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.  

Multi-dimensional impact of a changing Industrial Operational Workspace vs. the Transforming Workforce!

Multi-dimensional impact of a changing Industrial Operational Work space vs. the Transforming Workforce!

This blog has discussed a lot about the changing workforce, but let’s step back and look at the real change that of the industrial work space. The way in which we operate the business, from:

• business strategy to operational execution real-time alignment
• to serving customers
• new product introduction
• to operating across multiple plants and regions
• to collaboration manufacturing
• to speed and agility of manufacturing

Are all changing, at increasing speed, forcing increased volume, quicker, accountability and consistent “actionable decisions”.

There are two significant forces (workforce transformation to dynamic workforce, and the work space transformation) at play. That are “lining up” to drive the most significant transformation in the  business/ operational landscape required in order to be competitive, leveraging the third force available that of technology, (bandwidth, Internet of things, cloud, etc).

This post will focus on the changing Operational Work space as illustrated in diagram below depicts:

Shows that at least four dimensions in which the work space is changing, I suspect there are more around collaboration, sharing, accountability due to regulations. Just looking at this diagram we four dimensions:

• Moving from Multi Layers and vertical integration to flattened org, but a very virtual org, that spreads across the product value chain, not just within a plant. So you can have now a product organization that manages the product business as a whole, new products, delivery, competitive position, etc. across multiple plants, regions, etc. Compared with traditional vertical organization usually based on location.

• Moving from Command and Control to Flexibility and Agility org structures, rise use of matrix organizations, where  vertical local plant and horizontal product lines of business effect combine to drive the goals, and objectives of the personal on a plant. This is a clear evolution as the operational workforce becomes more empowered to make real-time decisions. Their responsibility and accountability increases forcing actionable decisions will require different interactions in the organization structure.

• Transforming from ladder growth/ evolution in an operational team, to a more rotating less structure evolution of a team with changing and evolving roles. As operational processes/ models change, so roles and activities of those roles with evolve. Virtual roles will become more common with the roles has operational responsibility over multiple plants /regions. So too the way in which an operational business can recruit and evolve its operational team will change. An operational team the new personal may come from anywhere, or even be located anywhere as the roles evolve, compared to the tradition ladder where roles have been relatively local and consistent for 20+ years. No longer will roles and role structure be consistent, roles will evolve and be agile to fit the new operational paradigms of the company.

• To correspond with the evolution of roles, and organizations so too HR must evolve from a process to “talent Science” that enables the evolving roles and required skills to map to transforming workforce of skills, locations. A lot of traditional HR methods must go out the door, and workforce evolution is the key to matching the role, and organization evolution, combining this with the Gen Y culture differences.    

I have spoken a lot in this blog about the changing workforce.

In reflection we must not get confused with significantly transforming Operational Work space, and the fact that organizations and roles will also be dynamic in the new world. It is important that we design our operational/supervisory system to be able to transcend the changes in roles. 

The leading thought and practice to address this Operational Workspace transformation, is the operational / supervisory system design must be centered on “activities” vs roles and applications as today.These activities are performed by roles that are changing based on "activities they are accountable for", and the system can be sustained  through the evolutionary management of these “activities” and the associated information, and action.  

Next week we will talk about the other leg of this change the workforce and “Empowering a New Generation of Front Line Workers”.

Key Operational Challengers of the next 10 years: New Product Introduction, Agility to Change, and Operational Effectiveness with a transforming workforce.

Sitting at dinner with three end users who own strategy, we had a stimulating discussion on the key design parameters or drivers for operational/ automation systems over the next 10 years. Key was the high level operational drivers not the technical hurdles that they are facing as these are just constraints that designs and new practices must absorb. One End users from Water utilities industry, food manufacturing, other from mining. The surprising part was that within 15 minutes we had narrowed the drivers to three key items:

Agility to adjust to market conditions and change:

The clear common requirement was the end to end operational alignment, understanding across the value chain. This holistic operational control, was a significant change in all three industries the sites had run with independence, in all cases the expectation was that site / regional uniqueness will be maintained but now alignment and traceability of action, product across the total value chain, e.g.| multiple assets/sites. A fascinating discussion here was both water and food talked that they expect this end to end to include outsourced assets that make up the chain, and effect the quality of the product or service that their brand is delivering. This is why it is the ability to federate assets and systems while still allowing site uniqueness is key. The inclusion of non company assets in the value chain and requiring operational traceability, accountability and agility to change are just around the corner.

