Good practices of digital transformation.

I have been working on the digital transformation of manufacturing companies for a few years. Over various projects, I have visited quite a few manufacturing plants and gained exciting insights. Above all, I have learned and acquired information that allows me to define and write down what separates companies that have successfully embarked on digital transformation from those that are a bit legging in this area. Usually, the success of a manufacturing company is linked to several factors, and digital transformation is no exception.

If you are operationally involved in manufacturing processes, you don't have time to visit a different manufacturing company every week. But I have had the opportunity to see in those years more than 100 manufacturing plants. These visits and my involvement in various projects have given me enough experience and knowledge to get a quick picture of where the company is and what logical steps to take toward better productivity through digital transformation solutions.

How important are the organization, management, and culture of the company?

If a manufacturing company wants to be successful, it must ensure minimum standards of operation for its employees and customers. It is probably not part of digital transformation. Still, if a company provides its employees with regular and decent pay for their work, it is easier for them to succeed in digital transformation. Employees in such companies need help finding the motivation to step out of their comfort zone and implement change, even though it might be a great solution to make their job easier. I had a case where the employees saw the vast benefits and were impressed by the demonstrated solution, but they needed the right motivation to use it. Even I, as an outsourced company, was asked whether they would get a pay rise by using this solution. These companies usually invest less in modernizing their machinery and workplaces and generally in good company culture. There are many reasons for this, but without this foundation, a manufacturing company runs a reasonably high risk that digital transformation projects will fail.

On the other hand, companies that somehow look after their employees, that continuously invest resources back into the company, the machine park, and the employees, you can see that these employees are more collaborative. In meetings, there is also a greater motivation on their part to change something and implement a new solution, even though these employees do not represent management positions. For this kind of company, I have noticed that the management lets, or at least listens to, the wishes and requests of the employees who are operationally involved in the process because they are aware that these employees know the workplace better and what they need to be even more satisfied and efficient. Besides that, they are aware that at the end of the day, those employees will have to work with these solutions daily. All this creates good working conditions and a healthy working environment, primarily through trust and respect between employees. These companies are also more organized at first glance, have a better and tidier external image, and may already know which direction they want to take in their digital transformation.?

The implementation and impact of the LEAN method.

When implementing one of the solutions, we set a criterion where the prerequisite for implementation is that the manufacturing company has already implemented or is already implementing Lean manufacturing. We arrived at this conveniently and painfully. During the deployment and implementation of the solution, we experienced several challenges that represented too high a risk for the business model we had set up at that time. We had taken on a few more similar projects, and implementing the solution in production plants without lean would have meant that such projects would have been more costly. Usually, such companies are chaotic, especially if you observe the processes from a distance. They also tend to be in a group that does not provide specific minimum standards to make the company more agile and successful. This is certainly not the rule because this group also includes companies that, although they offer a high standard for their employees and can be very successful in business terms. But on the other hand, they needed help to keep up with the rapid growth in sales in the production area. The organization and the process is based on the employees, who usually have everything in their "heads", i.e., they do not use any tools to lead, manage or organize, but everything depends on the daily form of the employees.?

Then there are the companies that have successfully implemented Lean manufacturing and are still engaged in continuous improvement. They still need to progress to be the most digitized companies on the market. But they are indeed the best organized. If you imagine a football team, it is a team where you know exactly who is doing what on the field, with minimal opportunity for improvisation. In most cases, employees are also happier in such companies because the organization is more secure and tends to be more transparent. Certain companies represent an excellent starting point for further digital transformation. Even during the digital transformation, the company must continue to implement lean production in parallel, as some studies have shown that this approach can improve performance indicators by up to 40%. Otherwise, the company runs the risk of digitizing processes that need to be optimized, poor practices, and ways of working, which can lead to failure in digital transformation.

Modern vs. traditional IT department.???

Sooner or later, every digital transformation initiative has to deal with an IT department. A much tougher nut to crack are manufacturing companies where the IT department is a support department whose main task is security. These companies are pretty defensive about digital transformation. Because the IT department has to deal with 'fire-fighting,' figuratively speaking, of course, but as an example, I have noticed in the implementation of solutions that the IT department has to deal with an issue relating to changing the password of one of the employees or how to book a company car. Unfortunately, such companies still need to be at the stage of realizing that the IT department is currently their flagship and should be driving digital transformation. In most cases, IT employees are somehow afraid of digital transformation because they know that it means extra work that is hard to bear, apart from password management, as such departments are usually under-resourced.?

On the other hand, it is possible to see companies with a very modern IT department that is even developing its solutions. They may have small-scale solutions or even solutions that are difficult to obtain on the market. Such companies are usually more open to digital transformation. They typically want an outsourcer's support as they know that digital transformation is a complex process requiring a coordinated effort to achieve the objectives. Such companies are aware of the importance of digital transformation and are reaping its benefits, typically as market leaders in the industry.

ERP - Enterprise Resource Planning.

It is challenging to talk about digital transformation if companies don't have an ERP (enterprise resource planning) system. These companies carry out essential operational matters manually in Excel. At the moment, I hardly imagine any company today doing business without an ERP system. Still, several providers in this area offer solutions dedicated to manufacturing plants. A slightly worse starting point for digital transformation is an ERP system that is "locked in." I have often come across vendors who offer service with a philosophy that tries to tie the user to the solution. The problem with this type of project is that typically these companies spend a lot of resources to maintain such a system, and they need the services of an ERP vendor for each new implementation of another solution. Every recent integration in such an environment is very rigid. It almost always takes more time compared to projects where the ERP system is open and quick integration with the rest of the databases, systems, and solutions are possible. This still does not mean that the digital transformation of such companies is destined to fail. Still, there are usually slightly longer implementation times and higher costs, which can lead to lousy will and, in some cases, to failure.?

Companies that use an "open" ERP system and collaborate with other system providers, where integration, configuration, and modification are possible without high costs, represent an excellent environment for further successful digital transformation.?

Paperless production.??

Paperless production is the current reference point against which any manufacturing company can orient itself. Companies that have yet to reach this point and have positively implemented the above conditions are certainly well-placed to embark on this phase of digital transformation. Of course, they will have to implement or update several systems and invest resources in additional hardware.

Systems that are somehow key to ensuring paperless production:

• The documentation system,
• PLM (Product Lifecycle Management) system,
• MES (Manufacturing execution system).?
• WMS (Warehouse Management System) for warehouse and inter-phase inventory management.

However, companies that have already somehow ensured paperless production are at a significant advantage over other competing companies because they already have the data to operate with. At this point, every manufacturing company must strive to monitor data in real time, which again entails a particular implementation of different systems and technologies (IIoT, Big Data, Data Lake, etc.).??

Real-time monitoring.??

From here on, companies have an environment where decisions are based on actual data. So companies that have provided their employees with information resulting from real-time data analysis have a tool that allows them to test what works, what solution is suitable for their manufacturing business, and what the next steps are in their digital transformation. Because such an environment allows the monitoring of a multitude of indicators, take, for example, the implementation of a solution based on artificial intelligence, which, first of all, can only work optimally with the relevant data. Still, on the other hand, those responsible for implementing such a solution can monitor and analyze the situation before and after implementation, and in this way, quickly build up a picture and get results as to whether the path towards implementing artificial intelligence makes sense. Any change or a new way of working can be monitored and checked to see if it delivers the desired results.??

It is good practice for a manufacturing company's digital transformation to reach the paperless production phase. This is a common denominator for manufacturing companies enjoying tremendous success, which is also reflected in their business performance.?