How manufacturers can align key metrics with technology to achieve digital transformation
Where manufacturers have struggled is in the execution of a digital transformation strategy.
Sales & Marketing
Technology / IIoT
The barriers to digital transformation across Canada’s manufacturing sector have nothing to do with a lack of interest in its benefits.
All firms would like to experience the increased productivity, improved efficiencies and ability to collaborate with suppliers and partners that technology adoption can bring. Where manufacturers have struggled is in the execution of a digital transformation strategy.
There can be uncertainties, for example, in how best to deploy digital tools and the business process changes that might be required. Employees who have little experience with advanced technologies need to be trained. And of course, unforeseen events such as the COVID-19 pandemic cause massive challenges and disruption.
In fact, a study based on interviews with more than 500 manufacturing leaders that was released earlier this year from Canadian Manufacturers and Exporters (CME) and BDO Canada found most firms are struggling to see production levels return to where they were before the pandemic.
At the same time, the setbacks manufacturers have suffered because of the pandemic only serve to underscore the urgency to digitally transform their operations.
The high costs of manufacturing products, lack of capacity to invest in new products and prototypes, regulatory impediments — these are all among the sector’s most common pain points. The right use of readily-available technologies provides the most viable option to address them.
Perhaps the easiest way to begin developing a digital transformation strategy is to look at some of the most common manufacturing key performance indicators (KPIs) and where the relevant technologies could bring value:
We all know the formula: projected customer demand = raw materials * production rate. As simple as it sounds, however, each of the elements in that formula can be affected by factors that are difficult to control.
Manufacturers can’t afford to make mistakes in demand forecasting, however, because it leads to cost overruns, waste, or worse.
In many other sectors, technologies like a CRM have been critical for offering a central hub to collect, manage and analyze all the data associated with demand in order to improve their forecasting practices. It can bring the same benefits to manufacturers.
Return On Assets
The equipment manufacturers use represents one of the biggest areas of capital expenditure. When it gets worn down, breaks down or needs to be replaced, there are obviously huge implications on metrics such as throughput and revenue.
Thanks to sensors that can connect equipment to the Internet of Things (IoT), manufacturers have an opportunity to predict when they will need to fix or upgrade equipment.
Enhancing the return on assets will not only avoid business interruption. It could free up budgets to invest in other game-changing technologies.
Use of the IoT and other intelligent automation could also help in other metrics, such as avoided cost or even cash-to-cycle time.
When you’re switching a production line from manufacturing one product to another, every second counts. Some manufacturers are already seeing the way leveraging robotics, particularly on the shop floor, can avoid costly delays and maximize production attainment.
Of course, it’s not just machines that change over in manufacturing. One team will end their shift and another will begin theirs, often with a need to pass on information or discuss unexpected issues. Technologies that promote fast, flexible collaboration and an ability to easily share information will smooth out a lot of the wrinkles in this area.
There are many other manufacturing KPIs we could look at here, such as inventory turns or even Takt time. There are also other technologies, from mobile computing to augmented reality, whose potential is well worth exploring.
The point is that Canadian manufacturers need to look at digital transformation as a means to an end. The sooner you identify the KPIs that matter most, the faster you’ll be able to prioritize the technologies that help you meet your business goals.