The digital transformation buzz in manufacturing
The buzz around Industry 4.0 and digital transformation in manufacturing is becoming incessant. The call for AI, VR, Digital Twins – it can all seem a bit daunting. However, beneath the buzzwords and hype, behind the (what we like to call) ‘Icing technologies’ (that are exciting and shiny but sit on top of an already well designed factory), you get to the real substance of real value these technologies can generate for your business.
In fact, the Manufacturer’s Annual Manufacturing Report 2019 found that while 73% of manufacturers believe that digital technologies will produce ROI, more than half of manufacturers said they are yet to implement digital technologies. So there’s a good chance that reading this, you might be unsure of how to implement technologies, or maybe it is that while they know it will deliver ROI, you are not sure to what extent or how to prove it.
Mostly, we believe the problem is that the message is so geared towards larger organisations that it is difficult for SMEs to follow. Thankfully, this roadmap is very geared towards SMEs, the challenges you’ll face, and the digital transformation journey you might embark on.
Jonathan’s digital transformation
Firstly, I’m going to introduce you to Jonathan. Jonathan is an SME owner, that works in the aerospace sector looking to start his digital transformation in manufacturing.
His business is fairly stable, it is operating in the aerospace sector, performing precision machining jobs and maintaining happy customers.
Despite this, one day Jonathan wakes up to find the whole world is speaking about this “Industry 4.0, digital transformation”. Sound familiar?
Equally, he didn’t understand what that means for him. His suppliers demanded more from him. His customers were demanding better visibility and intelligence. And partners are demanding things that fall under the “industry 4.0 category”. So, he decides he needs to go out and buy some “Industry 4.0” for his business…
A leap of faith
As anyone would, Jonathan started to learn about it. Initially, he tried getting all this material together from relevant publications, but was overwhelmed by the options an amount of different opinions out there. After learning a bit, he realised he didn’t really have time to look at it in depth. He said, “Look, I’m just going to go for it!” and took a big leap of faith. Everyone around him was talking about it. How hard could it be?
However, he wasn’t quite ready for what he bought. Unfortunately, the gap between himself and Industry 4.0 was bigger than he thought, and he had no support or safety net to catch him. So, despite his best efforts, and the promised land that digitalisation should bring, Jonathan falls short in his leap of faith and lands in the shark infested waters beneath. Which has potentially cost Jonathan his business.
So, what can we learn from Jonathan? You can learn about Industry 4.0, robots, additive manufacturing and artificial intelligence, and you can try that now, but the reality is, it’s probably a few steps away.
Before we’re ready for that, we need to do some groundwork to get there and lay solid foundations. These foundations can be your platform for your digital transformation in manufacturing, or if it’s not handled well it can have repercussions on your business.
So you really need to understand what works best for you. And this is where the message differs for SMEs compared to larger organisations.
The challenges of SMEs
When Industry 4.0 is discussed generally, it is around being “digitally ready.” The guidance for adopting digital assumes that the business is stable and running optimally.
However, the reality for SMEs is that you are are tight for time and money. Do you have positive cashflow? Are your jobs generating profit? Do your people have the right skills? Do you have visibility of these issues? And everybody is firefighting issues all of the time. You’re always reacting to things that fall on you.
When we look at the message of Industry 4.0, larger organisations might be concerned with similar issues, but is the level of risk equal? Will they go out of business if a new investment fails to deliver ROI in the first 3 months? Do they have the same limitations in people to start new projects and new initiatives?
These challenges make investing in Industry 4.0 a bigger risk for SMEs, and this is something that is so often neglected in the wider Industry 4.0 conversation.
How to start your digital transformation in manufacturing
So, how can you avoid the pitfalls of digitalisation that Jonathan experienced and start your digital transformation in manufacturing? When you have all these challenges, restrictions of time and money, and the inherent risk that comes with any investment, how can you navigate the journey successfully?
If we return to Jonathan before he takes his leap of faith, he needs to look at bridging the gap between where his business is now and his end goal of digitalisation. But, before he can start building the steps to get there, he needs to lay solid foundations.
With any investment, there is a massive risk of failure. What if the solution doesn’t work? Do your employees have the right skills and attitude towards adopting technology? What if you spend this money and implement these systems and technology but you don’t increase your customers to make back that outlay?
To mitigate these risks, you need to lay some solid foundations. And these foundations need to be a robust core of people, process and technology. Taking the time to embed these foundations will give you the knowledge of what’s really going on throughout your business, and the tools to be flexible and adapt to changes when they occur, and protect you from the shark infested waters.
They will be your safety net, giving you the freedom to try things out.
We have identified 6 foundation steps to have in place before looking at implementing industry 4.0.
1. Create capacity for change
Firstly, you need to make time to focus on the direction of your business. Returning to Jonathan, every time there was an issue with production, on the shop floor or with suppliers, he was firefighting those issues.
However, while you need to ensure your business runs effectively, as a business owner or managing director, you also need to be able to step back and look at the whole business without being sucked into the fires on the shop floor (hopefully not actual fires!).
