Manufacturing Industry Leads Cloud Adoption

It was good to see a blog by Gary Mintchell revealing that the industry sector is leading the adoption of Cloud, yet so often I hear the words that “it will not happen in our company or industry for years!”.

Gary writes a great set of blogs always worth having a link to it.

http://t.co/LIPLIc6SgV

Some Quotes from this blog:

“global study that indicates cloud is moving into a second wave of adoption, with companies no longer focusing just on efficiency and reduced costs, but rather looking to cloud as a platform to fuel innovation, growth and disruption.

The study finds that 53 percent of companies expect cloud to drive increased revenue over the next two years. Unfortunately, this will be challenging for many companies as only 1 percent of organizations have optimized cloud strategies in place while 32 percent have no cloud strategy at all.”

So often I have sales and people saying that cloud is driven by a change in cost model, but also in all my interviews with customers and strategic thinkers it has been a platform for addressing the “changing speed of change and flexibility needed today” that is driving it. The world is changing faster and faster, and the ability to deliver the RIGHTS:

• Right Product
• Right Price
• Right Cost
• Right Time
• Right Location

Is key and this means rolling increased new numbers of products across a distribution of value assets (plants) that will produce smaller lots (production runs), at less cost.

Understanding NOW what the state of Inventory, Work in Progress, and equipment to get to market is key.

Also we seeing the “walls of a plant” expand, beyond the manufacturing plant to now treat the whole manufacturing, and distribution supply chain as part of manufacturing. So the traditional MES (manufacturing Execution System ) is expanding, to offer the ability model the plant to store as operations, where product must be tracked to compliance, and work items distributed to workers and assets in that distribution chain.

“In the study IDC identifies five levels of cloud maturity: ad hoc, opportunistic, repeatable, managed and optimized. The study found that organizations elevating cloud maturity from the ad hoc, the lowest level to optimized, the highest, results dramatic business benefits, including:

•        revenue growth of 10.4 percent
•         reduction of IT costs by 77 percent
•         shrinking time to provision IT services and applications by 99 percent
•         boosting IT department’s ability to meet SLAs by 72 percent
•         doubling IT department’s ability to invest in new projects to drive innovation.”

Cloud Adoption by Industry

By industry, manufacturing has the largest percentage of companies in one of the top three adoption categories at 33 percent, followed by IT (30 percent), finance (29 percent), and healthcare (28 percent). The lowest adoption levels by industry were found to be government/education and professional services (at 22 percent each) and retail/wholesale (at 20 percent). By industry, professional services, technology, and transportation, communications, and utilities expected the greatest impact on key performance indicators (KPIs) across the board.”

The above learnings and results do not surprise me, based upon my own engagements in the field, and observing the increased realization that speed of change is important, and tradition large projects are going out the door. Replaced by rapid projects leveraging existing expertise in the industry and adding through own operational process value to differentiate.  

Mastering Variety in Industrial Production, Issues a Challenge for Industrial Architectures and Drives the Requirement for Platform Strategies

For many businesses, variety (or choice) is core to the strategy where its effect cascades down to the execution level (as well as upstream in the B2B value chain.) The operational challenge of variety (or variability) is that it can create waste and inhibit velocity. The challenge and opportunity is with companies, especially as they move to unified value chains (multi plant manufacturing). “How do you manage this Variability, so that production consistency, agility and increased production output are achieved?”

“Standardization is not a business goal – it is a means to an end.
The goal of business is to make a profit.”

                                                             - Continuous Improvement Leader

Thus, any standardization effort must distinguish between the different types of variety in a way that maximizes profit without constraining the business strategy. Thus, the business challenge can be summed up (using the Food & Beverage example illustrated on the above) as follows:

• Mastering necessary variety: More brand choices drive the number of order line items (SKUs) and master recipes, which in turn drive the resulting plant-level recipes that must accommodate the variations in process equipment as well as ingredients. This type of variety is necessary and must be mastered in order to survive and succeed against the competition. Other “necessary variability” are material composition variance from different suppliers or regions, raw materials will vary. Location delivery in skus due to language, for example, the same product will have to be delivered to different countries in different language or different quality requirements. All must be mastered to optimized production.

• Accommodating unavoidable variety: Situations like M&A make it difficult to standardize on any single automation vendor, where “rip-and-replace” isn’t economically viable despite engineering’s desire for a more homogeneous environment. The growing one in this area is the “changing workforce” how do have a system that can accommodate a changing, (rotating) workforce while maintaining timely decisions and consistency in actions.

• Eliminating unnecessary variety: Anything other than the above two scenarios would be eligible for standardization.

This challenge is driving companies to adopting “platform strategies” that abstract the variability and can absorb variability while provide a platform of services that enable standards to be built on. Providing the architecture for “sustainable innovation” through managed standards that can evolve over time. The word of standards can be operational models in supervisory for alignment of context and structure, as well as operational actions to guide users through tasks in a consistent way. Also, configuration of control strategies should be over multiple vendors, where common control standards for process can be deployed over multiple controllers but managed in structured way.

Does this mean one platform? NO, not for the industrial landscape different layers of the industrial operations landscape have different roles. Providing different services and different ability to absorb variety, but the common services between these platforms must enable them to “tightly aligned but loosely coupled”.

