Manufacturers Reinvent Themselves and Become Stars of Digital Transformation: BVEX Community Insights

Women in factory holding digital tablet
Manufacturing, long consigned to being the bridesmaid sector when it comes to IT investment and digital, is now playing a starring role in digital transformation. Organizations that have performed the same way for decades are grasping the opportunity to re-engineer their extensive supply chains, and to capture and connect data over the Internet of Things. For manufacturers, it’s a golden age when they can reinvent the way they do things and reconnect with customers.

To find out more about the changes happening on our factory floors, in showrooms and manufacturing ecosystems, the Business Value Exchange asked members of its manufacturing community the following question: What are the early advantages and early steps to realizing connected/digital manufacturing and putting the customer at the centre of the value ecosystem? Here are some snapshots of their responses.

Manufacturers the protagonists in the Internet of Things

Andrew Marawaski (@amorawski),  Head of IoT (Internet of Things) Americas, Vodafone, set the scene and nailed manufacturers’ leading role in exploiting the IoT. “The manufacturing industry is a prime industry to be connected by Internet of Things technologies and we’re already seeing the benefits. Manufacturers can track assets in their factories, consolidate control rooms and increase the analytics behind operations. These benefits can ultimately impact the customer, particularly with their overall experience with the company, creating a loyal base of customers.”

He cited the 2016 Vodafone IoT Barometer, an annual study of how IoT is transforming business. A whopping 76% of companies believe that taking advantage of IoT technologies will be critical for the future success of any organization and many already assign as much budget to IoT as they do to other high profile technologies, such as mobile, cloud and analytics.

As a result of increased customer visibility along the IoT, Marawaski commented: “The customer experience is increasingly becoming one of the most important parts of a company, and manufacturing plays a role in getting products and services created and delivered appropriately. By adding IoT connectivity and related solutions, manufacturers can put the customer at the centre and drive efficiencies that the customer benefits from. Each stage of the product lifecycle can be optimized with IoT connectivity and ensure that the product ultimately meets the customer’s expectation.”

Teamed with analytics and AI, the IoT will profoundly impact customer experience. GK Senthil, Connected Vehicles – Solution Architect Consultant, Toyota Connected, made the case: “AI and analytics are the quintessential nerve centres of digital manufacturing (4.0). Data being the key nutrient for these systems, early movers will have the advantage of gathering more data, enabling them to improve their products, leading to more users, hence more data, and maintain the positive momentum, provided the product is fundamentally what the market needed.”

He added: “One can look at Tesla’s autopilot and Amazon Echo for examples on the first movers and the steps they took. Both created significant excitement through smart marketing. Targeted early adopters let their users take on a significant chunk of [the] testing effort to collect useful data and keep advancing their products through incremental, yet exciting, upgrades.”

Reversing ‘product first, customer second’ mentality

The opportunity to gain new business intelligence and apply this to optimize processes and to exploit new service and revenue opportunities was a recurring theme. William Rhodes (@wrhodes3) Executive IT Consulting, Percussion Center, argued that leveraging a consumer-focused connected manufacturing process ensures customer requirements are met. It simultaneously allows the collection of critical market data and increases consumer brand loyalty.

Doctors and business team having a video conference meeting.“Reversing the historical go-to market strategy of product first and consumer second, companies can leverage critical consumer input, leading to increased revenue. A consumer-centric manufacturing process must be tempered with appropriate selections that align with product development to avoid customer inaction.”

Maurizio Pilu (@maurizio_pilu) Vice President, Digital Innovations (Global), Lloyd’s Register, identified the key advantage of putting customers at the centre (instead of the end) as being much more rapid innovation cycles. “Increasing customer involvement at most stages will ultimately lead to better products, but will also increase competitive pressure for those manufacturers and their suppliers that do not embrace this model. The most important early steps are assistive manufacturing techniques where relevant/possible, but crucially opening up through digital services and APIs data and processes.”

Industrial ages converge in connected manufacturing

Bert Schurink Senior Director of IT Creation and Corporate Marketing at Adidas Group offered a novel perspective. “Connected manufacturing brings us the advantages of the pre-industrialization age, such as personalization, local production and fast turnaround.” While the benefits of the post industrialization age – cost advantages, quality aspect – are not neglected either, he points out.

