Every manufacturer has been impacted by the COVID-19 pandemic in some way. It is difficult to imagine that an unforeseen event of this magnitude would force organisations of all sizes to rethink and retool their operations at speed.
Currently, a manufacturer’s future success hinges on its ability to balance short-term stop gaps with powerful and sustainable long-term business transformation. This article will focus on the latter.
Up until some months ago, the physical-to-digital transformation had been marked by challenge, uncertainty and adaptation. Surprising benefits have been realised by the early adopters who were able and willing to fully embrace these new technologies.
The new reality is that many modern manufacturing technologies, such as Industrial IoT (IIoT) connectivity, self-managed Cloud infrastructure and Cloud-based software for remote monitoring and digitalisation of manufacturing process, were previously seen as optional. These are now defined as essential and their implementation is now a priority for many businesses.
Digital transformation is about driving sustainable operational excellence by combining machinery connectivity and digitalisation to drive people, process and technology collaboration to achieve your business goals.
While we are still amid a pandemic, the time of reconstruction will come. And with it, the opportunity to develop a new business strategy based on digital business transformation initiatives, to reinforce the ability of your company to do business despite external forces, succeed over competitors and proactively secure a better market position.
Globally, less than one third of manufacturers have started on their digital transformation journey. So, it is not too late to get started. Here is our guide to navigating the most common digital transformation challenges to achieve your business goals.
The Scalability & Sustainability of Change
In working with medium-sized manufacturers across New Zealand, we have found they are utilising manual or outdated systems for data entry and collection. As these manufacturers work to scale their production to meet seasonal demand changes, for example, such systems become a liability and impede efficiency gains.
With modern, flexible and self-managed systems in place, manufacturers are better equipped to respond to changes in demand without sacrificing quality or machinery health, while keeping their key engineering and production resources focused on revenue generating functions, such as the manufacture and distribution of products.
Research finds the expected cumulative revenue increase over five years, due to investments in digital technologies, to be 14.7% on average. Your business’ digital transformation is an investment. Therefore, select a modern, scalable and self-managed system that will grow with your business and support your operations for years to come.
Simply put, IIoT is about the automated digital collection, contextualisation and storage of data to drive cross-facility connectivity. A common concern for manufacturers considering IIoT technologies is the security of data.
A study commissioned by Microsoft found the average cost of a cyber-attack to be $10.7 million per breach for Asia-Pacific manufacturers.
Often, the costs associated with remedying a breach are overlooked. Examples include fines associated with breaching customer data laws, loss of productivity and employee overtime to rectify the breach.
Manufacturers must recognise that these attacks are, unfortunately, not uncommon. Cisco reports that 31% of all organisations have experienced cyber-attacks on their IIoT infrastructure.
As IIoT technology adoption grows, the threat to manufacturers also grows.
It is not uncommon to find a range of solution providers utilising a single server to store data for multiple organisations to reduce costs associated with third-party software licenses, storage and hosting.
While these organisations may be saving money, the potential true cost is unforeseen system issues enabling other organisations to access your data.
Before writing off self-managed and Cloud-based IIoT technologies as too risky, perform a detailed risk assessment of the pros and cons, including the cost and damage associated with a potential data security breach or data loss, prior to proceeding with an implementation.
Connectivity is Key
Connectivity within the factory and beyond is critical to success during the pandemic and beyond. Research into the applications of IIoT into manufacturing by McKinsey has identified two powerful use cases: Operations optimisation and predictive maintenance. The pandemic has emphasised the need for operations management and optimisation to occur remotely.
Connectivity across your facility allows your team to perform scheduled predictive maintenance. The effective scheduling of predictive maintenance allows operations managers to minimise the number of staff on-site, while balancing the need to meet fluctuating demand caused by COVID-19.
The argument for the deployment of IIoT technologies is strong with 79% of respondents’ current or tentative use cases for IIoT devices being predictive maintenance.
The level of connectivity and automation achievable with digital IIoT solutions is unmatched by manual systems, especially when applied and used at scale. For that reason, manufacturers should take advantage of these new technologies. The key to success is starting small by connecting and managing the maintenance of a small group of machines using a Cloud-based maintenance system as under a pilot project. This minimises capital expenditure and risk, while allowing you to validate a Maintenance 4.0 system.
While it may be tempting to dive headfirst into a digital transformation journey, long-term success hinges on an ability to build a solid foundation for your business.
Many manufacturers find a successful and well defined pilot project is key to unlocking the budget and resources required to action a larger scale digital transformation. It allows for the application of key learnings from the pilot project phase to be implemented in subsequent stages of the project. It also enables effective management of risk, garners management level buy-in and delivers a quick win by achieving or exceeding the desired ROI. These pilot projects are often the springboard for a larger scale digital transformation across your facility.
On the topic of unlocking budget, manufacturers can reduce implementation costs by over 50% through utilising a single supplier offering modern and flexible new technologies, all based on a pay-per-use model.
Manufacturers should seek to engage a company that can guide its business through every stage of its digital transformation. Working with multiple providers and consultants will complicate your transformation, increase cost and risk without ensuring that what is promised will be successfully implemented and deliver the desired outcomes.
Another common misstep is delaying the kick-off a digital transformation until you have defined a fixed end point. Both COVID-19 and the Industry 4.0 movement have highlighted the speed with which our world can change.
In taking a problem-by-problem approach, manufacturers can start small, validate and realise their transformation. Once the value is cemented, business leaders can look to scale their transformation initiatives to suit their business needs and available resources at a cross-facility level.
The main takeaway: Now is the time to start your digital transformation journey.
Before you get started, download our handbook for more insights and customer success stories.