Digital transformation is driving manufacturers to plan and conduct business differently, offering boundless opportunities. But business leaders may ask…what exactly is it and why should I care? This presentation boils it down to a definition and set of three key outcomes that enable manufacturers to make better decisions, have greater enterprise visibility and operate with greater efficiency.
Welcome to three keys for digital transformation, I’m Dave Morfas from Plex Systems. Plex, as you may or may not know is a 100% manufacturing focused cloud ERP system.
Today we’re going to discuss a range of digital transformation areas, and we’ll talk about three key things that are critical as a foundation for why digital transformation impacts manufacturing.
We’ll start with some background on what digital transformation is, we’ll discuss “why should I as a manufacturer care,” how this transformation applies to you or your company, and some of the benefits realized by those that will make or have made the transformation.
And, again, we’ll encompass all of this by bringing it back to three reasons or keys for manufacturers and why they make this journey.
Up front I also want to state that it’s important to keep in mind that digital transformation is a big, broad evolving topic and has different interpretations and meanings based on the size, sophistication, maturity and needs of a particular company.
Regardless, we want to think of it as a strategy rather than a technology, and we’ll bring that out during this webinar, and we’re going to focus very practically on how manufacturers can or have started on this journey, which is really how prospects and customers think about innovation – what does this mean to me.
Let’s set the stage – we live in an evolving digital economy. That means technology and tools are becoming more central to our lives, more prevalent in our jobs, and more impactful to company success.
Think about these statements;
Apple, Alphabet, Amazon, Facebook, Microsoft
Internet economy is the 5th largest – US, China, Japan, India, Internet
Additional analyst data from the likes of Harvard Business Review states that the Internet’s contribution to GDP of the G20 countries has doubled over the past 6-7 years and continues to grow
So no question the world is becoming more digital by the day.
Manufacturers are also becoming more and more technology driven as a strategy to build business success.
Plex conducted a technology survey this past year – the State of Manufacturing Technology survey – in which almost half of customers stated that technology had an effect on their growth and nearly 20% stated that their next technology investments will be in smart/connected tools; this is equal to the amount of customers investing in lean and quality technologies.
So the environment is clearly digital and investment dollars are moving toward technology investments to back the digital strategy.
http://www.istockphoto.com/photo/industry-4-0-concept-illustration-infographic-gm500160330-80617261?st=_p_digital%20manufacturing
http://www.istockphoto.com/photo/female-manager-working-on-tablet-in-factory-gm527045000-92709157?st=_p_digital%20manufacturing
http://www.istockphoto.com/photo/media-app-icons-flying-around-globe-on-tablet-computer-gm516357942-88950421?st=_p_digital%20revolution
Mftg is increasingly tech driven
46% of growth attributed to technology
Companies investing in new tech
Big data growth and tools for using
Plant and office automation opportunities
IIoT is not a trend, it is what’s happening – sensors, M2M, M2Person
Increase in untethered workforce
Increase in connected products (GenZe, MFC, etc.)
…but companies still dealing with disparate systems, processes, visibility, etc.
Digital transformation is then a natural extension of this evolving landscape. And we’ve been here before.
Go through each step –
Where we are today is an environment where smart tools begin to proliferate, machines have the capability to talk to humans but also to each other, creating an environment where data and information can be mined and also shared real time.
We also have an environment where, because of modern technology, system users have immediate access for example to production data. From that they can make immediate decisions, whether it’s to plan for rerouting production around machines that will soon need maintenance – before having an unexpected stoppage – or for example receiving notification that something is out of spec or tolerance.
In any and all cases, we’re dealing with more automated processes, we’re seeing a far more data-driven environment – both in data collected and shared as well as the intelligence for using that data, and again an environment where people and machines are communicating differently. Even so far as having tremendous advancements in speech-driven commands and hands-free scanning and operation.
Arguably we’re in the infancy of what’s to come as machines and software think and act autonomously, but that’s the age in which we live.
And while we have these wonderful advancements, we acknowledge some technical challenges.
