Digitalization of manufacturing operations is one of the most extensive and challenging investments for modern industrial companies. As a consequence, there are a number of options for co-financing these projects by the state, since improving production efficiency is one of the fundamental conditions for maintaining the competitiveness of the manufacturing economy.
However, research results by Gallup, show that even in developed European countries, more than 70 percent of digital projects in manufacturing do not achieve their set goals. Therefore, the question naturally arises, what are the key obstacles to a successful digital transformation of production, and how can we avoid them.
Given the above, a methodology has been developed to help managers in digital transformation projects, which includes six strategic steps:
1) Gap analysis and goal setting. Before starting a digital transformation, managers should identify the most prominent production gaps that represent key weaknesses or opportunities for process and productivity improvements. Then, benchmark these existing capabilities against competitors, industry standards, and best practices to derive to a set of goals for digitalization.
2) Creating and sharing a vision. Digital transformation often starts with executives, but loses momentum when it spreads to manufacturing employees. Therefore, it is necessary to convert the digital goals into a compelling vision that will be easily understood for every stakeholder in the company. If leaders fail to achieve positive expectations, digital initiatives fail because employees won’t see the benefits and will resist changes.
3) Selection of priorities and measurable implementation of changes. Digital transformation often impacts several departments or even the entire company. Therefore, a properly planned approach to implementing changes is essential, as well as the appropriate inclusion and coordination of all departments involved. The plan should lay out clear objectives, stating what these are, how they will be achieved, by whom, and over what timescale, including external experts who can help with their practical experience.
Typically, companies select one or two priority digitalization initiatives and determine key factors such as timelines, measurable KPIs, and sufficient human and financial resources. Experience shows that starting digitalization with multiple initiatives at the same time can lead to confusion and does not achieve positive results.
4) Pilot projects. Before allocating more resources and implementing digitalization on a broader scale, it makes sense to conduct smaller and shorter pilot projects, to identify obstacles to success, organizational strengths and weaknesses and test capabilities. Pilot projects are also important for gaining experience, with the help of which digital initiatives can be implemented more easily and quickly in the remaining parts of the production process, in different locations, and perhaps even countries.
When implementing digital solutions, it is essential to have “quick wins,” to gain the momentum, as projects with longer horizons lasting months or years often lose enthusiasm and become watered down. Agile methods allow us to do this. Firstly, they are naturally collaborative and consider different areas and points of view. And secondly, because with shorter work cycles, they identify obstacles more quickly and avoid them in time by adjusting the tactics.
5) Monitoring results. During and after the implementation of pilot projects, managers must monitor the impact of the new technology according to measurable criteria. The key is that the results are consistent with the planned goals. If this is not achieved, it may be necessary to change the approach and test again with a new pilot project, before wider roll-out of digital initiatives occurs, with more resources.
6) Roll-out. Once sufficient experience and feedback has been gained through pilot projects and they confirm the strategy’s suitability, as well as reduce the risks of failure to an acceptable level, the digital transformation can be rolled-out across the business. If this doesn’t happen quickly, there is a likelihood that the enthusiasm for the results and the momentum will die, and the participants will return to their daily work and forget the lessons learned over time.
In summary, one of the most important factors for success is that management support and finance are sufficient to achieve the goals of digitalization. However, it is also essential ensure the commitment of employees as users of the digital solutions as well as everyone else who participates.
For a successful digital transformation of manufacturing operations, experienced partner is essential
Digital transformation is never easy, especially in times of rapid technological and business changes that constantly push the boundaries of what is possible and acceptable. It is even more challenging if most employees do not see the point or do not feel ready, and most challenging if the return on investment is not realized.
The main reason that two-thirds of projects fail to achieve their goals is that inappropriate planning does not consider the basic rules of implementing and managing change, such as the need to change working practices.
Therefore, it is highly recommended for all companies that are considering introduction of digital technologies in manufacturing operations, to work with an external partner who has the appropriate knowledge and practical experience.
At Metronik, we’ve helped more than 100 manufacturing companies exploit the benefits of digital transformation and gain confidence for more extensive production operations projects. With a mix of technological as well as operational expertise, we bring all the necessary capabilities for successful implementation of standard and tailored software solutions, and facilitation of the necessary change management in organizations to make changes stick.
For more information about the planning and implementation of digital solutions in manufacturing operations, contact Saša Sokolić, at: sasa.sokolic@metronik.si
