The late Beatle John Lennon once stated, “Life is what happens while you are busy making other plans.” If manufacturers didn’t believe that truism before, they certainly believe now it — thanks to 2020. “By many accounts, 2020 was sure to be ‘the year’ for digital transformation,” writes, Peter Fretty (@pfretty), IndustryWeek technology editor. “Pilots were fruitful enough to convince manufacturers about the importance of data. Manufacturers heard the growing call for mass customization and streamlined operations. Investments were made. Strategic plans were set in place. Then COVID-19 happened, and a new normal slowly started to surface.”[1]

The “digital transformation” to which Fretty refers is often called “Industry 4.0” — the moniker the German government gave to the fourth industrial revolution spawned by digitization. John Kottayil (@JoKottayil), Executive Director of the State of Bavaria India office, explains, “Every industrial revolution has brought with it a drastic and inevitable wave of change. A disruptive leap in the way people communicate, travel, the industrial processes, the lifestyles and so on. This has already been witnessed in the previous three industrial revolutions. The first revolution was brought forth by the invention of the steam engine. Mass production and new industries like steel, oil & electricity marked the second revolution. Whereas computers and the internet ushered in the digital age, the third revolution. It is now time for the next revolution, Industry 4.0, the overall integration of manufacturing systems, production processes, digital communications technologies and automated machines.”[2]

The digital transformation imperative

Fretty believes digital transformation is an imperative for manufacturers and he insists “navigating the new normal does not have to be a road block” to digital transformation efforts. In fact, he asserts, “Digital has a great role to play in navigating the new normal.” Kottayil agrees. He explains, “The third Industrial Revolution introduced the power of digital into the world. The next industrial revolution [i.e., Industry 4.0] reinvented the digital tools to converge Information Technology with Operational Technology to create a cyber-physical world. This convergence in technologies is helping to drive manufacturing’s digital transformation through the integration of previously disparate systems and processes through interconnected computer systems across the value and supply chain.” Among the technologies he believes are driving Industry 4.0 are: The Industrial Internet of Things (IIoT), big data, cloud computing, advanced robotics, additive manufacturing, and augmented reality. Unfortunately, he left out the most important driver of digitization: cognitive technologies (i.e., artificial intelligence (AI) systems).

The Digital Age is characterized by the massive amounts of data being produced. To analyze the oceans of data in which manufacturers are drowning, cognitive technologies are a must. To make this point, Fretty points to a number of questions manufacturers must address in the new digital landscape: How do you collect data? How do you make decisions using analytics? Do your decisions give you the ability to get enough early warning of things to come? How can you continuously predict failures or ways to take advantage of opportunities, and then actually optimize? Without the advanced analytics embedded in cognitive computing systems, those questions cannot be answered satisfactorily.

The lifeblood of the Digital Age is data. And, Arnie Gordon, President of Arlyn Scales, insists, “Data is today’s most valuable currency. Conversely, lack of data — or incorrect data — can be painfully expensive.”[3] He lists a number of ways data can help manufacturers in their digital transformation efforts. He writes, “Manufacturing operations can take advantage of the data in a number of different ways: Inventory levels; quality control data; equipment productivity; operator productivity; and, condition of equipment.” By collecting the right data, and analyzing it using the right cognitive solutions, Gordon insists the results can be valuable and impressive. He notes, for example, repairing equipment when the first indications of a problem arise can save loads of energy. “Industrial energy consumption accounts for about 32% of all U.S. energy usage,” he writes. “It is estimated that properly operating equipment can save more than 15% of this amount. This saved energy represents about the same amount of energy used by 12 million average U.S. households. The environmental impact is staggering.” Cognitive technologies can help manufacturers find efficiencies and savings in almost every area of operation.

