Manufacturing organisations are awash with data, much of it not collected, stored, or utilised. Connected Technology Solutions spoke to Andy Hill, CEO of digital transformation specialists, VisualPM to gain an insight into how well the sector is currently able to utilise valuable real time data to drive performance and customer service improvements leading to increased profitability.
According to the World Economic Forum, the manufacturing industry continues to suffer because of the disconnect between data collection and data usage, particularly in driving business performance, thereby hindering or altogether eliminating valuable use cases. It is hard to argue against their assertion that despite the massive amounts of data collected, the industry continues to be a laggard amongst its peers, showing the lowest levels of task automation in data management.
With so many connected assets, manufacturers see the value in collecting operational data. However, the raw data collected is not providing the solution it was intended to offer; that of a decision-making engine which has the potential to truly transform business profitability.
Core to collecting and analysing that data are the software systems that drive production such as enterprise resource planning (ERP) and manufacturing execution systems (MES). Modern MES are integrated with ERP and lifecycle management applications, among others, to provide visibility, coordination, and control over manufacturing processes. The main role of MES is to increase the process capability and productivity of the manufacturing process. According to research from Market Research Future the global MES market is projected to reach £46 bn at a healthy CAGR of more than 15 per cent over the next five years. However so far the link between systems and business profitability has at best been tenuous.
Big trouble with big data
However, even though manufacturers understand that the future of manufacturing will be data driven and with the readily available software support, manufacturers, particularly SMEs, are still struggling to extract value from data and drive operational excellence and increased profits through digitalisation. One company that has been working with SMEs for over two decades to directly increase profitability is VisualPM.
According to Andy Hill, CEO of VisualPM, until recently they had shied away from employing technology to improve manufacturing performance. “Our background is in performance improvements primarily within manufacturing groups,” he says. “If a manufacturing company had a problem we would go in and deliver a turnaround project, whether that was putting processes in place, changing people’s thought process, or putting management control systems in place. Some of the problematic and extremely costly SAP implementations discouraged many organisations from investing heavily in IT. Over the past decade, with the advent of MES that perception has changed.”
With the increased utilisation of ERP and MES allied with the maturation of Industry 4.0, the challenge has moved away from the technology itself and manifested as a skills issue. “The real issue now is there has always been a lack of skill sets and understanding on how to contextualise and understand the data and use it to make significant improvements,” Hill explains. “That is why people like us have been in business for so long, because that is our background. Three or four years ago we jumped into the connected data world by linking ERP into the MES from a more pragmatic viewpoint, and that is where we got into the technology arena.
“We have now gone full circle and are a big advocate of it and gone to the stage of developing and investing into our own AI modules that we then taper for our client’s needs. With AI, most of the value is not the coding, it is understanding the data, getting that correlated and having some knowledge about what the client’s organisation and sectors challenges are, that’s the basis of all the AI and we work on the back of that.”
It is generally accepted that up to 80 per cent of companies still have not figured out how to use data, and that fact is borne out by experience of VisualPM with their clients. “The problem is that organisations are leaving so much on the table, because they are not exploiting the data that they have,” Hill adds. “They are losing their competitive advantage, losing potential growth, and huge opportunities for profitability and productivity. They are constantly trying to deliver, and they have not stepped back, appreciated and understood all this untapped potential in their organisation with the data.
“Clients invariably have no idea how much data they collect, and if you ask them, they probably get within ten to 20 per cent of what the real volume of data is. The problem is that even at the 20 per cent figure it scares the living daylights out of them because all they hear back from a C- level is invariably they cannot trust the data. It is amazing how many companies are still in that headspace and unfortunately a lot of CEOs and CFOs of SMEs are thinking there is a silver bullet in just replacing the ERP system to solve their data issues.”
Aspiration versus realism
There has been much talk amongst the vendors of manufacturing software about one version of the truth or a single pane of glass view. According to Hill concepts such as these are aspirational, and it is important to work with the tools and abilities that a company possesses. “Fundamentally the problem will be something to do with the processes that is not working, or people not following those processes,” he continues. “There is a missing element in that people do not understand what they want to derive out of the data, or how they want to map it to manage the business; cascading all the management information down so that it is relevant at the different levels, and then cascading it back up again, and concentrating it.
