Digital technologies are creating new capabilities for manufacturing. Glenn Leask, President and CEO of Competitive Capabilities International (CCi), explains the required approach and strategies to transform your organization and to capitalize.
Consider the manufacturing organization of not too long ago: factories and facilities, machinery and equipment, warehouses and transportation fleets. A lot of noise, usually, and busyness, pulled together by means of rigorous, lean methods and practices gearing maximum efficiencies and pushing continuous improvement.
In one sense, this still applies. But manufacturing today is more aptly described as production, which encompasses a more holistic amalgamation of systems and networks, people and processes, design and development, innovation and collaboration.
As a foundation for navigating burgeoning levels of complexity, traditional systems are still hugely valuable. But Industry 4.0, hurtling towards 5.0, requires a build, an extension into a modernised production system – sometimes referred to as a ‘digital operating system’, or DOS – which harnesses the promise of digital technologies. (Access CCi’s comprehensive white paper, Digital operating systems: The next generation of production systems, for deeper analyses and insights into the advantages of digitized, modern systems in manufacturing.)
A cohesive digital transformation is multifaceted
There is a near-universal understanding among corporate leaders that accelerating growth requires enhanced digital capability. Very recent surveys of US CEOs confirm that more than half plan to increase digital investments by at least 10% this year, continuing a consistent (and worldwide) trend of the past five to six years.
However, instituting a DOS requires a blueprint. There are many aspects to strategize, and implementation actions and steps to consider to ensure that the journey towards digital maturity neither disrupts operations nor compromises the organization’s culture.
Taking stock: how solid are the foundations?
A necessary starting point is a thorough assessment of the current status. This avoids the mistake of beginning implementation only to discover that suboptimal fundamentals – perhaps a lack of process standardization or erratic maintenance planning – retard progress, amounting to a wasted transformation resource.
Evaluate the efficacy of existing continuous improvement (CI) programs, and whether these are truly integrated across functions, and between processes and people. Are KPIs being delivered, is Lean as lean as it should be?
Dig deep into understanding the degree of alignment between manufacturing operations and the company’s other divisions, and across the wider supply chain, including key customers. Digital maturity will power an agile, responsive and predictive end-to-end, demand-driven value network (DDVN) – but pre-existing fault lines should be fixed before progression is initiated.
Crucially, check the culture climate. What is the state of the workforce’s preparedness? Change isn’t easy, so leadership should explain the need for transformation and inspire the embrace of a digital vision for the company. And then lead the transformation by example.
At the heart of a modern production system are the technology tools, platforms and systems which connect, analyze, automate and accelerate. And, increasingly, predict: the power of Artificial Intelligence (AI) is projected to add $15.7 trillion to the world’s economy by 2030. Indications are that the global manufacturing sector is investing significantly in AI; spending is predicted to reach $16.7 billion in five years’ time, a CAGR of 52%.
A short-term action for technology enhancements is rethinking the function of information technology (IT). Digital skills must be embedded throughout the enterprise, so consider removing any remaining silos in the design and distribution of IT teams.
Remember, too, that multiple studies prove the correlation between data-driven enterprises and ROI. Make sure data and analytics tools are prioritized in planning the technology component of your organisation’s digital transformation.
To synchronize, or not?
Gauge the merits of a test-bed transformation in one location versus a holistic, simultaneous, phased approach across all production sites. There are merits to both, but modern best practice is to assess and standardize the state of maturity throughout the network, and then to synchronize progression universally. This weights the hard-yards analysis towards the initial stage and reduces the complexity of locational differences as the digital upgrades roll out.
The goal: ceaseless, integrative improvement
There are unambiguous proof-points for the benefits of digital. Post digitization, end-to-end productivity gains of up to 50% have been measured. Research also indicates that organizations that lead in digitizing their operations generate significantly better revenues and margins compared to their industry’s followers.
However, first-mover advantages may not be as important as orchestrating a structured, phased approach, fast-tracking as appropriate whilst also taking a long view – and budgeting aggressively. Building a modern production system is essentially a quest for digital maturity, and maturity is a state of capability rather than a definition. In five years’ time, and then five thereafter, technologies will have shifted again – and in exponential waves. Priming the enterprise for emerging technologies, and ones yet to be fully imagined, is one of the key aspects of leading a manufacturing-based company today.
Leaders must design the road map to full digital maturity. Make it rigorous, but keep it flexible. And keep thinking how digital and transformation strategies – just like the organization – can be improved.
Download the white paper Digital operating systems: The next-generation of production systems for more on implementing a modern production system and orchestrating holistic digital transformation in your organization.
CCi is a privately held global company that enables organizations to deliver sustainable results across the value chain through TRACC, a solution for continuous, integrated improvement.