As a long series of failed transformation projects shows, new does not always equal better, and transformation for transformation’s sake is rarely worth the effort.
The greatest obstacle to digital transformation success is a disconnect between companies and plants.
2. Manufacturing companies must:
Balance their level of influence
Provide adequate resources
Turn global partnerships more attractive to the local plant level.
3. Plants leaders must:
Boost their internal decision-making speed
Optimize technologies and systems adoption.
Invest in acquiring and developing human capital.
Just a few months ago, you were named Plant Director. But after the third meeting for the day you start to wonder whether it’s even worth it. Shouldering the margin improvement pressure, keeping the plant profitable with minimum cost, developing your staff to hit productivity targets — and now? Your Global Transformation contact is pushing for another digital transformation project. Worse? The last three digital initiatives had abysmal performance. And if this one does too, you’ll share the blame.
In SmarterChains’ experience, the picture painted above is far too common in many manufacturing plants. The purpose of this paper is to give Plant Directors (especially newly appointed Plant Directors), a plan to turn the transformation hurdle upside-down, and leverage transformation initiatives to their factory’s advantage.
“Nothing is particularly hard if you divide it into small jobs” ― Henry Ford
If you divide a digital transformation effort into its constituent components, it breaks down into three parts: Strategy, which is planning and launching the transformation project, tactics, which is adapting the transformation project in real-time, and capabilities, which is having the resources and infrastructure necessary to execute the strategy and tactics in real-world conditions.
According to SmarterChains’ research, the greatest obstacle to transformation success is a surprising disconnect between company-level strategy and plant-level capabilities. Many factories simply lack the data, technology, and talent resources to succeed in the digital world.
This disconnect must first be addressed on the company level: Manufacturers need to adopt a digital-oriented operating model, that’s based on an ecosystem approach to excellence. Many forward-thinking leaders like Akio Toyoda are already moving their companies towards this direction — and there are already many insights others can draw from them.
In practical terms, on the company level, manufacturers ought to focus on the three following pillars:
1. Optimize level of influence: The key lies in balancing project oversight with freedom of movement. More centralized decision-making means slower projects.
2. Provide adequate resources: Companies should be providing adequate resources — financial, human talent, know-how and more — to strengthen the foundations upon which transformation efforts are built.
3. Streamline strategic partnerships: Experience shows that global agreements and contracts — with technology vendors, for instance — are rarely used on a local level. This means that the industry needs a faster and more effective match-making model.
Still, there’s also plenty of work to be done down to the plant-level. Plant directors should strive to increase capabilities on three levels: Decision-making, technologies and systems, and finally, human capital.
Streamline Decision-Making: Prioritize, collect and scale
Modern decision-making demands data and analytics fluency. The problems start when there is so much data available that prioritizing which data to interpret becomes cumbersome. At this stage, it is important to take a step back and re-prioritize the focus with a customer-centric lens: What would be most valuable to the customer?
After high-value data sources are identified, efforts should be made to build an adequate infrastructure to collect data. Simultaneously, it’s essential to invest in acquiring specialist human talent that’s capable of running, energizing and maintaining the insight-generating machine.
The final step is scaling this specialist data-driven mindset across the entire plant and workforce. To do this, plant managers must encourage the formation of hybrid teams which include analytics, technical and business experts. This type of team is able to respond with clarity and agility to business problems, gradually integrating data into the daily decision-making of the plant.
Overcoming technological barriers: Assess, Update, Discover
When discussing which new technology to implement, the first question should always be: Do I need to change my existing system? If the answer is no, plant leaders should not be quick to label their existing technologies and systems as obsolete or “legacy”.
As a long series of failed transformation projects shows, new does not always equal better, and transformation for transformation’s sake is rarely worth the effort. Worst of all, each failed transformation attempt generates cynicism and disinterest within the organization, which hinders future transformation projects.
Instead, plant leaders must demystify the much-hyped Industry 4.0 Transformation. On one hand, many existing systems and technologies can usually be updated to operate effectively even under the new industrial era. On the other hand, all new technologies should be carefully reviewed and evaluated before being adopted.
In this matter, a one-size-fits-all approach is insufficient. Technologies, even cutting-edge technologies, should not be assessed in a vacuum but with criteria custom to each plant’s specific business context. And even when an Industry 4.0 system or technology has proven value-creation potential, its implementation should only be considered when mapped into a holistic technology roadmap.
Boosting the human capital: Transforming your frontline to a bottom line
No matter how much manufacturing companies like to think they’re ruled by objective data, it is humans who decide which data to collect, which initiatives to support, and what technologies to implement. The same is true on the plant-level. Digital transformations are powered by people and often, it is those same people that block them.
In order to become champions of transformation, all employees — operators, line leaders, even the managers themselves — need to be fully engaged with the effort. To accomplish this task, two objectives must be set: An orchestrated effort to develop a digital-ready culture and attract digital-ready talent.
To attract the digital-ready talent you need a compelling value-proposition: Nowadays, this boils down to offering an environment of lifelong learning, which, in turn, ensures lifelong employability. Of course, status and fair compensation are still valid incentives. Retaining talent is a bit trickier. Feeling fulfilled today is less about climbing a specific corporate ladder, but rather, being able to piece together elements from diverse skillsets, experiment, and develop useful and profitable cross-functional abilities.
Even under ideal conditions, today’s competitive market makes capturing all available talent rather unlikely. For this reason, companies should invest in developing training programs to upskill the existing workforce, or otherwise risk creating a workforce that operates on different speeds: A segment of fast digital-savvy employees and a segment of slower, traditional employees.