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Digital Transformation: Guidelines to Success Industry 4.0 = People 4.0 + Process 4.0 + Technology 4.0 Oct 2019 Tom Rafferty Digital Transformation: Guidelines to…
Digital Transformation: Guidelines to Success Industry 4.0 = People 4.0 + Process 4.0 + Technology 4.0 Oct 2019 Tom Rafferty Digital Transformation: Guidelines to Success Overview Industry 4.0 is the digital transformation of industrial markets (industrial transformation) with smart manufacturing currently at the forefront. Industry 4.0 represents the so-called fourth industrial revolution in discrete and process manufacturing, logistics and supply chain (Logistics 4.0), the chemical industry, energy (Energy 4.0), transportation, utilities, oil and gas, mining and metals and other segments, including resources industries, healthcare, pharma and even smart cities. Industry 4.0 signifies the promise of a new Industrial Revolution—one that marries advanced production and operations techniques with smart digital technologies to create a digital enterprise that would not only be interconnected and autonomous but could communicate, analyse, and use data to drive further intelligent action back in the physical world. It represents the ways in which smart, connected technology would become embedded within organizations, people, and assets, and is marked by the emergence of capabilities such as robotics, analytics, artificial intelligence and cognitive technologies, nanotechnology, quantum computing, wearables, the Internet of Things, additive manufacturing, and advanced materials. While its roots are in manufacturing, Industry 4.0 is about more than simply production. Smart, connected technologies can transform how parts and products are designed, made, used, and maintained. They can also transform organisations themselves: how they make sense of information and act upon it to achieve operational excellence and continually improve the consumer/partner experience. In short, Industry 4.0 is ushering in a digital reality that may alter the rules of production, operations, workforce—even society. Deloitte Insights 2017 Industry 4.0 can deliver significant long-term benefits however benefits will not realise their full opportunity if technology alone is seen as the answer. Industry 4.0 = People 4.0 + Process 4.0 + Technology 4.0. This paper outlines the importance of focusing on each element and getting the right balance to deliver results. Expecting technology alone to get you there is a flawed assumption. People need new skills to understand, maintain, grow technology solutions and on how to interpret and act on data outputs. Processes also need to be lean, clearly understood and optimised before adding high cost automation. 2 People 4.0 Given enough capital, any manufacturer can invest in the latest technology. But without the right people in place to optimize that new technology, it will take a long time to recover the investment. DDI research shows that companies with high leadership quality and engagement are nine times more likely to outperform their peers financially. Therefore, in parallel to a technology roadmap every business should have, a people development roadmap is essential. The following are key considerations: 1. Find change champions that will influence others. It is difficult to reach out to everyone in the organisation at the level of engagement required to effect change but Change Champions can lead change on the ground and support those around them to embrace new technology. Change Champions don’t need to be technical experts. The most important attribute is that they understand the benefits of technology and are influential across the employee workforce in getting them to embrace it. 2. Ensure that your employees buy into the change Communication cannot be underestimated. Communication must be planned and coordinated. One of the most obvious fears for employees is job security. This needs to be explained upfront. While technology can reduce or eliminate manual tasks it can also open the requirement for new skills and focus areas. A study carried out by Deloitte shows that only 6% of companies expect their workforce in Europe and the United States to shrink as a result of automation and artificial intelligence 3 3. Involve employees, they know their process Whether your workforce is working on a factory floor or field operations, engage them form the beginning. They know their process better than anyone. If they feel as they are playing a part in the solution they are much more likely to feel a sense of ownership and willingness to work with the new technology. 4. Give employees the right skills Technology can often mean a new way for employees to carry out their tasks, a new machine within a factory, a mobile app replacing paper in a field operation, new technology requiring new support skills, new data requiring new analytical skills. A training plan needs to be developed to ensure people skills match the support and use of new technology. There are other key considerations. In most cases employees have access to new data or real-time data that they didn’t have before. While technology can provide this in abundance it is of little value if employees are not shown how to use it and get the most from it. Following is a McKinsey study that shows the projected skills shift over the next 12 years. 4 5. Culture of Continuous Improvement Lean Six Sigma tools and processes compliment new technology really well. Companies who have a Lean program are better prepared for Industry 4.0. Lean embraces culture, engagement, change that otherwise would make people readiness for Industry 4.0 more as challenging as the technology itself. Process 4.0 People run processes. Technology enhances processes. Everything a business does is built on a process. So, whether you’re investing in people or investing in new technology for your business process, any investment in a bad process will, in most cases, ultimately result in a poor return. A bad process will always win. The following process considerations should be taken into account for Industry 4.0. 5 1. Optimise your process first Before making a big capital investment it is worth taking time upfront to review your current process, inputs and outputs of each step and the implications for each step on the overall process. Lean tools and methodology are very effective in eliminating waste and ensuring that all stakeholders have a level set understanding of how the process works and how it can be improved. Taking waste steps out can reduce the investment requirement. 