Jan 27 2015

Q&A on Digital Transformation

QA2With any innovation cycle, there will always be variances in adoption rates. Commonly referred to as the “early adopters,” this group is eager to learn what is new, try it and then communicate their findings. At the other end of the spectrum are the “laggards,” who really are not interested in change, and will defer or avoid it at all costs.

A digital transformation is now underway, which is impacting the way we live our lives, engage socially, listen to our music and make our products. Some industrial companies have embraced this technology as an opportunity for competitive advantage – others believe that new digital technologies are best suited to consumer-oriented companies.

I had an opportunity to discuss this topic with Peter Conway, Principal at Strategy& (formerly Booz & Company). Here are the questions and answers from that interaction:

GB: Peter, how would you gauge the level of maturity of digital transformation amongst industrial companies? What level of adoption would you say we are at?

PC: “Industrial companies” is a very broad category. To keep it simple, let’s define the space as firms which define themselves as “industrial” – while noting that the most quintessential “digital” firms – E.g., Amazon – now derive a lot of value by their back-office – which in some cases looks like a distribution firm like we’d see across industrials. Based on that definition, the level of adoption varies, by both sub-industry and of course firm by firm as well.

That said, I would say that we are at a “3” on a scale of 1 to 10, with “1” being defined as a company which is completely disinterested in the potential of DIGITAL – writ large – and 10 being a firm where every member of the team thinks “what could I do with digital technologies to make this product, process, or customer interaction better?” By every member of the team, I mean the CEO implementing a new ERP, the Director of Manufacturing testing “Internet of Things” applications across her factory floor, and the new team member in marketing intuiting and developing a new customer interface that drives more orders.

GB: Given this level of adoption, what would you say are the reasons for these organizations to have not invested as much in transforming their operations to being more digital?

PC: Costs of “cutting-edge digital platforms” – be they ERP, Internet of Things, web tools, etc. are not where they need to be, particularly for small businesses – but this will change, either because small firms are acquired and transformed by their buyers, who can afford the cutting edge, or because costs will fall through innovation driven, in part, by small manufacturing firms themselves. More importantly, however, perceptions are not where they need to be. That Dir. of MFG I mentioned earlier is under a lot of day-to-day, traditional pressures – safety, production volumes, and quality – all of which can be handled in the old ways. It takes clear effort by a firm’s leadership to attract and retain the type of talent that can do their 9-5 job by 3PM so that they can be an agent of digital change the last 20% of the day. Most critically, to make the often many successive leaps – some large, some small – to “digital” requires that several challenging things all be true at the same time. Each person be aware of numerous technologies that could help him or her in the myriad daily tasks, recognize the cost benefit tradeoff of each, and based on those results, create a prioritized detailed roadmap to re-conceive and re-conform the organization as a whole … one deliberate step at a time.

This is why transformations, digital or otherwise, are extremely difficult to get right. Those who know the old technologies, processes, and customs are rarely well-versed in new methods, what those methods might cost vis-à-vis their benefits, how they impact other stakeholders within the organization (e.g. IT, HR, Finance) Those who could help lay out the case for change and drive the organization – consultants, internal cross-functional teams, etc. – need to be both visionary and capable of weighing subtle trade-offs and coming up with a workable answer; this is a pair of skills that rarely occur together in nature. Finally, in general, those members of the team who might naturally be called upon to most seamlessly imagine the digital future of their current industrial home are those with the least formal experience and decision rights – the young. While there are certainly interesting examples of youth-led skunkworks tasked by top management to drive radical change – Iacocca’s team at Chrysler in early ’80, Toyota’s e-commerce team in 1996, because of the organizational headwinds such teams face, their success is often limited.

GB: What would you say are the most compelling reasons why an industrial company might invest in transforming their operations to be more digital?

PC: Companies MUST go digital to survive. What that means differs by firm, in the products and culture unique to it, by market, in the strategies and tactics of both its producers and buyers in which that firm competes.

This shift to a more digital-centric model is irreversible and inevitable and will result in significant disruption to traditional industrial markets and companies. A number of companies now offer proprietary digital platforms to their customers. These systems can take huge amounts of data that are thrown off by, say, a dual-cycle gas turbine, and then aggregate and translate it into the key performance metrics on the operations of the system that their customers need to maximize performance of that very complex, very expensive piece of machinery.

Another example is Tesla, which is upending the automotive market in many ways. Tesla’s cars are on the forefront of the industry in how they receive data from their maker, and act on that instruction, upgrading entertainment, engine, and safety capabilities in real time. For example, E.g. Tesla pushed a safety software update to raise all Model S cars 1″ on highways – something no other automaker can do yet. This saves them the cost of bringing all the cars into the dealer for the update, and saves their customers the time required to make the trip into the dealership. It’s a virtuous cycle of cost reduction and customer satisfaction.

GB: How much of this transformation can be attributed to internal pressures (i.e. cost cutting, process improvement, etc.) vs. external pressures (i.e. customer expectations, feature sets of new products, etc.)?

PC: The truth is that both are powerful drivers.

On the internal side, look at the cost reductions, in multiple areas, that can be achieved with the move to cloud computing.

Yet the product front – a type of external focus – is replete with examples of digital-driven innovation. “Nest” home thermostats, Fitbit and other health applications are already in the market. Emerging systems for setting insurance rates based on health and driving behavior, potential connected-car traffic management systems give indications of how world-changing this will be – and industrial companies will be delivering the devices and infrastructure that makes it all possible.

GB: What are the key benefits industrial companies should be focusing on when evaluating an investment in digital transformation? In other words, where is the big ROI for such a decision?

PC: Executives should focus on how a digital transformation will position their firm to compete in the market. Does this initiative yield an outcome that is necessary to keep you ahead of the competition – or, from being left behind? There are analogues to this in ERP implementations, for example. Historically, those were expensive and hard to justify on an ROI basis – because what is the ROI of good information on your business? But it still made sense to do it, because once a business reaches a certain scale, you need to invest to stay on top of the information you need to run that business.

Digital is similar. Long-term, you are focusing on profits. In the shorter term, you are focusing on increasing the collection, distribution, and use of data to drive better decisions for your customers or your own firm. On the potential for integrated solutions that include hardware and software components to drive higher bundled margins. On boosting efficiency and cutting costs by getting to know customers more intimately by providing new digital services experiences to delight them.

GB: Lastly, what are some of the hidden benefits that manufacturers might not be fully considering when evaluating this decision to transform their operations to be more digitally-focused?

PC: The greatest hidden benefit is that your company will be empowered by the realization that it can draw on “an expert at every desk.” How so? Because every white-collar worker is now a digital firm of sorts. S/he must decide whether they can afford the latest technology – “do I get the new iPhone (thanks to BYOD) or should I hold off another year until the company will pay for it and save the cost? Do I buy a smaller car and spend the extra on a home video meeting set-up (thanks to work from home)? That would allow me to visit my six sites across the US to a greater degree than I can from the two “boots on the ground” visits my budget will allow me.”

 

Gordon can be found on Google+

Permanent link to this article: http://www.apriso.com/blog/2015/01/qa-on-digital-transformation/

Jan 22 2015

In the Automotive Industry, was 2014 a Year Worth Recalling?

year_worth_recalling2014 was a record-setting year in the automotive industry – but not in a good way. Recalls reached record levels, and show no sign of letting up. You couldn’t pick up a paper, log onto your favorite news portal, or turn on the radio without hearing about the industry’s quality problems. If it wasn’t a new and damaging recall, it was an auto executive being grilled by a government committee.

In an age where information rules, and where the price of failure is so high, why do recall problems continue to make headlines every month? Why is quality so hard to control in the automotive industry?

Increasing Complexity

Obviously, part of the answer is the sheer complexity of the modern supply chain. The more global our industries become, the more far-reaching the processes that we have to monitor, control, and correct. This is why manufacturers and suppliers have become so focused on improving the track and trace systems that provide visibility to quickly identify problems and their sources—ideally down to the specific part and production run—so issues can be contained quickly.

Improving Responsiveness

But there’s another part of the issue that isn’t getting as much attention, and that’s the manufacturing industry’s ability to respond quickly and precisely once an issue has been identified. In this case, identifying a recall issue sooner and responding faster could have an enormous impact on reducing the cost and impact, letting manufacturers rebound faster from a problem, and then quickly re-supply production operations—either to provide the needed parts for recall or to ramp up new and better products. To tackle this aspect of the problem, auto manufacturers may need to think about how to improve their ability to see issues sooner, to react quickly and to pursue remediation actions within minutes of a problem being identified. Global product traceability solutions are now available to perform this capability.

