, like SAP and Baan, created pre-configured templates in the application for business processes. They labeled these like, for example: Order-to-Cash, Procure-to-Pay, Plan-to-Make. With ERP, not only was it possible for medium and large size companies to retire hundreds of legacy systems and home-grown custom applications with a single system, but it also enabled Business Process Reengineering (BPR) and help to dramatically improve the business processes with template best practices and configurable system functionality.
The strategy to go with ERP reduced the number of systems and integrations, but the need for integration was not over. ‘Point solutions’ were still needed for: manufacturing process planning, barcoding, quality management and shop floor equipment. The good news for ERP was that it provided a data-model which enabled ‘single source of truth’ for data, but these integrations between ERP and ship floor were extremely custom – and expensive.
The ERP system became the spider in the middle of the web. ERP vendors capitalized on this by adding more capabilities, expanded into new functional areas that would allow companies to replace ‘point solutions’ and reduce the integrations.
Manufacturing in the 2000s
In the late 1990s and early 2000s Customer Relationship Management (CRM), Supply Chain Planning (SCP), Human Resource Management (HRM), Warehouse Management System (WMS) and Product Data Management (PDM) emerged. Major ERP vendors tried to incorporate these domains into an integrated data model with their ERP system. With successes of I2, Siebel, Commerce One, PeopleSoft, and Siebel, ERP vendors like SAP and Oracle realized that they could not really stay ‘best of breed’ by building everything themselves. They started to focus on acquisitions and strategic partnering.
During the 2000s, ‘best of breed’ solutions for process optimization continued to emerge. These were very appealing for companies to adopt, because of the high ROI and short payback period. Financial planning (Hyperion), demand planning (Demantra), service optimization (Servigistics), transportation optimization (Glog, Caps), global trade management (Amber Road), warehouse management systems – and the list goes on. Some of these companies were acquired by the bigger software companies, but others continued to blossom on their own.
The ‘best of breed’ or ‘niche’ solutions that enabled process optimization pushed the need for better integration technology. Batch oriented file-based integrations were no longer sufficient to meet all integration scenarios. There was a greater need for realtime business event-based integration patterns and guaranteed delivery. Integration technology based on Service Oriented Architecture (SOA) became more popular as a result but was not cost effective. Reasons for the high cost were that open standards were not very well established and proprietary vendors like IBM, Tibco or Oracle were (and are still) extremely expensive with the ‘closed’ license products they provide. Only larger enterprises could truly leverage some of the benefits and were able to invest into SOA philosophy and technology and could more easily adopt these ‘best of breed’ solutions.
Also, some large manufacturers and distributors could justify investing in RFID technology for their manufacturing, distribution and maintenance business processes. Large investments were required to integrate RFID sensors to specialized equipment and then via proprietary technology with other business systems.
Manufacturing in the 2010s
With the rise of cloud technology and ‘Software-as-a-Service’ (S-a-a-S) in the 2010s, it is now easier and more affordable than ever to adopt ‘niche’ or ‘best of breed’ solutions. Besides larger companies, also smaller companies can afford these tools to automate and optimize their processes and integrate across the value chain.
The integration paradigm shifted and required ‘hybrid integration’. The larger companies started to attempt to reduce cost by shifting to S-a-a-S, but the monolith ERP systems are still solidly anchored and cannot be easily replaced. Integrations are not only with systems on premises, but also with applications over the internet with Cloud applications. Smaller and midsize companies could afford S-a-a-S, but integration technology or investment in integration development was limited due to the high cost.
Technology company Oracle realized early on the cloud based S-a-a-S is the future and started already during the 2000s to provide much of their offerings via the Cloud (Finance Cloud, HCM Cloud, etc.). Cloud ERP for larger companies is by far not mainstream, but adoption started within small and midsize companies.
The S-a-a-S vendors like SalesForce, Workday or Dynamics have realized that the key to success is that their applications support secure and open standard based integrations. They adopted standards like REST (and previously SOAP) APIs, making it much easier to integrate. Also, standards for authentication and access authorization (like OATH, SAML, JWT) have been adopted, so make sure that access is secure.
Cloud evolved RFID to the next level. It is now a part of the Internet of Things (IoT). The greater use of cloud platforms for IoT has been a catalyst for scalable IoT applications, easier connectivity and sharing of information. Data streaming from these IoT devices, can be used to integrate with business applications for process control, recording of order completions, picking of goods, shipment confirmations, receipts, etc. It can be used for real time data analytics, alerting, big data, machine learning.
Hybrid integration solution
Due to availability of S-a-a-S applications, companies of all sizes can run their business and make use of ‘niche’ or ‘best of breed’ applications that support their business processes.
With the introduction of cheap IoT devices, standard protocols (MQTT) and IoT platforms, operational data across the value chain can be easily used to manage, control and optimize operational processes.
“Yenlo is well versed in interconnecting back office systems like Oracle and SAP by means of modern API and web service technologies with process automation systems. In this field, Yenlo has realized several integration solutions for manufacturers with regards to the Internet of Things (IoT), robotica, and process control.”Ruben van der Zwan, founder and CEO of Yenlo
Systems, devices and information ‘on premise’ or ‘in the cloud’ can be seamlessly integrated using the ‘hybrid integration’ platforms that Yenlo provides. This hybrid approach does not only underpin a short time-to-market, but also smooth integrations with other parts of the chain – all in compliance with modern day standards. Our Connext solution is the ideal candidate to support such a modern hybrid integration structure, partially in the cloud and partially on premises.