2. Don’t rely solely on technology Technology can give you better, more real-time, insights to your process but combined with non-technical improvements can yield far more effective results. Waste steps within a process can often be removed without technology 3. Determine the right KPIs you should be tracking Technology can give you an explosion of data about your process that you didn’t have before. Before implementation spend time reviewing what KPIs you need to run your process. Too often data is collected that isn’t fully understood or needed. Measure what really matters and will be used. Then figure out how your data sources can collect and report this data timely, accurately and using automation 4. Standardise processes If you are running several production lines or service contracts create standard processes as much as possible. Differences in product types in manufacturing or contract terms in a service business can drive process differences however consider creating a platform where similarities are run the same and differences customised where required. This will help with people training and drive more standard technology 5. Good quality data, right first time When you have determined the best KPIs for your process there are 3 key considerations on how you collect data to report these KPIs. 1. Collect the data at source and get it right first time. 2. Setup your database that can accept data from various sources and can be easily accessed 3. Automate your KPI reports. If the data is available the reports can be automated If your data source is from an employee then check how you can minimise data errors for every piece of data collected. Send data from you ERP to the employee’s device so that it 6 can auto-populate data field inputs and add drop down menus where possible to standardise your data fields captured to make reporting easier. Technology 4.0 With your people and processes aligned and ready for technology, the likelihood of technology being successfully implemented will be far greater. There are so many options and decisions to be made when it comes to technology. The following are some considerations when deciding what to invest in. 1. Think end-to-end Don’t look at your processes and technology in isolation. Ensure that technology implemented in one area will work with technology in other areas. Data that flows from one process to another should do so seamlessly. For example, maintenance tasks can be automatically sent to your maintenance team from your machine and linked to your ERP system so that when new parts are installed replacement parts are automatically reordered. Consider implications upstream and downstream of each decision you make. The merging of Information Technology (Business Applications) with Operational Technology (Devices and Software) will drive a step-change in efficiency and create new business models. 2. Be Creative Use technology to get data as quickly as possible to the people that need it. If for example you have a process failure, instead of just sounding an alarm, consider how you can create automated alerts to your support teams with failure details for faster resolution. Data that is delivered real-time, about your process, to those who can use it to drive improvements is the best form of data. 3. Think big start small scale fast Build an ecosystem. Create a vision and build a step by step plan to achieve it. Start small with a proof of concept at the edges. At times, it makes sense to start with smaller stakes, where strategies can be tested and refined with relatively fewer consequences. Prioritise areas that can unlock several waves of potential value and consider then building on those successes for exponential growth. Initial successes can serve as proof points, leading to a greater willingness to take a chance on more substantive investments. 7 4. Adopt a Cloud strategy Adopt cloud computing to improve agility responsiveness and accelerate product development and innovation. A cloud strategy will reduce IT costs and allow your teams to focus on your business. Cloud will allow easier access to data from any location and provide better connectivity from one location to another. 5. Mobility Smartphones and tablets are now used more than pcs to access the internet. They can also be very effective for running your business. Use smartphones and tablets to display your KPIs. Use them to schedule tasks in your factory, send and receive updated works schedules for your field workers. Mobility gives you flexibility and easy access to your teams. How can Cofficient help you? Cofficient have extensive experience in Hi-Tech manufacturing, Utility Service and Oil & Gas industries. We can support your business across People, Process and Technology. We can ensure that your people are ready and engage in using technology. We can streamline your processes to ensure that they are well designed or reengineered and ready for Industry 4.0. We provide asset tracking and management, industry 4.0 solutions and digital transformation that are connected end-to-end. Here are a few examples of projects carried out: • Best of Breed Process re-engineering of high volume production lines @ HP that delivered 10-fold productivity improvements over 5 years • Design, build and operations management of World Class highly automated production lines in Scotland • Global Rollout of HP Services Life Cycle Management Program • Implementation of Continuous Improvement programs at Actavo • Implementation of Oracle-NetSuite ERP across Actavo Industrial/Marine from lead generation to invoicing and everything in between • Transformation from paper to paperless process for fibre installation for SIRO broadband contract, allowing real-time performance updates and billing capabilities • Change management across manufacturing and Utility Services industries with a proven track record in getting people to embrace technology who never used it before • Digital Transformation of Warship refit program at Devonport, utilising mobile applications for real-time data-capture (job tracking, time & attendance, health & safety, asset inspections) Managed by NetSuite ERP for automated payroll, project and inventory management and financials via KPI reporting dashboards. 8 9
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