Managing business transformation with Smart Manufacturing

There is a misunderstanding preventing us from unlocking the true potential of Smart Manufacturing and the digital transformation. A misunderstanding that revolves around the notion that it is all about technology, and this is reinforced by the many definitions and tactics used by some software vendors when they promote their technologies as “the solution”.

This misunderstanding is not a new phenomenon. If you have been working in manufacturing automation for the last few decades, you have seen this before. We have been telling people that it is not about the technology for years, but the hype of new technology seems to be irresistible. Evidence of this misunderstanding is clear in the fact that surveys reveal that 70% of IoT and digital transformation projects fail. [1,2] A recurring theme in these project “failures” is that they are focused on trialing technologies with an overconfidence that technology alone can achieve great productivity gains. However, many of these projects in hindsight reveal a modest ROI and end up shelved.

There is actually very good technology available today that can be used to solve the problems that have been plaguing manufacturing for decades, and technology can help us achieve productivity increases here and there. But that is not Smart Manufacturing.

Smart Manufacturing is a transformational opportunity that requires comprehensive cultural change to truly leverage the technology and create a new business engine powered by an efficient ecosystem collaboration and data exchange.

Smart Manufacturing is a transformational initiative

A transformed Smart Manufacturing enterprise is digitally enabled by technology, but more importantly, by a shared digital mindset of enterprise-level transparency, optimization and enhanced decision making. A transformation is a dramatic change that requires a completely different way of thinking about the business processes that thread the plant and its entire ecosystem together.

It is impossible to succeed in this transformation if the organization doesn’t have a clear picture and doesn’t understand the value of attaining the final state. New technologies should be explored with a clear understanding of how they could promote the desired future mix of products, services and business models for the enterprise.

Start the digital transformation with a focus on business strategy and organizational change. Define the company’s desired future state while understanding the organization’s current state and develop a plan to make the required changes. First, focus on business processes and organizational structure, and only then define the required technology infrastructure.

Define Smart Manufacturing in business terms, not technology terms

MESA International has a definition for Smart Manufacturing that does not mention any specific technologies, but focuses instead on the initiative’s goals.

“Smart Manufacturing is the intelligent, real-time orchestration and optimization of business, physical and digital processes within factories and across the entire value chain. Resources and processes are automated, integrated, monitored and continuously evaluated based on all available information as close to real-time as possible.”

This definition focuses on establishing a vision and a mindset for the organization of a future state where teams are working together to achieve a better value creation process for internal stakeholders, through to customers and shareholders.

Key to the success of the digital transformation to Smart Manufacturing is the mindset. The practices are secondary, and the technology discussions come afterwards. It’s essential to start the enterprise digital transformation by setting a future vision, talking about how the organization wants to deliver products and services, and working with partners in the ecosystem as part of this new corporate strategy.

In an enterprise digital transformation, it’s much more important for all your teams to have a shared understanding of what digital means, than for them to have shared digital practices. A shared definition of “digital” must be part of your organizational culture. That’s the best way for an organization to get real benefits from a Smart Manufacturing initiative.

This article originally appeared on MESA International’s blog. MESA International is a CFE Media content partner. Edited by Chris Vavra, associate editor, Control Engineering, CFE Media, cvavra@cfemedia.com.

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