The business world is littered with big name companies who, despite leading their fields, failed to keep pace with the organisation wide change required by digital innovation and have ceased to exist.
In manufacturing, digitalisation is already threatening to create its own class system, with those who embrace the industrial transformation element of digital transformation securing their long-term health, and those who ignore it, their demise.
David Baskett, Technical Strategy Manager at SolutionsPT, looks at the manufacturing divide already being created by digitalisation and imagines what the future looks like for those who don’t make the change.
UK manufacturing has long needed a boost. Plagued by the perennial productivity problems that have seen the UK workforce unfavourably compared to its worldwide counterparts, a lack of skilled employees and the potential disruption of Brexit, good news for UK manufacturing has been sparse and focused on short term successes.
However, digitalisation – or Industry 4.0 – has offered many cause for optimism, promising transformational improvements from the factory floor to the supply chain. Digitalisation is offering a lifeline to British manufacturing, so you’d think manufacturers would be racing to embrace it.
Not so. In a session during a recent conference, ARC Advisory Group (ARC) cited its recent research of 157 process manufacturers that found that there were still barriers in organisational accountability, culture and employee change management that impeded transformation. The research found that although more than 80% of industrial process manufacturers are piloting advanced technology, only 5% to 8% of them are ready for digital transformation today.
The finance, insurance, health and retail sectors have rapidly harnessed the Internet of Things (IoT), artificial intelligence and big data to meet the changing needs of their customers, but the manufacturing sector has been slower in adopting new technologies.
So, what are the main barriers to adoption? For many, the issue is internal, with a lack of digital-savvy leadership, a shortage of skills to implement and maximise technologies, and a generally low awareness of how to build an effective business case for the required investment all proving problematic.
Other challenges to adoption often include concerns about cybersecurity, challenges posed by legacy equipment and concerns about the cost – and potential disruption – of change.
But doing nothing is not an option. History tells us that an unwillingness to innovate puts any company at risk of failure but refusing to evolve with the market can be devastating.
The examples of those who have ignored the digital revolution are everywhere. Kodak invented the first digital camera but were so focused on film that they didn’t want to tell anybody about a new technology that would deflect from their ‘core’ offering. The company filed for bankruptcy in 2012.
Sony changed the way we listen to music with the invention of the Walkman but didn’t adapt to technological innovations such as digitalisation and eventually lost out to Apple. Closer to home, a failure to acknowledge and embrace e-commerce sealed the fate of high street chain HMV.
What’s key here is not the digital invention, whether it be the camera or the iPod, but the fact that these technological advancements came in response to changing consumer requirements. Manufacturers used to be a step removed from the consumer, but changes to the buyer journey have filtered down every part of the supply chain.
Mass producing one product for millions of customers is increasingly rare; consumers want options, personalisation and customisation, and to do that in an industrial environment requires the technology to dynamically adjust production, dialling up and dialling down, whilst looking for efficiencies and monitoring maintenance requirements.
Digital transformation is key to achieving objectives like improving efficiency and quality, reducing costs and waste, and creating innovative products and services. The benefits of digital transformation in the industrial sector are many.
Among them are improved asset health that will result in a reduction in unplanned downtime and better asset performance and enhanced incident prediction capabilities that have the power to lower operational risk and protect worker safety.
Other digital innovations now available for manufacturers to utilise include Context Driven Interfaces, which will increase efficiency and enable informed decision making; Artificial Intelligence and Machine learning, which allow the automation of low skilled tasks; IIOT devices that can use sensor technology to deliver low cost, non-intrusive sensing to drive efficiency without impacting control networks; and symbiotic plant and cloud technology, which will enable decision making and control available at the Edge.
One good example of a company which has embraced digitalisation is Procter & Gamble with its “decision cockpits.” Acting on the need to empower employees at all levels through data, it has created cockpits which take the form of real-time, one-stop screens displaying the current state of the business and any important trends.
This data is accessible to all employees at any time, helping them stay informed and engaged, enabling faster and more accurate decision making and delivering cost savings and operational efficiencies. And Proctor & Gamble are not alone. BMW, Rolls Royce, Schneider Electric, Starbucks, Ikea and even Domino’s Pizza have all digitally transformed their business models to give themselves the competitive edge.
Digitalisation is no longer simply a tactical aspect of the manufacturing business – it is becoming vital to pursue end-to-end digital transformation in order to achieve objectives like improving efficiency and quality, reducing costs and waste, and creating innovative products and services.
The manufacturing operations we’ll be seeing in 30 years times will be very different than those of today. To be a successful manufacturer of the future, the need to build an effective roadmap to guide you along the transformative changes of the next five, ten or fifteen years needs to start now.
The key is to see industrial transformation not as a one-off implementation project, but as a constantly evolving process designed to add incremental value, a process which encompasses your assets, operations and people.
A recent report found that the early adoption of advanced digital technologies by the UK manufacturing sector has the potential to grow the UK economy by £455bn, create 175,000 new jobs, increase productivity and cut CO2 emissions over the next 10 years.
It’s for this reason that Industry 4.0 forms such an important part of the UK government’s industrial strategy. This issue is not simply about the performance of each individual company, but how competitive the UK is on a global scale.
Perhaps, for some, the scale of what they feel is required for digital transformation is too daunting, but what’s important is to take those first initial steps. Continuously improving – even by a small percentage year-on-year – via the use of digital technologies, is much more appealing than stagnation or decline.
It’s easy to see how failure to act now will create a huge gulf between manufacturers in the next two to three years. Digitalisation cannot be delayed any longer; the potential of Industry 4.0 must be recognised now. It will play a key role in shaping and enabling the growth of the manufacturing industry in the years to come.
