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The Challenge of Connecting Non-hierarchical Manufacturing Networks

The European electronics industry faces stiff competition from manufacturers in the far east and United States. In order to compete, European companies have to respond with improved flexibility to changing requirements and collaborate across the supply chain effectively capitalizing on collaborative decision making, shorter distances, high skill levels and shared cultural understanding.

According to Fortunato Cartolano, who is tasked with managing research and development for a project dubbed “CONVERGE,” it is essential for the European electronics industry to capitalize on opportunities for streamlining the supply chain through shared knowledge, collaborative decision making and cultural understanding.

To address the issue, the electronics industry has already formed a number of non-hierarchical networks that inherently require greater collaboration at the tactical and strategic management level, which in turn requires a new level of data and information sharing between network partners. The new collaboration level requires a higher level of coordination on tactical and strategic management level and therefore a new level of data and information sharing with network partners. Managers have to distinguish in a new manner between shareable and non shareable information. As they weren’t obliged to do this in the past tools and methods are missing. The CONVERGE project closes this gap by providing a framework and tools for exchanging tactical and strategic information for decision making in non-hierarchical supply chain networks.

At present, collaboration within non-hierarchial networks is primarily focused on the operational level and is accomplished through Enterprise Resource Planning (ERP) systems. At the operational management and shop floor level, ERP systems can provide an integrated view of operations information across all functions within a company and can be used to build links to other companies. Where they fall short is in providing transparency at the strategic and tactical planning levels — and that is exactly what Fortunato Cartolano and other electronics industry experts are addressing with the CONVERGE project.

The CONVERGE Solution

The CONVERGE project brings a consortium of experts, representing the European electronics industry, academia and technology providers, together as part of a research effort aimed at closing the gap by providing a framework and tools for exchanging tactical and strategic information necessary to make informed decisions. The overarching goal of the CONVERGE research project is to facilitate the free sharing of data and the “interconnectedness” of different supply chains while providing assurances that confidential information is secure.

The speed of development in the electronics industry demands supply chain transparency. Companies need visibility into future orders and risks across the supply chain, as well as visibility into tactical and strategic decisions made by their suppliers and customers, in order to plan their own activities accordingly. CONVERGE endeavors to create a network of partners who share information on previously agreed terms. Because each partner in the network needs the ability to make its own tactical and strategic decisions based on the multiple supply chains, the information cannot be centralized.

To that end, CONVERGE delivers a de-centralized decision support system for production planning and resource optimization based on:

1) a new reference model for inter-organizational decision taking,

2) deployment methods to adapt the generic reference model to application fields, networks and companies and

3) existing software supporting customer and supplier relations. Besides scientific and technological experts the CONVERGE consortium involves

a) four manufacturing companies addressing directly their network problems and

b) a supply chain interest group (non funded) representing the companies’ network partners.

This ensures a high industrial impact and dissemination level. In about 5 years the expected cost saving is in the order of 180 Mio. € (~$248 million) just assuming a diffusion rate of 10% of the 600 European Electronic Manufacturing Service companies.

Project CONVERGE Expected Results in Detail

15% on quotation generation cost

20% on delivery times (proactive production planning)

15% on inventory levels (current asset/non operating working capital)

+ 20% income and fulfillment of orders

Improvement of product quality

15% to 20% time savings (closer strategic coordination)

Overall performance and capacity enhancement

Meet Fortunato Cartolano

Fortunato Cartolano brings 25 years of business development and key program management experience to the table, having worked for SIEMENS Automotive and Magneti Marelli. Fortunado offers a bicultural background, is fluent in four European languages, and has practical work experience in over twelve countries across four continents. He holds a Master of Science in Aerospace Engineering from Institut Supérieur de l’Aéronautique et de l’Espace in Toulouse, France, and an Executive Master of Business Administration from HEC International Business School in Europe.

Today, Fortunato is President and CEO of FCO Global, a firm that specializes in strategy and management consulting, operational and financial performance improvement, and domestic and international business engineering and development.

Fortunato Cartolano is also actively involved in a 30-month research and development project called “CONVERGE,” which aims to improve supply chain integration and real-time decision making by connecting non-hierarchical manufacturing networks within the European Electronics industry.

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This post was submitted by Anna Kurghinyan.

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