Action plan to futureproof manufacturing

Industrial businesses across the board are exploring the ‘art of the possible’ to build in resilience and de-risk assets. François Disch reports

Since presenting at Smart Manufacturing Week, several manufacturing leaders have suggested to me that industrial digital transformation still remains their top priority. This has been the case for over a decade now, but where the conversation splits and common challenges arise is in how to determine success.

Even before starting a transformation journey, defining how and why to undertake it is often challenging, especially when dealing with what cannot be seen.

Furthermore, when overseeing multiple factories, making the most of digital transformation investment requires input from every level of the business. It’s a big task with many steps and with this article we want to offer an action plan that is applicable to manufacturers of any size or specialism.

True transformation is realised when there is a direct and positive effect on top-level business KPIs. These could include revenue, operational expenditures (OpEx), and Environmental, Social and Governance (ESG) goals.

The current state of adoption

Belief in the potential for digital transformation has grown significantly over recent years. A  study by research firm Omdia of 250 global manufacturing and process industries found that 94% of respondents believe digital transformation will impact their operations in the next two to three years. In comparison, a similar report from found that 70% of manufacturers believed digital technology would have a high/critical impact on operations.

Despite these figures, manufacturers still face significant challenges preventing widespread adoption of digital technology. The European Industry report, which reports on digital progress and the realisation of Industry 4.0, states that 41% of companies surveyed had not adopted advanced digital technologies. Similarly, the Omdia study found that while half of companies are deploying digital transformation across multiple facilities or business functions, the other half is only now taking the first steps by introducing pilot projects and small implementations.

Potential barriers

For manufacturers in the early stages of digital transformation it is important to understand the barriers that can slow progress, such as:

• Some companies lack in-house digital technology or corporate transformation expertise. This gap in organisational and skill readiness can hinder progress during investigation and experimentation phases. The growing skills gap means professionals in data analytics, augmented and virtual reality, IT/OT infrastructure planning, or cybersecurity are hard to come by. These roles often exist at a corporate level but the need for local talent to implement and execute projects may be lacking, creating a need for significant external support.
• Another barrier in the early stages of a transformation journey is a lack of coordination and shared vision. Manufacturing transformation requires input and understanding from all layers of the enterprise, but data shows that CIOs and IT departments are the most influential roles whilst operations should be actively leading on requirements and expectations. Misalignment can lead to a discrepancy between the corporate vision and the reality that plant managers or operations managers interact with every day. Each and every corporate function – HR, IT, OT, operational excellence, finance, corporate operations, individual sites – has a specific role to play in the transformation.
• There is also a temptation of continuing a ‘business-as-usual’ approach which leads to a lack of commitment. While this may save on immediate spend it can reduce a company’s competitiveness in the long run.
• Even when companies have successfully completed pilot projects, digital transformation gets stuck at the pilot purgatory stage. Furthermore, poor use case selection or slow corporate guidance can leave a bad taste for decision makers. Even when a pilot project achieves results in one facility, it may not translate to other sites if it was achieved through non-standard methods. Roughly 40% of surveyed companies believe their headquarters has not provided clear messaging and visibility on digital transformation objectives. This lack of standardisation will limit the potential of digital transformation for the entire enterprise.

The art of the possible – overcoming barriers

It is safe to say that securing leadership from operations is often the greatest barrier to digital transformation, as well as being the source from which other challenges originate.

Getting buy-in usually requires explaining the ‘art of the possible’, which means communicating a vision to achieve outcomes that were not previously possible. This requires looking beyond simple performance improvements and identifying ways for transformation to improve uptime or flexibility, empower operators to do more with less and support continuous improvement in safety, quality, and throughput. It’s essential that industrial digital transformation should not be seen as simple cost reduction, but as representing value creation.

Digital transformation is a team effort, requiring input from every level of an enterprise. That being said, the main tasks of alignment and education must come from the top. C-suite should set the strategy and oversee local teams as they identify and implement use cases. This differs from a bottom-up approach as it plans for scalability from the outset.

Aligning leadership with on-the-ground facility operators also keeps a focus on selecting use cases based on financial return and ensuring everyone’s needs are met. This will deliver immediate improvements at a local level, however it will also build a foundation for wider benefits. By collecting and analysing data locally, the manufacturer can gain insight and make better decisions. In turn, the manufacturer will be more resilient to market shifts, agile to customer needs, and have the evidence it needs to continuously strive for the cutting edge of digital technology.

Four-point action plan

A company-wide digital transformation strategy that will define a manufacturer’s future must start somewhere. It’s worth noting that no two practical deployments will ever look the same, even for different sites in the same enterprise.  However, building a strategy on these four principles will lead to successful digital transformation:

1. Principle One – Align business goals with the facility’s needs
   This step may seem obvious, given how much we have spoken about alignment and education being the first step. However, distinct teams do have different visions. Aligning these before starting to investigate any use case will identify shared goals and overcome differences, leading to positive returns for pilot projects and scale-up deployments.
   
2. Principle Two – Build a dedicated team with the skill set to deploy at scale
   Scalability is important at every stage of a digital transformation journey. Appointing a group leader is essential at the outset; someone who knows where to find the right expertise and explain the vision. The expertise doesn’t necessarily have to be in-house, a service partner can bridge the gap when internal resources are unavailable.
   
3. Principle Three – Balance standardisation of the core model with localised flexibility
   The manufacturing sector is already well versed in agility and flexibility – and can apply these practices for digital transformation success. Manufacturers must define a digital core model which will set the priority for improving business performance. Allowing for flexibility within this core model means that value can be unlocked across the entire enterprise. This is where the strategy can foster scalability from the outset. In practice, the core model should include the use cases that will streamline operations, minimise waste, and optimise resource allocation. Every facility is different, manufacturers must remain flexible to ensure the value of pilot projects can be replicated.
   
4. Principle Four – Define a governance to safeguard progress and maintain momentum
   Each of the statistics in the Omdia study show that even forward-thinking manufacturers can stall in their digital transformation journeys, sometimes for good reason. What is crucial for long-term success is ensuring that a pause to assess progress and recalibrate does not result in a total loss of momentum. Systems and processes from top level decision makers will help transformation projects maintain alignment and progress, ensuring that all promised outcomes can be achieved.

Industrial digital transformation is not a traditional project that starts and ends with a definitive completion; instead, it is a continuous improvement process brought on by constantly evolving technology and relentless willingness to strive.

However, the lack of set deadlines should not deter teams from investing now as there is both a genuine risk of falling behind and an urgent need to decarbonise operations. Industrial digital transformation requires a strategic approach, continuous improvement, and strong alignment between corporate objectives and operational realities. A technology partner can provide support, whether in setting a strategic plan or delivering its goals.  

François Disch is Digital Transformation Delivery Lead, Schneider Electric.