Shaping the Smart Factory of the Future with Digital Transformation | What it is and how to do it

Industry 4.0 has taken manufacturing to the next level, handing processes over to technology, smart machines, and artificial intelligence (AI). These transformations often happen in isolation, creating siloed environments that miss the bigger purpose of digitalisation. But when a company connects data among people, programmes and processes, this creates a digital Smart Factory of the Future.

Digital transformation within the manufacturing industry comes in many flavours, however the key themes can be summarised into five areas. Your business may be able to take advantage of some or all these components and can use the thinking behind them to help innovate new ways to improve the service offerings, efficiency, profitability, and sustainability of your business.

Having a resilient supply chain means that you can be confident in your ability to ride out a storm, manage your inbound and outbound networks to minimise disruption, and continue to service your customers and clients.

Having a connected business allows your team flexibility, it means that you and your network can connect into your business and automate processes, minimising effort and allowing you to become more embedded (and therefore sticky) within your partners’ supply chains.

Your workforce is key. Any transformation will impact them directly, so their ability to engage with you is important, their ability to be empowered by internal systems, policies, processes, and procedures is essential to ensure the success of your business. Improving your employee connectivity and minimising friction allows them the freedom to grow and improve your joint outcomes.

Having good relationships with your customers is essential, becoming part of their business allows you improved insight into future behaviours and allows you to mould your business into service lines that directly – and positively – impact the goals of your customers.

All the above provides the foundations for digital innovation, the ground-breaking use of technology that can transform your business offerings and positively improve the outcomes and experiences of your customers and supply network.

At HSO we have the expertise and experience to help you explore each of the above and to help you reach your digital potential. This article is intended to provoke thought and to encourage you to engage with us to define the digital experience within your business for the next 3-5 years.

Digital transformation – how to do it

While the next section will discuss the different components and opportunities of digital transformation, the key part of a successful project is in the combination of technology and knowledge of your business processes, operations, and network.

Your manufacturing business is unique, its special. The relationships you have with your customers, suppliers, partners, and employees is unique, so any new initiative must be sympathetic to these relationships. Acknowledging this is key to the HSO design process.

Using established design thinking methodologies HSO bring together key influencers in your business and together we ask and answer some “what if…” questions. We look to inspire your transformation team with the “art of the possible” and to take inspiration from leadership and idea generators across your business.

Usually, these sessions generate a list of potential transformative initiatives, obviously these need to be prioritised and assessed. We collaborate with you to take these concepts into robust deliverable programmes along with interim phases making sure that your business takes the correct steps to embed the transformation into your network.

Of course, if you have a clear initiative, a defined way to become effective, then please contact us. Let’s bring that idea to life. Let’s put the technology together to implement it and ensure that it enables you to realise the benefits that you envision.

What does having a resilient supply chain mean? And how can technology help me?

Resilience is about managing risk, it’s about understanding the likely challenges and having strategies in place that mitigate or simply avoid those risks.

In the last few months’ Supply Chains have been evaluated more than at any other time. We are all aware of these events including:

  • Blockage of the Suez Canal
  • War
  • Component (particularly “chip”) shortages
  • Limited labour availability
  • Inflation
  • Brexit and legislation changes
  • And, of course, the Covid-19 Pandemic
    – Change in Routes to Market
    – Remote working
    – Limited supplies

All of these have disrupted supply chains that were otherwise smooth and consistent (with the occasional, inevitable ripple). Now businesses are aware of the likely disruptive impact on their performance, supply chain management and visibility is becoming the primary focus of their boards.

Knowledge is Power

To mitigate risk, you first need to know how you are exposed to it. Understanding the location of your suppliers, your inventory, your customers, and your key partners is the first step to managing the risks. Simply installing a supply chain control tower (Business Analytics) provides an excellent first step to enhance your knowledge. Understanding where your products are and leveraging functionality like Microsoft’s “Supply Chain Insights” can start to highlight the risk and impact of major world (and even weather) events. Using the power of machine learning and predictive analytics can then help you make decisions on how and where to move your goods. The same analytics can then help you understand which markets and customers are the most important to your business, allowing you to focus your efforts on ensuring their supply, while throttling supply to markets/customers who are less strategic. The Microsoft Power BI “Key Influencer” and “Decision Trees” are exceptional at bringing these decisions to life.

