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Success today is not long lasting. To create a sustainable successful business, firms need to continuously innovate adopting emerging digital technologies. The confluence of digital technologies can potentially disrupt any industry, including manufacturing, creating new frontiers of competition. It’s like a blank canvas; the digital tools are there, and those embracing digital will have a head start.
For incumbents in the industry, it presents a huge opportunity to look beyond what they are doing currently, from selling products to selling services, becoming part of larger ecosystem, staying connected with end customers and so on. The startups can leverage digital and challenge the status quo of the incumbents – simply by doing it the ‘digital way’. One can drive in Uber, buy / sell on Alibaba, watch movies on Netflix, book hotels on AirBnB, buy cars online from Tesla Motors, lease jet engines and so on. Digital has enabled firms to rethink and re-apply processes, but with a different approach. It has made business execution smarter, convenient, creating a win win situation for all stakeholders. The examples here may look like a case in a point, but the overarching story is doing digital has become the new normal for every industry and manufacturing industry though being late in adoption has started seeing traction in recent years.
So how do companies start adopting digital? Is there a right formula for business? The answer is not that straight forward. The journey of Digital Transformation is unique for every firm and requires a holistic approach of understanding business, competition, market and emerging trends i-line with the business landscape. This article lays down key imperatives for manufacturing firms to adopt Digital and address common concerns that arise when organizations start their digital journey.
But before firms jump on the bandwagon, it is important to understand What is Digital? If one thinks adopting Digital means it’s all about just the technology, I suggest you read Section 1, else skip to section 2.
Section I: Digiterati Landscape
Defining Digital: The confluence of digital technologies – social, mobile, analytics & cloud with emerging technologies such as the Internet of Things (IoT), AR, VR and now block chain is opening a multitude of opportunities for firms to innovate. Digital Transformation is not all about technology and disruption. The competitive advantage lies in culture, people and processes running in a framework comprising of agile business models, processes, eco systems, platforms, and data led initiatives, along with a customer centric focus. Digital brings key considerations for every element of business as shown below:
Business Models: How does the business makes money? Should it focus on increasing production to generate more revenue or should it scout for alternate models such as pay per use? Some Industry leaders such as Pratt and Whitney are offering usage based services and payments for their product (Jet Engines). What if you could monetize data generated from customers, machines, applications?
Business Processes: What are the digitization opportunities in the value chain? Should you crowd source ideas for product development? Collaborate with your suppliers for faster supplies? Can Gamified day-to-day operations improve employee productivity? Do you have a strategy in place to serve the need of Millennials? But what about baby boomers? Do you not risk cannibalization of your own market segments?
Partner Ecosystem: Can you go beyond selling products? What more can be offered to create that differentiation for the products ? What if you could partner with suppliers, distributors, dealers, last mile agencies, compliance and legal bodies to offer a one-stop-service to your customers? What could be a profitable model for it?
Asset Monitoring: What if you could monitor and control critical parameters of your plant located far away? What if you get alerts on impending breakdown of a part ? How about drones equipped with sensitive sensors monitor widespread plant assets and alert you on a mobile device for any unwarranted deviations?
These are few scenarios where digital technologies can hugely impact business at all levels – strategic, tactical and operational. Depending on industry type such as Industrial Machinery, Automotive, Aerospace, Oil & Gas, Cement etc. the digital landscape and applicability of technologies will change, however the key imperatives for a digital transformation program would be similar if not the same.
Section II: Key Imperatives
Start your journey with a clear understanding of where you are in the game. It is important to know what digital trend is shaping your industry. Know what your competition is doing. Start with assessing your current digital maturity and set well defined and measurable goals.
a) Define the scope for the digital transformation. Do you want to digitize your operations to cut down on costs? Or you are looking for a disruptive new business model? Are you looking to bring digital capability in your products using sensors? You might want to transform your enterprise end-to-end. It is important to note that without a clear and well defined scope it is easy to get lost in the journey.
b) Evaluate the challenges, constraints and tradeoffs by digitalizing your business. Take precautions from over digitalizing – not every function / process can be made digital. For instance in customer engagement, Digital can be a complementary channel, not necessary be a replacement for an existing channel. An Indian e-commerce firm replaced their web portal to an app only model. It was not a well thought move as there was a significant customer base who still prefered the original web experience. The firm was smart enough to relaunch the web platform but such careful considerations need to be analyzed through a digital lens.
c) Once your scope is defined, and you have evaluated your options, its time to set them right in the form of a plan and a roadmap to take it through. The roadmap is to be created as per business complexity. One simple approach can be prioritizing benefits delivered against level of effort. So you can start sequencing with business cases that involve low effort and are expected to give better returns. Likewise you can add more parameters such as customer delight etc to further strengthen your roadmap.
d) Ensure the right digital KPIs are set in line with your business strategy. The digital KPIs will be transitional and typically end with your transformation program. For ex: No of customers using online purchase, no of employees using BYOD devices, number of assets that are connected and so on. It is the business benefits – revenue, cost, margin that are going to stay. So take extra care in defining measurable targets that can help you measure success, correctly!
e) A digital governance team should be formed to drive the program. The team at minimum should have representation from the key business stakeholders and technology partner(s).
f) Digital transformations can start with a pilot program involving all stakeholders including your employees. They form a vital part of such programs and their suggestions should be well considered and rewarded. This will help in internalizing the digital culture across the organization. The success or failure of a pilot program may be analyzed to improve the next strategy.
The above imperatives form the basic “must haves” for all businessed wishing to ride the digital wave.
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