2
Engineering a Manufacturing Enterprise

MANUFACTURING NEEDS

A manufacturing enterprise must possess three kinds of assets to successfully turn out a product: physical property (such as buildings, tools, and equipment); human resources (such as people, training, and protocols); and knowledge (such as designs, process plans, business processes, and all the documentation needed to put out a product). Because the committee was not given sufficient information to evaluate either the physical property or the human resources of Crusader’s manufacturing enterprise, its analysis focuses primarily on the knowledge aspect of the manufacturing enterprise.

For a system as complex as Crusader, management of the information and knowledge necessary to efficiently design, produce, and support it is extremely important. The use of information technology to develop and manage this information and knowledge has been an important contributor to advances in manufacturing practice in the past two decades. In this section of the report, the committee comments on the Army’s manufacturing vision for Crusader and on innovations such as the enterprise model, product data management, enterprise integration, and supply chain management.

The strategy and objectives presented to the committee mainly involved the knowledge portion and had little to do with physical property and nothing to do with human resources.

Recommendation 1: The committee recommends that the vision and objectives for the human resources and the physical assets should be addressed more completely, especially the issues that surround moving the production from Minneapolis to a permanent manufacturing facility in Oklahoma.

THE ARMY’S MANUFACTURING VISION

The manufacturing vision (Sidebar 2.1) and production enterprise objectives (Sidebar 2.2) for the Crusader project were presented to the committee at its April 10–12, 2002, meeting. The manufacturing vision was well stated, and the goals are understood by both the PM Crusader’s Office and UDLP.

Finding: The committee observed that the Crusader team was enthusiastic and well informed about both the project and the personnel framework. It also observed that both parties desired to apply the manufacturing vision and goals identified by PM Crusader.



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2 Engineering a Manufacturing Enterprise MANUFACTURING NEEDS A manufacturing enterprise must possess three kinds of assets to successfully turn out a product: physical property (such as buildings, tools, and equipment); human resources (such as people, training, and protocols); and knowledge (such as designs, process plans, business processes, and all the documentation needed to put out a product). Because the committee was not given sufficient information to evaluate either the physical property or the human resources of Crusader’s manufacturing enterprise, its analysis focuses primarily on the knowledge aspect of the manufacturing enterprise. For a system as complex as Crusader, management of the information and knowledge necessary to efficiently design, produce, and support it is extremely important. The use of information technology to develop and manage this information and knowledge has been an important contributor to advances in manufacturing practice in the past two decades. In this section of the report, the committee comments on the Army’s manufacturing vision for Crusader and on innovations such as the enterprise model, product data management, enterprise integration, and supply chain management. The strategy and objectives presented to the committee mainly involved the knowledge portion and had little to do with physical property and nothing to do with human resources. Recommendation 1: The committee recommends that the vision and objectives for the human resources and the physical assets should be addressed more completely, especially the issues that surround moving the production from Minneapolis to a permanent manufacturing facility in Oklahoma. THE ARMY’S MANUFACTURING VISION The manufacturing vision (Sidebar 2.1) and production enterprise objectives (Sidebar 2.2) for the Crusader project were presented to the committee at its April 10–12, 2002, meeting. The manufacturing vision was well stated, and the goals are understood by both the PM Crusader’s Office and UDLP. Finding: The committee observed that the Crusader team was enthusiastic and well informed about both the project and the personnel framework. It also observed that both parties desired to apply the manufacturing vision and goals identified by PM Crusader.