Take action…

Knowledge of vulnerabilities is one thing, doing something about it can be another. It’s quite easy to know that you’re vulnerable to a single source of supply, and helpful to know that your major customer is located in a politically sensitive area, but what can you actually do?

Obviously, your supply chain is unique, and the creative ability of your teams is key to resolving these challenges, but by using manufacturing system technology we can provide the infrastructure to ensure the right people get the right information to make the best decisions. We can help highlight opportunities for dual sourcing, and work with you, alongside some of our preferred ISV’s, to get the right inventory into the right place at the right time.

Customer care

Keeping your customers informed about your challenges and understanding their evolving situation can also be a key to success. Making sure that your customer communications are clear and transparent can make the difference between success and failure. Allowing everyone to have input into your CRM (Customer Relationship Management) system can allow insights to be communicated quickly and reacted upon even more efficiently. It may even help you to recognise where your strongest relationships lie (possibly not in the account management team) and thereby allow you to use the right people to deliver the right message.

Connect your manufacturing business

Every business is connected, but some are more connected than others… OK so it’s not quite George Orwell’s animal farm, but the concept is the same. Some businesses are more equal than others.

Can your business be operated by your staff from anywhere? With a Microsoft Dynamics 365 connected business, almost all non-physical aspects can be managed from anywhere, with your team simply requiring an internet connection. This capability has proved its value globally as it has allowed, and continues to allow, many employees to work flexibly with minimal infrastructure requirements. It has also allowed remote sales teams to import orders quickly, and facilitated improved decision making from management teams via web-based analytics.

Manufacturing businesses, however, do require a physical presence and not just the resilience of cloud edge devices. Allowing your machines and infrastructure to be connected, enables predictive and preventative maintenance requirements to be identified, thereby reducing the amount of unplanned downtime and allowing your business to operate with minimal disruptions.

Connecting to your customers allows you to provide a service that other manufacturing businesses simply won’t be able to match. With the right connections you will be able to identify, from images or more traditional data interfaces, when they require more stock, when their devices require attention, or simply when the next visit might be appropriate. If you can predict when they might need more stock, then you can start to manage your supply chain more efficiently and avoid the need for costly strategic (safety) stock.

Allowing your suppliers and partners to connect to you helps them reduce their costs and allows you and your team to focus on offering value added activities. Imagine if your suppliers simply knew when to provide you with more materials, which arrived on time, without fail. How much of a difference would that make to your working capital and what difference would it make to your staff? Simply enabling VMI within your business could be one of the fastest ways to gain significant efficiency savings. If you can achieve this sort of benefit, then think – can you deliver the same to your customers?

How can HSO help you to integrate with your supply chains?

Microsoft Dynamics 365 Vendor and Customer Portals are there to provide that sort of connectivity – making your business more accessible than ever before and allowing your partners to interact with the inner workings of your business directly and without friction.

Connectivity extends much more than that. Your data is exceptionally valuable, so how can you exploit it more? What sort of applications can it drive that can further enhance your offering? Is your team capable of capturing more information on products, customers and the market, whilst on the road? Can image processing help you reduce the amount of time spent inputting data? With the ability to connect the Microsoft Power Platform to your Dynamics 365 data, enriching, leveraging and assessing your data can make a real difference in driving performance, without changing any of the core code within your manufacturing applications.

Standard workforce productivity apps can also help you reduce effort. Our mobile apps allow your engineers (internal and on the road) to keep informed of workload and priorities, and inform the business, customers and more, about progress. Information is key, and capturing it live – with minimal effort – means that your business will be more informed than ever before and that your supply chain partners (with automated communication facilitated by Power Automate) can be kept up to date with changing positions, live.

