The future of manufacturing is digital. Processes and systems must extend lean and continuous improvement into the next generation of Digital Operating Systems.
New technologies are disruptive by nature
And technologies keep marching. Yesterday’s mainstream is no longer competitive; today’s cutting-edge is tomorrow’s mainstream; emerging concepts on the horizon take shape as the decade progresses. This means, right now, organizations should have cloud capabilities, concerted data analytics, and some interoperability between information (IT) and operational (OT) technologies. They should be poised to move from testing or bimodal use to holistic implementation of applications such as additive manufacturing, blockchain and virtual reality. And planning and budgeting for quantum computing and autonomous machine-learning systems, throughout manufacturing locations, should be commencing.
The crux: Value networks of the very near future will be entirely digital-based. As companies’ technology strategies move in ever-closer lockstep business strategies, so too the operations model and systems for manufacturing must migrate towards full digitization.
Manufacturers must regear for competitiveness
Economies and businesses are straining under the impacts of COVID-19. But it’s important to envisage the potential in the post-recovery landscape or longer-term horizon. Models point to immense economic value which will be unlocked through Industry 4.0 and its shift into 5.0. Artificial Intelligence (AI) in particular is projected to boost global GDP by 14%-16%, some $13 trillion, by 2030, with the Logistics and ‘Automotive and Assembly’ sectors among the biggest winners, according to The Economist.
Are manufacturers poised to capitalize?
In the aftermath of the initial supply chain shock of COVID-19, over 90% of supply chain leaders acknowledged diminished confidence in their systems and capabilities. In many instances, stuttering responsiveness and limited end-to-end visibility can be directly attributed to the value chain’s lack of digital progression and capability.
Traditional production systems and S&OP operations models – intended to optimize efficiency and drive improvement – were designed with delineation between functions, and a concomitant clarity in how to align and execute the business processes to fulfil the principles of lean. This historic model is outdated, mainly because it limits the interconnected fluidity and agility required of today’s value networks.
The technology revolution of Industry 4.0 opens a new paradigm of integrated operations. In reshaping all aspects of the network, it enables more collaboration and integration, more and better data, and faster analysis – including predictive, machine-learning modelling. The goal is smarter, streamlined and synchronized decision-making and the liberation of talent to maximise human inventiveness.
This, then, is the next important step in the evolution of manufacturing processes, operations and business systems. From a manufacturing angle, the agile efficiencies, scaled improvements and innovation possibilities are massive. For the overall business, the potential is transformational.
Developing a blueprint for future manufacturing
Companies with a holistic degree of digital maturity are, as yet, fairly few. Multiple surveys of CEOs and chief supply chain officers confirm that they understand the importance of digital. But many are not prioritizing their companies’ digital transformations. A MIT/Deloitte 2017 survey reflected that 61% of respondents ranked their status poorly. Two years later, over two-thirds still rated their companies as either ‘Early’ or ‘Developing’ in their stage of digital maturity in this infographic.
At this point the requirement is to assess state of digital progression, understand its benefits, and to chart milestones and timelines to progress.
What is your company’s status along the curve to comprehensive digital capability? Here are some key points to consider:
| 1. Strategy | A digital-first positioning requires deliberate, dynamic and progressive planning. Key question: Is digital transformation prioritized and formalized into the organization’s business strategy and goals? |
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| 2. Ecosystem | Digital platforms are increasingly leveraged to widen external collaboration in the pursuit of enhanced customer value and end-to-end capability. Key question: What is the degree of digital alignment and strategic partnerships across the network? |
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| 3. Leadership | A digitally-geared business and operating model reflects the C-Suite and senior leadership’s prioritization of digital transformation. Key question: Has your company’s leadership instilled a compelling vision of how the business will thrive in the digital world? |
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| 4. Design | Internal organizational architecture is increasingly being redesigned to break from silos, to integrate towards agile operations. Technology tools and applications are key to improving this cross-functionality. Key question: Is a documented stage-based process being implemented to design for improved agility and comprehensive value-add? |
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| 5. Data | Data, and its monitoring and assessment through appropriate analytics, can unlock insights and create value. Key question: Does data gathering and analysis drive the operation of the business, and is this understood and used as a competitive lever? |
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| 6. Technologies | There is an is escalating scope for automation in manufacturing operations and business processes, and technology applications to support and fuse enterprise systems. The extrapolating IoT – 75 billion devices will be connected by 2030 – means that Supervisory Control and Data Acquisition (SCADA) and Manufacturing Execution Systems (MES) will interlink more holistically, and interconnect with other business processes. And as capabilities approach quantum computing, the potential for surging Big Data analytics and advanced, real-time decision-making and execution will become a reality. Key question: Does the organization have a three- to five-year-plan for assimilating new technologies, including Artificial Intelligence (AI), into its operations? |
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| 7. Innovation | The development of innovation goals, the establishment of digital innovation teams and the company-wide use of innovation tools are signs of a maturing digital culture. Key question: Has the company identified one-, three- and five-year goals for embedding digital innovation? |
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| 8. Capability | Talent must be enabled to perform. The digital workplace and factories of the future will require a new level of digital and technology skills – which will need to be continuously renewed and updated. Key question: Is there a formal upskilling program for all employees? Is it linked to business objectives and synchronized with the planned progression and pace of digital transformation? |
Next-generation digital systems can unlock ROI
Technology can leverage OEE improvement scores by up to a further 50%, according to Digital Lean: A Guide to Manufacturing Excellence. And the digitization of Industry 4.0, when implemented strategically to enable agility and better end-to-end decision-making, improves the bottom line: companies in higher digital maturity stages achieve significantly better revenue growth and net profit margins, on average nearly 50% more than low-maturity companies, and a third better than organizations in the middle stages of digital development, according to this Deloitte insight.
Manufacturing companies should be readying for another leap. The quest for excellence and competitive edge must now be rooted in digital-first strategies, a prioritisation of technology investments, and a business ecosystem designed to fit and flex within the transforming paradigm of the late-stage Digital Age.
Read Digital transformation: Why operational maturity is your road map to readiness for the five-stage journey that builds the foundations of sustained performance improvement.