Digital Transformation in Manufacturing: Achieving Success – Operatio... https://operationsandsupplychain.wordpress.com/2019/04/09/digital-tran...

Operations and Supply Chain Management

University of Waterloo

Digital Transformation in
Manufacturing: Achieving Success
ON APRIL 9, 2019 / BY PETER CARR / IN DIGITAL
TRANSFORMATION IN MANUFACTURING

This section highlights areas that most organisations should focus on

for a successful transformation. All transformations should begin with
a focus on the customer and technology enables closer engagement
with them than has ever been possible before. The empowerment of
employees is required to achieve the active involvement in change that
will ensure that opportunities to exploit the technological investments
are maximised through innovation. Collaboration inside and outside
the organisation enable an integrated approach to be taken to use of the
technology and its application in the business. Partnerships with
vendors and others will enable access to valuable expertise.

Leadership of the transformation must come from the top of the

organisation. A clear vision and roadmap should guide your progress
and investment in the required new skills will be essential. Finally,
security should be a constant consideration in digital transformation.

Engage With the Customer Constantly

Digital transformation should be driven by the customer. As the

manufacturer changes products, processes and business models, it is
critically important that they are acutely sensitive to the impact that this
is having on the customer. Awareness of this should drive the
investments that are made and should focus efforts to fine tune and
improve. Rapidly changing competitive conditions mean that market
knowledge and customer engagement are essential. The following
video provides a good introduction to customer engagement in
manufacturing:

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Technology enables organizations to get closer to their customers. The

internet of things enables much more data to be gathered, customer
relationship management tools enable more effective engagement,
which can be strengthened with the use of artificial intelligence and
social media provides powerful tools for engagement and contributes
more data. It is essential that manufacturers’ digital transformations are
customer focused.

Canadian Tire’s ‘Tested for Life in Canada’ program involved 15,000

customers in its product development process. Customers signed up to
test products at home and share their experiences with the company
and other testers and customers online. The program provided valuable
data for the company and is a new, authentic approach to engaging
customers.

Empower Employees

The impact of digital transformation on employees is discussed in this

blog. It has been noted that effective transformation requires careful
management of the changes that are required in their activities at work.
Some will be impacted negatively and this can impact the culture of the
whole organization – it should be handled with sensitivity.

Kitchener, Ontario based Unitron is a global hearing instrument

manufacturer. They use Salesforce Chatter to connect employees, to
enable them to collaborate across borders on projects and
improvements. Information is easily shared and productivity has
improved.

Options for how technology will be applied in employees’ jobs will

often exist. It will be important to consider whether technology will
assist employees and enable them to contribute more to organizational
objectives. For example, employees can use information gathered from

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internet of things sensors, assisted by artificial intelligence, to improve

the productivity and quality of the machines they are operating. Robots
can make jobs easier and safer and enable workers to focus on areas
that require skilled human attention. A positive relationship between
humans and machines is often possible and better for the
manufacturing operation.

Digital transformation requires that employees are actively motivated

to contribute to change and participate in continuous improvement.
Cultural change to support this is necessary but so too is the ability to
make real change happen. Development of necessary skills, devolution
of authority and access to necessary support functions are essential for
meaningful empowerment of employees. Here is some good advice on
empowering employees in digital transformation:

Enable Innovation

Innovation puts good ideas into practice. Successful innovation

requires a culture, processes and practices that enable it to happen.
Innovation is especially important in digital transformation because the
large-scale change that is taking place requires the ability to rapidly
respond to the problems and opportunities that it creates. In
organizations that are not innovation-enabled transformation will be
likely to fail, because it will lack the capacity to respond when
challenges arise. Companies that fail to seize emerging opportunities
will be overtaken by those that can.

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As part of the strategic plan that manufacturers create for their digital
transformation, conscious emphasis on how innovation will be enabled
is necessary. DevOps could be used to integrate technological
innovation with operational activity.

Collaborate Inside and Out, The Importance of the Supply Network

The benefits of digital transformation can only be fully achieved with

an integrated, organization wide approach. These benefits will be even
better if that collaboration extends to the manufacturer’s supply
network and involves the partners in its new eco-system, including its
customers. Jabil research indicates that 63 % of manufacturers expect
that partners will deliver capabilities that will help them transform.

Teva Pharmaceuticals, Canada, applied social technologies to their

supply chain, raising fulfillment levels from 80 – 95 %, reducing
manufacturing cycle time by more than 30 % lowering supplier lead
times by 25 %.