 

The operational workforce transformation operational role retention / rotation: The impact of the operational culture, approach with gen Y and more holistic operations. These  have covered extensively in the blogs, but is the area both of my dinner companions spent over 50% of dinner time. The key areas are

·       The knowledge transfer from the retiring generation and how is the captured.

·      The highest critical concern is the fact they are already seeing people in roles for much less time, and this is across the operational roles. So the issue is how to embedded and design the experiences to enable to become effective dramatically faster, e.g.| 20% of the time today. Our conversation went away from industrial operational systems, to commercial systems, such as Facebook, banks, mobile phone applications. The key here is these applications are being delivered to market without having to train the users, they have intuitive experience that leads users through the steps. Agreement that this is a paradigm shift in operational design, from today's approach where user interface is thought of well after the control, and we have engineers who are not human in factor people, designing the systems. All attendees said we need to continue this discussion, as this is not just control rooms, but reports, and information etc. 

New Product Introduction: The life time of products and services is dramatically reducing, and the companies stated that seem to have ever change and introduction of new products and services. The move is to individual products and services for each consumer. How do we introduce, absorb these new products and services to the operational systems that will deliver them in a timely manner without significant error.

This could be considered agility, but both wanted this pointed out separately as it is a real dynamic that effecting them, vs the infrastructure and assets that are also changing and must absorb agility of change. An intriguing point here was that they commented that operational system and automation system absorb new product introductions without change, but all commented on the challenge of new assets with existing systems requiring federation into the system, and how do introduce new products procedures to operational staff. So the discussion for new product introduction was not just for systems, but also for people to execute, how can they take the new product from the PLM system, and deliver the control, and instructions, across many sites with different systems, and different cultures.  

Are these three points new no, but the fact that 3 decidedly different thought leaders from three different industries rapidly agreed on these as operational drivers, combining this with the fact that each point effects the others. The eventual take away was they were being asked to deliver one operational ecosystem to run the end to end product production over multiple assets with operational consistency. While 3 dynamics constantly change, the value assets / plants are added and taken away, new products and services are added at an ever increasing rate, while the operational workforce is becoming dynamic with a culture of evolution of the role and job, and people will not be in a role longer than 2 years.

What and exciting time we live in!!!

“The Future is Here, It is just Unevenly Distributed!”

This statement caught my eye when reading and listening to feedback from this year’s ARC Conference 2 weeks ago. It came from a presentation by John Carey, Vice President of the Aviation, Industrial, Marine, and Energy Business at BP Castrol. Who followed up with another statement that got my interest, and is so true in what I am seeing:

"What keeps me awake at night is that everything that has made my organization successful today will block our success tomorrow."

What a true statement! I just wonder how many people understand it. At a dinner conversation this week I was in a debate on the changing world, and it was clear to all of us that this is not just a technology changing time, but there are three factors all playing at one:

·    Technology is evolving in leaps and bounds, but the role of the internet has had some impact on the industrial world, but nothing compared to what it will have in the next 10 years, where it will change the whole nature of industrial architectures. This is not due to the internet, it is actually due to increased bandwidth of infrastructure and high availability that enables the internet to now leveraged as natural member of the industrial architecture, instead of traditionally for an offline access for information, and basic email, notification capability. The whole ability to share, reliably put systems in the “cloud” and depend on them will enable the designs to accommodate the changing behaviors in the modern business. Mobility plays into this, with the explosion in devices and access, we can now naturally work and act while in a roaming world.

·    Globalization of Business ( “Flat World”): You may say that is old, yes it has been a concept around for a few years, but it is still taking hold but is accelerating at a rapid rate. Chaning the behavior in searching for products, how we buy, how we live our lives, we no longer restrained buy county of regional boundaries, we travel at whim, we communicate, and buy across the world. We all behave in business in a global virtual world. There is not a day goes by when I would not be on at least one meeting where we minimum of 3 continents in the meeting virtually, this is why we don’t work a 9 to 5 day anymore. If businesses are to stay competitive the “holistic” global approach to value supply chain and making it flexible and agile is key, and this drives core behavioral changes.