It struck me as I was reading about the on-going airbag recall, one of the biggest such events within the industry. Given the size and scope of the recall, a major issue in tackling the problem is how widespread it appears to be. Given the lack of precise historic operational intelligence to know exactly which airbags are defective and the scope of the problem going back several years, a conservative approach will likely avail whereby more airbags are recalled than actually necessary.

Alternatively, if the companies had recorded and archived more detailed information about the individual components, a more “surgical approach” could be pursued, limiting the impact to both end-user customers and manufacturers of this recall.

It’s not too tough to see that the ability to swiftly and precisely respond to a suspect part situation could go a long way toward paying for a manufacturer’s investment in a state-of-the-art global track, trace and containment system. Return on Investment could be quickly achieved through reduced liability, improved public goodwill, faster resolution, and less “hits” on brand equity via fewer headlines. At the very least, it’s yet another strong reason for automotive companies to be investing in modern manufacturing systems.

In any event, here’s hoping that 2015 will be a more forgettable year for recalls!

Permanent link to this article: http://www.apriso.com/blog/2015/01/in-the-automotive-industry-was-2014-a-year-worth-recalling/

Jan 20 2015

10 Steps to Establish Best Practices in Maintenance Management

10_tips_maintenance_managementEstablishing best practices in production maintenance is an achievable goal. But it’s a goal that many talk about but few achieve. So why is it so difficult? And, why are so many manufactures still running at over 90 percent reactive?

Many blame it on the age of their manufacturing assets and the repairs they require. More blame goes to not stocking the critical (and expensive) spares needed to sustain production. And still more can be blamed on today’s fast-paced manufacturing that doesn’t allow for proper planning or time management.

Rather than play the “blame” game, what steps can be taken to proactively reach world-class maintenance in this reactive environment? Here is what I would propose:

  1. The first step of any journey to best practices is to gather as much data as possible on machine downtime, meantime-between-failure, parts spend, tech utilization, technician response time and percentage of deliveries made on time. With this, you can begin to calculate the average cost of one hour of downtime.
  2. Given your estimate on the average cost of one hour of downtime you can then begin to measure the effect of maintenance on production. By making some simple assumptions (based on the cost of one hour or downtime), how much would an improvement of only five percent in machine availability be worth to your operation? Although it seems like a small amount, a five percent improvement can provide remarkable results.
  3. Now look through the variables in your operation. How much more savings would be possible by initiating a plan for critical spares? What effect would an increased response time have on providing more machine availability? How would a work order system improve uptime?
  4. As you analyze these variables you will start to see opportunities to add more value. Now it’s time to invest. Adding a Computerized Maintenance Monitoring System (CMMS) could have a monumental effect on virtually all your variables. That’s because a CMMS system could provide work order information, it could also increase technician response time, which lowers your mean time to repair and reduces the amount of downtime.
  5. Now that you are inputting work orders through the CMMS, every manufacturing asset in you operation is shown at the touch of a computer screen. Critical parts and spares can be tracked. Preventative maintenance (PMs) can be scheduled and checklists generated.
  6. Moving from reactive requires planning for your technician’s time as well as planning for having the right part at the right time. That’s why introducing a scheduler planning function can be one more way drive out downtime by maximizing machine PMs.
  7. So now we are moving from a reactive model to more proactive model. But where do we go next? Welcome to predictive tools. Along with a good PM checklist it’s important to develop a predictive PM checklist as well. Electrical equipment should have a thermography PM included to look for overheating issue. Rotating equipment should be scheduled for vibration analysis. And airlines need ultrasound scanning for air leaks.
  8. So where do we go after predictive? Total Productive Maintenance (TPM) takes the maintenance to the next level by involving the operator. No one knows the day-to-day operation of a manufacturing asset better than the operator. So why not provide some simple ways that the operator can assist with maintenance. These could be a simple as installing sight gauges to monitor fluid levels or cleaning and repainting the asset to make leaks or malfunction more visible.
  9. Now we are on the road to reliability. Reliability Centered Maintenance (RCM) puts it all together. Through this concept, your operations become more experiential. Individual machines are no longer brought down for scheduled PMs on a scheduled basis. Rather, they are run to the threshold of failure to assure the most productivity possible. In some cases, run to failure is permitted based on cost and mean time to repair.
  10. Moving the needle from reactive maintenance to best practices in maintenance takes time, a complete cultural shift and talented maintenance technicians. And with today’s skilled labor shortage finding and retaining skilled technicians can be difficult. So it is conceivable that you might need help from a third party – not only to find talented technicians – but help to establish the proper metrics and processes within your operation. To find the right third party provider don’t be afraid to reach out to that providers customers and ask the tough questions that only a customer can answer. Next congratulate yourself for starting this journey to Lean maintenance. It’s an investment that will pay handsome dividends for years to come.