When you look at IT operations, for example, you deal with keeping up with innovation, managing complexity and data, inventory accuracy – all of which require a closely connected system.
At the same time, skilled resources are becoming more and more of a challenge. In fact when we’re presenting at manufacturing conferences, we ask how many people have a hard time finding resources, every hand goes up. We ask who is struggling keeping up with innovation and managing data, every hand goes up.
So there is a need to innovate, deal with data, but also a need to either find the right skills or unlock the capabilities of employees to take on new roles. As an example, the digital economy makes data analysis skills much more important and in high demand.
And manufacturers face business challenges as well beyond IT.
<Read and react to each>
Layer on top of this that manufacturing ERP ecosystems – those systems that handle the business and production – are becoming more and more complex. So we’ve got an evolving digital landscape, technical business challenges, myriad manufacturing challenges, and an increasingly more complex systems environment.
And so how do companies prepare for a significant move into the digital economy?
Plex really looks at digital transformation as a business strategy that takes advantage of technology and innovation. Our customers focus on addressing a few key things that are the foundation for digital transformation, and those customers have chosen a modern platform to accomplish these three fundamental things, which sets them up for success: control the plant floor floor, enable total business connectivity and unlock the people potential needed to thrive in modern manufacturing.
You could call these results, you could call these impacts, you could call these outcomes or capabilities gained. Let’s look at each in turn.
Customers want and need to control the plant floor. The digital transformation will play a role in changing the way modern manufacturing is conducted, supporting control of plant and enterprise operations. Manufacturers strive for visibility from the supply chain through fulfillment, including the ability to track material through production, which also makes recalls or mock recalls simple and quick.
Additionally, employees want to see things like OEE and equipment performance, they want to know if things are being produced in our out of spec., and they want and expect to see that now. For many companies struggling to gain this control and insight, this is the transformation they’re looking for.
Manufacturers also require and will thrive as a result of better connected systems. Far too many manufacturers are using patched together systems, bolt-on products, customization after customization and systems where each plant is a silo.
Modern manufacturers have moved to well connected, single systems of record across the enterprise that offer constant software updates.
These modern software systems have the ability to use data for making autonomous decisions or for making quicker human decisions by quickly providing insights not available in archaic systems.
And finally, no matter how technical or automated or digital manufacturing becomes, companies need to unlock their human or people potential to really succeed.
One of the reasons this is key when it comes to digital transformation is because data is being generated at unprecedented levels, and manufacturers have to figure out how to use that data. And while there are analytics and systems that help with that, ultimately it’s humans that have to develop methods and program algorithms for how best to use that data.
In addition, increased access to information creates a more informed, engaged and effective workforce capable of tackling more and bigger challenges
All of this is foundational for transforming manufacturing and setting up companies for a more efficient digital future. And cloud ERP enables them to accomplish these goals unlike any other platform can.
Our approach to digital transformation therefore is rooted firmly in reality. Let’s take a look at how this plays out for many manufacturers today.
For many manufacturers, the central command center looks like this. They have a system:
Manual, paper-based processes that are hand-carried between activities
Copies of work instructions and checksheets that may or may not be up-to-date. And how do you know?
And if you’ve logged some or all of these documents into a digital system like a Quality Management System, does that system control production operations? Is it fully connected to the rest of the enterprise?
Probably not, and, it likely still requires a lot of manual intervention, either entering the data or compiling it and sending to the right people to take action.
No matter how good your paperwork is, it likely does not “operationalize” your quality system
At this very basic level, major steps in the strategy of transforming your business is <point 1 and point 2>
These reduce cost, reduce errors, simplify and better automate production, and centralize information into a single database. We’ve seen this have profound results in customers. So what does it look like to take advantage of the digital environment in manufacturing?
Let’s start with the plant floor. We strongly believe that key business data starts at the plant floor.
There is that old adage “you can’t manage what you can’t measure” and that’s true.
Around that plant floor are a number of areas where work is done, where data is gathered, and each represents a potential chokepoint or area where manual data entry can cause downstream problems.
