How to accelerate your digital operations journey

By Simon Treis, Hans-J?rg Kutschera, and Jens Neumann

While most manufacturing companies have started their digital operations transformation in one way or the other, only a few have taken a strategic and systematic approach. Instead, some have launched successful prototypes, but then struggled to scale them up, and others are still trying to find the best way to untap the potential of digitization. 

However, as the global pandemic has clearly demonstrated, driving the digitization of operations systematically is no longer optional – it is a must to stay ahead of the game. Experts agree that if companies are not already intensively involved in applying or experimenting with digital technologies, they are at risk of losing their competitive advantage. Current analyses indicate that effective implementation of smart manufacturing solutions and a strong increase in manufacturing flexibility could help companies cut costs by 10%-15% over the next five years.

To design and implement a programmatic approach, digital leaders must work to balance the requirements of demonstrating tangible results, rather quickly, with operational buy-in. That requires getting alignment across the business on how to solve day-to-day challenges while also managing a longer-term, sustainable digital transformation. 

Illustration 1: Thinking about how to start or accelerate a digital transformation?

For many companies, identifying where to start most effectively can be very challenging. With a large number of new technologies and buzzwords — such as augmented reality, predictive maintenance, and blockchain — all of which may be considered potential solutions for a variety of different problems, the way forward often feels nontransparent, difficult to understand, and nearly impossible to achieve. But in fact, the journey may be smoother than you expect if you start with our four-step approach. 

Illustration 2: Defining an individual digital manufacturing strategy

Step 1: Develop a next-level manufacturing vision

In order to start or accelerate your digital transformation, you need to first define a clear vision, aligned to your company’s strategic focus. Imagine yourself inspecting your manufacturing processes, thinking to yourself: Why do we still rely so much on paper-based processes? Your vision should reflect your ideal target state, such as a paperless factory, a flexible production process, or a no-touch process, as well as necessary optimizations to achieve your strategic agenda. At this stage, your vision is not yet connected to detailed tools or applications but provides direction to design optimal solutions and enable technologies. This is your first step on the road to becoming a digital champion.  

Step 2: Define solutions and use cases with impact

With a clear vision in mind, the defined long-term targets must be enhanced with carefully selected smart solutions that address relevant problems. To ensure they support your vision as effectively as possible, you need to define use cases or application areas along your production processes to facilitate the determination of key requirements and functions. For example, the use of automated material replenishment and smart tracking solutions in bottleneck processes can play a crucial role in achieving your goal of flexible production. Ideally, the implementation of smart solutions will promote several objectives simultaneously.

Illustration 3: Connecting your vision with smart solutions and technologies

Step 3: Define and implement enabling technologies                  

Once you have your identified use cases and smart solutions, the next step is to define what necessary information sources and technologies you will need for the retrieval or automatic processing of data. Since smart solutions usually utilize several sources and different technologies (e.g., sensors, machine connectivity, and big data analytics to support predictive maintenance), it is essential to define which technologies best meet your specific requirements and/or guarantee the best possible return on investment. That then brings us to step four.  

Step 4: Maximize the number of use cases and advance your vision

In order to inspire your team, and senior leaders, to support your vision, you must have a comprehensive business case validation. The optimization potential and strategic relevance need to be fully evaluated and should play an important role in defining your digital transformation roadmap. However, since the introduction of new technologies is usually quite costly, it is not unlikely that business cases, if evaluated individually, will turn out to be negative. Therefore, it is critical to identify and realize the full potential of new technologies across a number of use cases. Each potential technology must be analyzed and reviewed to evaluate additional areas of application and, with them, additional optimization to support your business case and advance your vision further. Implementing sensors and connectivity on metal presses, for example, is usually quite costly. But if the data is used for quality assurance and production planning, as well as for predictive maintenance, the benefits increase — making the overall business case positive. 

Are you interested in the outlined approach and would like to discuss it more in detail? Are you at an early stage of your digital operations journey or currently struggling with your digital transformation? Get in touch with me or my colleagues.

About the authors:

Simon Treis co-leads Strategy&’s manufacturing practice in Europe, working across sectors with business leaders in industrial products, medtech, food and beverage, chemicals, automotive, and logistics/aviation. Based in Zurich, he is a Director with Strategy&.

Dr. Hans-J?rg Kutschera is a leading practitioner in strategy-based operations transformation focusing on the aerospace, defense, and industrial manufacturing sectors. Based in Munich, he is a Partner with Strategy&.

Jens Neumann co-leads Strategy&’s manufacturing practice in Europe and is a leading practitioner in operations strategy, advising companies in particular in pharma & life sciences, medtech, consumer products, chemicals and utilities. Based in Duesseldorf, he is a Partner with Strategy&.

Georg Krubasik, Marc Münch, Xenia Lojewski, and Daniel Michel also contributed to this article.