 As we have pointed out the key to success in this dynamic but changing world is the ability to “Master Necessary Variety” in your business, while “Accommodating Unavoidable Variation”, eliminating all other variation for efficiency.

Food for thought!

Collaboration with plants and Governance is key to Standards,

There can' t be a week go past that companies do not talk to me about standards leading rapidly to discussion on standards management. Standards are the only way companies can achieve:

1/ Rapid roll out of new processes across plants

2/ Reduced risk

3/ Reduced dependency on key critical experienced resources.

4/ Consistency in operations, information across plants

Yet most companies do not really understand what a standard is and the investment, design, and approached needed so that the standard can evolve over time, and be sustained as a standard.

When you have comments like;

 "You that standards library we built? We now have 45 of them ones for each site."

Losing the whole effect of what a standard is and hamstringing the ability to evolve and react to the market in an agile way.

The culture of a standard is closer to that of “a product" than an “application" yet most companies treat them as an applications. Missing the culture and governance needed to make the standards grow and be naturally adopted.

Culture:

Too often we see it as push from the Center out, with the standards being designed in isolation of the plants, or certainly that is the perception from the plants.

The key is to have a culture where the standards and built with the first site, but with a mind that it will be rolled out across plants. So the design, architecture and approach allow for future capability to be added to it.  Providing the plant teams the ability to contribute, and feeling like they have some ownership, so they will adopt. Plus the culture that sites engineers can contribute improvements back the central governance and improvements will happen.

  

Governance:

Clear ownership of standards management, this could be or multiple people with different aspects of the standard library being managed by different people. Similar to what we do with software products, we have product managers, who gather the feedback, define the vision, and strategy, and then provide direction for improvements from version to version. The same concept Product Management for the standards, listening interacting with the sites, determining what is common and valuable to standard by version. Then making sure there is clear governance process, enforcement in place, and testing of the standard.

Architecture levels:

It is important to have the correct standards and levels, so the Hierarchy levels need to set up, with the correct number so the appropriate changes can be added at the correct level. A good example is below where there are corporate, to site, to area, then plant, each of these allow extensions to that level while sustaining consistency from the top.

Accountability Theme Growing in the Industrial Sector!

As the adoption of Flexible Integerated Operational Teams grow, the need to share/pass the execution of work items between team members becomes a requirement. Along with this is the growing theme of "accountability" in the industrial sector at all levels. The challenge with today's social media even email is you copy everyone, so they are all aware, but even this is changing as you need to address the owner of the next action in the "to" address, making it very clear and “accountable”.

Now apply this to operational teams, where the system generates an alarm the owner is the operator on duty, with the responsibility to acknowledge but how does he take action add this to work item list, that will be followed up and resolved:

·         By right clicking he generates a work item, the system prompts which person this is going to or group e.g.| maintenance, process etc, and the work flow will inform that person or group who "accepts ownership" and now they start executing. Already through that work items life time we have had two owners.

·         Now part way through this work item, the shift changes, and the work item appears on the shift handover report, and the new person on the next shift takes ownership of the total outstanding work items, so we have a third owner.

·         Now having completed 3 sub actions in that work item, the current owner, needs have a production department validate the test, so again the work item is reassigned to "production" and ownership stays with the maintenance team, until a particular person in "production" accepts. There is a clear passing and ownership, and accountability of work item.

·         So as, actions and records are captured the full trail to the work item resolution, including time to execute the work item and the action step times are logged and understood.

 

Is this new the answer is "no" plants must have a process for this today, usually paper and knowledge, but as the teams become more dynamic, the paper procedures need to come embedded in the system for consistent execution. Regulation from the market and governments require responsibility to be taken, and when actions are being executed remotely, and workers have more responsibility and work items, the chance of dropping (bot following up and resolving) work items grows.

The leading companies want their strategic targets effecting the targets/ KPIs of all the roles at different levels to be aligned so that as tuning of the strategy happens all people workers accept the change and start executing to that evolved strategy. This is different to a KPI system it is about aligning actions and targets downwards with transformation to local context.

Also leading companies are looking at the operational "day in the life" of their workers and finding two major items:

1/ increasing inconsistency in operational procedure execution from plant to plant, shift to shift, as the workforce transitions and people tenure in a role or location reduces.

2/ that only Approx 35% of work items executed by people on the plant floor are planned at the beginning of a day, the rest are ad hoc from "fire drill" plant actions.

 

Both of these factors have a dramatic effect on:

·         safety

·         regularity compliance

·         efficiency and costs, due to variation in procedure execution time and response action.

·         agility to react to changes in the market.

 

By embedding procedures companies can realize many Operational Goals in controlling their operations such as:

·         Alignment of strategy to all roles activities and targets as they can linked and transformed

·         Consistency in operational procedure execution, combined with the ability tune procedures as they can now monitor how long steps in work items take and improve them.

·          Awareness of outstanding work items, clear ownership providing the ability to increase the planned work in a workers day, so increased efficiency, less chance of safety incidents.

 

In the next week, I will introduce the concepts of operational work management, as a new trend to enable the above.

As plants transform to flexible Integrated Operational teams accountability, ownership, and awareness of outstanding work will become foundational.