Digital transformation 101
Digital transformation is taking manufacturing by storm, which is unusual for this field where change tends to happen at a slow pace. In 2016, $178 billion were invested in the “internet of things” and more companies are looking to switch to these newer technologies to remain competitive and to achieve operational excellence.
Understanding the digital thread
Digital transformation does not consist in replacing an outdated technology with another. There is a group of new technologies that are disrupting the way organizations operate and a need to switch to a model where processes are connected via digital thread.
This digital thread begins with the design team and ends with consumers. In some cases, the supply network is also a part of the digital thread to ensure that quality standards are met. This is a common approach in the aerospace industry. The automotive industry is an interesting example of how the digital thread is changing things. Most manufacturers have adopted a model where the design team, management, employees, consumers, manufacturing equipment and the cars themselves are connected.
What is operational excellence – and how does it relate to digital transformation?
Operational excellence is a philosophy and a business model geared toward continuous improvement. There is an emphasis on the consumers’ needs, on empowering employees and on solving problems. Visibility is another important element since employees would ideally have access to the information they need to identify problems and fix them.
Here is how digital transformation is helping businesses achieve operational excellence:
- Big data and analytics are providing more visibility into what consumers want.
- Analytics also allow for predictive maintenance, which is already a game changer for the transportation industry.
- The Industry 4.0 or industrial internet of things technology provides employees with more visibility and empowers them to make decisions. This technology can deliver real-time alerts to reduce flaws and waste.
- Cloud-based solutions are improving communication across several locations and with different partners and suppliers to achieve a more consistent result when it comes to implementing quality standards.
- Some decisions and other tasks can be automated, which frees up time for other activities that result in a better experience for customers and better understanding of their needs.
- Adopting these technologies and creating a digital thread forces businesses to break out of the old silo model and to take a more global approach. This results in more efficient operations, improved communications between processes, more efficient problem-solving, and an emphasis on a common end-goal – which is to deliver what consumers want.
Getting ready for the digital transformation
This digital transformation encompasses the adoption of several disruptive technologies, but it isn’t about destroying the old to build the new. You should approach digital transformation as a process that consists in integrating each silo into a global model.
This transformation is creating new challenges for businesses, including identifying the value of these new technologies, setting some clear goals for their adoption, making the most out of the data collected, and keeping the digital thread as simple as possible. There is a strong need for tech-savvy leaders and for a convergence of IT and OT in the new business structure.
These challenges can be addressed by creating a transition team that will bridge the gap between IT and OT, encouraging leaders to educate themselves about these new technologies, and hiring new talents or finding new partners to work with. It is also crucial to study how the digital transformation will benefit the business and which unique challenges will arise as the new technologies are implemented.
For businesses that have not looked into adopting a model based on the digital thread yet, manufacturing operations management is a good place to start. This technology consists in digitalizing the manufacturing process and results in an improved performance besides working as an anchoring point for the rest of the transformation.