As always, well-managed operations are essential to turning revenue into profit, but we are currently seeing a shift in the approach to digital transformation in this area. Advances in sensors, cloud, machine learning and the Internet of Things are enabling companies across all industries to transform their operational capabilities. In addition, leaders are seeing how operational excellence can go beyond administrative efficiency to enable compelling customer experiences and business models that competitors will not be able to copy. This operational transformation is occurring across three elements of digital capability:
1. Automation of Essential Process
While some companies are still implementing traditional automation strategies, such as enterprise resource planning (ERP), manufacturing execution and product lifecycle management systems, other companies are going further to digitally reinvent operations.
Amazon’s distribution centers deliver inventory to workers instead of sending workers to fetch inventory. Rio Tinto, an Australian mining company, uses autonomous trucks, trains and drilling machinery so that workers can be assigned less hazardous tasks, resulting in greater productivity and safety.
In rethinking the automation of core processes, advanced technologies are useful, but not essential. Asian Paints went from being a paint manufacturer in thirteen regions of India to a provider of paints, painting services, design services and home renovation in seventeen countries by first creating a common core of digitized processes integrated into an ERP system. This gave them a foundation to build on and a source of high-quality data to generate insights. Subsequently, the company incorporated machine learning, robotics, augmented reality and other technologies to digitally empower its expansion.
2. Connected and Dynamic Operations
Thanks to the increasing availability of inexpensive sensors, cloud computing infrastructure and machine learning, concepts such as Industry 4.0, digital threads and digital twins have become a reality. Digital threads connect machines, models and processes and provide a unified source of truthful information to manage, optimize and improve processes from specification definition to maintenance. Raytheon Technologies engineers, for example, create industrial lathes by operating directly on the cutting surface, enabling them to obtain perfect components the first time, with the desired tolerances, surfaces and defect rates. Construction companies compare drone measurements with original drawings to detect and correct problems before they require costly rework.
The ramifications go far beyond the manufacturing process. Schindler, a manufacturer of elevators, escalators and other transportation systems, used to manage each of its products separately, making it difficult to understand and manage overall traffic flows in real time. However, by connecting its products together and adding data analytics, the company was able to optimize transportation throughout an office building or campus-allowing them to predict when people would move from one place to another-to modify speeds and routes accordingly, and addressing any mechanical problems before they became breakdowns.
3. Data-Driven Decision Making
In recent years, the foundation for operational decisions has increasingly shifted from retrospective reporting to real-time data. Today, connected devices, new machine learning algorithms, smarter experimentation processes, and more abundant data are enabling
more informed decisions. This capability is also extending to strategic and marketing decisions. Digital masters are taking advantage of this to integrate operational and strategic decision making in new and powerful ways.
and strategic decision making in powerful new ways.
Flex, a global provider of industrial and supply chain services, created Flex Pulse to deliver capabilities
management capabilities based on data analytics. Pulse monitors and optimizes inventory usage and supply chain status at more than 1,000 Flex customer companies, and each customer can view its own supply chain information through these applications. When there is a disruption or risk in one part of the world-a volcano, a political crisis, or a disease outbreak-Flex can respond by adjusting supply chain processes. Pulse also provides Flex with deep, data-driven insight into overall geographic, industry and supply chain trends, enabling it to better choose, manage and negotiate with its suppliers.