Can we achieve the last mile of operational Excellence without IOT?

This question was posed to me last week, and it is a good one. The critical items is to understand what is operational excellence is trying to achieve to realized that it is journey and moving goal of effectiveness pushed by the market and technology. Like when you are riding a wave, you staying in front, and leveraging the wave to excel, otherwise it swallows you up.

Operational excellence is about:

• Agility to deliver products/ services to Customer/ market at the correct price, time and location
• The ability to rapidly introduce new innovation value to lead the market and open new markets
• The ability to enable sustainable innovation and value through effectively leveraging people, and technology.

The diagram below illustrates this, and I am sure some people will have different angles, but it is about leading the competitive edge.

But can you achieve this with the traditional approaches? I believe you can get to 60/ 70 % of the way with traditional approaches and current technologies, but that last mile needs a paradigm shift in “actionable decisions”. Agility requires timely decisions across a team, and consistency and timely actions associated with the decision across teams, roles etc.

A core concept of Internet of Things (IoT) is teams of things (devices, and people) interacting in an orchestrated manner to achieve an operational timely result. With devices being more “self-aware”, empowered to take actions, interacting with workers or other devices to move “work “to the next step.

This foundation of IoT and the orchestration of devices /people, timely knowledge, provides that much needed paradigm shift to enable that last mile on the above operational excellence journey. The constant discovery of new capabilities, and knowledge through big data techniques, the ever increasing lake of embedded knowledge lends it as the basis for companies to go on this Operational excellence journey, but with this is the required cultural evolution to continuous improvement and knowledge/ wisdom.

                                       Source ARC

The above IOT maturity model matches to Operational Excellence journey, especially on the stages of “smart, and autonomous” linking to the Operational Excellence stages of “Driving Business and Driving the Market”). Foundational to Operational Excellence is timely knowledge and procedures being delivered so actionable decisions can be taken in a consistent manner across plants, assets and people. The IoT principles provides the opportunity to deliver this knowledge, while abstracting the variability in plant, assets and experience levels of people.

To me the desire and programs being enabled at companies to take them down the operational excellence journey provides the cultural evolution needed combined with IoT to succeed and make IoT effective not just from technology but most of all business side

Collaborative Manufacturing is Becoming a Reality

The concept of Collaborative Manufacturing has been attempted in the past and successfully with Toyota and others but the time has come for a change that will enable an ecosystem of small agile manufacturers to form a “product value chain”. So lets start with what is Collaborative Manufacturing:

In Collaborative Manufacturing, designated individuals and organizations – both internal to a manufacturing enterprise and extended to its suppliers, customers, and partners – work together for mutual gain. The objectives of Collaborative Manufacturing are to streamline end-to-end business and supply chain processes and provide a more comprehensive and

accurate information base from which to make decisions.

Collaborative Manufacturing allows multiple groups to act together as they set plans and policy, agree to actions, and execute operations. Collaborative Manufacturing can boost responsiveness, agility, and customer-centricity. It also fosters the most cost-effective methods to design, source, make, deliver, and service standard, mass-customized or to-order products.

An effective Collaborative Manufacturing strategy requires business processes to include more inputs and interactions than most traditional processes. To support Collaborative Manufacturing, information systems must integrate and aggregate information from across the manufacturing business and from its suppliers, trading partners, and customers. It must also provide the means to intelligently distribute that information across various business entities.

So why now what is different?

Key to me is that fact that small enterprises can now leverage “Managed service” in the cloud that deliver the rich operational business capability of inventory management, operational process and manufacturing, and specification management which was only available to much larger companies. Now an end to end product chain can be developed with aligned a process and enable a product manufacturer to divided up over multiple operations, each operation executed by a small manufacturing entity.

The transparency of the product manufacturer across the sites all using “managed services “ in the cloud for ERP/ Order fulfillment, and MES operations / quality etc., provides the visibility to enable this agility. Effectively one Product Manufacturing chain (route) is been executed updated on a particular site as the product moves through, transport, assemble are also managed in this higher MES.