So if you’re either not adequately measuring or tracking data or that’s being done manually, you run a number of risks. Incorrect or old data is passed on, you might have inventory discrepancies, you’ll likely have some cost issues either in carrying costs or expedites, perhaps quality data isn’t readily available and you produce out of spec or tolerance product which results in waste.
The point being, each area is an island, multiply this by however many plants you might have.
Once digitally transformed, manufacturers can then begin to analyze production data to identify patterns ranging from tool wear or equipment vibration to quality inspection data that can improve decisions to improve quality, productivity and equipment downtime. And in some cases, making autonomous decisions such as shutting down a machine if a tolerance trends out of target.
The key here is connecting data throughout the enterprise to provide insights for improving business processes. As machines and systems continue to advance, your ability to react to or, ultimately, pre-emptively act on information coming from production increases efficiency tremendously.
Layer on this the availability of analytics platforms that take that data and produce it in tailored, role-based dashboards and you have people interacting with machines in a very real time manner.
You can’t do this unless you’ve transformed to a digital, automated, very centralized environment.
And having this very controlled, connected environment provided by the cloud is the first step that most manufacturers take in order to tackle many of those practical and very real challenges we showed earlier. This transformation provides the platform and flexibility then to adjust to future innovation.
And once the plant floors and top floor are talking, manufacturers can expand their connected system horizontally to suppliers. Again, you have a digital system centralized in a cloud database where people can get to the information pertinent to them.
Now you can better control your supply chain and they can partner better with you to ensure your business needs are met more real time. This helps in meeting variable demand and provides better planning and forecasting.
Next, your customers can access information relevant to them. And while supplier and customer portals aren’t new concepts, what the cloud does differently is ensure that all data from across the enterprise – not just from each silo’d plant or location – is in one place and is always up to date. It’s not waiting on manual uploads, rather the ERP system is collecting production and quality and inventory and shipping information real time in one place.
This is a huge struggle for many manufacturers today, but those that are on cloud have addressed these capabilities and have made this initial transformation a reality today, and are poised to take advantage of additional digital transformation capabilities that come down the road.
And to provide some real numbers about how critical connectedness is to manufacturers, IDG asked that question in a survey earlier this year.
The vast majority of manufacturers see connectedness as a key to driving what they need - efficiency, productivity, and communication and collaboration.
So we know that business connectedness is key to managing complexity, that technology and innovation is central to managing data and adding much-needed efficiency to the business.
Industrial Intenet of Things is a hugely important shift in technology for manufacturers…and can only grow and thrive in a truly digital world. <Read definition>
The Industrial Internet of Things (IIoT), is a logical extension of automation and connectivity. It’s the connectivity of objects, machines, etc in industrial applications. IIoT, it should be noted, is not a single ‘thing.’
You also might here terms like Industry 4.0, Smart Manufacturing, Factory of the Future, Industrial Internet, etc… We would say they are all related – they all have to do with how manufacturing will facilitate communication between people and systems, and how this will happen more and more in a more automated way over digital systems.
We then look at some evolving capabilities, one that many talk about today is the Industrial Internet of Things or IIoT.
IIoT is pretty broad and is also evolving, but one of the things we discovered earlier is the significant focus on investment in smart tools and equipment, which is part of IIoT.
The tools available or becoming available to manufacturers, specifically smart tools that – for example – connect to the digital network.
What we find is that manufacturers are indeed on the cutting-edge of connected devices that drive high data capture and sharing. <Chart> Probably not a surprise to see the high number of hand scanners but even those are becoming mini-computers, and in fact some are full browser and app capable which allows users to access the entire digital ERP system.
But look at consumer mobile devices – nearly 80%. Again, mobility is no longer an afterthought. It can’t be.
Sensors at 50%, all of which generate data and communications.
Even smart thermostats and lighting at almost 25%. We have a customer that uses smart lighting to visually gauge activity in certain parts of their plant, and also to conserve energy when those areas are not in use. Related to energy, we actually have some customers that are “lights out” manufacturers as well, running 24x7x365 capabilities (Polamer Precision), so using smart thermostats and lighting can bring down energy usage and costs.
