Tuesday, March 24, 2020

Smart Manufacturing as a Cultural Change – Part 1: Managing the Business Transformation

Conrad Leiva, Stefan Zippel   

There is a misunderstanding preventing us from unlocking the true potential of Smart Manufacturing and the digital transformation. A misunderstanding that revolves around the notion that it is all about technology, and this is reinforced by the many definitions and tactics used by some software vendors when they promote their technologies as “the solution”.

This misunderstanding is not a new phenomenon. If you have been working in manufacturing automation for the last few decades, you have seen this before. We have been telling people that it is not about the technology for years, but the hype of new technology seems to be irresistible.
Evidence of this misunderstanding is clear in the fact that surveys reveal that 70% of IoT and digital transformation projects fail. [1,2] A recurring theme in these project “failures” is that they are focused on trialing technologies with an overconfidence that technology alone can achieve great productivity gains. However, many of these projects in hindsight reveal a modest ROI and end up shelved.

There is actually very good technology available today that can be used to solve the problems that have been plaguing manufacturing for decades, and technology can help us achieve productivity increases here and there. But that is not Smart Manufacturing.

Smart Manufacturing is a transformational opportunity that requires comprehensive cultural change to truly leverage the technology and create a new business engine powered by an efficient ecosystem collaboration and data exchange.

Smart Manufacturing is a transformational initiative 

A transformed Smart Manufacturing enterprise is digitally enabled by technology, but more importantly, by a shared digital mindset of enterprise-level transparency, optimization and enhanced decision making. A transformation is a dramatic change that requires a completely different way of thinking about the business processes that thread the plant and its entire ecosystem together.
It is impossible to succeed in this transformation if the organization doesn't have a clear picture and doesn’t understand the value of attaining the final state. New technologies should be explored with a clear understanding of how they could promote the desired future mix of products, services and business models for the enterprise. 

Start your digital transformation with a focus on business strategy and organizational change. Define your desired future state, understand your organization's current state, and develop a plan to make the required changes. Firstly, focus on your business processes and organizational structure, and only then define the required technology infrastructure. 

Define Smart Manufacturing in business terms, not technology terms

MESA International has a definition for Smart Manufacturing that does not mention any specific technologies but instead focuses on the goals of the initiative. 

"Smart Manufacturing is the intelligent, real-time orchestration and optimization of business, physical and digital processes within factories and across the entire value chain. Resources and processes are automated, integrated, monitored and continuously evaluated based on all available information as close to real-time as possible." 

This definition focuses on establishing a vision and a mindset for the organization of a future state where teams are working together to achieve a better value creation process for internal stakeholders, through to customers and shareholders. 

Key to the success of the digital transformation to Smart Manufacturing is the mindset. The practices are secondary, and the technology discussions come afterwards. It's essential to start the enterprise digital transformation by setting a future vision, talking about how the organization wants to deliver products and services, and working with partners in the ecosystem as part of this new corporate strategy. 

In an enterprise digital transformation, it's much more important for all your teams to have a shared understanding of what digital means, than for them to have shared digital practices. A shared definition of “digital” must be part of your organizational culture. That's the best way for your organization to get real benefits from your Smart Manufacturing initiative.
In Part 2 of this article, we will discuss some important considerations for a successful change in culture towards a highly connected transparent and optimized enterprise. 

1. DX Journal Staff. INVESTMENT: 70% of digital transformations fail, so here’s what you can learn from them. DX Journal Covering Digital Transformation. [Online] October 25, 2019. https://dxjournal.co/2019/10/70-of-digital-transformations-fail-so-heres-what-you-can-learn-from-them/
2. Cisco. Cisco Survey Reveals Close to Three-Fourths of IoT Projects Are Failing. The Network, Cisco's Technology News Site. [Online] May 23, 2017. https://newsroom.cisco.com/press-release-content?articleId=1847422.
About the Authors 

Conrad Leiva, Director Ecosystem and Workforce Development at CESMII (https://www.cesmii.org/), and Chairman of the Smart Manufacturing Working Group at MESA International (http://www.mesa.org/). As a recognized industry authority, he engages manufacturing business leaders, solution providers, educators and practitioners across all dimensions of industry to develop and share knowledge on both How and Why to leverage information technology. His work has focused on Smart Manufacturing, Industrial Internet of Things (IIoT), and the digital thread between engineering, business, manufacturing and sustainment systems working with manufacturers and PLM, ERP, and plant automation partners.

Stefan Zippel, Senior Application Engineer with Litmus Automation Inc. (https://litmus.io/). Stefan has more than 10 years of cross-industry experience. He has worked as a MES expert in both the process industry and electronics manufacturing, and as an Industry 4.0 Architect for discrete manufacturing. He understands that making the right decisions at the right time is crucial, and that technology by itself is not the solution. Employees are the key to standing out in a crowded market. That is why he strongly believes that a true digital transformation is a combination of organization, processes and technology, working together to support the corporate vision, mission, strategy and values of any enterprise. Stefan holds a degree in Mechanical Engineering-Computer Science from the University of Applied Science in Leipzig, Germany.

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