A Connected Digital Enterprise is the foundation of a Globalized Demand-driven Supply Chain and a step towards the factory of the future. We are proud to be a business partner at MES & Process Minds 2017. Meet us there for more insights on Expediting NPI in Pharma & Bio Tech Industry.
While in Australia on a business tour, one of my colleagues purchased a pair of leather oxfords. At the billing counter, he was amazed to learn that the shoes were designed in England, manufactured in China, and carried the label of an American company, while the leather was imported from Italy. What makes this complicated scenario possible? The answer: globalized demand-driven supply chain
With global supply chains rapidly gaining prominence, ensuring real-time visibility in the plant has become critical for responsiveness to unexpected fluctuations in demand, supply, and inventory levels. So how would you ensure a supply chain is as effective in practice as in theory? Well, a connected digital enterprise holds the key.
An integrated digital enterprise allows you to mass customize products, while ensuring optimal asset utilization and shorter time-to-market. In such an environment, systems ‘talk’ to each other to provide end-to-end transparency and facilitate efficient product delivery cycles. Interconnected systems also make it easier for you to understand your operations better, and forecast demand and supply with accuracy.
A three-step approach to establishing an integrated digital enterprise
If you are looking to create an integrated digital enterprise, here is what you need to do.
Begin with standardizing all the processes across various plants, and create a single version of truth of the master data across the enterprise. This is a crucial step since most organizations have siloed systems that generate data in varying formats. It is extremely critical to bring data to a standard form and shape so that it can be effectively analyzed to derive business insights.
The second step includes vertical, horizontal, and engineering integration.
Vertical integration- from shop floor to top floor: In a previous blog post, we discussed the aspect of vertical integration. The bottom line here is whether your decision-makers are able to access a single version of truth for effective enterprise resource planning and transformation? For example, the sales and marketing data may present a certain view of your customers. But the inventory data – by virtue of visibility into customer demand – may add another dimension to this profile. It is important to correlate these two datasets and arrive at a master data source. Connecting shop floor systems with business and execution systems helps achieve vertical integration.
Horizontal integration – across the value chain: This is all about connecting your manufacturing plant with the larger ecosystem that includes suppliers, customers, as well as energy and utility systems. Seamless interaction among all these entities can give you a transparent and holistic view of plant operations. L’Oréal, a pioneer in this space, has gained comprehensive demand visibility and ensured fulfillment by collaborating closely with its suppliers. In 2015, they collaborated with Avery Dennison on a sustainability initiative, to reduce the environmental impact of packaging labels. Successful horizontal integration makes it possible to implement such innovative measures that positively impact the business, stakeholders, and the environment.
Engineering integration – from design to manufacture: How effectively do you use digital technologies to make your processes more efficient? Can you simulate and digitize your manufacturing processes to achieve better time-to-scale and time-to-market? These questions are at the center of engineering integration. Companies like Siemens and Dassault Systemes are working on a holistic digital enterprise platform that covers product design, planning, manufacture, execution, services, and customer experience. An integrated digital enterprise solution takes them a step closer toward realizing the potential of Industry 4.0.
Finally, the third step calls for using data intelligently, by integrating manufacturing analytics to move from reactive to predictive. Manufacturing operations generate and consume huge volumes of data on a daily basis, thanks to industrial IoT frameworks. This data can become more meaningful if leveraged for predictive alerts and prescriptive workflows. A McKinsey report on Industry 4.0 points out that advanced analytics can increase production volume by 20 to 25%, and reduce operation downtime by up to 45%. It can also help you identify and add new service offerings that directly affect the top line. Take the case of smart sensors on a turbine that help monitor the health of the asset remotely and provide predictive maintenance alerts. Not only this, it can help you to introduce new service lines. Some manufacturers have even started offering industrial machinery on an asset-as-a-service model with performance pay models.
Why an integrated digital enterprise makes sense
Integrated digital enterprise is fundamental to a manufacturer’s vision for the ‘factory of the future’. It helps you realize the concept of source, make, sell, and support from anywhere. Transforming to an integrated digital enterprise requires a phased approach to implementation – from performing a functional and technical assessment to developing a manufacturing IT blueprint, deployment, and global collaboration.
This transformation offers several benefits, such as improved efficiencies and flexibility, and evolution of new business models for improved returns. The numbers match the optimism – a PwC study estimates that Industry 4.0 will add $200 billion to European revenues by 2020 and huge enterprises with revenues in excess of $7 billion are set to witness a whopping 92% growth. With higher returns on the capital employed (ROCE), the manufacturing industry is expected to channelize 3.5% of its annual revenues on digital manufacturing. With better agility, transparency, accelerated new product introductions, and stellar returns, the coming years promise to be truly transformative for manufacturing enterprises across the globe.