Jump-starting
digital transformations at low-volume, high-complexity manufacturers
Mass-market, assembly-line environments aren’t the only places where
digital is transforming manufacturing. Makers of complex, tailored products are
also seeing major impact.
Low-volume,
high-complexity manufacturers—for example, companies that make agricultural or
construction equipment, highly customized aircraft components, or industrial
machinery—face barriers that have thus far slowed their adoption of digital
technologies. These companies construct products with very low levels of
repeatability, leaving few tasks that would be well served by automation, for
example. Understandably, leaders in these organizations are often under the
impression that only bespoke digital solutions will be effective in their
operations, and that there’s nothing on the market to support them.
These factors mean that
although most manufacturers in this category understands they need to embrace
digital, they usually lack a well-developed business case to justify the
necessary investments. Large-scale corporate programs to champion digital
manufacturing projects rarely take off. Instead, such solutions are more
commonly identified and implemented by single business units or in single
plants.
Despite these barriers,
many players have a sense of urgency to implement digital solutions, feeling
that they will fall behind the competition if they do not integrate digital
manufacturing into their production. They’re right: the potential impact of
digital technologies is significant. We estimate that low-volume,
high-complexity manufacturers could improve annual output by 5–20 percent by
harnessing these solutions, with integrated operations as the enabler for
substantial savings. Furthermore, the large volumes of unused data that these
organizations are now producing could hold the key to productivity
improvements.
How digitization can transform operations
Digital solutions can
directly address specific challenges that low-volume, high complexity
manufacturers currently face. The secret lies in applying digital to integrated
operations rather than single functions. In our experience, three areas hold
significant potential.
Quality and
reliability. The reliability
of products in the field is a key selling point and top priority, so predictive
analytics and remote maintenance could be incorporated into equipment to
increase uptime and limit disruptions to operations. Manufacturers could
establish remote access to monitor product health and build predictive models,
using field data to optimize it. An agricultural-equipment manufacturer, for
example, could equip controllers with a mobile data connection for remote
access. The same concept can apply to the manufacturer’s own equipment, with digitization improving the
efficiency and effectiveness of maintenance, reducing unneeded downtime.
Demand volatility. High volatility and
unpredictability in production and the supply chain makes determining demand
difficult, yet doing so is essential for decisions ranging from production
planning to inventory management and staffing levels. Data-driven demand
prediction can provide manufacturing leaders greater insight—for example,
through statistical models that link production demand forecast to external
data sources. A maker of mining equipment could estimate demand for its
products based on metal-market forecasts.
Production variability. Almost by definition,
low-volume, high-complexity production means managing a large number of product
variants, a wide range of production tasks, and close collaboration between
manufacturing with engineering. Digital standard operating procedures (SOPs)
and performance management can significantly improve an organization’s ability
to manage the complexity. For production, manufacturers can establish remote
access for SOPs from tablets, and then link jobs to SOPs to automate
performance management. For example, displaying customer-specific options on
devices such as Google Glass can increase efficiency and lead to better
decision making.
Speeding the implementation of digital solutions
A lack of familiarity
with specific applications can prevent executives from imagining the impact
that already-existing digital technologies could have on their organization.
But recent conversations with industry executives have highlighted six steps
that can accelerate a digital transformation.
1. Complete a digital-capability scan. Manufacturers should assess their current
digitization capabilities, culture, strategy, and organization.
2. Generate a transformation incentive. By rethinking their budgets, business units can
capture the benefits from transforming into digital businesses and use
surpluses for further digital transformations.
3. Broad skill-building. Companies should consider launching
a “digital academy” that offers digital learning courses for all functional
areas. In parallel, a two-year intensive training program exposes top talent to
digital solutions.
4. Create a digital backbone. A digital implementation team consisting of IT,
strategy, and functional specialists should be assembled and tasked with
ensuring that each business unit and location develops and strengthens a
digital backbone.
5. Showcase the new way of business. Companies should identify around ten business
opportunities or processes and use them as “digital lighthouses”—examples of
how digital solutions can enhance operations to inspire the organization.
6. Crowd-source digitization. Companies across industries have had success in
asking employees to submit ideas for high-impact initiatives, and some have
even held competitions for the best suggestions.
Of course, these steps
may make sense on paper, but operations executives well understand that the
real challenge can be in translating new ideas to the shop floor. Their
skepticism is often justified.
That’s where an
experiential approach to learning about digital technologies can help leaders
make real breakthroughs. Take the concept of a “digital waste walk,” which
exposes the waste in a company’s existing digital processes—such as rework when
software incompatibilities cause procurement teams to reenter data received
from product designers. Learning how to conduct these walks in a real-life,
risk-free environment of a model factory is far more effective than reading
about it. Yet it’s also far less daunting than trying to do so on a real,
working operation where mistakes could have lasting consequences.
The resulting insights
have helped executives recognize the likely gaps at their companies, and
spurred them to action. “The idea of a digital waste walk is new to me and very
helpful—I will do this tomorrow,” one executive said. Another went further: “We
have unused potential in all our plants. We need to decide if we want to be
leaders in our industry or lag behind.” And a heavy-equipment manufacturer has
taken the first step, with workshops held in the safe environment of an
external site to lay the foundation for digital-manufacturing pilot projects
that can help define its future strategy.
https://www.mckinsey.com/business-functions/operations/our-insights/operations-blog/jump-starting-digital-transformations-at-low-volume-high-complexity-manufacturers?cid=other-eml-alt-mip-mck-oth-1809&hlkid=f8101f93fcc14f4dac55cec7a4aa821c&hctky=1627601&hdpid=1830bf32-e596-4ec4-b66d-d732730216f0
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