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Sidebar 2.1 Manufacturing Vision for the Crusader The manufacturing vision for the Crusader project is this: [to] create a business enterprise and organizational environment that employs innovative, highly efficient, and state-of-the-art production and business practices, processes, and facilities with the highest level of organizational cooperation throughout the entire supply chain while supporting the principles of Department of Defense’s acquisition reform. Source: Scott Knudsen, U.S. Army Program Manager, Crusader, Picatinny Arsenal, N.J., presentation to the committee on April 11, 2002. The committee noted that the Army’s production enterprise objectives for Crusader include most of industry’s best practices as expressed in the report Next Generation Manufacturing: A Framework for Action (NGM Project Office, 1997). The next-generation manufacturing project identified a set of generic enabling practices and technologies that are critical to the enterprise model (Sidebar 2.3). These include four high-level elements: (1) people-related imperatives (workforce flexibility and knowledge supply chains),1 (2) business-process-related imperatives (rapid product and process realization, innovation management, and change management), (3) technology-related imperatives (next-generation manufacturing processes and equipment, pervasive modeling and simulation, and adaptive, responsive information systems), and (4) integration-related imperatives (extended enterprise collaboration and enterprise integration). These elements are strongly interdependent and must be addressed simultaneously to realize maximum benefit (NGM Project Office, 1997). The committee suggests that the Army and UDLP’s Crusader team consider the issues in the Next Generation Manufacturing report (NGM Project Office, 1997). The committee observed that the Crusader team is strategically deploying modern tools and technologies to support its vision for a distributed and effective manufacturing enterprise. These tools and technologies are primarily used for the integration-related imperatives of the next-generation manufacturing framework.2 However, some are in the area of business-process-related imperatives. These tools and technologies include modeling and simulation for integrated project and process development and collaborative tools for a distributed environment. The team also understands the needs of product data management and its integration with supply systems, including enterprise resource planning and other electronic business tools and systems. 1   A knowledge supply chain is defined as the application of concepts of supply chain management to relationships between industry, universities, schools, and associations to rapidly provide and continuously update the knowledge and talent needed to run a business in a timely and cost-efficient manner (NGM Project Office, 1997). 2   The NGM report includes under integration-related imperatives some areas categorized in this study as business process-related.

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THE ENTERPRISE MODEL An enterprise model is a model of “what the enterprise intends to accomplish and how it operates. It identifies the basic elements and their decomposition to any necessary degree. It also specifies the information requirements of these elements. It provides the [data] needed to define the requirements for integrated information systems. It is used to improve the effectiveness and efficiency of the enterprise” (ANSI/NEMA, 1994). The enterprise model should contain subsets of business processes, including a communication strategy (who needs access to what, when, where, and in which format), an information management system (who controls and owns various knowledge systems and how information is stored and accessed), financial systems, purchasing systems (purchase orders, quotes, schedules), and scheduling systems. Each should have a detailed plan to feed into the enterprise model. The Crusader team consists of the prime contractor, UDLP, and its major suppliers and customers. This team approach is an excellent first step in linking the business processes to the Sidebar 2.2 The Army’s Production Enterprise Objectives Maximize the use of commercial products, suppliers, and the best practices of private industry. Minimize facilities infrastructure, inventory expense, and government investment. Exploit information technology to facilitate 21st century production. Streamline the acquisition process and eliminate requirements that do not add value. Use production-representative articles1 for system testing. Reduce total ownership cost and improve readiness. Implement innovative business practices and manufacturing processes that bring lean manufacturing. Ensure availability of cost-effective competitive suppliers, including foreign sources. Make extensive use of modeling and simulation. Minimize the need for new, defense-unique industrial capabilities. Rely on the technology and industrial base sustained primarily by commercial demand. Foster competition in critical technology areas. Validate critical manufacturing systems and processes during system design and development (SDD). Allow contractors the flexibility to define and use their preferred quality management process. Replace hazardous materials through changes in system design, manufacturing, and maintenance processes when alternative technologies become available. Prevent all forms of pollution or reduce pollution at the source when designing, manufacturing, testing, operating, maintaining, transporting, and disposing of systems. Integrate engineering, production, and life-cycle support. 1   Production-representative articles are those that are manufactured to the same specifications and under the same conditions as the final product, but at a much smaller scale. Source: Rocco Percibali, Office of U.S. Army Project Manager, Crusader, Picatinny Arsenal, N.J., presented to the study committee on April 11, 2002.