Yes, it will require a new thinking and alliance of small businesses but the value on agility and cost and the ability to scale provides a real opportunity for a new manufacturer and deliver model to take on the larger companies.  

To maintain a competitive edge, manufacturers must make a major shift in strategy to effectively synchronize activities among functionally and geographically dispersed groups. Those with whom they need to collaborate include:

• customers and, in some cases, their customer’s customers;

• distributors and channel partners;

• materials and sub-product suppliers;

• outsourced or contract manufacturers;

• logistics partners for distribution, warehousing, and transportation;

• providers of services such as legal and regulatory advice;

• multiple departments and divisions within their own company and with any of those entities described above.

A Collaborative Manufacturing strategy can help a company maximizes the effectiveness of its value chain in order to better control profits and address changing market demands.

Is this real, my answer is yes, I was on a plane last week, and two fellow travelers talked about the alliance and the seeking out others to make this ecosystem, combined with the agility of 3D printing, and then assemble these two expected to grow and had a good pipeline due to satisfy the “pay on delivery, with small order sizes” also the ability to have local final assembly close to distribution centers and significant retailers make them more desirable to occupy the “shelf space”. Both agree the reality is only now that the tracking and management are common across the plants in a hosted “managed service”.

Food for thought! 

Manufacturing Trends towards 2050

Well it is a new year and in many of us we look ahead, last year I looked at 2020 from an operational landscape, this year let us take a little bit further look out for looking at manufacturing. These are long term trends that will evolve and impact architectures, and I believe the whole landscape of operational systems. It relates to the discussion I brought up late last year on the trend from globalization to continentalision, due to speed of demand, and cost relative to energy etc.

Some interesting charts that show another set of trends I found in reading from ARC:

The top chart shows an interesting but fully expected trend towards more local, often small businesses, this aligns with continentalision, where time and agility to deliver is key, combined with another trend which is the move to customization of the end product. (note this is the opposite to what we see in the industrial software/ commercial software market where customization is giving way to “good enough” applications.) People will shift from brand to local product that aligns with the way they live , environment etc, this means more than language it means the culture of the consuming product. To achieve this combined with optimization even multi national companies will shift to local manufacturing sites for final productisation.  Example is in tobacco manufacturing where primary manufacturing is trending to centralize, and the packaging is local, enabling supply chain optimization, while agility to serve local markets.

But the bigger trend this move to “local/ smaller manufacturing facilities” suggests is the shift to “collaborative manufacturing” across an ecosystem of smaller more agile manufacturing facilities often run and owned locally. The opportunity for this comes through shift in technology to the “cloud” and “managed services” which enable a multi site manufacturing chain to managed in a series manufacturing facilities across the “product value chain” even if they are not the same company, but now a “collaborative manufacturing value chain” for that product. Managed services also provide the ability for these smaller companies to adopt mature operational/ MES applications as “managed services” providing them with operational control and alignment which has not been affordable before.

The chart below also supports the big trends by functions:

The key trends of shifting to renewable s, the impact of energy costs as the end of the “second industry revolution (oil based) “ declines, the “bottom of the pyramid” which refers to lowest 4 Billion income earners how we raise their standard of living. This is much more holistic view of the world than the 20^th century, except for the mass customization demand of my local product.

My feelings that this time to deliver, and satisfy the market the old “shelf space” will rule, with immediate satisfaction and freshness driving buying habits, combined with costs as transport and logistic costs and risk rise.

The final chart to reflect on shows the growing factors that effect manufacturing and operational decisions and therefore systems. 

This diagram does not look into the future but shows how in the last 20 years the major factors that influence manufacturing have expanded significantly, and they continue to grow. I would add the big one which is the shortage of skilled people, or operational empowerment in a dynamic workforce. Where now we have plants coming on line faster, or being acquired either into a global supply chain, or being added into a “collaborative manufacturing value chain” relative to a product. Combine this with the dynamic workforce that will be rotating roles, locations at less than 2 years in a role, while the ability to deliver more customized products drives the complexity of the production process, and value chain.

All good food for thought, as we look at significant operational transformation.