Like other digital experts from the sector, he welcomes the fact that digitization concentrates more power into the hands of the consumer and assesses the implications for brands. “As with modern design tools and manufacturing connectivity, in principle everybody can produce products without having the traditional barriers of huge initial investment, governance and control of production, etc. So it in principle can redefine the core value proposition of a brand: What does the brand offer so that the consumer still is a customer?”

Improved efficiency a given

Interestingly, increased efficiency, the overriding goal of efforts of earlier industrial ages, was not a priority in BVEX membership responses. It is, however, a very valuable output of digitization, as Lina Huerta, Head of Technology Strategy for Digital Manufacturing, Manufacturing Technology Centre, pointed out. “When implemented in a user-driven and targeted way, digital technologies can have [a] significant quick impact on operational efficiency across the value chain.”

Horizontal color image of female hands holding a digital tablet in a corridor of futuristic distribution warehouse. Ordering online from a modern warehouse on a touchscreen tablet

Current business drivers continue to be quality, time and cost. In addition to these, companies can now expect digital technologies to enable increased agility and flexibility. Nonetheless, Huerta cited the High Value Manufacturing Catapult, which has found that most of the long-term opportunities for business transformation in industry will evolve around customers. Examples include: servitization of aero-engines; new business models between the pharmaceutical/medical sector and operational partners such as the NHS and health insurance companies; and dynamic supply chain brokerage driven by customers as designers.

Know your baseline – measure projected value

The responses and thinking of our BVEX crowd panel were peppered with visionary examples of Industry 4.0 in the future and instances of connected manufacturing here and now. Martin Rainer (@MartinRainerAT) VP & GM Manufacturing Industry EMEA North, Hewlett Packard Enterprise, brought a note of pragmatism with his recommendations for starting on the digital path. “Every digital strategy has to be based on solid and measurable understanding of your current business, and a reliable projection of value creation by digital initiatives.”

He further counseled: “The initial business area and related scope has to be chosen wisely, taking current maturity, benefit potential, but also ease of execution into consideration. My clear recommendation is to start small and simple, by using established or off-the-shelf technologies in order to drive fast and visible initial benefit. However, all initiatives should be aligned into a holistic digital roadmap, with a clear end in mind.”

Tips for starting connected manufacturing journey

A couple of participants from the BVEX manufacturing crowd offered their own tips for beginning connected manufacturing. Bert Schurink suggested these points for consideration:

  1. Easy-to-use user interface for consumers to define the product they are looking for – simple design tool or easy-to-use customization engine.
  2. The clear definition of business rules to prevent the consumer selecting undesirable combinations – combinations of materials, when personalized.
  3. Smart ways of bridging the gap between consumer communication to machine understanding – machines often need very elaborate and precise instructions to work properly.
  4. The connection between the new way of doing things and the old value chains in a company.
  5. Redesign of supply chain principles to respond properly to a more difficult to forecast demand.

While Huerta offered: “Quick wins can usually be achieved through digital solutions that are bolted on to current systems or that result in low levels of disruption. Some examples include simulation-driven improvement, digitization of legacy data, tracking and traceability, and streamlining of current information systems.”

It’s the sum of the parts that counts

Another personal tip came from Fredrik Östbye, VP Internet of Things at Telenor Group, who recommended: “Early in [the] enable [stage] you should pick the best ecosystem partners before they get too busy with your competitors.” He also warned that: “The difference of being a first mover or a late mover can be the difference of surviving or dying,” and that “in many digital services there is only one who gets it all… business as usual is not an option.”

The final word must surely go to Östbye, who adroitly explained that it is the sum of the parts of connected manufacturing that makes it such a powerful proposition: “IoT, Big Data and AI are each powerful, but combining them is when magic happens.”

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Helen Beckett

Author: Helen Beckett

Helen Beckett is the Community Manager of the Business Value Exchange. She has been a writer and editor for over 20 years and takes a particular interest in the challenges facing the CIO in today’s business climate.