The New Manufacturing Enterprise Wheel

The new Manufacturing Enterprise Wheel

describes six critical success factors for competitive manufacturing
1. Customer
2. People and Teamwork in the Organization
3. Shared Knowledge and Systems
4. Processes
5. Resources and Responsibilities
6. Manufacturing Infrastructure

Introduction
The Computer and Automated Systems Association of the Society of Manufacturing Engineers
(CASA/SME) published its vision of enterprise-wide teaming--the CIM Enterprise Wheel--in 1985.
Reaching far beyond the 75,000 members of the Society of Manufacturing Engineers (SME), the
"Wheel" was enthusiastically received. It demonstrated that manufacturing had entered a new age, an
information age, where computer technology helps us manage the manufacturing enterprise. It
provided an architecture for continuous improvement.
Our understanding of enterprise integration has also continued to improve. In the mid-1980s we
understood the need to break down the walls between design and manufacturing. We did not articulate
other issues so well, such as the importance of simplifying processes before automation and the
interaction of the enterprise with its customers and suppliers.
New insight brings us to the new Manufacturing Enterprise Wheel. This updated vision preserves the
understanding gained from the previous CIM Enterprise Wheel. The old Wheel looked primarily at
automation and integration inside the enterprise. The new Wheel looks outside as well. It adds
understanding in these six areas:

 The central role of a customer-oriented mission and vision to strive for continuous
improvement.

 The importance of teams and human networking in the new manufacturing environment.

 The continuing importance of computer tools, now increasingly distributed and networked.
This includes tools to support networking and concurrent engineering.

 A focus on key processes and best practices throughout the enterprise, from marketing through
design, manufacturing, and customer support.
  Recognition of the move away from bureaucratic structures, to leaner and more agile
organizations.

 The need to integrate an understanding of the external environment, including customers,

competitors, suppliers, and the global manufacturing infrastructure.
CASA/SME continues to provide leadership in enterprise integration, through education and
information services for its members. The new Manufacturing Enterprise Wheel is, in a sense, a
graphical index to the knowledge and organizational approach required in today's manufacturing
world.

Six Perspectives on the New Manufacturing Enterprise

The new Manufacturing Enterprise Wheel describes six fundamental elements for competitive
manufacturing:
1. The central role of the customer and evolving customer needs. A clear understanding of the
marketplace and customer desires is the key to success. Marketing, design, manufacturing, and
support must be aligned to meet customer needs. This is the bull's-eye, the hub of the Wheel,
the vision and mission of the enterprise.
2. The role of people and teamwork in the organization. Included here are the means of
organizing, hiring, training, motivating, measuring, and communicating to ensure teamwork
and cooperation. This side of the enterprise is captured in ideas such as self-directed teams,
teams of teams, the learning organization, leadership, metrics, rewards, quality circles, and
corporate culture.
3. The revolutionary impact of shared knowledge
and systems to support people and processes.
Included here are both manual and computer tools
to aid research, analysis, innovation,
documentation, decision-making, and control of
every process in the enterprise.
4. Key processes from product definition through
manufacturing and customer support. There are
three main categories of processes:
product/process definition; manufacturing; and
customer support. Within these categories 15 key
processes complete the product life cycle.
5. Enterprise resources (inputs) and responsibilities
(outputs). Resources include capital, people,
materials, management, information, technology, and suppliers. Reciprocal responsibilities
include employee, investor, and community relations, as well as regulatory, ethical, and
environmental obligations. In the new manufacturing enterprise, administrative functions are a
thin layer around the periphery. They bring new resources into the enterprise and sustain key
processes.
6. The manufacturing infrastructure. While a company may see itself as self-contained, its
success depends on customers, competitors, suppliers, and other factors in the environment.
The manufacturing infrastructure includes: customers and their needs, suppliers, competitors,
prospective workers, distributors, natural resources, financial markets, communities,
 governments, and educational and research institutions.

