FY2009: Manufacturing Innovation through Supply Chain Integration

Challenge

Everyone has experienced the occasional headache in sharing or moving data from one computer to another, but in the nation's manufacturing and construction industries, it is a multi-billion-dollar problem. America's large manufacturers are globally distributed enterprises that rely on a system of small manufacturers, parts suppliers, shippers, and raw materials producers organized in extended "supply chains." The U.S. construction industry is made up of an equally diverse network of more than 1 million firms. Using the auto industry as an example, the average car has more than 15,000 parts coming from 5,000 manufacturers that are made to the precise specifications of the auto company and must arrive on time.

Production costs are no longer the major cost component in these global supply chains—the dominant cost is in the engineering and business activities, which depend critically upon clear and error-free exchange of information among partners.

Inefficiencies and needless roadblocks in the exchange of product design and business data in manufacturing and construction are estimated to cost the U.S. economy more than $25 billion per year. Small manufacturers are particularly hurt by these problems, but they affect the competitiveness of entire industries.

Proposed NIST Program

In the 1980s NIST pioneered work in developing early open standards for data exchange. Under this initiative, NIST will conduct a much more extensive, wide-ranging, and technologically advanced program. Working closely with U.S. manufacturers to develop seamless data transactions throughout global supply chains, NIST will work to shorten the design-to-manufacturing cycle, improve quality, and lower costs for large and small U.S. firms.

Major goals will include:

• creating "roadmaps" for the development of open standards for enterprise integration in target industry sectors;

• developing validation and conformance tests to help ensure the performance of these standards as well as their proper use; and

• ensuring the standards are integrated and consistent with developing international standards and easily available to small and medium-sized U.S. manufacturers.

Expected Impacts

A robust, widely accepted framework of standards for enterprise integration will help open the global marketplace to the nation's small manufacturers.

Other potential benefits include:

• savings of approximately $1 billion in enterprise integration costs for U.S. manufacturers and producers in target industries (initially automotive and construction);

• a 20 percent reduction in "time-to-market" for manufacturers and producers in target industries;

• a 50 percent reduction in information technology costs for small and medium-sized manufacturers in target industries; and

• spillover benefits to other manufacturing industries, including electronics, medical devices, jet engines and aerospace, shipbuilding, chemicals, and specialty textiles.