SAG_Twitter_MEME_Digitalization_for_Manufacturers.jpg“The whole enchilada” is an American expression meaning everything –as in take everything into consideration. In order for manufacturers to grasp and achieve digital transformation, they need to take a look at everything - the industry, their enterprise and their capabilities - the whole enchilada.

Manufacturers are digitalizing.  Commercial enterprises are following a “Network Imperative,” a call to action for digitalization. It seems as if a new piece of research is published almost daily that focuses on manufacturers needing to become digital or face eminent extinction.  And then there is Industry 4.0, the Industrial Internet of Things and Smart Manufacturing.  How does this all fit within digital transformation and what does this all mean? 

Grasping digital transformation is best accomplished by understanding key industry initiatives and the critical capabilities that enable them, with the context that digitalization spans the entire enterprise.  It’s not a single project or department-based undertaking; rather it is a methodology that impacts enterprise processes, data, actions and performance.  It is wholly focused on deriving greater levels of value by combining each part of an organization. 

While digital transformation is undertaken initiative-by-initiative, examining digitalization solely as a single or departmental-based initiative is incorrect, as a significant amount of the value of digitalization lies in harmonizing a business. 

A predominant initiative for manufacturers with service operations is to incorporate IoT sensors to provide data to predictively maintain equipment at their customer’s locations.  This data can be continuously analyzed to determine equipment condition while supporting dynamic prediction of remaining useful life of components and equipment.  While analysis and prediction is important, it’s only a single part of digitalization. 

A digital manufacturer has the ability to automatically send electronic calibration instructions to the equipment, understand if that has corrected the issue based on remaining useful life changes and then order the service components needed automatically. It can automatically dispatch a technician with the correct skills to resolve the issue during a planned downtime for the customer and automatically invoice the customer for the work performed.

While there is real value in terms of increasing revenue by selling more service contracts, reducing net working capital requirements by decreasing service component inventory and increased efficiencies through optimized technician scheduling, digitalization yields a greater value.  The ability to transform this service operation to enables sales to cost and sell the product and the services based on customer desired outcomes, rather than on the number of responses to issues they may have. 

Digitalization is the key to unlocking this value and there are seven key disciplines underpinning these business capabilities. 

  1. Transformation: The ability to harmonize end-to-end processes and rationalize the applications supporting those processes on a global and regional basis. In this example, this means that processes from field service, to supply chain, to procurement are aligned and synchronized. Applications that are not needed are identified and removed quickly.
  2. Integration: The ability to quickly and effectively integrate data between internal applications. This means that service component data is easily accessible. The CRM that houses the entitlements on a customer-by-customer and machine-by-machine basis is able to be accessed automatically on-demand and, when a service component is automatically ordered, the SRM has the ability to provide needed lead time and supplier performance data to ensure flawless performance.
  3. Data: The ability to have flexible connectivity outside of the enterprise, including to API’s, mobile devices, IoT data and traditional EDI communications. A supplier may receive an order for a service component electronically, the field technician may communicate with the organization through his mobile device which may also be used to support an augmented reality app the guides him through his service tasks.
  4. Visibility: The ability to guarantee consistent data models, views and access to information. Units of measure are consistent, quantities are consistent in every application spanning the globe and, when units of measure differ, an automatic, consistent conversion is completed.
  5. Applications: The ability to analyze data and make decisions at the right time. Reports are not relied upon to generate action; sophisticated algorithms scour vast amounts of data to find those critical, perishable insights that need to be acted upon. An example is real time machine condition monitoring and remaining useful life prediction with alerts that trigger when unexpected deviations are found.
  6. Big Data: The capacity to manage real-time big data challenges. Leveraging historical data is critical to continuous improvement but the digital manufacturer leverages huge amounts of data in real time, such as the data streaming from an IoT device, or thousands or millions of IoT devices.
  7. Connectivity: The ability to automate processes to support end-to-end agility. Technicians are dispatched automatically, service components are ordered without a person creating or approving a requisition or purchase order and updates are provided to customers without a customer service representative spurring this action.

These key disciplines are the underpinnings of almost any initiative that a manufacturer takes to become digital.  They take into account the whole enchilada of manufacturing.

Forrester has recently conducted a survey on the digital readiness or fitness level of manufacturers and Software AG has created a tool to benchmark your fitness level against the Forrester benchmark. A digital assessment for the Seven Disciplines will be launched at Software AG's Digital Business Days in NYC on October 3 and you will be able to compare your company against Forrester benchmark and your peers. 

 

 

 

 

 

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