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Digital business transformation comes to manufacturing

The digital business transformation is steadily making its way to manufacturing, but an expert panel advises that strong leadership is needed to reach full potential.

Manufacturers are the laggards in the digital business transformation, but this is changing, according to a panel of experts.

Speaking before a packed ballroom at the Ernest N. Morial Convention Center in New Orleans, panelists said creative leadership is the key to getting manufacturers on board with the digital transformation.

The panel, held at the Microsoft Envision conference, included Jerry Jasinowski, former CEO of the National Association of Manufacturers; Jerry Knoben, Microsoft's  corporate vice president of manufacturing; Gary Pisano, Harry E. Figgie professor of business administration at Harvard Business School; and Pierfrancesco Manenti, vice president of research at SCM World, based in London.

There is no doubt data is going to change manufacturing processes, and companies will need to figure out how they can best use the vast amount of data coming in to their best advantage. "I think that operational excellence is going to get totally redefined by how we use data," Jasinowski said. "I've been in manufacturing for over 30 years, and even though we've increased the amount of visualization of data, it's still a stacked process. Every day, you have a factory meeting on the production floor to review quality and output, then you have a weekly meeting with managers to review all the factories and how they're doing."

Now, however, Knoben said you have the ability to know, at any moment, what the issues are in manufacturing facilities. "I can go to my PC right now, and at 13 manufacturing sites, I can tell you which lines are running, which lines are doing which products, [and] I can tell you the yields and outputs, without even asking a single question. I can just look at it," he said. "Anybody in the company can actually know what's going on every day."

Having all the data in the world won't solve problems, unless you have the right managers and personnel in place, and they will need to select the right technologies, including robotics, 3D printing and various Internet of Things technologies. But putting the technologies in place is not enough, Jasinowski said, because they need to be well understood and connected. This is the challenge for most manufacturers.

"The bulk of manufacturers aren't Microsoft; they're not yet at a point where, digitally, they're sophisticated enough to begin to connect with the processes," Jasinowski said. "You have to look at this as a strategy that you're implementing, that takes the technology and understands it, and uses the kind of data that Microsoft and others provide to connect the things. And that's what you should be thinking about; it's stitching together the technologies with the digital network, and then finding the right people to be creative enough to implement it."

The digital transformation for manufacturing can resolve some of the old bottlenecks, but implementers need to be aware of the new bottlenecks, Pisano said.

"Historically, we've had bottlenecks in all places. When we collected data on the shop floor, we literally hand-typed it in and things were not connected," he said. "We started connecting things with the first ERP systems, but we still lacked the real-time data. Now, we are starting to have sensors, and we're starting to get the data and have the capacity to process it, but the bottleneck now is that we don't have the tools to make sense of any of it."

This is where analytics can help manufacturers to make sense out of data -- for example, to know if problems have been repeated, and then to get to the root causes. Companies can resolve customer issues much faster these days, and companies can piece together bits of information along the chain from production to the end customer to resolve issues, Knoben said.

"If you can actually piece together this data, you can see it as a larger problem than what you thought it was," he said. "That's where I think this taking all this data and doing this machine learning is a huge opportunity to take these small problems and solve them before the customer experiences them."

However, for many manufacturers, it will take a significant culture change to make this happen. "Most of the CEOs that I know just don't have yet the culture on digital or the culture on technology to stitch it all together," Jasinowski said. "You have to become a creative culture that looks at doing things differently, and that culture reinforces the analytics, which reinforces the technology and all the rest of it. But the cultural change required in most manufacturing is substantial."

Pisano noted leaders need to be familiar with and have an appreciation for new technology, if not necessarily expertise with it. "I think that's a big thing, and I think you're going to find more of it in some sectors than others. Obviously, at a company like Microsoft, it would be shocking if you didn't understand digital; it's the world you operate in.

On the other hand, for a food manufacturer that hasn't been part of the equation, it's a whole new skill set that has to be developed and a mentality," he said. "Leadership is going to be critical, because it's a long-term commitment. You don't do this stuff today and have it pay off tomorrow. You have to have a strategy and a path that you keep pushing ahead, and the job of leadership is to keep pushing that against the inertial forces that tell you to stop, that tell you to wait, because you're not quite ready."

Creative leadership keeps pushing an organization through the transformation when there are mistakes made and failures, and gives it the permission to experiment, learn and adapt as things change, according to the panelists. The panel agreed there was no particular distinction in the industry segments that are better at introducing transformational technologies, but that consumer-focused companies have been at the forefront.

"I don't think there's a particular laggard industry, but [there are] industries that are a bit more ahead in their mindset in type of speed of change," Manenti said. "The consumer products industries are used to the speeds of the markets, but they are not used to the personalization of the organization. Vice versa, we get to the auto industry, who are used to the personalization, but they are not used to the speed, so different industries have different challenges, but I see this cross industry convergence."

Jasinowski agreed the consumer sector of manufacturing, with companies such as Nike, Proctor and Gamble, has been further ahead in innovation than the nonconsumer sector. "It seems to me that they are more tuned into this and are more sophisticated than the heavy-equipment companies," he said. "The whole Internet thing was a consumer thing, to some extent, and that carries over. We have to shift that."

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