6 Fundamentals of Manufacturing Strategy

It’s one thing to say that C-suite executives must lead their companies’ smart manufacturing strategies. It’s quite another for them to know what to do and how to do it, especially when they’ve become accustomed to delegating those strategies to their manufacturing and IT people. The first step is to understand how smart manufacturing technologies are transforming manufacturing business strategy. The second is to fashion a vision and a plan to implement a smart manufacturing strategy.

Before starting that second step, it’s critical to consider the lessons learned from those on the front lines of implementing these new technologies.

1. The Smart Manufacturing (R)evolution

Manufacturing is now called “smart” today not because it was dumb before. Smart manufacturing is often portrayed as a revolution, but the technologies have been evolving over the past several decades. The term smart manufacturing is used simply to highlight the numerous technologies, all coming to maturity over the past several years, that connect, streamline and speed up every step of the manufacturing process.

Through the years, manufacturing businesses have installed a veritable alphabet soup of technology, including enterprise resource planning (ERP), supervisory control and data acquisition (SCADA) and programmable logic controllers (PLCs), all of which automate and connect manufacturing processes. The ubiquity of such technology is why many C-suite executives might wonder what all the fuss is about over smart manufacturing. After all, they’ve heard manufacturing professionals talking about connectivity and automation technology for decades.

The difference now is that the latest technologies finally allow manufacturers to do much of what they’ve been trying to do with earlier technology. Smart manufacturing technologies include the internet of things (IoT), mobile internet, cloud computing, augmented reality, 3-D printing, RFID and advanced robotics, just to name a few.

Together, these technologies enable connectivity between humans and machines as well as the business suite and the factory floor. They also do the same throughout manufacturing, from design to delivery and across increasingly distributed and outsourced supply chains.

How companies adopt combinations of these technologies will determine whether a company dies, survives or thrives in the Industrie 4.0 era.

2. Start With Manufacturing

It might sound counter-intuitive, but in building your business vision and strategy, the place to start is in manufacturing. Too often, companies start a smart manufacturing initiative from a technology perspective (i.e., with a focus on installing the latest software or hardware. “But there are some things you can’t change, like the way you build your product, whether it’s brewing beer or assembling a motorcycle,” says MESA President Mike Yost. “You can’t push smart technologies into plants without taking their perspective into account.” (Full disclosure: I’m on the MESA Americas Board of Directors.)

C-suite executives must understand that plant professionals are experts in how to produce their products and know better than anyone in the company what’s keeping the factory from producing faster or with more agility or flexibility.

3. Technology Is The Means, Not The End

As is typically the case with “business improvement” projects that involve technology, companies declare the project complete when the technology is installed. Often, the IT team holds a little celebration before heading off to the next project.

But installing the technology is just the start. At that point, no improvements have been made by the business, no additional capabilities have been added and no cost reduction has been realized. For the business, the project is just beginning.

4. The Transition Is A Journey

The advice most often given by presenters at the recent MESA Conference is that the transition to smart manufacturing should not be thought of as a project with a beginning and an end but rather as a never-ending journey.

First, connecting the entire enterprise, which often involves connecting facilities throughout the globe, is a massive undertaking that will take years to complete.

Second, the technology continues to rapidly evolve, which continually changes customer demands and, in turn, requires more and different smart technologies. As with your overall business strategy, you’ll need to update your smart manufacturing strategy to meet ever-changing market expectations.

5. Go Slow To Go Fast

The second most often cited “lesson learned” noted by MESA presenters is that the single biggest failure point in a smart manufacturing implementation is attempting too big an implementation, too fast. This tends to happen for two reasons. First, over-eager manufacturing engineers might push for a multimillion-dollar overhaul. Second, the CEO demands it.

CEOs must resist these all-too-common tendencies. It’s best to identify a problem to be solved with smart manufacturing technologies, implement the solution, then use the return on investment to fund the next step.

6. Smart Manufacturing Will Happen With Or Without C-Suite Leadership

Your company’s transition toward smart manufacturing already is underway, whether you know it or not. In the past few decades, manufacturing engineers have adopted what are now recognized as early versions of smart manufacturing technologies. Often, they have installed these technologies unbeknownst to CEOs.

Yost describes an early project: “The CEO had insisted that a certain software system would never be used at the company’s factories. Trouble was, an inventory showed that 99% of the company’s factories already had deployed the technology.”

What’s happening is that production leaders have problems they need to solve and they’re implementing this shadow IT because the business is not supporting them with the technology and tools they need. So they go out and solve their problems by implementing technology that works for their situation, without regard for how it might fit in with or affect other plants or the business.

To gain the highest business value from smart manufacturing technologies, C-suite executives must take ownership of their companies’ transitions. They must actively create a vision that is aligned with the business strategy and a roadmap that communicates how to achieve it. That way, when manufacturing leaders need to choose a particular technology to solve a problem, they’ll choose something that fits within the company’s smart manufacturing vision.

John Clemons

John Clemons

Over 30 years of experience in technology engineering product and service innovation, project management and consulting services. John is heavily experienced in the food and beverage, the oil, natural gas, energy, and alternative energy sectors, the chemical / petrochemical sector, brewing, and consumer packaged goods (CPG). John is a champion of lean manufacturing, operational excellence, total quality, and other paradigms that optimize productivity, efficiency and profitability.

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