At its core, a smart manufacturing strategy is about creating a more competitive, profitable business by adopting the latest smart technologies. As with all business endeavors, “It’s all about the money,” asserts Mike James, chairman and CTO of ATS International B.V. in the Netherlands. “Make sure the technology and business models deliver an ROI.”
This focus gets lost when CEOs and other C-suite leaders don’t understand the business ramifications of the recent onslaught of smart technologies. As a result, business leaders fail to integrate smart manufacturing strategy with the overall business strategy.
To achieve this, consider the following five critical components of a successful smart manufacturing strategy.
1. Articulate A Smart Manufacturing Vision
C-suite executives don’t have to get deep into the technical details, but they do have to understand enough about the new technologies to create a vision of what their company will look like and how it will operate as a smart business.
Top executives must understand how the increased adoption of smart technologies has transformed how businesses create value. “Manufacturing is moving from the optimization of the individual unit, plant or production line to the optimization of the entire production ecosystem,” says Dan Rozinski, a Dow Chemical Company Manufacturing Technology Fellow.
This change, referred to as the fourth industrial revolution, he adds, “impacts entire companies and industries, not just their manufacturing assets.”
This trend demands that companies rethink their source of competitive advantage and renew their strategic direction and vision with smart technology at the forefront.
When the C-suite articulates the vision, it’s the first step toward a time when every other functional leader, including those overseeing IT and manufacturing, can make technology decisions in concert with what works enterprise-wide.
2. Assemble An Empowered, Cross-Functional Team
With business and technology models changing, senior leaders must assemble innovative, empowered teams that understand the business opportunities created when the business ecosystem, rather than the individual parts of the business, is optimized.
“The primary goal of this optimization is to maximize the company response to customer/market needs,” Rozinski says. This results in “a differentiated customer experience that unlocks greater customer engagement, deeper market penetration, and continually improving products and services that deliver greater margins.”
The team should be charged with plotting a roadmap and its implementation plan. It should also be responsible for communicating the vision and roadmap throughout the company.
Developing and coordinating a strategy that tightly integrates every aspect of the company across an entire business ecosystem requires the right people in the right positions. This team should include top leaders from every functional area and include not just IT but also OT, the operations technologists, along with manufacturing leaders.
This team will make critical decisions about enterprise-wide technology, so when each individual facility needs to implement technology to solve a problem, they’ll choose something that is interoperable with the company.
Also, since the company’s shift toward a digital future will impact everyone in the company and the way they do their jobs, this team also must proactively manage the change and the potential resistance to change. It must ensure that every person in the company understands what’s happening and why it’s happening, as well as how it affects them and how they do their jobs.
3. Chart The Business Process Roadmap
With the vision and team in place, the next phase is to create a business process roadmap that moves the company toward achieving its vision, step by step.
“The first thing we did was try to better understand our business needs,” says Ken Marapese, manager of manufacturing execution services at Rockwell Automation, a company several years into its smart manufacturing transformation. “Then we asked ourselves: ‘Does the current way our supply chain is set up really support what we need to do and where we need to make our improvements from a business perspective?’”
The roadmap should lay out a plan that illustrates how each of a series of projects will contribute to achieving the vision. With a roadmap, your organization can avoid the impossible task of attempting to build it all at once — the mega-million-dollar project — as well as the confusion caused by point solutions.
Companies that wish to embark on a smart manufacturing strategy should build in checkpoints to review and adapt their plans.
4. Select Supporting Technology
Once the vision, team and roadmap are in place, it’s time to choose the technologies needed to support the vision. Even though smart manufacturing derives from the convergence of new technologies and ultimately makes the vision achievable, technology is still only an enabler.
How would you know whether you needed cloud technology or which cloud capabilities you need if you don’t know what business problem it’s going to solve or competitive advantage it will deliver?
When organizations begin with technology rather than the business needs, some business requirements are inevitably missed or existing solutions might be ignored.
For Rockwell, the decision was identifying the technology that would take “the information that we have from our business systems and combine it with the information that’s available out of our machines and equipment on the shop floor,” says Marapese.
5. Launch A Pilot Project
With the groundwork completed, it’s time to begin implementing the plan by connecting equipment, software and business systems. But where to start?
One recommendation is to apply lean tools, such as value-stream mapping, according to Conrad Leiva, VP of Product Strategy and Alliances at iBASEt. “It can help you prioritize action items and reveal what has the most value, fending off pressure to take on everything at once,” he says.
Once you’ve launched the first project, you will have effectively merged your smart manufacturing strategy with your business strategy into a smart business strategy, which, like all strategies, must be revisited and revised as market conditions change.
“This is a continuous journey,” Marapese advises. “As long as technologies continue to change, new equipment is being manufactured. It’s not where to end — it’s how much quicker should we be delivering all of this.”
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