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Sidebar 2.3 Next-Generation Manufacturing Imperatives The Next Generation Manufacturing report (NGM Project Office, 1997), which is frequently cited in this report, lists 10 imperatives for manufacturing a new product. While this report is not centered on these imperatives, the committee believes they might prove valuable. People-related imperatives Workforce flexibility Knowledge supply chains Business process-related imperatives Rapid product/process realization Innovation management Change management Technology-related imperatives Next-generation manufacturing processes and equipment Pervasive modeling and simulation Adaptive, responsive information systems Integration-related imperatives Extended enterprise collaboration Enterprise integration manufacturing and delivery of the Crusader. The need for an enterprise model for the complete Crusader team was discussed by UDLP, which gave the committee evidence that the above mentioned elements are being developed. However, the committee is concerned that UDLP lacks a complete enterprise model. Because the Crusader manufacturing enterprise will be a complex system of interconnected components, it requires a solid system design that will specify all of the important subsystem interactions. For example, UDLP should decide whether the scheduling system will acquire system status from the enterprise resource planning system, or from automated control systems on the factory floor, or in some other way. It also needs to consider how often rescheduling should occur and what effect this decision will have on the requirements for data currency. Another consideration is whether each supplier will run a separate scheduling system, or whether scheduling will be performed across the entire enterprise. Finally, UDLP must consider how, and how often, the separate systems will synchronize. It is important, if this endeavor is to be successful, to address all integration issues concurrently. Finding: Development of an enterprise model may be the most important next step in implementing the manufacturing vision. Until the information flow is fully articulated, all attempts at integration and establishing common standards for interfaces will be wasted. Within any manufacturing organization, there are certain issues that define its operation. In the present case, 80 percent or more of the total cost of the Crusader project will be for producing the components of the vehicles and 20 percent or less for the assembly facility. In addition, 80 percent or more of the cost is locked in by the design phase. The committee is concerned that the efforts described by the Army and UDLP may not address some of the most important issues. It is not clear

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to the committee that issues such as design for manufacturability, design for assembly, design for reparability, and failure mode and effect analysis have been adequately taken into account. In a commercial environment, the investment in physical assets and human resources determines a large portion (up to 50 percent) of the manufacturing costs. Based on information the committee received on the planning for the Crusader system, UDLP may want to consider the phased assembly approach, with teams of three to five people, which is common in the manufacture of small numbers of complex systems, as opposed to the proposed assembly-line approach. Subsystem and main vehicle assembly teams move to different “stalls” (areas) for the assembly. This approach facilitates the training of new team members, reduces the area needed for assembly, and may make the transition from Minneapolis to Oklahoma easier. The large number of components and systems that have never before been produced (that is, the new content) in Crusader requires that a great deal of effort be expended on verifying the performance and reliability of the system, as well as the major components, before assembly begins. The committee perceives that the Crusader team expects testing during the assembly process to be the primary means of providing the required reliability of the Crusader. The committee believes that testing efforts may be required for reasons other than reliability and that testing during assembly would not be a cost-effective means of increasing reliability. Briefings to the committee included little about program management techniques. However, the committee believes that a detailed program management plan for each of the major components is mandatory for a complex distributed program such as the Crusader. PRODUCT DATA MANAGEMENT In any complex system, much product information (e.g., design, manufacturing, repair, and reliability data) is necessary to support the system over its life cycle. Because the Crusader is a complex system with a long life span, product data management (PDM) will be a critical part of production and sustainability. In such a system, PDM is at least as important as supply chain management and is key to achieving effective integration between product design, manufacturing, and the enterprise system. To accelerate the integration of the Crusader production systems, UDLP plans to use a commercial off-the-shelf tool for PDM. Based on the limited amount of information it gathered, the committee suggests that UDLP should identify standards and protocols that already exist in the Department of Defense and the relevant industrial communities and integrate them into the implementation of this system. In the application of PDM tools, the focus should be on product lines and processes that will ensure the reusability, reconfigurability, and scalability of processes, equipment, and workforce skills. The team should employ multidisciplinary and integrated product and process development tools concurrently to engage all stakeholders, including the PM Crusader, and all (relevant) divisions of the prime contractor and subcontractors. It is essential to establish electronic databases and standards for unambiguous representation by digital data of the product and the processes to build it. When necessary and with appropriate security precautions, these data need to be shared seamlessly, using open systems exchange in a distributed environment. Collaborative tools are also necessary to enable and facilitate team-based product development and validation of product and process technology across the extended enterprise. Recommendation 2: UDLP should pursue an open and continuous approach to integration of the manufacturing control system, paying particular attention to scalability of and interoperability between the various enterprise resource planning systems that exist in the supply chain.

