A Global Think Tank Targets The Factory

Can hundreds of research teams working together rewrite the way we manufacture?

There's a classic brainteaser that goes like this: A traveling salesman has to visit five cities in one trip. He can visit them in any order he prefers, using any route he likes. What is his quickest path? It turns out that the only surefire way to solve this problem is by brute force--you have to look at each possible path and tote up the distance. For a five-city trip, there are only a dozen possible paths. But add another ten cities, and the permutations quickly climb into the millions.

For Rockwell Collins, the Cedar Rapids (Iowa) avionics subsidiary of Rockwell International Corp., this puzzle becomes a monstrous practical problem. Every day, the company shuffles thousands of different-size parts and products among dozens of research, production, and storage centers using a variety of vehicles and routes. Trying to figure out the best path for each part was a logistics nightmare. "We had a long list of research and development projects" to try to solve it, says Jack R. Harris, director of advanced manufacturing technology. "There wasn't enough money to cover them all."

Enter the Intelligent Manufacturing Systems (IMS) program, an international research initiative involving 220 industrial companies and 189 university and government research labs in seven regions. IMS seeks to address the knotty technical and logistical challenges that nearly all manufacturers will face in coming years. And it aims to pull this off without compromising the unique proprietary skills and advantages of its corporate participants.

COMMON LANGUAGE. Born in a Japanese government brainstorming session in 1989, the initiative is pulling together whole industries in a global quest to identify best practices ranging from the optimal layout of a factory floor to a blueprint for a global virtual corporation. Members have committed $250 million across 18 consortiums looking at everything from "biological" models of manufacturing to Hollywood-style 3-D simulations of how a worker interacts with machine tools (table, page 86H). Within these consortiums, companies and universities pool research staff, expertise, and funding. Participants may not be able to predict exactly what manufacturing will look like in 2050. But at the least they will gain a common basis for discussing R&D collaborations, intellectual property, environmental risks, and other pressing concerns.

The IMS process hasn't been a cakewalk, particularly for its U.S. adherents. It took years to iron out the project's political and legal frameworks before work could begin. Individual consortiums have suffered a host of bureaucratic delays. More troubling, over the past five years, participants have seen new Internet-based modes of collaboration ripple across nearly every industry. Amid the dazzling proliferation of Web marketplaces, auction sites, and exchanges, the top-down, government-led IMS framework looks distinctly out of date.

Rockwell and other early adopters, however, find much to praise in the IMS process. Research cost savings are what first attracted Rockwell's Harris. "We figure that every dollar we spend in this consortium yields about four dollars' worth of value," he says. And that's just an appetizer. In 1997, the company joined an IMS consortium called GALAXI--short for Global Algorithms for Logistics Analysis, Xecution & Integration. The project was designed as the kind of multilateral group-think that might just be a match for the traveling-salesman problem. It allowed Rockwell staff to tap into a global pool of university and private research groups.

Since all IMS projects must have sponsors in at least three member regions, GALAXI's responsibilities are parceled out to three teams. In the U.S., Rockwell Collins works with researchers at the University of Iowa to develop the underlying math for coordinating production schedules with the movement of materials among far-flung factories. Simultaneously, industrial scientists at Japan's Fujitsu Ltd. and South Korea's Hyundai Motor Co. are working on ways to link these mathematical models to real-world conditions. In the last stage, sometime next year, academics at Karlshue University in Germany are going to incorporate less predictable factors, including human error and variable production schedules.

SMART WAGER. Intellectual exercises of this sort are too complex for any one company or group to work out, says M.C. Jothishankar, senior industrial engineer at Rockwell Collins. And while there's no guarantee that collaboration will result in triumph, success would have an immediate impact on efficiency, he notes, adding: "Nothing currently exists to coordinate manufacturing schedules with shipment logistics." If all comes off as planned, Rockwell Collins--and by association, its industrial partners--expects to shave 30% from its current cost of material movement.

Testimony such as this from Rockwell Collins and its collaborators gets remarkably close to the original, idealistic vision of Hiroyuki Yoshikawa, who came up with the idea for IMS while serving as dean of engineering at Japan's prestigious Tokyo University in the late 1980s. Yoshikawa recognized that while research collaboration is common in academic circles and even among individual companies, there are few examples of substantive collaboration across entire industries.