“There are a lot of business and operational issues that you need to work out to understand what to do with the data, even with the tools that clients have already got. We are not big advocates of throwing systems out, we are more advocates of trying to work out what the fundamental issue is, what you are trying to do, and then finding out what the problems are. We try and work with what companies are already using. If we discover their current ERP, CRM or MES is not up to scratch, then that is a different discussion. But invariably it is more to do with the usage of the systems, or the usage of the data; this is a behavioural issue rather than technical.”
Not your standard management consultants
Ever since Dr Shigeo Shingo successfully helped Toyota achieve Lean manufacturing in the Sixties, consultants have been rife within the sector plying methodologies such as Lean, Six Sigma, and 5S with varying amounts of success. Much like the disdain for IT programmes, consultants have had to work hard to shed the stigma of failed initiatives. “I think one of the fundamental switches is we have put technology at the heart of what we do now, rather than it being an afterthought,” Hill says. “We appreciate that good smart technology can solve an awful lot of problems, is incredibly quick and easy to implement, and can be quite a driver to accelerate change within the teams.
“Teams often do not understand what they are looking at. For example, at a manufacturer in the northwest of England we recently worked with, they were running around like headless chickens. They had stacks and stacks of work orders arrive every day that were printed out and they had to work out how to prioritise those. We installed some straightforward, connected technology, which only took four weeks to connect all the machines, and link them into the central planning function. We could then work out what was happening with the front end with the sales and logistics, procurement, then suddenly, people started seeing what the problems where. They see it in real time, and it is almost like a realisation factor for them.
“We will not embark on a project unless we have a couple of fundamentals. The first is we have the CEO sponsorship, the second is we all must have a very clear understanding of what the pain points are, and what that means for the business moving forward if we can address them. We tie our performance into the performance of that programme, that is why it is key for us because we put skin in the game from our side to make sure that we are all heading in the right direction. Unless you have those very hard, straightforward discussions up front, then invariably you cannot get to where you need to get to.
“I think that is a big differentiator for us. That comes from our business turnaround and consultancy history, you have got to have those straightforward, tough discussions, which unfortunately goes against all the sales mantras because the clients are not always right. They may have a preconceived idea that they want to digitise, but they need to understand what the fundamental issues are for the business, and to address where that is going to filter through into your numbers, and how it is going to make some significant change. The value in that for your business is phenomenal, both financially and culturally.”
That still leaves the thorny and often complex issue of extracting value and actionable insights from the vast amount of data accumulated. “The first challenge is understanding from the outset what the issues are within the organisation from the very top and mapping out a clear programme that has all the different issues combined,” Hill adds. “That may be understanding what the process changes need to be, what the impact on the workforce is going to be, or what the technical aspects of an implementation can be.
“You have several different facets that you need to address and need to be agreed up front so that everybody understands where we are going, then you cascade that down to the different levels within the organisation. There is an appreciation throughout the organisation that behaviours need to change as well as just technology.
“If you get the set up right, then your data is reliable. In fairness, you may have one or two glitches as you go. I come from a background going back 20 odd years, where we were using data tip sheets, manufacturing points, where you could not rely on the data, you were relying on supervisors going round every half an hour to make sure the data tip sheets were filled in; it is a very different world now. You can rely on the manufacturing data that is coming out, and I think that is why we put focus on developing other modules as well, because the more you can get the teams utilising the data, so the grunt work is done, then the human interaction happens afterwards on contextualising, interpreting, and actioning.”
Entering the age of artificial intelligence
Another fundamental difference with the approach adopted by Hill and his team is the use of artificial intelligence (AI), although as Hill explains that is not an easy road to travel. “There is still a big resistance to using AI because many companies still have not got rich with their data, and I think AI is probably a step too far for a lot of companies just now,” he concludes. “The real danger that the SMEs have when they are part of the supply chain is the large enterprises are moving quickly and starting to use AI to drive decision making. Unless SMEs get on board very quickly and use data and then have an aspiration to use AI within the organisation, they are really going to struggle. People who leave more than another 12 to 18 months to jump in with both feet, they are really going to be under pressure, because the pace of change is phenomenal from the large organisations downwards.
“Client organisations need to appreciate that the workforce is going to have to change, they are going to have to invest into the workforce to upskill them, so the repetitive tasks are done by AI and machine learning. Then the workforce can add quite an awful lot more value, rather than the repetitive tasks.”