Doing digital right

Successful companies place equal emphasis on people, processes, and technologies. This has been true in the past and remains true in the Digital Age. Too often during the digital transformation process, organizations focus on technology and processes and forget how important people are in the process. Business and tech writer Louis Columbus (@LouisColumbus) asserts this is the wrong strategy. He writes, “To achieve lasting success with any digital transformation strategy, manufacturers must put employees first then selectively focus on technologies that enable every member of their team to excel and stay connected.” Kottayil and Columbus suggest a few steps manufacturers need to take to continue a successful transformation journey. They include:

1. Devise the Right Strategy. Columbus notes, “All manufacturers are in a race to digitally transform themselves to become more resilient while looking for new ways to gain customers while reducing costs.” According to Kottayil, to achieve those goals, “A bold strategy is required to implement digital technologies that will redefine business values and forge new revenue streams and customer experiences.” If you’re stuck on how to proceed, he recommends that “leadership teams go on a discovery tour, to talk to start-ups and visit innovation centers and manufacturing peers. This will help build better knowledge for decision making and a finer strategy.”

2. Introduce a Digital Culture. People are essential for digital transformation success; however, many employees are uncomfortable with change — especially when that change involves new technologies. Kottayil writes, “Organizations that lag in cultivating a digital culture risk stumbling into Industry 4.0 tremendously unprepared. Identify and/or select external partners who can help you navigate the complexities of digital culture. Cultivate a vibrant mix of partners savvy with connecting organizational dots, from IT networks and talent development to overall business goals.” Columbus adds, “The greatest productivity gains in manufacturing happen when digital transformation strategies put the health and safety of workers first. There’s the risk that focusing too much on technology alone won’t solve the innate productivity roadblocks holding workers back from achieving more. It’s the manufacturers putting workers first and making sure they’re equipped with the best possible tools to communicate, collaborate, stay connected, and excel that are succeeding at digital transformation today.”

3. Encourage experiments within the organization. Digital transformation efforts will never achieve desired goals if those goals are not specified and measurable. Deploying new technologies without making a business case for doing so is a waste of both money and time. On the other hand, true digital transformation means being open to a completely new way of doing business. Tricia Wang (@triciawang), a self-described Tech Ethnographer & Sociologist, explains, “A lot of companies treat digital as if they are ‘doing digital’ — this is ‘digitization’ at its worst — as if it’s some checklist of things to do. It’s very transactional, and people are so busy doing digital they don’t even know WHY they are doing it in the first place! Whereas [some companies] embrace ‘being digital’ — this is ‘digital transformation’ at its best — it’s a total paradigm shift in the culture and operations — it’s not just about buying the latest digital tool, but about creating a new system, new cadence, new mindset.”[5] Kottayil writes, “Conduct workshops using design thinking to identify problems and real opportunities. The identified opportunities are prioritized based on the leadership team’s willingness to engage in the project. Then define and execute the respective projects making sure that the staff affected by the changes are encouraged to participate in reshaping their work and managing the change.”

4. Be agile. If your company is going to fully transform (i.e., create a new system, a new cadence, and a new mindset), it must be agile. Columbus explains, “The ability to shift quickly from one manufacturing process to another and manufacture new products in days is a much sought-after strength that digital transformation initiatives value most. The agility to switch from one manufacturing approach or strategy to another with minimal downtime is essential for manufacturers to transform their operations and excel for customers first digitally.”

Concluding thoughts

Like many businesses, some manufacturers are struggling to survive the economic downturn created by the COVID-19 pandemic. With variants of the virus popping up around the world, the effects of the pandemic are likely to persist for a long time. To survive hard times, and thrive when things get better, Fretty believes manufacturers have to be both efficient and lean. Other subject matter experts caution that companies can get too lean and put themselves at further risk. Cognitive technologies can help companies get through these hard times because they can help decision-making when data is ambiguous. And good decision-making matters in both good times and bad. If your company has delayed it digital transformation efforts due to the pandemic, it might be time reassess and get them started again.

Footnotes
[1] Peter Fretty, “Digital Transformation Isn’t Just Possible Today, It’s Crucial,” IndustryWeek, 7 July 2020.
[2] John Kottayil, “Changing Digital Landscape in Industry 4.0,” NASSCOM Insights Community, 9 October 2020.
[3] Arnie Gordon, “Your Secret Asset — Factory Floor Data,” Forbes, 7 January 2021.
[4] Louis Columbus, “How To Achieve A Successful Digital Transformation In Manufacturing,” DELMIA Manufacturing Blog, 5 February 2021.
[5] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.