Workforce Transformation

Skills and the development of the workforce is key to sustaining a business and letting it thrive. Empowering your teams to “self-serve” in their HR environment (holiday bookings, pay slips, training applications for instance) is now the minimum expectation of a modern business, and particularly Millennial or Gen Z employees.

While that sort of capability is important, it isn’t what drives a business forward. The ability to be proactive in employee training and development is crucial in making sure that you have correctly trained and skilled individuals. Individuals that ensure compliance and capability whenever and wherever you need it. Being able to proactively manage your workforce and allow for disruptions associated with sickness means your business is in a great position to ride out any likely storm.

Now, more than ever, employees want to take control of their career, they want to know what they need to do to achieve the next step, they require transparency and a clear path forward. We think you need the same level of visibility to plan the development of the workforce, we want you to be able to identify likely future gaps and to have the ability to fill them. We want to allow you to have the right initiatives in place that motivate and encourage your staff while allowing them to develop and fulfil their potential. We want you to have the information that permits accurate performance assessment and the ability to react to those triggers with appropriate encouragement or remediation as needed.

We want you to be able to “take the temperature” of your staff regularly, to allow you to understand when your teams are particularly stressed or when they are challenged by circumstances in and out of work. We also want to allow you to intervene before any challenges impact performance and/or to take advantage of good ideas. All of this combined allows you to help your workforce transform.

Even with the most motivated workforce change is hard. Introducing a digital transformation is difficult and ensuring that your teams have the ability to understand and adapt to its implications is important. Once again, we want to help you here and our PROCI© qualified change management consultants can help you achieve and embed your vision.

Customer Engagement

  • What is your market share?
  • What is your pipeline?
  • Who is converting leads into opportunities and into real revenue?
  • How successfully are your customers working with your account management team?

These are the traditional ways of managing a sales team and pipeline, the traditional questions asked and answered by a CRM solution, but is that really engaging your customer? Clearly there is a place for the traditional metrics but how can you use technology to drive customer engagement? How can the customer be encouraged to see you as a commercial partner rather than simply as a supplier of goods?

Two answers to these questions spring to mind:

1. Be as easy as possible to do business with.
2. Provide a service that can’t obviously be bettered by someone else.

HSO helps you to do both. We provide you with the tools so that you have visibility of what your customer is trying to achieve and the ability to pivot your supply chain and service offerings to directly fill that need. We provide you with the ability to provide your customers with insights so that you and your business can drive performance and efficiency across the partnership.

Capturing all customer communication allows you to validate your assumptions about where your strong relationships might be and, if necessary, who the right person to deliver/manage bad news might be.

Using the Microsoft customer engagement tools that we have at our fingertips, we can provide you and your customers with an accurate live picture of the state of your relationship. We can use this information to provide deep links between your businesses, streamlining your supply chain operations. When there is direct contact from your customers, we can ensure that their key details are captured and, using sentiment analysis, highlight key words and even the mood of your customers, thereby allowing you and your team to react to your their desires or simply provide internal retraining.

Digital Innovation

Digital Innovation could be the secret source that unlocks the full potential of your business. In this next section, we explore the tools that are available to deploy, enabling your business transformation vision to take root.

  • Choose to leverage customer based IoT devices to better understand demand and stock levels, thereby allowing you to reduce your stock holding and provide a more efficient delivery service, all while improving on-shelf stock availability.
  • Use cameras and Microsoft Azure based behavioural analytics to identify areas of inefficiency within your factory, to highlight repetitive work patterns and allow your teams to reduce their impact.
  • Capture site-based weather information and use that to divert your resources to the areas where they will have most effect.
    Automate your processes and practices to free-up the time of your staff and allow them to make more efficient, practical and impactful decisions.
  • Set up digital twins, and associated modelling, to allow you to assess scenarios and investment opportunities and be sure of their outcomes.
  • Leverage augmented reality to increase the impact of your skilled engineers ensuring that they can guide multiple apprentices, without having to go on site with them each time.

All of these digital tools, and many more, are at your disposal. Take advantage of some or all these components and innovate new ways to improve your service offerings, efficiency, profitability, and sustainability of your business to become a smart factory of the future.