How the Internet of
Things will reshape future production systems
Rich
data, ubiquitous connectivity, and real-time communication are changing the way
companies work. For leaders, that transformation will extend much further than
the machines on the factory floor.
For decades, many
of the world’s best companies have used their production systems as a source of
sustainable competitive advantage (see sidebar “What is a production
system?”). But such a system isn’t just about doing things well, with fast,
efficient manufacturing processes and consistently high quality. What
differentiates benchmark
organizations like Danaher or Toyota is their ability to improve
those operations continually, at a pace their competitors struggle to match.
Strong production systems have other powerful benefits
too. They give companies a clear, precise picture of their own performance,
allowing direct comparisons among plants, for example, and encouraging internal
competition. They provide a common culture, vocabulary, and tool set that
facilitates the sharing of best practices while minimizing confusion and
misunderstanding. And by developing the
skills of existing staff and creating an attractive
environment for talented new hires, they help people contribute to the best of
their ability.
The best production systems are simple and structured,
and built around a company’s specific strengths and challenges. That requires a
good deal of self-knowledge. A company must not only understand what it wants
to achieve but also identify the methods, resources, and capabilities it will
need to get there. Ultimately, a good production system is a unique, bespoke
management approach that’s difficult for competitors to copy.
Today, even the highest-performing companies can boost
their performance still further. That technology-driven opportunity comes from
data—specifically, the huge volumes of data on processes and performance
generated by new generations of network-connected devices: the Internet of
Things (IoT). To capture the opportunity, companies must revisit and
reassess many of the processes and principles that have been so successful for
them in the past.
Four dimensions of
the IoT’s impact
The advent of IoT technologies—and the more general move
to digital tools that support operations, communication, analysis, and decision
making in every part of the modern organization—won’t change the fundamental
purpose of production systems. It will, however, transform the way they are
built and run, offering improvements across four main dimensions:
Connectivity
Traditional production systems embody a collection of
separate tools bound together loosely by the rules governing their application.
Usually, these rules are at best defined only on a paper document or a
corporate intranet site. In the future, such links will be much tighter and
more automated, and fast digital connections will allow the whole system to
operate as a seamless, cohesive whole.
Integration will change production systems in two ways.
First, performance measurement and management will be based on precise data.
Sensors will monitor the entire production process, from the inspection of
incoming materials through manufacturing to final inspection and shipping.
Companies will store the output of those sensors in a single, central data
lake, together with a host of additional data from other internal sources, as
well as external ones (supplier specifications, quality indicators, weather and
market trends). All these strands of data will combine to set the production
system’s targets and measure its performance continually, so the staff will be
able to see, at a glance, if the system is performing as it should.
Second, connectivity will support better fact-based
decision making. Access to comprehensive, up-to-date production information,
together with a complete historical picture, will take the guesswork out of changes
and improvement activities. As the collection and reporting of data are
increasingly automated, frontline operators and managers will play a larger
role in solving problems and improving processes. Root-cause problem solving
will be easier: aided by advanced analytical techniques, staff will be able to
identify the changed operating conditions that precede quality issues or
equipment failures. Furthermore, stored information about similar issues solved
elsewhere will help identify appropriate solutions.
Speed
Today’s production systems are necessarily
retrospective. While they aim to maximize responsiveness by emphasizing
discipline, standards, and right-first-time practices), the reality falls
short. Manual measurement and management mean that most opportunities for
improvement cannot be identified until a shift ends and the numbers come in.
With the introduction of comprehensive, real-time data
collection and analysis, production systems can become dramatically more
responsive. Deviations from standards can immediately be flagged for action.
The root causes of those deviations can therefore be identified more quickly,
as will potential countermeasures. The entire improvement cycle will
accelerate.
It isn’t just the management of day-to-day operations that
will get faster. Capability building will, too, thanks to focused, online
training packages customized to the specific needs of individual employees.
Finally, IoT technologies will speed improvements in the production system
itself—for instance, by automatically identifying performance gaps among plants
or updating processes throughout the company whenever new best practices are
identified.
Accessibility
Back-end data storage isn’t the only thing that will be
unified in the production systems of the future. So will access. Staff at every
level of the organization will get the tools and data they need through a
single application or portal (see sidebar “The human factor”). That portal
will be the organization’s window into the system’s dynamic elements—especially
minute-by-minute performance data—as well as more static parts, such as
standards, improvement tools, and historical data.
These portals—with responsive, customized interfaces
ensuring that the right employees get access to the right information and tools
at the right time—will simplify and accelerate the operation of the production
system. If it identifies a deviation on a production line, for example, it will
be able to alert the team leader, show current and historical data on that
specific process, and offer appropriate root-cause problem-solving tools,
together with a library of solutions applied elsewhere.
Using secure and tightly controlled interfaces, the
production-system portal will also be accessible beyond the organization’s
boundaries: it will allow suppliers to track consumption and quality issues in
materials, for example, or external experts to review current and historical
performance to find improvement opportunities. Using online support and
predictive analytical tools, manufacturers of equipment will increasingly
operate, monitor, and maintain it remotely. The portal will even allow
companies to benchmark their own performance automatically against that of
others.
Anchoring
One of the most powerful effects of IoT and digital
technologies, we foresee, will be to anchor the production system in the
organization’s psyche. This will overcome the most critical challenge many
companies struggle with today: sustaining change, so that the organization
improves continually.
That anchoring effect will be achieved in several ways.
First, the unified data, interface, and tool set will not only help enforce the
adoption of standards but also ensure that the right way of doing things is the
easiest way. Staff won’t need to improvise production plans or override machine
settings if the optimum settings are just a button click away.
Second, future production systems will help the
organization to collaborate more effectively. An end-to-end view of performance
will break down barriers among functions and ensure that decisions reflect the
interests of the business as a whole. The communication and sharing of
information will be greatly enhanced, since a central knowledge hub and
social-media tools will let staff in one area access support, ideas, and expertise
from another.
Finally, future production systems will make performance
far more visible: when the whole leadership can see the direct link between
operational performance and profitability, for example, the production system
will no longer be considered the concern solely of the COO. Digital dashboards
on computers, mobile devices, and even smartwatches will show staff in every
function and at every level exactly how the organization is performing, as well
as the precise value of the contribution of their businesses, plants, or
production cells. The result will be genuine transparency—not just about where
the value is being created, but also about how.
Adopting IoT: Early
wins
Although the fully integrated digital production systems
described in this article don’t yet exist, many of the building blocks are
already in place. The oil-and-gas industry, for instance, is rolling out
industrial-automation systems that can monitor the health of expensive capital
assets in remote locations. These systems facilitate timely preventative
maintenance by using sensor data to generate real-time performance information
and provide an early warning of potential problems. Automakers already have
production lines where hundreds of assembly-line robots are integrated with a
central controller, business applications, and back-end systems. This
technology helps companies to maximize uptime, improve productivity, and build
multiple models (in any sequence) without interrupting production.
The next challenge
for manufacturing companies is to complete the integration process. This will
mean taking the tools and capabilities that now work on individual production
lines or assets and extending them to the entire enterprise and then its entire
supply chain. For companies that succeed, the reward will be greater
efficiency, rich new insights, and dramatic, continual improvement in
performance.
By
Vineet Gupta and Rainer Ulrich
https://www.mckinsey.com/business-functions/operations/our-insights/how-the-internet-of-things-will-reshape-future-production-systems?cid=other-eml-alt-mip-mck-oth-1711
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