Bluetooth devices at almost 40% - Those include sensors, beacons and traditional headsets and communications, for example.
IP-enabled tools and machines – companies using IP-enabled calipers and torque wrenches for immediate tolerance and spec measurements, but also increasing numbers of production machines sharing information at the manufacturing moment. That means stamping machines, vats and tanks all sharing pressure or temperature or other measures. This helps determine maintenance schedules but also action to be taken as the need dictates. It also promotes high automation and machine-to-machine learning and action.
So IIoT in the context of these kinds of tools and communications is a very practical, real concept aided by inexpensive technology and real results, and manufacturers must make that first leap in digitally transforming their business with something like cloud to take advantage of this.
The emergence of the cloud and focus on big data are happening in parallel, and aren’t unrelated.
Cloud enables greater business connectivity and support for digital transformation through centralized data collection and analysis as we talked about.
What we do see with cloud taking on a more strategic, core role in business is a shift in the jobs that technical people will perform. Where technical IT people often managed hardware and software that can now be managed in the cloud, many wise manufacturers that make the digital transformation by moving to the cloud are pivoting those people to address other strategic gaps, for example in analyzing data or business processes.
And fear not – people are still core to manufacturing.
The new age of business presents opportunities for people, in fact probably now like never before.
Because of the change in manufacturing and the new skillsets required – for example data analysis – manufacturers are seeing a shortage of skilled workers as a major challenge. Now part of this is certainly about trying to replace a retiring manufacturing workforce, but major opportunities exist for those people that embrace the new age of manufacturing.
And as we talked about Industrial Internet of things and the modern tools and capabilities becoming available and that people are still the core of manufacturing, one of the things really changing the way manufacturing employees work and unlocking their potential is mobility.
In a digitally transformed manufacturer, mobility should deliver access to the entire enterprise and enable a seamless work environment, from anywhere, for anyone. In this example we see wireless scanners which, by the way, are increasingly smart devices that can access the ERP application itself. Plex is browser-based and mobile capable, so there is no software to install to access the system. We also see things like IP-enabled calipers and torque wrenches.
Plex customer Caltherm in a recent video pointed to the fact that right from their phone they can look at and move inventory between any facility. You see a photo of their materials manager with his phone in this picture, and you can see the full customer video on our website.
Heck, we even have a customer working to integrate Microsoft Hololens, which is a virtual and/or augmented reality device, into manufacturing. They look at this as a way for a user from a headset to access or record production information hands-free and for serving up job instructions, etc.
So again, opportunities for the new, untethered workforce made possible by an infrastructure that is connected and digital in nature.
And I’ve mentioned that a modern software platform is key to success in a truly digital world. When you look at older systems like the one on the left, you often have accounting-focused software on servers at each plant storing information about that plant. You then have to access it, try to reconcile the data, and then try to consolidate this data manually across multiple plants or locations. It really isn’t aligned to the world in which we live.
What has happened is a fundamental shift in software architecture.
For example, modern software is versionless and always current for every customer. What that means is that those painful, time consuming upgrades are eliminated. This is huge and a game-changing, paradigm-shifting difference, I’ll give you an analogy in a minute.
And with a single version, it also means a single database for all locations, plants, etc. That means data is collected real-time for all locations, and all data pulled or reported or analyzed is from one source of truth. No more hunting and trying to reconcile data, it’s all in one place.
So when we ask cloud users if they value certain capabilities that cloud delivers, here is how they responded.
All of these then play into how companies run a modern business.
And having a modern platform is an important aspect in transforming the business and preparing it for the future.
I’ll start to wrap up by demonstrating some results.
Once manufacturers transform their business, the connectivity and data brings some benefits.
Again, you can’t get this type of result unless you have a totally connected system.
We talked earlier about the need to go paperless.
And about information and data access to make business decisions.
As a reminder, digital transformation is a big, broad evolving topic. As you hear about it, read about it, and see presentations about it, you’re likely to see and hear different angles and perspectives.
We looked at it very practically today – how manufacturers are making this transition and the results.
<Read slide>
With that we’ll open it up to questions.