Harnessing the power of data and analytics for the factory of the future

The COVID-19 pandemic has created a challenging business context. As a result of ongoing lockdowns around the world, many manufacturing companies face immense financial pressures as they grapple to adjust to the “new normal”. In uncertain times, leaders are understandably tempted to curtail investment and, instead, batten down the hatches to weather out the storm. However, such an approach is often short-sighted, particularly when it comes to the pressing need for organizational digital transformation. The reality is that harnessing the power of data and analytics can help manufacturers secure their positions in an ever-changing world, and strengthen their operations for any storm.

The pandemic has certainly fast-tracked the business need for digital adoption. However, Industry 4.0 was already well underway before the pandemic hit, disrupting and challenging the manufacturing sector to redesign the corporate production system for greater value creation. There is a growing awareness that digital technologies can help companies re-engineer their systems and supply networks to take advantage of increased productivity potential as well as global competitiveness.

Using data and analytics to power the factory of the future

When data is put at the center, manufacturing operations benefit from advanced analytics and greater collaboration. Data that is collected in real-time, fed through analytical models and made accessible across the production network and extended supply chain is powerful. A smart factory is one that can identify the value attached to its data and harvest it for predictive and autonomous applications. Shareable, value-driven data is crucial for competitive business thinking and strategic decision-making, improving operational and tactical outcomes.

However, putting data at the center of an organization’s operations requires integrated implementation supported by a well-planned and well-managed strategy. Transitioning an organization from outdated systems to data-driven technology platforms can be an intimidating process if not managed carefully. All too often issues arise during implementation which compromise the company’s digital journey. These include a lack of leadership guidance, poor communication, limited inter-departmental collaboration, employee confusion and, crucially, a limited understanding of the drivers for change. A successfully digitized organization is built by leaders who accept the fast pace of technological advancements and acknowledge the importance of data and analytics in their business strategies.

The ability to “think in data”

There are many factors to consider when putting data at the center of an organization. A digitally enabled, data-driven business requires data and analytics leaders to ensure seamless implementation. These chief data officers (CDOs) work with their C-suite colleagues – CEOs, CIOs, CTOS, CMOs and CFOs – to advance the use of data and analytics within the business. The CDOs guide the organization as a whole to ‘think in data’ and solve business problems from a data-driven perspective. To embed data in a company’s core, the CDO needs to adopt an integrative approach to continuous improvement (CI). In return, the use of data analysis enables CI and helps drive the company’s digital transformation journey.

Data and analytics play an important role in ‘integrative improvement’ by tracking the stages of digital implementation and integration. The principles of integrative improvement embody collaboration, knowledge-sharing and incentives to create a problem-solving operational culture that is united in its quest for digital transformation. Data analysis is key to success, informing the metrics for CDOs and their teams to nurture the processes and people – as well as build the digital operating systems (DOS) – necessary for achieving a sustainable competitive advantage.

Data and advanced analytics: the building blocks of DOS

Forward-thinking manufacturers are leveraging new technologies such as big data and analytics to build factories of the future that can withstand shifting demand with greater adaptability. A DOS is the ultimate realization of putting data at the center, re-engineering production systems by incorporating lean business principles with smart manufacturing.

With data and advanced analytics at the company’s core, DOS can provide manufacturers with endless opportunities to unlock value across their supply chains, enhancing operations for better business results. The intersection of lean and digital merges CI principles with real-time data visibility, deep data analysis and seamless data sharing across the organization to streamline its day-to-day performance and improve its manufacturing capabilities.

Data and digital maturity: an integrated journey of improvement

To achieve digital maturity, manufacturing organizations need to pursue integrative improvement, the next level of CI. This advanced approach to CI embeds excellence throughout the organization by integrating all functions and processes across the value chain. Data and analytics are key to this journey as both help track and review progress, highlighting areas for improvement and keeping stakeholders accountable to the metrics.

Adhering to the following five integrated CI principles will help organizations use data to achieve an enduring digital maturity and a sustainable competitive advantage:

1. Build a workplace culture that is collaborative and encouraged to solve problems.

2. Unite employees in the pursuit of clearly defined, well communicated and shared organizational goals.

3. Use the data to develop KPIs, incentives, training programs and knowledge-sharing opportunities.

4. Dismantle siloed functions and build an organization with transparent flows of information.

5. Instill a leadership culture that motivates and supports its teams to strive for excellence.

The use of real-time data and advanced analytics is key to the success of an integrated improvement approach to digital maturity. As an organization steadily matures, the metrics, people, processes, technologies and functions will eventually align to create a holistic, end-to-end and demand-driven value network.

However, achieving such levels of digital maturity is not without complexities. An organization’s adoption of DOS and its shift to a data and analytics-driven production system can cause disruptions if not managed carefully and correctly. Problems typically arise when new technologies are introduced piecemeal and without leadership consensus. A lack of strategy results in a fragmented implementation which undermines the benefits of the new technologies and can lead to employee disengagement.

The data-driven road map for digital maturity

Successful digital transformation requires a plan. To realize the benefits of its shift to DOS, a manufacturer needs to foster a digitally geared and technologically fluent organizational culture through:

1. People’s buy-in: This requires enhanced interpersonal leadership skills to communicate a shared digital vision. Employees need to feel secure enough to accept disruption and embrace agility. Data analysis can review and refine KPIs and identify important gaps in training.
2. Skills development: An organization is only as good as the people it invests in. A willing and able workforce is essential, but employees require ongoing training to unlock the power of new technologies. Digital skills need to be embedded throughout the company.
3. The right technology: With all the many available options, choosing the right technology is hard. Manufacturers need to first assess their IT architecture – is it embedded throughout the organization or is it a siloed function? If it stands alone, then redesign is imperative and must be managed immediately to enable the best choice of the right technology. The integration of supplier and customer technologies is the next priority; a robust review process that encompasses data and analytics can help plot a realistic timeline.

The COVID-19 pandemic has accelerated Industry 4.0, with a particular emphasis on the manufacturing sector. The business case for digital adoption is undeniable as uncertainty prevails and demand continues to shift. Harnessing the power of data and analytics to inform an organization’s technological transformation – as well as its integrated improvement strategy is crucial. The factory of the future is built on data at the center and guided by people who believe in the power of robust, reviewed and shareable information for better business results.

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