Why your Why matters
You don’t digitalize for the sake of digitalization. You do so because your business has certain problems you need to solve. Join us as we sorting out the different Why’s.
Time for a short thought experiment!
Your manager asks you to make a short presentation on the top 5 reasons to invest in a large digital transformation program. What would you write down? Resist the urge to read on for just a couple of seconds and try to answer this question in your own words.
Ready?
Most people will start listing technologies: they answer the ‘what’: AI, Digital Twin, IIoT, Robots, Cloud…,
Some dive into the problems they face on a daily basis,
Only a few will list their actual business challenges.
We see it so often: the focus on ‘what’ needs to be implemented. But to actually make digitalization across your organization work, you’ll need to broaden your perspective: Why are you doing this:
It will give your organization a clear direction, a North Star, against which you can check and validate all initiatives: is this going to help me reach our why?
When introducing a new process, a new technology, maybe even a reorganization, linking this initiative to your ‘why’ will smoothen the change process with your stakeholders as it helps you align their role to reaching the higher purpose.
You can’t micromanage every decision, nor is it desirable. By having a clear why you define the context in which decisions will be made.
Sorting out the different Why’s.
You don’t digitalize for the sake of digitalization.
You do so because your business has certain problems you need to solve. Solving these problems needs to result in a positive return on investment. Some of those are easy to measure (for example when you were able to increase throughput), others are not.
We understand, you’re special, we’re all special. But if we take a step back we can see some patterns in the why’s around us.
In the end everything we do is about
(1) Profits
(2) Talent : how to find and keep the talent you need
(3) License to operate
Profits
The most popular of all why’s.
It’s not very inspiring but it’s why most companies exist in the first place.
Optimal operations:
Digitalization emerges as a powerful tool for optimizing operational efficiency and driving revenue growth. Most people consider an optimal process as the most important way to outperform the competition. That can be achieved by having the lowest cost per product/ton, or by having the best possible overall equipment effectiveness (OEE). Automation and process optimization can optimize several types of costs: equipment, labor, material usage. Moreover, smart digital solutions can contribute to reaching the optimal product quality (not too high, not too low), thereby reducing waste and rework. A focus on improving the first-time right ratio ensures that resources are utilized efficiently, while mitigating the risk of costly errors and defects. Additionally, you might want to focus on minimizing unplanned downtime, especially when you run at very high utilization rates.
Operational flexibility:
Flexibility (and agility) in your operations gives you the possibility to quickly introduce new or improved products, adapt to changing customer preferences, and seize market opportunities ahead of competitors. LEGO, for example, utilizes a modular plant layout in which the plant itself can be adapted depending on the sets who need to be created. This agility is key in their success and digitalization of the processes play a crucial role in it.
Increased value of product & new business models:
Today companies provide more and more digital solutions (for example at Tesla: continuous software updates are an important part of the value they offer to you as a driver). By delivering value-added products and services that meet or exceed customer expectations, businesses can foster long-term loyalty, drive repeat business, and outperform the competition in terms of both revenue generation and market share. For some companies this might even become a totally new business model, as an example, many hardware suppliers now offer accompanying data driven services with the physical device they sell.
Talent
This one is for those who dare to look further than next quarter. While assets are a key part of manufacturing, most of these assets are useless if you don’t have the right or even enough people to operate them effectively.
Several factors are coming together in the coming decade: baby boomers leaving the workforce, tight job market, high learning curves and an unattractive reputation.
Digitalization is an important piece of the puzzle, and those who start to take actions now will reap the benefits in the years to come compared to their competition.
Attract digital natives
Hiring for production isn’t easy. The sector doesn’t have the best reputation, hazardous working conditions, shift work, little to no remote work.
We want to add another one to the list. Most production sites feel like they’ve stopped evolving in the 80’s and 90’s . For the new generations joining the workforce this will be a deterrent. They never knew a world without the internet, streaming and constant connectivity: why would they want to work in a place where time seems to have stopped?
By creating a modern environment you will have a leg up in recruiting and keeping your future talent.
Recruiting and retaining them comes with an additional benefit. Their acceptance of digital solutions is much higher, facilitating the acceptance and change management for your new digitalization initiatives.
Speeding up learning
Attracting somebody is only the first step.
Many of us rely on experts with decades of experience in a plant or even in a specific (sub) process. They are the walking encyclopedias of your plant and probably are showing a loyalty you can’t find anymore. It is often seen as a badge of honor that you only really understand the plant after 10+ years of working.
Ultimately though, they will retire and the new generations coming in will not stay for 10+ years to learn all the ins and outs of your production process.
The only alternative is to speed up the learning process. You have to lower the time it becomes to become an expert from 10+ years to 2-5 years. To achieve that you’ll need to explore new ways to capture and use knowledge, simplify the work that needs to be done and automate even more.
License to Operate
Companies don’t work in a vacuum. We need to adhere to legal and industry policies or face the possibility of having to shut down. Ensuring a license to operate encompasses a commitment to sustainability, compliance with legislation, and adherence to industry policies such as Good Manufacturing Practices (GMP), amongst others. Digital solutions can facilitate a lot of the work we do in order to prove this adherence. Auditing and avoiding exceeding production emissions is easier when data is captured and calculated in real time.
In Summary
Your business needs to define its WHY
You can use the green part of the diagram below as a guide: print it out, let your leaders stick red stickers on those who matter. Decide on your priorities.You as a leader in the IT/OT realm are perfectly positioned to define the HOW. The how (both organizational and technical) is what connects the dots between technology, the actual problems, the organization and so on. Remember that people and change are more important than technology choices!
Finally, you can reach out to technology providers and figure out WHAT they can do to enable your organization reach its targets 🙂
