Three key ingredients for the successful digital transformation of manufacturing

The process of digital transformation is happening across a wide range of industries today, and perhaps no more so than in manufacturing. While we are seeing some examples of successful digital transformation across manufacturing companies and industries, the reported success of digital transformation at scale is slow. In early 2019 the World Economic Forum, in collaboration with McKinsey & Company, reported that more than 70% of industrial companies were in “pilot purgatory” when it came to their adoption of Fourth Industrial Revolution technology. The same report found that only 29% are actively deploying Fourth Industrial Revolution technology at scale, while a greater number, 30%, had yet to pilot or were only just about to begin.

Advanced manufacturing is at the heart of the Fourth Industrial Revolution, shaping the future of production and value chains. It is opening a wide range of new opportunities for companies to transform factories, business models, and to drive a new wave of economic growth. For the last three years, through its Platform for Shaping the Future of Advanced Manufacturing and Production, the World Economic Forum has been working with a group of pioneers at the forefront of the Fourth Industrial Revolution to help accelerate the digital transformation of manufacturing across industries and regions. A Global Lighthouse Network, which brings together some of the most advanced manufacturing facilities in the world, has been established to recognise the pioneering companies who are successfully deploying a wide range of fourth industrial revolution technologies at scale, while also keeping people and sustainability at the heart of their innovation strategies. The network has launched a cross-company learning journey and is helping manufacturers incubate new collaborations and partnerships aimed at shaping an inclusive future of production.

What the learning journey has revealed to date, is that there are two main drivers for the successful digital transformation of manufacturing:

• Business needs must drive all transformation efforts
• Organized processes deployed through a global program are key to success

Business needs must drive all transformation efforts

Firstly – and this is always the most important point to remember – digital transformation without business sense makes no sense at all. Getting to the crux of what you need to achieve in order to keep your business relevant, and grow it, in the digital economy is where you need to start. For example, setting goals that are outcomes focussed rather than “testing technology” will set the proper tone for your digital transformation initiatives. Consider objectives such as:

• Empowering your workforce to be safer and more efficient
• Optimizing the efficiency of assets and processes
• Ensuring operations are reliable and secure

Organized processes deployed through a global program are the key to successfully delivering such outcomes. Smart factories in the Global Lighthouse Network learning journey have revealed the three key ingredients that are essential in a global digital transformation program to be:

1. A “top down, bottom up” approach
2. Rigorous and centralized program management
3. External benchmarking

1.Top down, bottom up

Strong support and commitment from top management is essential to the deployment of a global digital transformation program. It sets a cultural expectation within your organisation and helps to spread a digital mindset. When combined with a global learning program to ensure all employees become digital citizens, it is a powerful tool for cultural change management. Companies with smart factories that are part of the Global Lighthouse Network are reporting this process has even led to new ideas being generated and put forth by employees. Company leadership can also set the pace of a digital transformation program by supporting a “start small” approach, and not putting on pressure for fast tracked results before a program is fully mature.

Video - Building Factories of the Future

From the bottom, most manufacturing companies have considerable expertise in their plants and operations. Leveraging this expertise to champion digital transformation efforts can help enormously with deployment. It is very likely you have people within your organization around the world that are passionate, highly educated and skilled in areas like manufacturing software, IoT and analytics, advanced robotics and automated guided vehicles, and augmented reality. Having these people take on ambassador roles in their area of expertise can support the roll out of advanced manufacturing technologies. These people can also be called upon to provide cross-site collaboration on the implementation, testing and scaling up of new technologies to drive the changes required to reap the full benefits of your digital transformation program.

2.Rigorous and centralized program management

A central digital transformation team that is at the service of the manufacturing sites that are actually undertaking the digital transformation efforts is the second key ingredient in your digital transformation program. Such a team can be seen as “consultants” who are tasked with deploying technology solutions in an agile manner and making sure that any solutions that are implemented address the specific business needs and that value can be found across the business, not just at one smart factory. They do this by being able to standardize solutions, create best practice recommendations, and duplicate success across sites. For example, the lighthouse network shows that leading companies are testing solutions in one plant for three months, then testing in another plant for three months, before rolling out across your business.

3.External benchmarking against the World Economic Forum’s Global Lighthouse Network

Leveraging the World Economic Forum’s Global Lighthouse Network to benchmark your digital transformation against pioneering companies can accelerate your program in two ways:

• Creating interest and competition amongst your different sites to also become accredited as a Lighthouse has shown to increase the pace of scaling digital transformation and “duplication” efforts
• Piquing interest from your wider ecosystem of partners, suppliers and customers – for example, at Schneider Electric the deployment of the Smart Factory Program in conjunction with the Global Lighthouse Network has clearly increased interest from stakeholders who want to understand in detail, and then duplicate, the processes for digital transformation on a large scale – which is leading to new business opportunities

Lastly, the learning journey has given us to two main pitfalls to avoid: The first is imposing technology from the top down without proper input or buy-in from operations. Doing this can result in underutilized technology and unrealized benefits. The second is trying to replicate success from one plant to another without first taking the individual behaviors, processes, and cultural norms of that plant into consideration.