In 2020, it seems that digital transformation has moved from an industry buzzword to an industry standard. The onset of COVID-19 has forced the hands of many companies to pivot their entire business approach and launch digital initiatives, with a limited amount of time and resources.
While the notion of digital transformation has gained acceptance, doing so at scale remains intangible for many industrial enterprises. Research from McKinsey has found that companies run on average, eight digital transformation-related pilots, but less than a third are implemented at scale.
Global pandemic aside, the escalation of Industry 4.0 for manufacturers is a once-in-a-generation opportunity for significant value discovery. With that said, there are countless digital transformation efforts that never come to fruition because value is not at the center of their plan of action – and pilot purgatory has yet another victim.
At PTC, we have seen long-term success stories when financial impact is at the epicenter of the transformation journey, and as a result, substantial business value across many critical areas of the operation is achieved.
An article published in the Manufacturing Leadership Journal, authored by PTC’s Craig Melrose, Howard Heppelmann, and Scott McCarley, takes a deep dive into a prescriptive framework of how to move beyond the pilot stage and achieve scale for industry 4.0 manufacturers.
Taking inspiration from the article, there are three components identified that can yield double-digit payoff – impact, speed and scale.
Impact – Alignment to Executive Plan
At PTC, we have first-hand observations of the paybacks a financial-first, versus technology-first, approach to digital transformation can unlock. Even with the increased interest and pressure at the executive level to go all in on Industry 4.0, many initiatives do not withstand the enterprise scale.
By aligning with cross-functional senior leadership and the existing top-level financial strategies, the pursuit of Industry 4.0 becomes part of the focus to prioritize resources and eliminates potential obstacles. Lack of executive support may lead to slower decision-making and a drawn-out deployment. Ultimately, these sort of initiatives that are not thought of through the impact lens do not deliver significant value.
With executive alignment, organizations establish the basis for increased deployment speed, business adoption, and overall success. We refer to this mapping as the “Value Framework”, as illustrated in the figure below. Consider this the core blueprint used to discover, capture, validate, and communicate value through the journey of digital transformation.
Identify business goals Determine the important operational bottlenecks Prioritize high-value use cases Take note of the expected operational outcomes
This closed loop approach is key when communicating value to the broader senior leadership team to accelerate momentum and gain greater competitive advantage.
Speed – Resolve Bottlenecks and Improve Operations
After an organization assumes an impact-first strategy to Industry 4.0 use cases, speed and scale become the close second in terms of business prioritization. As to not overwhelm the process, it is important to focus on the highest value use cases that can scale across the organization.
When considering your bottlenecks, an element that must be factored into the use case selection is that not all factories, lines, and equipment share common constraints. This means you must keep the focus of deployment on constrained resources. Rather than focusing on the entire production system, identify the bottlenecks within each specific setting.
The result? By focusing on significant bottlenecks, the organization will be better positionedContinue reading