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ENTERPRISE INTEGRATION IN NEXT-GENERATION MANUFACTURING Enterprise integration is the interconnection of manufacturing applications. Successful enterprise integration will avoid islands of automation and enable intercommunication (NRC, 1995). In the case of Crusader, the enterprise includes UDLP and all the subcontractors in the supply chain. To develop an enterprise integration scheme, UDLP will need to develop ways of explicitly representing information on products, fabrication processes, and business processes and must determine how each element relates to other elements. To increase customer responsiveness, human resource responsiveness, and teamwork, there should be strong linkages both within and between companies. Companies respond to competitive pressures by reducing the time it takes to deliver results. Margins of error are shrinking, and products must quickly and reliably meet both the stated and implicit demands of the customer. Enterprise integration is important in responding to the drivers of change. It enables companies to make quick and accurate decisions that facilitate timely and responsive performance. The NGM report (1997) identified several major barriers to enterprise integration: Insufficient communications—lack of interoperability, robustness, reliability, security, capacity, or control; Outmoded organizational structures that inhibit timely, correct decisions; Inadequate process tools and user interfaces—difficult to use, not standardized, not compatible in terminology or business culture; Complexity of products, processes, systems, human resources, and ingrained culture, as well as the challenges of optimizing the use of limited resources; Lack of tools and metrics for evaluating and optimizing operational strategy; Legal and regulatory issues that affect the ability of an enterprise to be integrated (NGM Project Office, 1997). The relevant enterprise integration metrics cited in the next generation manufacturing report (NGM, 1997) are manifold. They include operational effectiveness, the average share of the cost of products and services being spent with suppliers, and average annual time spent on all work processes. Enterprise integration can also be measured more traditionally from a strategic, operational, and process standpoint as time to market and product life-cycle cost. These metrics are a fundamental component of managing an enterprise. Without them, program management cannot determine if the enterprise is performing up to the expectations of either the customer or the owner. UDLP is at a very early stage in its consideration of enterprise integration and apparently has not developed any metrics by which either it or the Army will be able to measure the program’s success. Recommendation 3: To facilitate better systems for managing business and product data in the Crusader project, the committee recommends the following two actions: UDLP should create a data system accessible throughout the enterprise. The system would contain data on product component attributes, process requirements, supplier requirements, facility capacity, technical assets, and expertise. UDLP should develop and test measurement systems that address the value of time and its relationship to other metrics.

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PRODUCTION MANAGEMENT Production management involves the tactical operations of the manufacturing process. It includes the day-to-day management of material all along the supply chain and the management of manpower and equipment. In other words, it is the execution element of the manufacturing enterprise plan. In this section, the committee addresses supply chain strategy and scheduling and tracking processes and proposes an approach to the integrated management of personnel, equipment, and material. Supply Chain Strategy The supply chain strategy is the design of the material flow processes throughout the enterprise. Although the assembly process will take place in Oklahoma, roughly 80 percent of the overall effort put into Crusader will occur elsewhere. As a consequence, UDLP will need to keep track of material as it moves from supplier to supplier and eventually to Oklahoma. The increased use of outsourcing in today’s business culture increases the need for collaborative partnering. Given that over 80 percent of Crusader’s costs are incurred through subcontractors,3 this need is particularly acute. UDLP needs to use both its own competencies and those of its suppliers in a relationship from which all benefit. Information systems that are compatible with those of the Army and UDLP’s suppliers are essential if this partnership is to function smoothly. The Crusader team intends to use Web-based methods to integrate its production. It has asked its suppliers to formalize the information models that support supply chain interactions between them. The committee commends UDLP’s investigation of consensus models, such as the Supply Chain Council’s supply-chain operations reference model,4 as a foundation for its integration models. While its intention to adopt Web-based methods is entirely appropriate, many questions remain about what sort of Web-based methods will be put in place. The spectrum ranges from simple Web pages for viewing data to fully integrated, dynamically generated, query-driven information systems that simply use the Web and Web browsers as an information delivery tool. Many commercial software tools to support distributed operations use Web browsers in the latter way—that is, the Web is being used more as a commodity, with differentiation arising from the processes, models, and systems deployed. UDLP is using mainstream engineering and production software systems, the providers of which have been actively participating in ongoing efforts to achieve industry consensus on interoperability. UDLP’s strategic design choices for the supply chain appear to be appropriate. There is some risk if UDLP becomes tempted to use a single vendor’s software suite to address a range of problems. For example, a particular suite may be strong in simulation and visualization but not as strong in addressing scheduling issues. Finding: After balancing the economic costs with the benefits of consistency and reliability, it is important for the Crusader team to make software choices that maintain its freedom to choose best-in-class software for each production function. UDLP has expressed its intention to change the manufacturing paradigm from one of merely supplying a product (the Crusader system) to one of providing service throughout the product’s life cycle. This is in line with similar trends in the commercial sector and is good for both the customer (enhanced product value) and the manufacturer (higher profits). The trend is evident in companies 3   Mark Signorelli, UDLP, presentation to the committee on April 11, 2002. 4   Further information is available at the Supply Chain Council’s Web site online at <http://www.supply-chain.org/>, accessed April 2002.