Effectively delegating responsibility and accountability to your team allows you to not get involved in the machine that’s gone down, or the late delivery that’s going to disrupt production schedules, and leave it to your team to deal with. If they don’t know how to fix it this time, invest the time to teach them, and make sure they are ready next time.
Importantly, the key takeaway is not to work IN your business, but work ON your business.
It’s your business, and you want to live and breathe it, but you need to take a step back and focus on the direction. Your role is to set the vision and ensure the team are working towards that vision. Creating capacity for yourself, and your senior leadership team will give you the time to fully investigate potential options, understand the opportunities to improve, and drive your digital transformation in manufacturing.
2. Implement your vision
Once you have the capacity to work on your business, you can explore what’s available. You can look at the market, your competitors, and new opportunities or threats that might come into effect. And you can begin to strategize how you’re going to differentiate from your competitors and what your business is going to be known for. In many situations it will be a simple case of refocusing on those key differentiators. What are you the best at? And how can you use the new opportunities and technology to ensure you remain the leading company in your field.
With a clear strategy in place, it’s important that your team buys in to that vision. Get feedback from key individuals and those people that will be most important to delivering the vision. The journey to achieving that vision will be difficult and there will be disruptions along the way, so it’s important that the key people involved in delivering the vision are as passionate and committed to it as you are.
This vision will adapt slightly over time as you implement the other business foundations, but even implementing the foundations can cause severe disruptions to business operations and teams.
3. Control of internal operations
Once you have an idea of what to get to, you need to know where you currently are. Then you can create a pathway to start to get there. Let’s look again at some of the key challenges for SMEs: cashflow, profitability, performance measurement, plant, process, partners and pipeline. These are important to have visibility and control of. Ultimately, you need to be able to answer the following questions:
- Is your business sustainable? (financially)
- Do you have processes to control your quality cost and delivery performance?
- Is your work culture one of continuous improvement and open to change?
You can look at any technologies you want, but if you aren’t profitable with steady cashflow then you will struggle to afford to take a risk on them. Also, if you don’t have control over your QCD performance, how can you determine if your investment has improvement performance? Finally, if your people are unwilling to adopt new systems, then the chance of them embracing and getting the most out of them will be low.
4. Basic business management software
Now that some core principles of people and process in place, you can start looking at a few basic business management systems. Introducing technology here can improve processes to make your shop floor paperless, reduce inefficiencies and provide better visibility of your finances; i.e. MRP, production control, or accounting software. Implementing these tools will give you the foundations to analyse your business performance, and be agile in adapting quickly to changes with reduced risk on product quality and business finances.
However, every business is different, and there are hundreds of options available to choose from. To help understand what is most important for your business, you need to look at what’s important for your business and how you operate.
To get started, you can try our quick, free online Digital Fitness Assessment which benchmarks your current digital readiness against companies like yours. This helps you understand where you are today, and builds a personalised roadmap of digital technology you can adopt to enable improvements in your business.
5. Plant management
Now you have some fundamental business management systems in place, you want to think of your plant. Your overall equipment effectiveness (OEE). How can you get your factory running at maximum efficiency? By using sensors or monitoring systems on your machines, you can gain detailed information about how many hours your machines are running; are there prolonged periods of downtime between operations? And if so, what’s causing them?
Understanding this can help to implement preventative maintenance and help you move towards “lights out automation”.
6. Business Intelligence
When you have the previous steps in place, you have what we call the ‘digital thread’ through your business. This enables you to capture information across your whole factory, and you can begin to analyse that information all together.
With data analytics tools, you can have that information on your mobile phone. You can monitor current work-in-progress while speaking with customers. You can receive alerts when issues occur so you can manage by exception.
When you know that your team are equipped with these tools and acting on accurate data, not just gut feel, you can feel more confident in how your company’s running. Furthermore, this facilitates creating capacity for change for the whole company. This intelligence and information frees up your workforce from performing mundane tasks to allow them to focus on improving the business, and performing value-adding tasks.
So, with those 6 foundations in place, you will be well placed to begin your digitalisation transformation in manufacturing.
Referring back to Jonathan, he has stepped back from his company, outlined a vision of where he needs to be, and invested 12-18 months in embedding these core foundations. He is still missing some steps to achieve digitalisation, but he’s no longer at risk of falling into the water and falling prey to the sharks.
By implementing the 6 foundations, you should be better equipped to start looking at Industry 4.0 technologies. This is not even starting your digital transformation, but it’s providing the platform you need to be able to make informed decisions, select the right investments for your business, and ensure you can be successful on your digital journey.
Also, it de-risks many of the challenges, so even if an implementation fails or doesn’t work out you always have this basic level to come back to. So you don’t have everything to lose. That is the first and most important step.
At Fitfactory, we are enabling industry 4.0. We provide technology for companies to manage their business, get better information from their plant and people, and generate actionable business intelligence. Working with industry leading companies and SMEs, we have developed our software to be scalable to support your digital transformation, whichever stage you’re at.
If you’re getting started on your digital transformation and would like some advice, please get in touch and a member of our team will be happy to help.
Finally, if you’d like to learn more about Jonathan’s digital journey or any other posts we share, you can follow the Fitfactory blog using the form below.Share: