Plan a long term digital transformation strategy with short sprints
Published on : Friday 08-10-2021
Nitin Kalothia, Advisor, Kaizen Hansei LLP & Partner, Patona Advisory.
Today, most industry stakeholders are aware of the many benefits of IIoT yet are wary of joining the revolution. What could be the reasons?
Manufacturing leaders in the country are not just aware of the benefits of adopting IIoT based solutions but are also excited about it. Thanks to multiple knowledge sharing platforms and easy access to information in today’s digital world. In fact, digital transformation (DT) is also one of the top priority agenda for most leaders in our country.
But when it comes to adoption, due to lack of in-house expertise, companies are often not sure of where to start? Many leaders are baffled with the question – Are we ready for the journey? Can we afford to make the investments and reap the benefits? Do we have the right skill sets to drive the journey and adopt it effectively on the shop floor? Many leaders are unable to make the investment due to lack of a RoI and business benefits demonstration during the consulting or the pilot phase of the project.
What are the challenges manufacturers face in adopting IIoT solutions?
There are multiple pilot projects being implemented, either because the company has taken the plunge and decided to make the investment, or the system integrators have gone the extra mile in hope of long term business. As per some leading research reports, 7 out of 10 pilots are unsuccessful since they fail to demonstrate the business benefit. This is mainly because companies get overwhelmed with the technology and pilot it without working out a detailed business case. Inability to identify and prioritise projects that can have maximum impact and solve a business problem has been lacking. There is excessive focus on technology!
For even the successful pilots to scale up is a big challenge. Either the cost of scale up is too high and not affordable, or RoI at large scale is not justifiable. In many cases, the technology itself has challenges of scale-up since a platform approach is lacking. Since most companies follow a discrete approach (point solutions) to digital transformation, integration, compatibility, automation, and security challenges become a bottleneck during scale-up.
Is the manufacturing sector, especially the SMEs, constrained by the paucity of system integrators?
I wouldn’t say that paucity of System Integrators (SI) is the reason for low adoption amongst the SMEs. But at the same time, it may not be wrong to say that the target segment for SIs in India is not the SMEs. Most SMEs lack the investment maturity to fund technology and digital transformation projects and wait for long durations to get return on their investment. Most SMEs still operate with unskilled and temporary workers, operating on very thin margins which makes it even more difficult for them to begin the digital journey.
I believe even the mid and large scale manufacturers have a long way to go in their journey to digital transformation and that’s where most project implementation will happen in the next decade. If SMEs wish to get on this journey, they can start with small but carefully chosen projects which can generate returns in the short term. The benefit accrued from these projects can be used to fund the next project and so on, so that it could be a self-funding and self-sustaining initiative over a short period of time.
Experts believe lack of skills is one of the main reasons for low adoption. How true is this?
Lack of skill, coupled with ineffective change management is one of the key reasons for low adoption and a big contributor to failure of digital transformation projects. Over the past few years, there has been a significant improvement in knowledge and awareness of digital tools and technology but not adequate for people to embrace and use it effectively, especially at the operating and middle management level. In most IT transformation projects, either change management is totally forgotten or is a non-critical and not focused activity on the list. In my experience, a well-planned and effectively executed change management can play a pivotal role in successful implementation and adoption of the DT project.
Solution conceptualisation, development and validation is often done by project teams of IT experts and business owners. Representation from the execution layer is often missing. The inputs of end users and adoption challenges should be taken into consideration in the initial design phase. Training and development, which is often the last step in the process, should be planned and executed ahead of time so that the end users have the required knowledge and awareness to use the solution when the project goes live.
In the Indian context, IIoT should actually resonate more with the solutions for brownfield plants, yet the response is slow.
For manufacturing companies in India, global competitiveness comes from providing the desired quality product at a cost effective price. We still depend on our ability to provide products at low prices, to stay ahead of global competition. To meet this cost effectiveness, investments in infrastructure, people and other resources have been limited to what is necessary. IIoT implementation requires integration with equipment for seamless data sourcing and in most cases, the equipment does not have the required capability, resulting in high automation cost. Most equipment requires retrofitting involving large investments which becomes a deterrent to project feasibility.
The other challenge with brownfield projects is the longevity of people who are used to working in a particular way and come with traditional thought processes. Aligning them to new age technologies and convincing them of its benefits is challenging at times. Many companies have been piloting their digital manufacturing journey in a newly established plant or integrating it as a part of the new facility setup.
How can the manufacturing sector overcome these hurdles and arrive at a holistic approach?
From my previous experience, one clear understanding is that IIoT implementation is not just a project that needs to be executed but a transformation journey that needs to be travelled together by everyone in the organisation. Three critical points that must be considered by manufacturing companies to overcome the common hurdles of implementation are:
1. Manufacturing companies are used to adopting manufacturing transformation tools like TQM, TPM, Lean Manufacturing, Six Sigma amongst many others. Similarly, technology is to be used as a tool for manufacturing transformation. The business case must be well established and should be aligned to the strategic focus areas of the organisation or the operational focus on the manufacturing plant. Use the technology to solve a problem instead of just implementing it because others are doing it.
2. Plan a long term digital transformation strategy with short sprints to gain confidence and reap benefits of the solution deployed. Most companies have challenges in scale-up due to a discrete approach that is normally followed. Build a 3-5 year digital transformation plan that is linked to business priority. Review and realign on an annual basis if the business priority or focus shifts.
3. Ensure Change Management is an integral part of the digital transformation journey. Involve key stakeholders including the end users throughout the project. Take into consideration adoption challenges during the process discovery and solution design phase. Plan end users training and align them to the future way of working well in advance.
Nitin Kalothia has over 18 years of industry experience in Manufacturing, Consulting & Technology. In his past roles, he has led manufacturing consulting practices in large organisations and driven the scale up. He has been responsible for conceptualising and building differentiated solutions for the manufacturing industry by leveraging domain and technical knowledge. He has launched many new programs like Global Performance Benchmarking, Technical due diligence for investment decisions, Smart Factory program, and Business Excellence Frameworks.
Nitin has 15+ Publications to his credit till date, focused on IT in Manufacturing, Operational Excellence, Supply Chain, Innovation, Sustainability and Green Manufacturing practices.