Feedback from this post, and our recent attendance at the Sydney IoT summit was unanimous – people recognise the value and importance of digitisation, but are unsure how to begin, or what it looks like in practice.
A few of the Nukon Team at the IoT Summit, Sydney, 2018
It’s difficult to summarise the way companies are approaching their specific challenges and showcase all that’s possible in this arena, but we’re going to present a possible approach to 4.0 digitisation, so you can get started.
One point to make right away is - don’t even think about a digital solution until you know:
- where you came from
- where you are now
- where you’re going
What a digitisation program looks like
We’ve worked with clients to fully digitise their quality systems, increase visibility in warehousing, analyse water assets using predictive machine learning, and provide real-time operational awareness through IT and OT integration.
While each of these projects are inherently different, the general approach for 4.0 digitisation is the same:
- Understand your current state
- Know where you want to go and why
- Develop a technology roadmap
- Design and pilot innovative projects
- Scale full solutions
- Continuous improvement and analysis
We’ve divided these stages of the digitisation process into two blogs:
Stages 1–3: A quick start guide to executing 4.0 digitisation (Part 1: Getting started)
Stages 4-6: A quick start guide to executing 4.0 digitisation (Part 2: Implementation)
We’ll jump into Part 1: How to get started with 4.0 now.
But an important point before you read on:
Your 4.0 journey must focus equally on technology, people and process. These are the three pillars of success – if you simply focus on technology without the change management it will fall flat.
Part one: getting started with 4.0...
1. Understand your current state (now)
“Begin with the end in mind” – Steven Covey 7 Habits of Highly Effective People
Steven might be jumping the gun here. Aside from the vision, which will guide what follows, the first step in digitisation should be to understand where you are now.
How: Conduct a current state assessment
Timeframe: 2-4 weeks
What: The assessment looks at your current processes and information flows and benchmarks these against similar businesses.
Action: Take the time to collect qualitative data, such as KPIs and reports, and quantitative data, such as the description of recurrent troublesome situations. This will help define the best approach for the next phases of the project. Ask questions and observe processes. Involve operations, production, supply chain and IT departments to gain a thorough understanding of your strong points, challenges and opportunities.
Why: Solve the right problems by uncovering the strengths and weaknesses of the current systems and processes. Pareto analysis helps identifying initiatives with high return value. Think about Industry 4.0 as a Marathon, not a 100 metre sprint. Saying this, building in some early wins will help oxygenate and keep the program alive. This stage provides a baseline for the technology roadmap.
e.g. a frozen food manufacturer believed they had an MES problem. A current state assessment identified problems and opportunities for improvement that would have far greater return than an isolated MES upgrade, including projects that could reduce raw material costs by 2% and improve throughput by 10%, adding up to tens of millions of dollars in annual savings. Importantly these solutions were around people, process change and technology.
Get started today with our simple current state check:
- Initiate: Meet with the engagement sponsor to agree on scope, terms of reference and motivation for the project
- Prepare: Prepare materials to facilitate workshops, interviews and data collection (qualitative and quantitative)
- Execute: Perform workshops, interviews and data collection
- Present: Compile the information collected, prepare outputs and present back to the key audience.
How Nukon can help: Nukon will consult with your business and perform data collection including interviews, observation, data analysis, and benchmarking to provide a true current state assessment and recommendations on opportunities to improve. We provide industry benchmarks by ranking your processes on its maturity, level of digitisation, and efficiency. A methodology with templates and tools are used in order to keep this as efficient as possible. A business case or ROI study can be developed.
2. Know where you want to go and why (future)
It may seem like an obvious question, but it pays to stop and ask: What do we want from 4.0?
Is it improved quality, faster response times, reduced costs, better visibility, or something else?
Next, we need to determine which conflicting goals will provide the most business value. Here we recommend conducting a value driver assessment to help identify where your money should be spent.
What: A value driver assessment is the study of key business drivers to identify the best digital transformation value areas
Timeframe: Generally of short duration – varies based on complexity and size.
How: First, get started with a strategy meeting. Meet with key business leaders and consider:
- the vision
- outputs from the current state assessment
- key drivers for business success and industry competitiveness
Then, conduct the value driver assessment. Actions:
- Review the current state assessment, which will have uncovered your challenges and opportunities.