·    Cultural Shift to Digital Native: enables culture and thinking, driving shorter times in roles, average of 6 careers in a working life, (not counting jobs). The ability multi task, search and filter collaborate with people in more active community vs the traditional day in the life of workers 10 to 15 years ago. This is not a technology change it is a fundamental behavioral/ approach and cultural change form the “baby boomer and 1^st half Gen x” to those who were born past 1970 who execute a day totally differently.

Not often in history do you get 3 significant currents of change happen at once with each of the three effecting and enabling the successful passage of change in the other, which will complete the significant transformation in the way operate in the business and industrial worlds by 2020 and 2025.

Mr. Carey discussed both current megatrends and specific technology trends that are already shaping the future of manufacturing. Megatrends include:

• Changing demographics and lifestyles

• Emerging networks of trust

• Hyper-personalization

• Digital everywhere

• Sustainability

According to Mr. Carey, today's technology trends in communications, transport, processes, energy, and materials are increasing both in terms of their globalization and complexity. “To succeed in this type of environment, manufacturers must innovate, but rather than actually being innovative in everything we do, we often talk about innovation as a separate department. Manufacturers also tend to manage their businesses from the inside out. The real issues are the discontinuities. How can you get your hands around them if you focus internally? Suppliers and customers must work together in strategic relationships. This requires deep trust."  "Today, the customer is king,” said Carey. "This disrupts everything: manufacturing, distribution, and supply chain." In the 20th Century, manufacturers simply designed, manufactured, and marketed their products using the “fire hose” approach. In the 21st Century, however, product design, manufacture, and distribution is increasingly being driven by the customer and his/her individual preferences and requirements.”

 

Stepping back this is not a shock we have seen this in the car manufacturing, but of interest is the rapid transition from managing the process to manufacture goods to “managing the product and that intern manages the processes”. By focusing on the product and value to the customer including quality, satisfaction and timely deliver of value to customer, the competitive position grows. So is born the requirement of “Flexible Operations”.  This is not a “nice to have” it will be a requirement to be competitive in this global market. This can be achieved through an aligned business from business strategy, through operations to process control. Aligned operational teams that span the value chain that enable realtime decisions.

A comment in the ARC conference in Orlando in Feb 2013 was:

"To meet 21st Century demands for mass customization, factories will have to become more intelligent and flexible. "In China, they are not just building more efficient factories, they're building flexible factories," Carey warned." For many leading executives, they feel they have reasonable control over their fixed capital assets not surprising as this mature, but what keeps them awake is the “operational team” the human asset alignment, combined with the agility required surviving in a global “flat “world.

In the mega trends, Carey talked about “sustainability” this is about sustaining the planet, with discussion at ARC conference supported the impact and importance of this moral trend. Yes, a moral trend that driven by customers and market beyond government regulation that consumer (which is the primary focus) has a growing desire to choose a service or product based upon capability and the one that is doing the most on the moral issue of sustainability. This means zero waste and zero emissions both in the manufacturing process and across the total lifecycle of finished products.

As we have discussed a lot in the last year and will no doubt continue, this is not just a technology evolution, it more of a behavioral, cultural evolution that will force a significant change in the way design operational and industrial systems.

Looking out at the industrial landscape, the future has arrived in some parts of the world relative to generation Y and rotating worker (e.g.| China, South Africa, India etc), for some industries many technologies are already here in techniques and materials etc, but not in their industry, yes people have a look outside their industry to see how to achieve the future. Example is the transport industry which leads the dynamic operational centers vs the mining industry that is just starting on that journey. Also in many cases the global business landscape of the future is here and is accelerating in adoption.  

Many companies are well down this evolutionary path changing the operational systems to align with the new business and cultural behavior, but others are approaching the challengers in the traditional automation thinking. It was encouraging to see these topics come to the surface at the ARC Conference in Orlando and be debated, it shows what I am seeing the growing recognition by executives of the extend of the wave change we going to have ride, over the next 10 years.