Collaboration has been enabled by technological advance for many

years and organizations have been slow to exploit its potential. This has
not been because of difficulties with the technology but rather a lack of
enthusiasm and trust. Within organizations, silos often have
antagonistic relationships and compete for power and resources. In
supply networks, sharing of information can lead to pressure on prices
and revenues. It is not surprising that collaboration has been slow. Trust
is hard to create and very easy to break.

New partners provide essential services and products as digital

transformation proceeds. Making collaboration happen effectively
between everyone in the new eco-system that results is a significant
challenge. Successfully tackling it will make a significant impact on the
value of the use of new technologies.

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Leaders Must Lead

Digital transformation has huge potential for organizations that can

undertake it successfully and is essential for survival in most
manufacturing sectors today. Change in organizations is rarely
successful without senior leadership commitment throughout the
period of change and beyond. There is no substitute for this –
leadership of transformation cannot be delegated. It requires the active
involvement of the Chief Executive.

Transformational change leadership also requires the involvement and

support of the entire senior leadership team. Each leader must ensure
the participation of their people and model the behaviors that are
needed in the innovation culture. A digital transformation strategy
should not be adopted without the enthusiastic support of the senior
leadership team.

Create a Digital Vision and Roadmap

Plans for digital transformation require a solid foundation in a clear

digital vision and a detailed roadmap for its achievement. A plan for
the application of technology and transformation of the organization is
essential for ensuring that effective integration occurs.

A formal planning exercise should be undertaken that creates a

roadmap that will be followed by the manufacturer. Beginning with a
vision that is established by the senior leadership team, detailed plans
should be developed with each functional area and consolidated by the
senior management team, based on organization wide exploitation and
selection of technology tools that create an appropriate integrated
infrastructure.

Implementation of the plan should be driven by the senior

management team and enable carefully considered modification when
circumstances require it. Performance measures should be used to
monitor implementation progress and the achievement of the
anticipated results. Here is HP’s approach:

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Invest in Skills and Knowledge

Digital transformation requires many skills that have been given less
emphasis in the past. Technical skills to install, operate and maintain
information technology-based equipment need to be combined with
knowledge that enables its effective application to meet company
objectives. Skills are also required in collaborating with others and
managing a technology-based, continuously improving manufacturing
organization.

Many manufacturing companies identify weakness in these skill areas

as a major challenge in digital transformation. The solutions adopted
will vary according to circumstance but it is likely will include
investment in the skills of existing employees and managers and
recruitment where possible. Relationships with learning providers are a
key partnership in digital transformation.

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Organizations and their employees need to be more learning oriented

than they have been in the past. Skills and knowledge needed will
continue to change as technology advances. Many companies have
adopted programs that are designed to encourage employee education
beyond the workplace, to stimulate creativity and a thirst for life long
learning.

Develop Strong Supportive Partnerships

Maximising the benefits of investment in new technologies requires the

combination of skills, knowledge and resources. Many of these will
already exist within the business and some may be developed
internally or recruited. Others will require the creation of relationships
with organizations that can provide them.

Vendors have invested in research to develop their product and have

extensive experience in its use. Their work with other companies like
yours can help you improve the value of your investment. Establishing
close relationships with vendors that can provide support is usually
beneficial for you and them.

Good vendors understand that they have a vested interest in your

success – it contributes to their knowledge bank and reputation. When
you select your vendor, look for one that will be a good strategic
partner, who you feel will be most committed to your achievement.

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Other partners will also be needed. Education providers, consultants,

recruiters and more will help you accelerate and exploit your
technology commitment.

Stay Secure

Failure to adequately manage the security aspects of digital

transformation can destroy businesses. We can’t emphasise too strongly
that security should be considered constantly as plans are made,
implementation is undertaken, operations are conducted and
improvements proceed.

Our research shows that most manufacturers are aware that

information technology is having a dramatic impact on their sector.
Continuing to operate as they do today is not sustainable in today’s
environment. All manufacturers must develop their own strategy for
the fourth industrial revolution.

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Digital transformation should be viewed as an opportunity for

Canadian manufacturers. We have outlined the main impacts that it
will have and the challenges that it creates. Digital transformation
requires significant changes to most manufacturers’ practices and we
provide guidance on how these can be effectively tackled.

The Canadian manufacturing sector can emerge strong from the fourth
industrial revolution. This report is intended to support that.

MANAGEMENT SCIENCES MSCI 700 OPERATIONS AND SUPPLY CHAIN

MANAGEMENT OPERATIONS MANAGEMENT PETER CARR UNIVERSITY
OF WATERLOO

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