- Align your key business drivers with the industry 4.0 value drivers (pictured below), considering current and long-term strategy.
- Identify the potential digital transformation opportunities for each key driver (note the table below provides a basic representation of options and you may benefit from a vendor agnostic technology provider’s input here).
- The complexity, costs and change impacts should also be rated to provide an overall view of the value potential
A basic representation of Industry 4.0 levers mapped against value drivers for manufacturing. Credit: McKinsey
e.g. Our frozen food producer’s focus on on-time delivery might translate into key 4.0 value drivers of ‘Time to market’, ‘Supply/demand watch’, ‘Quality’ or ‘Inventories’. Next, the Industry 4.0 levers will need to be considered in the context of the business’ specific pain points, current processes and opportunities outlined in the current state assessment.
Why: Sometimes to know where you want to go, you need some options on the table. While this step could be done on your own, the value comes from having a technology and industry specialist present you with options.
How Nukon can help: we can help you identify business requirements and determine the biggest leaver you can pull with 4.0. Following from the current state assessment, we’ll look at business processes, the strategic vision and consult parts of business (including ordering, product fulfilment, quality production scheduling, operations management, and customer support) to achieve a clear, financially viable direction.
3. Develop a technology roadmap (the Digital Strategy)
A solid technology roadmap, or Digital Strategy, should show how progress will be made towards the 4.0 values identified in step 2.This will be aligned to the digital maturity of the organisation and may trigger an evaluation of competing technologies to implement parts of the roadmap.
Timeframe: 2-4 weeks. Typical horizon 1-5 years.
Action: Identify a series of time-bound milestones that gradually build digital capability across processes, people, infrastructure, applications and data management.
e.g. our frozen food manufacturer wants to focus on the value drivers of Quality and Time to market. It has a few key processes that are still paper based, such as quality and planning. It sees that having a strongly connected worker and real-time visibility of events will support on-time delivery and streamline quality and planning processes. An example high level approach to achieving this would be to develop multiple streams in parallel ,while driving maturity up to increase end to end automation:
Once you have a high level roadmap, identify the specific projects required to reach each milestone and business capability. This will be different for each organisation, depending on the outcomes from previous activities, and desired goals for digital maturity:
Why: The digital strategy or roadmap will keep you headed in the right direction, avoid budget pitfalls and misdirected resources in your 4.0 journey. Outlining a roadmap and a vision also helps with change management and bringing everyone along with the journey. With a clear strategy, you'll avoid taking a piece-meal approach with different people pushing and pulling in different directions – all wanting the same thing.
- Be realistic about your time frames
- Don’t try and take on too much at once
- Keep the roadmap at a strategy level but consider technological requirements
- View the roadmap as a journey not a one-time project
- You don’t need to make ‘one big bang’; make modular, incremental and measurable improvements
- Be patient – often the initial steps will be piloting and small scale testing to validate assumptions and benefits, followed by getting foundational infrastructure in place
How Nukon can help: We can develop a realistic roadmap to get you from where you are now, to a position to realise your future value drivers. We will ensure the roadmap is moving you up the digitisation maturity curve for people, processes and technology.
Wrapping up Part 1 of your digitisation journey:
We’ve covered the first three stages of any digitisation project:
1. Understand your current state
2. Know where you want to go and why
3. Develop a technology roadmap (Digital Strategy)
By now, you’ll have a firm understanding of where you are now and where you should be targeting 4.0 digitisation efforts. You’ll have identified the most valuable industry 4.0 drivers and will have a clear roadmap as to how to achieve them.
From here, you will need a fine-tuned and integrated process supported by the right technologies to implement an effective program. This will be the difference between delivering the strategy and achieving competitive advantage, or having the program fall flat.
Time to make some key decisions and move to implementation.
Read Part 2 in our series: A quick start guide to executing 4.0 digitisation (Part 2: Implementation). There, we'll explore stages 4-6 of digitisation implementation:
4. Design and pilot innovative projects
5. Scale full solutions
6. Continuous improvement and analysis
Or if you like, read our free guide to integrating IT and OT systems. This is often a foundation step in any digitisation progress, and will set you up to be able to scale other business-wide improvements...