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like Caterpillar and General Electric Aircraft Engines (Caterpillar, 2002; General Electric, 2002). However, this change will place new demands on the seamless exchange of information throughout the supply chain. After production is complete, the issues become oriented to a service system that ensures the availability of the Crusader system in the field and allows the Crusader to be brought back to the manufacturing facility for upgrades. The seriousness of UDLP’s commitment to deployment of this life-cycle service approach was not clear to the committee, and the specifics of UDLP’s next step appear to remain in question. For example, it appears that large subcontractors are being asked to formalize their information models. Given explicit models of the information and processes, there are several alternative approaches that UDLP might pursue. One choice would be to allow their software vendors to integrate the models in the most expeditious manner, which would result in many translators between the proprietary formats and the protocols used by the vendors. In the opinion of the committee, a better approach to the exchange of production data would be the use of open, neutral standards wherever stable, robust solutions exist, since most of these standards are either being developed or have recently been developed. Examples include standards emerging from the Object Management Group5 and the International Organization for Standardization6 (specifically, TC184/SC4, Procedures for Transposing Externally Developed Specs into ISO Deliverables, and TC184/SC5, Architecture, Communication, and Integration Frameworks.7 Such standards will be crucial to providing the robustness needed throughout the supply chain as partners and supporting systems change over the lifetime of the program. In moving to a life-cycle paradigm, the team must first articulate a clear view of the production model being adopted from an architectural perspective. For example, the team needs to decide whether production will be driven by pull or push. There are many arguments supporting pull production systems at the micro, or plant floor, level for low-volume/high-complexity systems such as Crusader (Shields et al., 1997). Finally, while the committee was given no information on design for reliability, it believes this is an important issue. If the Crusader team has not already considered such designs, it should do so. Given the number of new, unproven, and untested technologies in the system, UDLP should conduct a reliability design review and address problems from the start rather than after production has begun. Finding: UDLP appears to have adopted a positive and appropriate strategic posture for supply chain management. However, as noted above, several operational issues still must be addressed. Recommendation 4: As the Crusader system matures and after production is complete, UDLP should deal with turning the supply chain from a source of parts into a service that ensures system availability and provides upgrades. Scheduling and Tracking Scheduling involves controlling the movement of components and materials throughout the manufacturing system at both an enterprise level and a supplier level. Tracking involves maintaining an information system that follows the location of each item of material in the supply chain. 5   See the Object Management Group’s Web site, at <http://www.omg.org>, accessed April 2002. 6   See the International Organization for Standardization, at <http://www.iso.ch>, accessed May 2002. 7   Further information is available online at <http://www.iso.ch/iso/en/stdsdevelopment/tc/tclist/TechnicalCommitteeDetailPage.TechnicalCommitteeDetail?COMMID=4275>, accessed May 2002.

