Rapid technology change is ushering in a paradigm shift in the way manufacturers do business. Market conditions, customer expectations, and technology capabilities are transforming manufacturing processes at phenomenal speeds, with no slow-down in the near future. This disruptive change is instigating smart manufacturers to take a 365-degree evaluation and modernization of their plant operations, from the core IT infrastructure to solution integration, personnel roles, operational best practices, and deployment.
As manufacturers strive to be on the front line of innovation, they must stop, look, listen and plan their strategy for being the Digital Enterprise of the future. It doesn’t happen overnight, but if you haven’t started deploying Smart Factory concepts, like Internet of Things, Big Data, Mobility and Cloud deployment, consider this your wake up call. Waiting is a high-risk decision. This article provides insights and practical advice from experts, including stepping stones for getting started. Think of this as your roadmap to transforming into the factory of the future.
Industry experts speak out
How does someone identify a digital enterprise? How do you know if your company can claim the title of Smart Factory or Factory of the Future? These terms are largely interchangeable. They all refer to the interconnected, advanced IT solutions which allow manufacturers to use data to be highly strategic, proactive, customer-centric and profitable. Typically, several interoperable solutions are involved, and they are often cloud-based. While many manufacturers have adopted next generation solutions and started to reap the benefits, many analysts believe this disruptive advancement in manufacturing is in its infancy. We’ve only just begun to fathom the potential and fully engage.
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Most analysts agree the full scale disruption is coming; it is only a matter of timing and scope. Deloitte, business analyst firm, says a digital strategy is so essential that it is synonymous with the entire business plan. In a recently published paper, Deloitte says, “In today’s highly connected world, digital strategy is business strategy. It’s developing new digital capabilities and integrating them across the organization to create an intuitive enterprise. A truly intuitive organization integrates digital initiatives enterprise-wide, regularly implements new and innovative technology, and uses digital capabilities to sense and shape markets.”
Most experts agree the scope of change is dramatic. In Technology Vision 2015 Accenture consultants sum up the potential impact well when they describe the “digital fabric” as a force that “has the potential to touch all aspects of their business, their customer relationships, and the world around them. Already, this fabric has provided enterprises with an ability to connect and scale up in unprecedented ways. Companies routinely deal with hundreds of business processes, thousands of employees, and millions of consumers. Many large companies are at a scale where they touch billions of lives.”
The report also cites a recent survey which examines how businesses, including manufacturers, view the impact. The report states that 81 percent of respondents agree “in the future, industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems. Huge efficiencies can and will be gained as businesses continue to master digital technologies internally.”
No matter which industry view you prefer, one element ties all of the definitions and views together: data. The growing influence of meaningful data is the driving force behind this paradigm shift to modern manufacturing and the factory of the future.
Digital Enterprise Stepping Stones
"Smart manufacturing programs can deliver financial benefits that are tangible and auditable," says Robert Parker, group vice president at IDC Insights, in a recent Reuters article. "More importantly, smart manufacturing transitions the production function from one that is capacity centric to one that is capability centric —able to serve global markets and discerning customers."
Becoming a Digital Enterprise by 2020 requires advanced planning. It is no simple task, nor is there one “off-the-shelf” product in a box you can buy and install that will suddenly transform your organization into a high performing Digital Enterprise or Smart Factory. It is a process, one that often involves multiple phases, outside expertise, investments, and top-level commitment. If you don’t have C-level support and backing, which includes a budget, the plan is doomed to fail. Here are the common stepping stones to reaching the status of Digital Enterprise:
1. Prioritize goals and set strategy
- Know what you want to achieve and why.
- Be specific with your objectives so you can measure progress toward them.
- Set realistic goals. Don’t over inflate benefits or ignore that there may be challenges.
- Keep customer satisfaction as a central part of your strategy.
- Include in your strategy definitions of success and how you will measure progress.
- Prioritize and choose goals so you achieve early wins in order to build support.
2. Create teams, exploit expertise
- Establish a cross functional team with representative from every department involved.
- Make sure you have one definitive leader with decision-making capabilities.
- Clearly define roles of team members and expectations. This can’t be a low-priority project that gets intermittent commitment.
- Invest in team building and empowering internal personnel to conduct research and become expects of specific subjects or tasks, such data analysis, configuration tools, or quality control systems.
- Break roles into manageable segments, being careful to not overload one team member or department.
- Involve skeptics as well as enthusiasts in your team structure. Differing perspective can help bring a balanced panoramic view to the project.
- Turn to industry experts, consultant and product vendors to assist with highly specialized areas. Don’t reinvent the wheel. Let the outside resources bring their history and “lessons learned” to the table. Ask for case studies and references.
3. Optimize market opportunities
- Develop an in-depth understanding of your target market, including buyer profiles, buying triggers, and the buying decision process.
- Explore new markets, regions, demographics, and vertical niches.
- In addition to considering expanding, also consider contracting — or specializing on a vertical industry or niche market in order to focus resources.
- As you choose priorities, select initiatives that support your efforts to reinforce current market positions as well as capture new opportunities. Be opportunistic, while keeping a strategic perspective and grasp of realistic expectations.
- Pursue the opportunities where you can create product differentiation and offer unique value propositions.
4. Implement, while controlling risk
- Successful companies often use a phased approach to deployment of major initiatives, such as becoming a Digital Enterprise. A phased implementation approach provides you with early wins and chances to refine your strategies over time.
- Start with foundational concepts then build from there.
- Make sure you get the basics right before you more on more advanced strategies. For example, when deploying a process to automate reaction to sensors, first make sure you can collect and contextualize the data — before you begin on automating response to the data.
- Start with technologies which will be used across multiple applications. For example Business Intelligence is used in nearly every application of a Digital Enterprise.
- Consider strong analytics and reporting tools as the prerequisites for moving on to more applications of data.
- Monitor for quality and security issues. As with any new initiative, integrity of data, quality, and security must be considered. Involve experts to minimize risk.
5. Evaluate and refine
Perfection is seldom achieved on the first attempt. Continuous improvement is an important concept that remains critical in manufacturing.
- Evaluate progress at predetermined milestones, making course corrections as needed.
- Keep your organization informed on progress. Celebrate achievement and accept suggestions for improvements.
- As move closer to your goal of a Digital Enterprise, you may want to set higher standards or goals for yourself.
- Don’t set the goals too low. As your expertise moves up, so should your expectations.
- Measure new revenue or gains versus investment to calculate your return. Remember your ROI can be less tangible characteristic, such as customer loyalty, recognized leadership, or positioning as the expert company in the field.
These five steps are merely highlights of a path to becoming a Digital Enterprise. Each industry will undoubtedly have variations and specific must-do steps which need to be introduced, such as any industry mandates, testing or compliance issues to manage. Each company will find its own cadence of “plan, research, enact, evaluate” that makes sense for their organization and stakeholder expectations. One size does not fit all, nor can a cookie cutter format for modernization be prescribed and expected to be followed precisely. The most important take-away is to get started on the journey. Use these guidelines as a starting point for discussion and planning. Good luck getting started!
Larry Korak is Industry & Solution Strategy Director at Infor.