That represents a failure of global proportions, Yoshikawa says. Masses of redundant research are funded every year as isolated companies struggle to solve identical problems. Even where whole industries adopt some innovative practices in one country, it may take years for the technology to flow across borders. One example is so-called concurrent engineering--the use of parallel teams of engineers to develop a product and design the necessary manufacturing processes simultaneously. As Yoshikawa tells it, this approach gained currency in Japan many years before it was transplanted to American factories. Delays like that are "a tremendous loss," says Yoshikawa, now president of the Science Council of Japan, which advises the Prime Minister on scientific issues.

Yoshikawa's vision didn't end with technical advances. He believed that the collaborative IMS framework could bring broader global benefits. Chief among his lofty goals was a commitment to "sustainable manufacturing"--which meant cleaner, more efficient production methods.

It was a struggle for Yoshikawa to sell this vision to Japan's Ministry of International Trade & Industry (MITI). And what came next was a huge blow to his idealism. Instead of enthusiasm overseas, IMS immediately sparked suspicions in 1991, when MITI backed the program with a $1 billion proposal and began shopping it around in Europe and America. In Washington, trade negotiators branded the project a Trojan Horse calculated to rack up more offshore conquests for Japan's industrial army. Across the Atlantic, the European Union stalled on various IMS proposals until 1997. "MITI was accused of trying to suck up foreign skills," says Masahi Ogawa, CEO of IMS International, the project's Tokyo-based administrative arm.

Despite government concerns, many U.S. manufacturers saw that IMS had merit. A 1991 bill sponsored by then-Senator Al Gore gave IMS a green light. To this day, U.S. participation is subdued. Just $47 million in federal money was put on the table for IMS in 1991. That number has since dwindled to zero. Europeans have been more generous. But in Japan, current public funding is just $11.2 million--a paltry sum as government projects go.

"CLEARER PRIORITIES." Yet the projects have validity. Despite the lack of public funds, the sole U.S.-led IMS consortium--dubbed Next Generation Manufacturing Systems--is one of the most productive of all IMS projects. Without the allure of research subsidies, companies "really have to want to be in this project," notes Charles M. Anderson, who oversees the NGMS project. In May, it published results of a study of a futuristic auto plant with no assembly lines. Potential savings: a staggering 87%.

Even though many observers criticize the bureaucratic pace of the research, the collaborative benefits remain more important. "From a U.S. perspective, where everything is fast food, [progress] can be agonizingly slow," says Robert Brown, president of Delmia Corp., a U.S. subsidiary of France's Dassault Systemes. But the company is staying put, in part because it gains exposure to new ideas, clients, and the thought processes of its competitors. Delmia participates in three consortiums, including one aimed at improving the linkages between factory simulation programs used by the world's biggest manufacturers. Further, Brown says IMS has given Delmia a window on the future requirements of its international customers--auto and aerospace companies and military contractors, some of which also participate in the project. "This doesn't necessarily change what we are researching, but it does give us clearer priorities," observes Brown.

What's next? As the IMS program approaches its fifth anniversary, the group's rich-nation clubbiness troubles founder Yoshikawa. He would like to add China to a roster that includes Australia, Canada, Japan, the European Union, South Korea, Switzerland, and the U.S. With its strong base of industrial and research skills, China could make major contributions. But other members won't warm to that idea unless China tightens its lax intellectual-property protections.

Beyond these goals, IMS must somehow figure out how to react more nimbly to accelerating technological change. Today, U.S. members of IMS are distinctly Old Economy: Caterpillar, Lockheed Martin, General Motors. Among Silicon Valley Web powerhouses, only Oracle Corp. has expressed serious interest in the program. "Companies in the U.S. are making too much money right now," says the NGMS' Anderson. "It's difficult to get them to focus on the need to invest in a project like this."

Advocates believe this will change. Rather than make IMS obsolete, the Internet might prove to be its savior. As the Net forces companies to boost the efficiency of their global operations, investors may eventually lose patience with single-company research efforts that constantly reinvent the wheel. Indeed, companies are likely to discover that cross-industry collaboration can be the fastest path to growth and profitability. Once that lesson is absorbed, companies in the fast track may even discover--as Yoshikawa predicted--that what's good for the whole world is good for local manufacturers.

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