How to find the ROI in smart manufacturing
Smart manufacturing can offer manufacturers a great return on investment (ROI), but that can only happen if they focus on the business benefits.
- Manufacturers must focus on how to achieve the business benefits to get a viable return on investment (ROI) with smart manufacturing.
- Manufacturers should emphasize making workers smarter as well as technology.
- Changing the business model can help improve smart manufacturing processes.
Today’s manufacturers face many challenges and are having to adopt new ways of doing business to stay competitive. Smart people and smart manufacturing technology are helping companies digitally transform facility operations for increased flexibility, agility, and responsiveness. But getting there is easier said than done.
Whether it’s called smart manufacturing, Industry 4.0, or the Industrial Internet of Things, (IIoT), installing a smart platform for the sake of implementing new technology doesn’t produce the desired business outcomes everyone’s talking about. While new technology can be cool, it must be practical and usable.
So how do manufacturers move forward and get the desired return on investment (ROI)? They must focus on how to achieve the business benefits.
Create a smart manufacturing vision for the future
Many companies must first admit their technology and systems are old and not getting the job done. Coupling this with bureaucracy that’s too big, too hierarchical and too slow leaves manufacturers with processes that aren’t reliable, repeatable or predictable. What’s needed isn’t just new technology and systems, it’s creating a vision for the future with new business processes and capabilities.
To create new processes and capabilities, first look at basic concepts like personalizing and customizing products and adding data and services to them. Next, focus on solving problems and providing solutions for customers, not just providing them with products and services. Manufacturers must update and expand the business strategy focusing on new business capabilities. Let the new capabilities drive the new technology.
Reduce operating costs with smart manufacturing
Reducing costs is a major priority for manufacturers, but it’s getting more difficult to reduce ongoing operating costs or even measuring them. Top-down and bottom-up approaches are valid ways to reduce costs. Data is a strategic asset and often makes the business case all by itself. The ability to access real-time data is invaluable as a differentiator in the marketplace.
Old-fashioned asset performance can also be worth a lot of money. There’s often no need to buy new equipment – just get more out of what is already there, focusing on waste, rework, and energy. Measure yields and efficiencies. Eliminate processes or standardize them if they can’t be eliminated.
Make sure the solutions and architecture are flexible enough to support different manufacturing processes, plants and products. Focus on relevant data used to make key decisions. Focus on waste, rework, repetitive jobs, energy usage and other key cost areas.
Make data-driven decisions using smart manufacturing technologies
Leveraging smart manufacturing, manufacturers can make data-driven decisions in real time. With improved data capabilities, manufacturers can create new business models and develop better production capabilities for improved consistency, predictability, and customer service.
Smart manufacturing focuses on capturing the data, analyzing it and turning the data into intelligent information to share. It gathers context, determines patterns, and reduces data and problem complexity. It closely examines the root cause of what happened and why it happened. Whether it’s adjusting a piece of manufacturing equipment or the whole line — or even making changes to the business — the idea is to take the intelligent data and make the changes necessary to best run the business.
Smart manufacturing also helps companies streamline and automate communications throughout. It also can improve team decision-making, helping people collaborate better with their customers and suppliers.
Empower people with data from manufacturing processes
The people side of the equation is extremely important. Afterall, smart manufacturing is about smart people using smart technology. Manufacturers need to find the technology that helps their people find new and better ways of doing business and do their jobs better.
When it comes to teams and decision making, culture change is difficult. New business models, capabilities and processes almost always put stress on an organization. They’re disruptive because they change people’s jobs. Get people involved and invested in the process. Continually retrain and realign the workforce. Invest in ongoing training. Provide incentives for versatility and deep process knowledge. Look at existing and future business models and review how to collaborate not only within the company, but with customers and suppliers.
Top-down alignment of people and processes helps empower teams and improves decision making. Ensure personnel, suppliers, and customers have access to the right data at the right time, in real time. Use technology to produce and share information to bring people closer to one another. Let people do what people do best and don’t be stingy with data. With the right data, people can do a better job and help improve business processes.
Change the business model, simplify manufacturing processes
With most companies still running outdated systems and too many paper-based processes, changing business models and creating new and better ways of doing business is difficult. The companies that do it well are going to be the ones that thrive instead of merely survive.
Changing business models doesn’t only mean big changes for the company, it also means big changes for suppliers and customers. For instance, a big change would be going from being a product supplier to a solution provider. Customers may really want solutions as they can always get products but there are few places where they can get solutions.
To create new and better ways of doing business, look to simplify processes and decision-making. Focus on the new business model and build a solid, step-by-step smart manufacturing roadmap to get there. The idea is to get started and keep moving no matter what.
Stay focused and reap the smart manufacturing benefits
Manufacturers are facing some daunting challenges. They need to change and align their business strategy and processes or find themselves left in the competitive dust. Whether it’s creating new capabilities and processes, reducing operating costs, empowering people, making data-driven decisions, or creating new and better ways of doing business, they must stay focused and keep an eye on the end goal.
Manufacturers can leverage all the cool, new smart manufacturing technology they want but must stay focused on how to achieve the business benefits and ROI. In doing so, they will find smart manufacturing can bring real, tangible bottom-line dollar value to their business with significant new business capabilities and a more flexible, agile, responsive competitive edge.
Keywords: Smart manufacturing, return on investment (ROI), Industry 4.0
What hurdles do you face when implementing a smart manufacturing system?