Industry 4.0, the Information Age’s technology revolution, is challenging businesses around the world to evolve their processes and systems. The manufacturing sector is no exception, and organizations are under pressure to digitize their operations with new production system implementation strategies – or lose market share to their competitors. Due to the COVID-19 pandemic, the need for increased operational speed and agility is more urgent than ever before.
A digital operating system (DOS) is the next generation in corporate production systems. It combines the established principles of lean manufacturing with smart advancements. This harmony of lean and digital embodies the practice of continuous improvement (CI), reshaping manufacturing processes to withstand unprecedented disruption and create sustainable value.
The first step in a DOS implementation strategy is an organizational maturity assessment. An organization’s review of its existing capabilities – its strengths and weaknesses – is critical to designing an appropriate production system implementation strategy. Once the company’s transformation needs have been determined and built into the DOS implementation road map, the digitization process can begin.
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Five focus areas to ensure a seamless modern production system implementation
Transformative organizational change needs to be managed carefully. A rushed implementation invariably causes employee confusion and results in interruptions to productivity. To mitigate systemic shocks and deliver a successful digital transformation, manufacturers should focus on the following five priority areas.
1. Organizational culture and leadership
A successful modern production system implementation strategy demands significant changes in organizational culture, structure and systems. The entire company needs to accept and participate in the digital transformation process which will push leadership to steer employee engagement, skills development, document standards and interdepartmental collaboration for positive outcomes.
A technologically enabled, digital-first culture puts people first. Ultimately, the business benefits of a DOS depend upon its users’ capabilities. Manufacturing leaders need to nurture their teams’ curiosity and inclusion, empower them with knowledge and skills, and foster an open, information-sharing culture. This is particularly important – and challenging – in the current remote-working environment which physically distances coworkers from each other.
Thus, to achieve sustainable, digital transformation, leaders must improve their communication and collaboration platforms, onboarding processes and incentive programs. Empowered with the best tools, good guidance and relevant resources, employees can perform their functions with confidence and enjoyment – whether they’re working on- or off-site.
A workplace that micromanages its people does not meet the cultural criteria for digital transformation. Leaders and their teams need to feel meaningfully involved in their organization’s evolution, and rewarded for their ingenuity and initiative. Only by involving everyone in their DOS implementation can an organization mitigate the risks of change and reap the rewards of digital maturity.
2. Skills development
A digitally mature organization is technologically-fluent at all levels. A DOS does not sit separately, siloed, for example, in the IT department. It is embedded within the entire organization, informing its operational systems, production processes and workplace culture. To leverage the full benefits of a smart production system requires talent that can use the technologies with confidence. This necessitates a company-wide emphasis on digital upskilling to align people’s capabilities with the demands of a modern manufacturing environment.
In tandem with upskilling employees, organizations need to restructure their operations to support a digital workflow. Functions are no longer siloed per individual per team. Instead, individuals are empowered to work across functions and contribute to various teams. Digitally mature organizations are fuelled by mature people who demonstrate multiskilled competence, innovative thinking and interdepartmental collaboration.
The evolution of talent will impact organizational design and challenge the more traditional, hierarchical structures. This is a positive outcome of digital transformation – however, it needs proactive management. Management structures and human resource processes need to support employees’ digital development as well as guide the organization’s overall evolution to digital maturity.
3. Technology advancement
To unlock the powers and potential of a DOS requires a production system implementation plan that harnesses the right technologies. There is a vast array of available digital solutions that help to advance an outdated corporate production system. What is more, given the fast pace of technological change, many manufacturers are understandably daunted by the need to choose carefully yet quickly. Once again, this highlights the importance of a digital maturity assessment to identify the organization’s specific technological needs before choosing one solution over another.
The application of advanced technologies that are appropriate to an organization’s specific digital needs can help transform it into a factory of the future. A digitally enabled workforce benefits from automated systems that manage repetitive, mechanised tasks. Employees can focus on their key deliverables with greater ingenuity and make faster, better decisions thanks to accurate, analyzed and up-to-the-minute data that is widely accessible and deeply insightful.
The pressures of Industry 4.0 can push nervous organizations into relying on outdated and traditional structures, such as a siloed IT function, to oversee their digital transformation journeys. Instead, companies need to critically assess their IT architectures and where necessary, redesign their mandates to disperse digital skills throughout the organization. A realistic time frame is thus crucial to allow for a strategy-driven process that successfully digitizes production and integrates manufacturing, supplier and customer networks.
4. Data at the center
Data is an integral component of a DOS implementation. However, its true value lies in how it is collected and used. Data contains valuable insights that digitally mature organizations are able to harvest through analytical models and share in real-time for integrative improvement.
When data is put at the center of operations, manufacturing processes and networks benefit from greater collaboration and accessible information. Data gathering and analysis is key to creating an operational culture that works, shares knowledge and solves problems – together. Such visibility empowers employees in operational, tactical and strategic positions with information that enables faster, better decision-making.
Real-time data and advanced analytics are also crucial to an organization’s steady digital maturation. Their use informs the metrics, processes and people involved in a DOS implementation strategy, providing crucial insights at each step of the journey. These insights help drive a digital transformation that is guided by integrated improvement. By consistently checking, updating and improving where necessary, a digitally maturing organization will eventually align its operations and networks for end-to-end value creation.
5. Operational and value chain alignment
A Demand-driven Value Network (DDVN) is the ultimate realization of a successful digital transformation journey. Implementing a DOS successfully requires an organizational alignment of the supply chain with manufacturing operations for optimized end-to-end value creation. A DDVN facilitates seamless communication and collaboration across all the organization’s functions and networks, creating more value for all stakeholders.
Cross-functional collaboration and communication is key to maximizing value creation. Digital maturity is built on the right technology and sustained through best practices that focus on addressing customer requirements. Essentially, a DDVN brings customers, suppliers and partners into the organization, aligning them with its business model and strategy for greater transparency. Performance outcomes are directly linked to customer requirements and production capabilities are tuned to supply chain deliverables.
Achieving a DDVN depends on the quality and relevance of the DOS implementation road map. An agile, digitally-enabled and empowered organization is characterized by transparent, value-driven processes that align its internal systems with its external networks. This functional harmony not only delivers real customer value, it builds a consistent competitive advantage that is uniquely positioned to stand the test of time.
A competitive advantage that stands the test of time
The pressures of Industry 4.0, exacerbated by the COVID-19 pandemic, are pushing manufacturing organizations to improve their customer engagement and exceed their shareholders’ expectations to remain competitive. Harnessing the power of a DOS is crucial to creating and sustaining a competitive advantage that can withstand market shocks. However, an organizational redesign of internal functions and supply networks requires a production system implementation strategy that mitigates for disruption and leverages talent, leadership and technology for sustainable improvements in performance.
Integral to a successful DOS implementation is putting data at the center of all organizational operations. A DOS can help manufacturing organizations take advantage of digital technologies to advance their production processes for better business results. A digitally empowered workforce making use of advanced data analytics within an aligned organization is the ultimate factory of the future – a robust entity that is built to last.