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At the enterprise level there are different enterprise resource planning (ERP)8 vendors in place across the different suppliers to UDLP. The Crusader team at UDLP has started developing interfaces between its system and the systems of its suppliers. This effort appears to center on a Web-based strategy, whereby templates will be developed that will be populated from the enterprise resource planning systems of each supplier and of UDLP itself. Both parties can then use the information as front end/back end input to their ERP systems. The Web site would be secure and available only to UDLP, its suppliers, and the PM Crusader office. This may be one of the few possible rational approaches to integrating disparate ERP systems along the supply chain. It is important that UDLP coordinate with existing standardization efforts, as this will bolster its own attempts at standardization. For example, a suite of open standards supporting the interoperability of ERP systems has been put in place by the Open Applications Group.9 These standards are compatible with electronic commerce and business-to-business middleware solutions emerging from organizations such as the Electronic Business Using Extensible Markup Language Joint Coordination Committee,10 electronic data interchange standards through the ISO Joint Technical Committee 1 and Subcommittee 32 on Data Management. They are also compatible with interoperability-enabling standards such as extensible markup language (XML) from the World Wide Web Consortium11 and Simple Object Access Protocol, submitted by Microsoft and others to the Internet Engineering Task Force.12 Because UDLP’s suppliers perform the majority of the total manufacturing process, it will be necessary to extend this approach to second- and third-tier suppliers. According to UDLP, a number of long-lead-time items in Crusader may need to traverse several companies, and active tracking of individual items throughout the entire manufacturing and logistic chain may be important because it enables the identification of potential problems in the logistics pipeline as early as possible. At the time of this report, UDLP was in the early stages of identifying the appropriate approach (e.g., bar codes or radio-frequency chips) for this tracking. Again, it will be important to initiate the tracking process at the earliest possible point in the manufacturing logistics chain. Tracking enables the use of simulation as a scheduling tool. From the U.S. Army’s (that is, the customer’s) standpoint, and barring changes in the number of Crusader systems required, the delivery schedule is known. Circumstances may dictate changes, but the goal is to prevent delivery delays based on manufacturing system deficiencies. The fundamental production management objective is to be able to assure that delivery schedules will always be met. At the enterprise level, UDLP has required each of its suppliers to build simulations of its production process in order to identify potential weaknesses. Because each supplier will have an analytic description of its operations, it will be relatively straightforward for UDLP to build a simulation model of the entire manufacturing and logistics supply chain. This is not a simulation to determine the initial characteristics of the system. Rather, it will start from a real-time expression of the characteristics of every active item in the system. Each item, part, or subassembly is identified in terms of its exact location and its present status. Each machine or process is identified in terms of its status (e.g., operable, broken with expected time until fixed, inoperable). The simulation starts immediately and runs with whatever jobs are in the system until the entire supply chain is empty. In other words, it forecasts the behavior of the manufacturing system. 8   ERP is a procedure to effectively manage material inventories for efficient organizational operations. It is helpful in getting the right parts to the right place at the right time. 9   Further information is available at the Open Applications Group Web site, at <http://www.openapplications.org>, accessed April 2002. 10   Further information is available at the ebXML: enabling a global market Web site, at <http://www.ebxml.org>, accessed April 2002. 11   Further information is available at the World Wide Web Consortium Web site, at <http://www.w3.org/>, accessed April 2002. 12   Further information is available online at the Internet Engineering Task Force Web site at <http://www.ietf.org/>, accessed April 2002.

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The result of the simulation is to identify issues at the earliest possible moment, giving management the best chance to keep potential problems from becoming real problems. Operationally, the process could be largely automated, with the output distributed to the appropriate management elements (e.g., UDLP, first-, second-, or third-tier suppliers, or the PM Crusader Office). It could be run every week or every day, and whenever a machine breaks down or a material delivery is missed, the simulation could provide new scenarios. While the committee acknowledges that the development of a distributed simulation tool will be difficult, it also strongly believes that the long-term economic benefits of such a tool outweigh the difficulties of its development and implementation. Finding: UDLP seems to understand the issues of production management and life-cycle support. Recommendation 5: UDLP needs to work toward standardization of interfaces between all the elements of the supply chain. It should also develop an integrated enterprise simulation model to support real-time control of all levels of manufacturing, from the manufacturing cell or factory floor to the globally distributed extended enterprise.