Portal Masks Integration Complexity

Johnson Controls has cut product costs by $20 million with a collaboration portal that integrates supplier applications.

Collaborate or die. That's the unspoken motto at Johnson Controls Inc. It permeates nearly everything from product design to delivery within the company's automotive supply division. So it comes as no surprise that Johnson Controls (JCI) is well along in an application integration project that has turned collaboration into something far more than a motto.

"Collaboration connects blue sky with solid ground," says John Waraniak, executive director of e-speed at the Milwaukee manufacturer. The automotive division where he works delivered $13.6 billion of JCI's $18.4 billion in revenue last year and is a Tier 1 supplier of car and truck cockpits, which include the dashboard, seats and other interior parts. JCI builds almost half of the cockpits used in the approximately 50 million vehicles manufactured by the world's major automakers each year.

Waraniak says product ideas must be analyzed in the early design stages by those most affected to avoid costly mistakes. Fixing a problem during engineering design, for example, costs one-tenth of what it would cost once a product reaches the prototype stage. If the product reaches the field, the cost can easily top 1,000 times what it would have taken to correct the problem on the assembly line. Waraniak says the collaboration work at JCI has saved the company a whopping 80% on research and development investments.

How the Technology Works

"Sixty percent of our work is engineer-to-order. We conceive and then we build," he says. "That means we depend on tribal knowledge for insight into the product and the process for making it."

Throw in a multitiered supply chain with countless suppliers, and that tribal knowledge wouldn't be possible without automation, including the integration of key applications as part of the collaboration process, Waraniak says. That's why the company was an early proponent of the automotive industry's Covisint business-to-business online exchange. It's also why JCI began work on its own "business place" in January last year using technology from MatrixOne Inc. in Westford, Mass. This private exchange acts as a portal that masks integration hassles by preselecting applications that work with those in use on the exchange.

Outside suppliers that access JCI's exchange run a version of MatrixOne's software on their sites. The software has extensions to the tools that a supplier might use. For example, a supplier can use computer-aided design and manufacturing data on the JCI exchange in the application it knows best, such as San Rafael, Calif.-based AutoDesk Inc.'s AutoCAD software with Catera 5, while still benefiting from collaboration with engineers that use different software. MatrixOne's software, which runs on each collaborator's location, takes care of the differences between users' applications.

Beyond engineering design, JCI is using MatrixOne for its manufacturing supply chain, where users inside and outside of JCI don't have to concern themselves with the source of, say, enterprise resource planning (ERP) information sent from a J.D. Edwards application to an SAP program. For example, JCI builds the cockpit for the Jeep Liberty using 35 suppliers, all of which can work with data from one another's various inventory applications to gauge when they will need to supply parts to JCI's manufacturing floor. "We want to provide visibility all through our supply chain," Waraniak says.

Few companies achieve the kind of visibility JCI does, says Kevin Prouty, an analyst at AMR Research Inc. in Boston. And it's paying dividends. "It's one of the few larger automotive suppliers [that has] grown margins during these down times," he says.

However, Prouty says he doesn't believe MatrixOne will solve all of JCI's future integration problems. "Just when you think that you've built the last adapter you'll ever need, you acquire a new company with a different legacy ERP system," he says.

What It Delivers

For Waraniak, the progress is tangible. Collaboration on 2003 and 2004 model-year automobiles has yielded gains in efficiency. He says engineers have used collaborative online design to reduce costs by $20 million in JCI's "core products portfolio," primarily by reducing the number of discrete parts in each cockpit component.

Collaboration cuts time out of component design, Waraniak says. What once took days as overnight express packages went back and forth takes "a few hours on the Web," he says, which is critical when there are as many as 5,000 distinct parts in a vehicle.

Engineers also save time using the exchange by sharing drawings, revising calculations and exchanging critical feedback on ongoing work. "Typically, engineers spend half their time engineering and the rest of the time they are looking for information," Waraniak says. "With the exchange, it's all brought together for them."

Copyright © 2002 IDG Communications, Inc.

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