Permanent link to this article: http://www.apriso.com/blog/2015/01/10-steps-to-establish-best-practices-in-maintenance-management/

Jan 15 2015

What Lessons in Creativity can Silicon Valley Entrepreneurs Teach Manufacturers?

transferrable_creativitySilicon Valley’s policy toward creativity and innovation within the software technology industry is well known within the manufacturing community. In this article we look at what policies the leaders of these companies have adopted – and to what extent these practices are transferrable to our manufacturing firms.

Starting from humble beginnings, the likes of Steve Jobs and Steve Wozniak at Apple, Larry Page and Sergey Brin at Google, plus many before them have created an Industry of competitive innovation that has reached into our homes and daily lives.

Here are three factors to consider in your manufacturing business:

1. Finding talented employees and keeping them

Even the biggest technophobe knows the stories of Google’s employee benefits. Lavish campuses are set up with massive employee lounges, swimming pools, decked out work spaces and strong salaries. These perks take employees off the beaten path and into a space where passion and creativity are rewarded.

The combination works; employees routinely go past the ordinary and extend their reach towards the extraordinary. For a manufacturing company, the same rules can be applied, albeit with more effort towards production and effectively implementing procedures that improve efficiency.

At Google, the ‘Innovation Time out policy’ or 80/20 policy takes things a step further. The company fosters their employee’s passion by letting them spend 80% of their time working on core projects and one day a week focusing on a project of their own. While costly at the start, some of these independent projects ended up turning into Gmail, Google News and AdSense.

The lesson that is learned from Google’s success revolves around two key points; creating a demand in the workplace and giving employees the freedom to pursue their own creativity.

Manufacturing companies can implement these points in a similar way to replicate the innovation model. Letting employees give their input in product development can shed new light on a problem or give a new dimension to a complicated project while giving those involved part ownership of the end result.

2. Encouraging risk

Do it. Try it. Fix it.” is a mantra used daily by employees at high tech companies across the valley. Solutions to complex problems come through trial and error, with pragmatic judgment leading the way through countless details. Teamed with an attitude that failure breeds success, people are encouraged to think out of the box and have the support to try the far-fetched, as well as the tried and true methods.

For a manufacturing company looking for an edge, this attitude can lead to innovative results and foster a fresh working environment that brushes off setbacks in lieu of the score at the end of the game.

Management can copy this widespread structure from the valley. Instead of being just an authority to report to, managers can also encourage and guide employees towards taking chances to solve problems and using their creativity to move forward. Giving employees the power to fail without repercussions transforms the workplace into a different space; trust is implied, setbacks are learned from and success is a group effort.

3. Competitiveness while collaborating

Survey findings suggest employees place high consideration on where they will work based on the team they will work alongside. While encouraged to be independent, there is a rare air of collaboration that brings new possibilities into the picture.

This leads to more networking both inside and outside the company; more than twice the number of IT professionals in Silicon Valley work on open source projects. Having these networks ties the culture of the IT world together, giving valuable insight and solutions to problems ranging from management issues to how to increase productivity.

For manufacturers this is a key question and a practice to implement with consideration. What projects do your employees undertake during their free time? Do you encourage working with company ideas outside of the workplace? What projects are shared by those across company boundaries which contribute to their success? Creating projects or encouraging employees to work in their field outside the workplace widens their effectiveness and increases their awareness of what they can accomplish.

