When looking at optimizing the digital transformation process in industrial and manufacturing verticals, the task is complex, fraught with risk and subject to increasing pressures in abundance. ABI Research has outlined a number of best practices that fall within a two-step process that will help in “de-risking” the transformation process.
Step 1 - Know your Maturity Level
Probably the most profound challenges for anyone looking to implement a technology-driven transformation process is clearly understanding where you are currently in terms of solution maturity and what the end vision should be. Once you know where you are, then you can realistically look to where to target for advancement.
The Industry 4.0 Maturity Model by ABI Research has been designed to provide companies with a quick snapshot of their maturity level and should be viewed as a tool to help align corporations objectively about not only where they stand in the spectrum of industrial development but also where their vision should be aligned regarding future projects. The levels of manufacturer maturity are:
- Level 0 – Human Controlled
At this level, a manufacturing firm has not implemented any of today’s transformative technologies. Humans manually control all machinery and operations. Individual human productivity limits the scale and efficiency of operations, and manpower costs reduce competitiveness. - Level 1 – Early Automation
Most large manufacturing firms in developed countries are at this level. They have at least started thinking about automation and technology on the factory floor but have yet to implement more than the most basic automation technologies. These firms still waste resources with failed physical test runs that they could simulate and still lack visibility into real-time equipment operation. - Level 2 – The “Modern” Factory
Still not close to the cutting edge, firms at this level have at least developed an awareness of transformative technologies. A lack of organizational direction prevents them from scaling new technologies. These firms lack foresight into equipment breakdowns. They have started work on customized parts but struggle to adjust production quickly. - Level 3 –IT/OT Integrated
These firms have a real strategy for innovation and transformation and have started to implement it. They can handle custom orders for customers willing to pay extra and can ramp up or decrease plant productivity easily but cannot reconfigure lines without significant costs. - Level 4 – Digitally Transformed
The truly cutting-edge manufacturing firms today have reached this level. They have scaled multiple transformative technologies and have a team or multiple teams dedicated to innovating with newer technologies such as AI or blockchain. They have started to master mass customization and can rapidly reconfigure production lines. - Level 5 – Lights Out
This future state will fulfill the idea of lights-out manufacturing. Factories at this level can operate without humans on site. Many of these factories will work dynamically with mobile work stations instead of a fixed production line for increased flexibility.
Once an organization has a good perspective of where it sits on the maturity scale, the job of avoiding common mistakes becomes a far easier prospect. The chances of chasing unrealistic technology goals and making poor decisions based on stock price rather than operational viability become far less when leadership is honest and aligned around a clear understanding of state zero represented in today’s modus operandi. However, any company is not out of the woods until it galvanizes around a few golden rules when it pivots towards making meaningful changes to your future fortunes.
Step 2 - Follow the Golden Rules
While approaching the next level of industrial digital transformation project can be daunting, there are several best practices that will significantly increase the possibility of the successful implementation of any industrial solution:
- Look for the quick wins. Find operational areas where a solution can be quickly executed and will reap benefits in a short time. All of this will help you to build alignment for future projects and provide some great learning opportunities.
- Get all the right people on the same page. Projects should include key influencers from both operational and IT roles. Get everyone involved early! Round up digital executives early on for a seamless and frictionless project.
- Don’t view technology projects as isolation. A single technology project can have great impacts on others both good and bad depending on how it is managed. Think of the projects as a continual macro process that needs active management and oversight. If all goes well, even 1 + 1 can = 3!
- A strategy is vital. Poor organization, unrealistic timelines, and unbalanced plans will lead to friction and even project failures. So always plan ahead.
- Base all your decisions in reality. Without a goal in mind, there will be no probability of demonstrating concrete value and driving alignment for future projects.
- Pick partners carefully. The need to engage with partners to co-create services and positive outcomes in projects is growing and the number of partners per project is also increasing. Don’t get dragged into technological dead ends based on partner agenda.
Clearly understanding your current solution maturity, knowing where you want your company’s transformation to go, and following the best practices outlined above will enable you to create higher quality products at lower costs with better margins and a stronger competitive positioning.
Stuart Carlaw is Chief Research Officer at ABI Research.
