Engineering news

‘Focus on finance to go from pilot to production in digital transformation’

Paul Haimes, European vice-president of solutions consulting at PTC

More than two-thirds (70%) of manufacturing companies worldwide are currently stuck in ‘pilot mode’ when it comes to digital transformation (DX) projects (Credit: Shutterstock)
More than two-thirds (70%) of manufacturing companies worldwide are currently stuck in ‘pilot mode’ when it comes to digital transformation (DX) projects (Credit: Shutterstock)

In October 2021, the World Economic Forum (WEF) announced that 21 new manufacturing sites had joined its Global Lighthouse Network – a group of 90 production facilities in total, all recognised as leaders in using digital technologies to increase efficiency, productivity and sustainability.

New entrants include the site of domestic appliance manufacturer De’Longhi in Treviso, Italy; consumer goods company Henkel’s new factory in Toluca, Mexico; and contract electronics giant Foxconn’s plants in Wuhan and Zhengzhou, China.

According to Francisco Betti, the WEF’s head of advanced manufacturing and production, “the future belongs to those companies willing to embrace disruption and capture new opportunities. The lighthouses are illuminating the future of manufacturing and the future of the industry.”

But what about the rest? What about the vast majority of manufacturing sites where Industry 4.0 pilots and proof of concepts (POCs) have yet to move out of the shadows and into the light?

By the WEF’s own estimate, more than two-thirds (70%) of manufacturing companies worldwide are currently stuck in ‘pilot mode’ when it comes to digital transformation (DX) projects.

Smart factory technologies may now be widely seen as drivers of competitiveness, but most companies remain stuck figuring out how they might be deployed to deliver business value. That means they are still some way off working out how to scale their impact – and preferably, scale that impact faster than their competitors can.

Value, speed and scale

So what differentiates the winners from the also-rans when it comes to achieving maximum impact at enterprise scale for Industry 4.0 initiatives?

One thing I’ve observed in my work with PTC customers is that winners tend to place financial value front-and-centre in their digital transformation plans – and not the technology itself. In other words, they focus from the start on the financial benefit a technology can deliver, most often expressed in the value associated with removing a particular constraint from the development process, production or through life support.

This focus on financial impact enables DX teams to prioritise and plan more effectively, allocating often limited resources and budgets to the use cases that offer the highest value. It also helps them speak the language of executive leadership, resulting in sponsorship and buy-in for projects that can help push them over the line from proof of concept to production.

With impact more clearly identified, project teams can then bring in two other key considerations – speed and scale.

In terms of speed, which projects offer the potential of delivering value quickly? These are typically projects that aim to tackle the most persistent, frequent and wasteful bottlenecks.

In terms of scale, which projects offer the potential to act as a foundation for incremental improvements and iterations, which can be built out to deliver high-impact value for larger groups of employees and partners, and for wider business processes?

Speed and scale matter because they lend momentum to a DX project. By contrast, long, drawn-out pilots eventually lose support and funding because of their failure to deliver organisational value on a wider basis.

Griffin’s Food Company, one of New Zealand’s largest packaged food manufacturers, has followed this ‘value, speed, scale’ strategy with considerable success. Facing fierce competition and razor-thin margins, its management team wanted to use Industry 4.0 technology to speed up production, improve quality and boost the bottom line. They began with a single chocolate mixer on the plant floor, and quickly proved the value and impact of monitoring this machine by improving quality, efficiency and throughput. After this initial success, work was scaled from one to four full production lines.

No more tinkering!

Make no mistake – the time to be tinkering with sensors and connecting them with software in an experimental way has long since passed. Five years ago, the Internet of Things (IoT) concept was still relatively new in the market and such trials were commonplace and necessary.

Now we know the technology works. It’s proven. That’s why we need a laser-like focus on financial impact and value.

In short, if you can’t articulate how what you’re doing will make or save you money, then you’re already seriously behind. Even if you can, you need to be able to articulate how the value you expect to deliver from digitising one part of a particular production line might then be extrapolated. What will be the value delivered over one year, when this technology is extended across several production lines in the same factory? And what about across production lines in four or five different factories?

Game-changing transformative value only materialises when manufacturers achieve speed and scale – so start small, certainly, but keep those goals in mind.

Want the best engineering stories delivered straight to your inbox? The Professional Engineering newsletter gives you vital updates on the most cutting-edge engineering and exciting new job opportunities. To sign up, click here.

Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.


Read more related articles

Professional Engineering magazine

Professional Engineering app

  • Industry features and content
  • Engineering and Institution news
  • News and features exclusive to app users

Download our Professional Engineering app

Professional Engineering newsletter

A weekly round-up of the most popular and topical stories featured on our website, so you won't miss anything

Subscribe to Professional Engineering newsletter

Opt into your industry sector newsletter

Related articles