Focusing on developing a team who work and play well together encourages a passion for work, whether it’s designing shoes or building airplanes. Giving people the rope needed to go out on a limb and come back in afterwards with difficult results brings innovation, from the next new phone to the next portable water filter. While manufacturers worldwide have a different set of rules to play by, tapping into the talent and resources already in place starts a change in the workplace that builds the company while restructuring it organically.

For the small manufacturer without the budget and resources for extravagant campuses, benefit packages and swimming pools, it’s a good reminder that Bill Gates and Steve Jobs started working out of their garages. By taking small steps using ground-breaking practices, they built their companies into the successes they are today.

Ideas that foster creativity, encourage risk taking, and actively inspire employees to think outside the box can cross over into the board rooms and factory floors of anything fabricated.

This is a guest post submitted by Steve Stretton, a social media marketer and writer from a (non-silicon Valley!) social media startup. Get in touch by visiting his website socialwatch.co.

Permanent link to this article: http://www.apriso.com/blog/2015/01/what-lessons-in-creativity-can-silicon-valley-entrepreneurs-teach-manufacturers/

Jan 13 2015

Avoid Downtime: Keep Processes Running and Optimized

avoid_downtime_keep_processes_runningKeeping a manufacturing facility running efficiently requires routine inspections along with maintenance and repairs. However, many routine repairs can be avoided when your facility uses quality equipment and follows standard procedures. Use these tips to safely avoid excess routine service to increase production time and reduce your labor costs. Use these tips across locations for even greater savings.

What defines routine maintenance?

Each facility will have a unique definition of routine maintenance. Machinery may undergo service on a weekly or monthly basis, depending on the nature of the equipment and the amount of use. Some of this cannot be avoided. Proper servicing is designed to reduce unplanned downtime and this makes the servicing valuable. However, by looking closely at each routine maintenance or repair procedure, you may find that some of the service being performed is not optimal.

Optimizing inspections and maintenance

Manufacturing facilities can use the same type of metrics that repair shops use to measure equipment performance and breakdowns. This requires accurate data collection and analysis of all machinery in the facility. Maintenance software programs can be customized to the type of equipment you use; the programs will help you optimize service intervals.

The first metric is Mean Time Between Failures (MTBF). Determine the failure rate for each equipment group with the routine your facility is currently following. A very low MTBF may indicate that the time between servicing can be extended. A high MTBF indicates worn out equipment, poor-quality repair parts or faulty procedures.

Mean Time To Repair (MTTR) measures how long routine repairs take for each set operation. Some of your equipment may end up out of service for longer periods due to extensive dismantling requirements. Other machines may not present the same issues. Lack of parts on hand or the skilled maintenance personnel needed are also factors in MTTR that must be considered.

Older equipment will often show more failures with a higher need for routine repairs. Your facility must analyze data collected to determine where the break point is for replacement. If machinery is failing frequently, you are losing production time, repair costs and the labor involved in the repair. Purchasing newer equipment could be less expensive than trying to maintain the existing machinery.

Routine inspections should always be performed for any safety issues. The same inspections can be used to prevent the breakdowns that are costly in equipment downtime. Cross-train your facility personnel if you have not already done so. Relying on just one or two individuals increases the MTTR and decreases your ability to extend service times.

Quality equipment and parts

Take a common example of routine oil changes in automobiles. Every three months or 3,000 miles was the standard. This is no longer true for many newer vehicles. Improvements in oil quality and filter materials are extending the service life. You can apply many materials improvement to enhance the equipment in your facility. By purchasing quality equipment at the start, and maintaining the equipment with quality replacement pieces, you can reduce the service required to continue full operations.

For example, using higher quality machinery oils can allow you to reduce the number of changes required. Using higher quality cables to operate the equipment will result in fewer replacements. Cables designed to provide impact resistance and higher flex life will reduce the number of times you have to replace wires due to wear.

Invest in higher quality belts and cutting blades and keep spare parts available for emergency repairs. While some items, like replacement motors, may be too expensive to keep on hand, the majority of the materials used for routine maintenance should be readily available. Having to wait for a shipment is not optimizing your operations.

By continuing to analyze data collected from machine operations, your facility can continuously improve your MTBF and reduce unnecessary service procedures. The end goal is to keep your equipment at the peak of performance without wasting labor and materials.

Permanent link to this article: http://www.apriso.com/blog/2015/01/avoid-downtime-keep-processes-running-and-optimized/

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