1) Customer
In the end, every activity in the manufacturing enterprise should contribute something of value to
the customer. Providing superior value to the customer generates growth and profits.
The role of an enterprise mission and vision is to align all work toward meeting--and surpassing--
customer expectations. This is the bull's-eye, the hub, and the center of the new Manufacturing
Enterprise Wheel.
A customer-centered mission provides a clear direction to align activities
and empowers the work of teams in the new manufacturing enterprise.
Recent years have seen unprecedented experimentation in the
organization of manufacturing enterprises. Start-up companies grew and
became giants. Huge conglomerates formed from other companies. Giant
companies faltered, with some regaining their competitive edge. Others
are gone. The globalization of manufacturing continued at a dizzying
pace, from small niche producers to the largest international firms.
These successes--and failures--have proven the need for a clear mission and vision, focused on the
customer needs. Profits and growth can only be sustained when customer needs are met or
exceeded.

2) People and Teamwork in the Organization (P-T-O)

All members of the organization stake their futures on their ability to deliver value to the customer,
and earn profits in return. The central role of people in the organization forms the inner circle of
the Wheel. The enterprise is only as strong as its people, organization, and culture. Today's highly
competitive worldwide markets require a new approach to managing, organizing, and applying the
knowledge and skills of people.

When venture capitalists consider funding a new company, their

first consideration is people--their knowledge, their experience,
their motivation. When successful companies explain their
success, the answer is much the same: it is "our people and our
organization." When Japanese or German business leaders explain
the manufacturing success of their nations, with fewer natural
resources than many, they again point to people. Manufacturing
success builds on the education, skills, drive, cooperation, and
leadership of people.
3) Shared Knowledge and Systems
In the past, epochs were named by the dominant materials and tools of the age: the Stone Age, the
Bronze Age, the Iron Age. Materials and processes are still evolving. Yet, today, the dominant
material of civilization is information; and the dominant tool is electronic interchange. In this age
of shared knowledge, people and systems transform information into better products and services.
Nearly every job in every company is changing in some way as a result of shared knowledge in the
information age. Computer systems and intelligent machines are as much an influence today as
were the stone, bronze, or iron tools of the past.

The unique expertise of CASA/SME is understanding information technology and the ways this
technology can empower people in the manufacturing enterprise. Indeed, a key function of the
Wheel is to illustrate ways in which computer systems support people and processes in the
enterprise.
The CASA/SME Industry LEAD Award (Leadership and Excellence in the Application and
Development of CIM) is given each year to a manufacturing company that exemplifies enterprise
integration. The CASA/SME-sponsored AUTOFACT Conference and Exposition is the world's
leading showcase of CAD, CAM, and other systems for product and process definition and
manufacturing.

4) Processes
The manufacturing enterprise combines people and tools, in processes, to add value to purchased
materials and components. Processes are the life of the manufacturing enterprise.
The real manufacturing enterprise might have hundreds or thousands of processes, depending upon
the level of detail. In the new Wheel, there are three main groups of processes, a trinity of actions
focused on customer satisfaction. These are product/process definition, manufacturing, and
customer support.
First is product/process definition. It defines what is to be built and how it is to be built. While
product/process definition may consume only 5 to 20 percent of the manufacturing enterprise's
total resources, it casts a long shadow.
When product and process definition is
complete, the ultimate performance and
value of the product, as well as most
manufacturing expenses, have already been
determined.
Second is the lower segment of the wheel,
manufacturing. For products like
automobiles, industrial equipment, office
equipment, and appliances, manufacturing
requires the largest investment of
resources.
Third are processes which, combined with
the manufactured product, make it
available and useful to the customer. These
customer support processes include global
support, distribution, sales and promotion,
and customer service throughout the
product life cycle.
The three main process groups are further divided. Together, all 15 processes form a
Manufacturing Enterprise value chain:
PRODUCT/PROCESS DEFINITION
1) Business Definition
2) System Design
3) Component Design
4) Continuous Improvement
5) Documentation and Release
MANUFACTURING (/Service)
6) Resource Planning
7) Operations Planning
8) Component Fabrication
9) Assembly and Test
10) Material Management
CUSTOMER SUPPORT
11) Global Organization
12) Distribution
 13) Sales and Promotion
14) Customer Services
15) Life-Cycle Transitions
This definition of 15 key processes is based on input from scores of leading manufacturing
organizations and on research about human problem-solving skills. For more information,
readers are referred to the related CASA/SME Blue Book.
The distinction between products and services continues to blur. Products become services as
they are leased, made available in service centers, or bundled with implementation services.
Services, in turn, become productized. Ultimately, our enterprises deliver capabilities, often as
hybrid products/services, to help customers realize their visions. Thus, many best practices in
product definition and process reengineering are as applicable to services as to products.
While these key business processes flow from one to another around the Wheel, one point must
be clear. The old sequential step-by-step process is no longer sufficient. Indeed, each key
process must be started at the earliest point in time. The key processes overlap so that as many
activities as possible are performed in parallel. Only in this way can superior products be
brought quickly to market.

