Today’s manufacturing landscape has drastically changed thanks to advancements in technology, equipment, processing power, and knowledge. The average smartphone today has a million times more processing power than the technology used to send the first astronauts to the moon!
According to a recent Siemens survey conducted on managers at 60 international manufacturing companies in 11 countries, digitalization has been anticipated to enable productivity gains of up to nearly 10 percent of total sales. In India, the Internet of Everything (IoE) is expected to create business value of more than USD500 billion over the next decade. In addition, the government’s Digital India program is expected to bring an additional 20–30 percent contribution to the country’s GDP by 2025.
Digitalization has emerged as the boon to fuel competitive pressures; forward-thinking companies are all looking to ride on the benefits for growth. Not only is it helping companies to operate efficiently, it has leveled the playing field by enabling SMEs to compete with larger firms on a global scale.
However, it has also brought along misconceptions among organizations that are less informed.
Misconception #1: Going digital = more aps
While app development is a buzzword, it ignores the more important aspect of apps, which is driving process maturity. Many organizations are pushing apps into their organizations without much consideration of the business processes around it.
Misconception #2: Digitalization is just a new buzz word for what we were already doing
While traditional growth engines have been automated in all forms (document, machine, process), digitalization today creates the opportunity of automation through impactful insights. This is a break from the traditional domains of IT investments like ERP and refocuses on the interaction between IT and manufacturing systems, that is, Cyber Physical aspects.
Misconception #3: Let us do a big data proof of concept (POC)
Organizations around the world are embracing the concept of big data PoC but they are also finding out (often brutally) that it is simply not a right fit. I have personally come across customers who embarked on big data PoCs for their 500,000 entry databases but ended up as technology clutter.
This is further a dangerous course since the organizations are now stuck with huge technology clutter that creates organizational inertia, preventing them from adopting effective solutions down the line.
That is why most manufacturers are turning digital to improve their entire value chain: from design, structuring, simulation, and optimization, right down to commissioning and service.
Setting up for the digital leap
Digitalization enables organizations of all sizes to transform their business models. The important thing is to start in the right place and then to design the transformation in a commercially viable manner with a forward-looking migration program. This transformation roadmap must take into consideration the three dimensions of today’s business landscape:
- Information layer. This is the traditional IT layer which incorporates not only the systems and its respective data but also the transformations and business objectives.
- Automation layer. This layer incorporates the various automation elements like the programmable logic controllers (PLCs), process historians, motor, conveyors, sensors. This is where the data is generated.
- Business process layer. This layer incorporates the business process functions of all the stakeholders in the organization. This includes actors (man, machine, material), activities, as well as transformations including business functions.
Embarking on the digital journey
For organizations looking to embark on the digitalization journey, we would recommend a three-pronged approach that advocates the BFTF philosophy (business first, technology follows):
- Understand the business process. All organizations need to confront their existing processes in all their forms – automation, business, and information – in order to make a holistic assessment of where they are and where they need to evolve. There is no shortcut to this process but there are tools, such as simulations and enterprise modeling, to help make this phase efficient. For instance, simulation of telecom network loads might yield priceless insights on bottlenecks and infrastructure gaps. These simulations are becoming commonplace today.
- Assimilate the ecosystem. As the organization gains understanding of all its processes, it will be in a much better state to understand the gaps and take very specific measures to achieve quick wins through consolidation and automation. This will further drive the organization to think about areas it wants to evolve. For example, an organization building routers may find that manual data entry is one of the most time-consuming processes and that automating this process will increase efficiency. Targeted automation, be it in hardware, software, or even workflows, are places where today’s organizations can find low-hanging fruit to tackle.
- Evolve the organizations. After understanding its own process, the organization should now recognize the value that it creates for the entire value chain, and how it enables “digital threads” that span out of its own operations and latch onto the ecosystem. For instance, telecom service operations rely highly on readily available spare parts for their continued operations. But spares carry cost and long lead time, and this is where tools like Warehouse Management Systems can help the organization better manage this risk through automated alerts and triggered POs to order the right materials at the right time.
At the heart of this approach lies the philosophy of insight and transparency of your processes – be it business, automation, or information. Only with maturity of processes can an organization be prepared to take the jump to efficiency through digitalization.
We at Siemens are always encouraging companies, large or small, to assess where they are at, and where they want to be. This is why we designed the ZerOne.DesIgn Manufacturing Design practice, to help manufacturers get on their digitalization journey using the above methodology. Through our solutions and ecosystem, we look forward to continuously support customers from all around the world to innovate and embark on the digital transformation.