Why and how to leverage digital technologies
2018 is looking like a tipping point in the adoption of smart manufacturing (aka, Industrial Internet of Things, Industrie 4.0, etc.), with research showing a spike in the number of companies launching digital strategies. Meanwhile, first movers have proven the value of smart manufacturing and defined the critical elements of a successful transformation. As their advice is shared and best practices are adopted, the trend towards smart manufacturing is sure to move even faster.
While just two years ago nearly half of manufacturers hadn’t even heard of the Industrial Internet of Things (IIoT), a majority are now reaping its benefits, according to research from the MPI-Group, a Cleveland-based research firm. Its findings indicate that 72 percent of manufacturers increased productivity, and 69 percent increased profitability, from the application of the IIoT technology to plants and processes, while 65 percent increased profitability from sales of IoT-enabled products (e.g., embedded intelligence).
The study also found big year-over-year increases in the percentage of manufacturers that have implemented IIoT strategies to improve processes (from 11 percent in 2016, to 36 percent in 2017), and enhance products (from 12 percent to 29 percent). When the manufacturers that have a strategy that hasn’t been fully implemented yet are counted, the percentage looking to apply IIoT to plants and processes rises to 60 percent; while those looking to apply IoT to products hits 55 percent.
Meanwhile, the percentage of respondents with no plans to develop an IIoT strategy dropped from 34 percent to 13 percent (processes) and 37 percent to 17 percent (products).
The Biggest Challenges
The MPI study reports that the biggest challenge to adopting IIoT or smart manufacturing is “identifying the opportunities and benefits of IIoT.” Other concerns focus on specific technology, workforce, and security challenges.
Companies at the forefront of the trend have overcome these challenges. They offer the following guidelines to help you focus on what’s important as you take the next step in adopting smart manufacturing.
Think Business—not Technology—Strategy
While it sounds counter-intuitive, a smart manufacturing transformation starts with business strategy, not the selection of technology. Even though smart manufacturing derives from the convergence of new technologies—which ultimately makes the vision achievable—technology is only an enabler.
As John Clemons, director of Manufacturing IT at Maverick Technologies and member of MESA International’s Executive Committee, asserted in a recent article: “How would you know whether you needed Cloud technology or which Cloud capabilities you need if you don’t know what business problem it’s going to solve or competitive advantage it will deliver?”
Understand the Business Implications
To launch a smart strategy from a business, not technology, perspective, manufacturing leaders must understand how the increased adoption of smart technologies has transformed how businesses create value. Dan Rozinski, a Dow Chemical Company manufacturing technology fellow, said it best: “Manufacturing is moving from the optimization of the individual unit, plant, or production line to the optimization of the entire production eco-system.” This change, he adds, “impacts entire companies and industries, not just their manufacturing assets.”
This means executives must rethink their source of competitive advantage and renew their strategic direction and vision with smart manufacturing at the forefront.
Smart Manufacturing 101
If that’s still too abstract, other leading companies have had success by identifying a problem and committing to solve it using digital technologies. This pragmatic approach, endorsed by LNS Research, launches the first stage of a smart manufacturing initiative, “with no hype or expectation of instant transformation.”
Indeed, the firm notes that 80 percent of factories do not have an MES system in place. Since smart manufacturing strategies are, at their most fundamental level, about getting the right data to the right places at the right time, automating and integrating that plant-level data and intelligence is the first step toward more sophisticated digital threads and integrated value chains.
The Transition is a Journey
Whether you’re just getting started or are well on your way, the transition to smart manufacturing should not be thought of as a project with a beginning and an end, but rather as a never-ending journey. The change ultimately is too fundamental, there are too many moving parts, and technology is changing too quickly.
- Articulate a Smart Manufacturing Vision
- Assemble an Empowered, Cross-Functional Team
- Chart the Business Process Roadmap
- Select Supporting Technology
- Launch a Pilot Project
One suggestion is to apply lean tools as you start to iterate through the steps. Conrad Leiva, VP of Product Strategy and Alliances at iBASEt and Chairman of MESA International’s Smart Manufacturing Working Group, recommends value stream mapping to “help you prioritize action items and reveal what has the most value, fending off pressure to take on everything at once.” Another example: Rockwell Automation used the PDCA (plan-do-check-act) cycle to keep its two-plus-year journey to the “connected enterprise” on track.
Go Slow to Go Fast
These early adopters recommend “going slow to go fast.” They note one of the biggest failure points in a smart manufacturing implementation is attempting too big an implementation too fast. Instead, companies pioneering the route to adopting smart manufacturing say the road to a successful digital transformation is a series of small projects that each solve a specific business problem.
Getting to ROI
The same “go slow to go fast” approach has a reverse effect for achieving ROI. Smaller projects mean faster payback, and many successful companies say they implemented small projects, then used the resulting ROI to fund the next project.
IT or OT?
Too many companies get bogged down in whether IT or OT professionals should lead a smart manufacturing transformation. The answer: neither “side” can do a smart manufacturing transformation alone. Again: Smart manufacturing isn’t an IT strategy or an OT strategy, it’s a business strategy. Therefore, the transformation should be led by the business, not the technologists, and lots of disciplines should be included in the cross-functional team that guides the journey.
It’s About People and Culture
The biggest challenge is not technology, it’s leadership. It’s about creating a business strategy that guides people toward, and establishes the processes for, a new way of working. Any company can buy the technology. More important is the unique implementation of the technology to establish competitive advantage.
Moving Forward with Smart Manufacturing
No matter where you are in terms of adopting smart manufacturing, it’s time to launch or double-down on implementing a smart manufacturing strategy. Don’t wait to develop a perfect plan or overcome all—or even most of—the technical challenges before implementing smart manufacturing. By keeping early adopters’ guidelines in mind, you’ll be well on your way to leveraging smart manufacturing to create competitive advantage.