Concurrent Engineering

Teaming and communication are required across the Wheel among all processes to make
"concurrent engineering" a reality. Both computer and human networking are keys to success.
The diagram illustrates a subset of the many possible relationships in concurrent engineering.
Each company--and its partners--must define their own uniquely effective ways of information
sharing.
A related trend is toward the "virtual enterprise," with key processes subcontracted to other
suppliers. For example, some computer companies design their products (processes 1-5), but
outsource manufacturing (processes 6-10), and rely upon value- added resellers for customer
support (processes 11-15). Strong companies can exist with core competencies in design, or
manufacturing, or customer support only.
 Virtual Enterprise

The new Manufacturing Enterprise strives for worldwide economies of scale and scope, by
networking business units, partners, and suppliers. These trends range from virtual co-location
of project teams to virtual enterprises spanning the globe.
The practice of concurrent engineering is the simultaneous consideration of all 15 of the key
processes in design, manufacturing, and customer support. Today's best practices involve cross-
functional and self-directed teams linking these key processes:

Product/Process Definition Manufacturing Customer Support

1 Business Definition 6 Resource Planning 11 Global Organization

2 System Design 7 Operations Planning 12 Distribution

3 Component Design 8 Component Fabrication 13 Sales and Promotion

4 Continuous Improvement 9 Assembly and Test 14 Customer Services

5 Documentation and Release 10 Material Management 15 Life-Cycle Transitions

In the end, how well matters more than who performs each of the activities of the processes. It
may be harder to communicate with outside suppliers, especially globally dispersed suppliers,
but new communication tools reduce transmission errors, speed up the process, and lessen the
costs. Today's teams and their processes are supported by computer systems and
communications, from electronic mail, to databases of best practices and computer
visualizations of products "to be."
The 15 key processes also give companies a way of comparing best practices. Reference to the
SME model is a good starting point for work in process mapping, process audits, and
competitive benchmarking.
Understanding the 15 processes, from business concept to satisfied customer, helps members of
cross-functional teams place a higher value on the unique skills each can bring to the
 manufacturing enterprise. We know that agile manufacturing requires better communication
among functions like design and manufacturing and sales. The 15 key processes serve as a
framework for this improved understanding and communication.

5) Resources
Manufacturing transforms resources and adds value. Inputs include capital, knowledge, skills, and
leadership of people, as well as materials, information, technology, and other supplies. Outputs are
finished goods.

This administrative layer manages the flow of inputs from the manufacturing environment. Capital
is transformed to:
- People and their skills (human resources, leadership)
- Materials (purchasing, inventories, storing, distributing)
- Tools (equipment, machinery, facilities)
- Information (on customers, markets, trends . . .)
- Technology (internal and external R&D, tools, processes)
- Suppliers (components, special knowledge, services, lead times)
As resources flow into the enterprise, value is added, and finished goods and services flow out
to customers. In addition to its customers, the management of the enterprise has
responsibilities to maintain its infrastructure. These responsibilities include:
- Employee (wages, benefits, security, worthwhile jobs)
- Investor (return on investment, stability, market share)
- Community (support of infrastructure)
- Regulatory (government regulations and regulatory trends)
- Ethical (moral responsibilities)
 - Environmental (minimum wastes, sustainable ecology)
In the field of biology every living cell has a membrane that insulates internal processes from
the environment. This outer layer must readily transport vital resources into the cell, and
transport by-products outside the cell. The paradox of the cell membrane is that it is
simultaneously resilient and tough, yet thin and permeable.
Why the analogy? Why not just call this layer by department names like personnel, purchasing,
and finance, and be done with it? The new Manufacturing Enterprise, aided by computer
systems, is finding ways to cut overhead, flatten the organization, and allow internal teams to
interact more directly with customers and the environment. Control comes as much from a
nucleus of shared value, as from administrative mandates from the top.
We envision that input/output functions will become more like the membrane--stretched thin,
but tough and permeable. The old pyramid organization, with management, overhead,
headquarters, and administrative functions taking the top three or four layers, is evolving to a
leaner and more responsive organization.

6) Manufacturing Infrastructure
Outside the nominal bounds of the enterprise is its environment. Some huge bureaucracies may
steer themselves like the ocean liner Lusitania, dimly aware of their environment and slow to react.
Yet, every enterprise must eventually adapt to the realities of customers, competitors, and other
external influences, or sink into oblivion.
Key elements of the external environment are:
• Prospective customers
• Customers and their needs
• Purchasing influences
• Raw materials
• Energy
• Suppliers
• Distributors
• Transportation systems
• Communications
• Educational institutions
• Research institutions
• Prospective workforce
• Community
• Governments
• Financial markets
• Competitors
• Demographic changes
• Political environment changes
Infrastructure (workforce, investment, transportation, communication, suppliers, schools, research, and
government support) separates top manufacturing regions and
countries from others. The old pattern was that the Manufacturing
Enterprise competed regionally. Even large companies often had
little reason to compete beyond the borders of their country. Now,
every Manufacturing Enterprise faces broader regional, national, or
global competition. By the same token, considerations of
customers, resources, and regulation have expanded to the new global infrastructure.
CASA/SME and SME have long contributed to the education and research infrastructure of
manufacturing through publications like the CASA/SME Blue Books, courses, and the annual
AUTOFACT Conference and Exposition. In addition, the CASA/SME University Lead Award
(Leadership and Excellence in the Application and Development of CIM) is given each year to a
university program that best demonstrates its contribution to a stronger educational infrastructure for
manufacturing.
Today, the importance of a strong manufacturing infrastructure is recognized worldwide.

World-class manufacturers organize, integrate, and invest their resources to achieve new levels of
customer satisfaction. The new Manufacturing Enterprise Wheel is a recognition of the significant
progress to date, and the progress yet to be made, in manufacturing. It serves as an overview of today's
best practice in total enterprise integration.
 1991-1993 CASA/SME BOARD OF ADVISORS
Barbara M. Fossum, PhD Frederick J. Michel, CMfgT Warren L. Shrensker,
University of Texas at Austin Factory Operations & Factory Automation CMfgE

Geroge J. Hes, PE Victor O. Muglia, CSI Dan L. Shunk, PhD

The Ingersoll Milling Machine Company Caterpillar Corporation Arizona State University

David E. Lee, PhD, CMfgE Mary Ann Roe, PhD Janet K. Talbott
Siemens Automotive Texas State Technical College EDS

Peter A. Marks Charles M. Savage, PhD Jack Wright, CMfgE, PE

Design Insights Digital Equipment Corporation Retired

The Manufacturing Enterprise Wheel was conceived and produced under the auspices of the Computer
and Automated Systems Association of SME (CASA/SME), and builds upon a foundation of earlier
work. It represents contributions from scores of experts. Peter Marks led the corss-functional team and
served as "system designer." "Business definition" and project support were maintained by George
Hess, Fred Michel, Dan Shunk, and Warren Shrensker in successive terms leading the Board of
Advisors. SME resources, including the SME library, were instrumental in research. Many others
contributed greatly to "component design" and "continuous improvement" processes, including all
those above. A special thank you note of thanks is due to the members of the CASA/SME Technical
Forum, under the additional leadership and personal involvement of Charles Savage, Warren
Shrensker, Barbara Fossum, and Vic Muglia. Nancy Mauter, Association Manager, took charge of the
"manufacturing" process. Tho the many others who contributed-- thank you.
CASA/SME Board of Advisors

Copyright© 1993, Society of Manufacturing Engineers

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