Innovation represents the most important driver for business growth and competitive advantage, yet manufacturers routinely face challenges around how to successfully manage the process.
The Manufacturer’s latest Director’s Forum Dinner, co-hosted with IBM and SAP, brought together a dozen manufacturing executives representing businesses operating in a broad cross-section of sectors.
Since the first Industrial Revolution almost 250 years ago, manufacturing businesses have faced almost constant disruption – from geo-political turmoil and economic decline, to technological advancements and fast-changing customer needs.
Yet, the world’s makers – particularly those in Britain – have a strong pedigree of adapting to change. History has repeatedly shown that the key to survival lies in embracing disruption and using technology to build flexibility and agility into your organisation; but does that strategy still hold true today?
Understanding market demand
The evening’s discussion kicked off with one of the largest potential inhibitors to innovation currently – the difficulties many businesses face in understanding, interpreting and reacting to rapidly shifting market demands.
With today’s prevalence of technology and data, it’s far easier to assess the who, what, where, when and why surrounding how customers are ‘consuming’ your products – which in turn leads to greater accuracy around forecasting future demand.
Yet, many organisations are still unsure how best to comprehend and articulate this deluge of information and use the resulting insights to enable quicker, more intelligent decision-making. It’s complex, laborious tasks like this that modern, cloud-based software systems are ideally placed to undertake.
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At the same time, given the significant level of uncertainty presently being felt by industrial decision-makers, it is perhaps unsurprising that investment plans around ‘digital strategies’ – particularly at the transformative level – aren’t at the level you’d expect.
However, the table unanimously agreed that data-enabled agility was arguably more vital than ever to short-term survival, long-term growth and unlocking new revenue streams.
Daniel Hatfield, partner and industry leader for automotive, aerospace and defence at IBM, agreed entirely; noting; “Yes, there are problems, but most problems have solutions. The end-result will likely rest on how well industry can become more flexible, agile and fleet of foot.”
“Increasingly, your survival will hinge on your ability to respond to change”
Managing director of a leading packaging manufacturer
Hatfield added that he had seen a noticeable increase in the adoption of ‘design thinking’ of late across both organisations and supply chains, an observation which resonated with several of those sat around the table.
Design thinking is a structured problem-solving approach to creating products, services, customer experiences or entire business models. By focusing on responsiveness, cross-functional collaboration and rapid prototyping to create a better service and fulfil a genuine need, design thinking helps drive differentiation, value and profitability.
For example, the head of mechanical engineering at a leading player in the aerospace, defence & security industry commented, “We are finding ‘sprints’ a far more attractive and effective way of working; focusing on rapid iterations and continuous improvement, rather than timeframes over months and sometimes years.”
Standardisation versus technology
According to Hatfield, is it Brexit or digital disruption that companies are currently most fearful of? The rise of CAVs (connected autonomous vehicles), for example, is having widespread ramifications across the global automotive supply chain and necessitates organisations to build capabilities into their operations. “Technology can bring those capabilities,” he noted.
Hatfield’s comment sparked a conversation about digital technology which saw the table split down the middle. Half agreed that digital transformation provided the agility that businesses increasingly require; while the other half said that standardisation trumped agility.
Success may lie in adopting a more balanced approach, suggested Jeremy Phelps, industry value engineer at SAP; “There are some things your customer really cares how you do it – i.e. the methodology. Other things, they really don’t. So, could those processes be more structured and centralised?
“Try and balance economies of scale for operational and mandatory requirements with agility for customer specific activities.”
It may be argued that not enough manufacturers are embracing the capabilities offered by modern, advanced digital technologies; but that certainly wasn’t true for those companies represented around the table.
One business is seeing a significant competitive advantage in its ability to collect, aggregate and distribute data from its machines to customers to help them better understand their operations and where capacity resides.
“There are four critical factors for every business: efficiencies, profit margins, employee knowledge and new revenue; digital technology is proven to enhance all four”
Willem Meijer, executive partner for industrial sector, IBM
“Data allows us to pinpoint exactly where profit lies and what the possible return on investment will be, which allows us to understand the whole picture and focuses our R&D and innovation activities,” one guest commented.
A leading packaging manufacturer has witnessed ‘a step-change in customer experience and value’ by using virtual reality and augmented reality (VR/AR) to ‘parachute products’ onto supermarket shelves and demonstrate to clients exactly how certain designs, materials and configurations will perform against its existing products and that of competitors.
The innovation director at a multinational infrastructure group explained how BIM-compliant field management software was helping the organisation collect and analyse how many errors it makes. “It’s not about right-first-time, it’s about how we can improve our processes,” he said.
The conversation concluded with a discussion on artificial intelligence (AI), which promises to be the next breakthrough in productivity improvement – following the advent of lean, automation and advanced IT.
By tapping into and harnessing vast stores of previously siloed data, AI can generate unprecedented levels of operational visibility and transparency. It’s a tantalising prospect that businesses are increasingly looking to leverage.
The Manufacturer’s Annual Manufacturing Report 2018 found that the vast majority (92%) of senior UK industrial executives believe that cognitive digital technologies such as AI and machine-learning will enable their workers to work in a more intelligent, efficient and agile manner.
“AI can be used to extract business insights from structured and unstructured data, it can drive new business modes and revenue, and it can enable businesses to get closer to customers and create more personalised experiences,” Hatfield explained.
“The rise of AI is largely mirroring that of the internet. Yes, there may be teething problems initially, but can you imagine now living without the internet? That demonstrates how technology is no longer a constraint, but an enabler. However, it’s critical you have a defined outcome, a reason for putting it in, otherwise, what’s the point,” Phelps concluded.