Companies are turning to digital to do one of the three things: improve customer experience (CX) using digital technologies; improve their operational efficiency to better serve customers; and launch new business models.
The manufacturing and industrial sectors are undergoing a similar transformation. In my recent discussions with leaders in this market, Industry 4.0 and smart factory dominate the conversations, but the discussions quickly shift to the Internet of things (IoT). While the industrial internet is the most significant manifestation of the digital revolution in these sectors, we are also coming across a broader range of digital initiatives from manufacturing firms.
Tech vendors and systems integrators working with manufacturing firms have identified two types of engagements emerging. Infosys’ Global Head of the Manufacturing Vertical, Nitesh Bansal opined that one set of firms are taking charge of sensors and monitors that they own and leveraging the data assets to improve predictive maintenance, asset efficiency and improve track and trace. Outcomes from these digital operational excellence (DOX) initiatives include:
Collecting data and analyzing it for better predictive maintenance
Empowering technicians to do their job better by providing actionable directions at the point of maintenance
Using augmented reality to help with quick diagnosis and fix
Increasing the asset throughput while increasing safety using automated self-driven vehicles
While the basic technology behind 3D printing has been around for decades, recent hype and coverage has recast a spotlight on the industry. Over the last few years, incumbent and emerging vendors have been rapidly developing 3D printers, each more productive than the last, with an ever expanding variety of printable materials and possible use cases.
Outside of consumer hobbyists, 3D printing will have the greatest impact on businesses that design and manufacture discrete products, introducing rapid prototyping to speed up development cycles and an alternative production method for customized finished objects.
What does this mean for CIOs and technology management departments?
As the resident technology expert, you may be called upon to evaluate the hardware and feasibility of 3D printing for your business. Beyond assessment, businesses may demand:
Technology support and management. If your business decides to incorporate 3D printers, as a new networked device, support could entail adapting and integrating the 3D printing ecosystem into current product lifecycle management platforms and processes, not to mention troubleshooting hardware and software issues.
Chinese manufacturers are repositioning. They’re willing to invest more in improving their core competencies, like R&D and design capabilities, by using outsourcing providers that have successfully served foreign peer companies in the same industry. They must dedicate all their resources — including internal IT systems and solutions like ERP — to meeting this goal.
We recently published a case study on Tagal, a joint venture of ThyssenKrupp Steel Europe and Angang Steel in China. The company was finding it difficult to face up to new business challenges; not only was its infrastructure aging, but its original outsourcing services agreement was constraining business development.
To solve these problems, Tagal changed its sourcing strategy and successfully migrated its ERP system to an Itanium x86 platform to accelerate business processes. The resulting ERP efficiencies enabled employees to process orders and reports twice as fast as before. This has improved Tagal’s relationships with its customers, which are some of the world’s largest automakers. Tagal also reduced its total cost of ownership by 20% in the first nine months alone, primarily due to the simplified sourcing strategy.
How did Tagal achieve these tangible outcomes? It redesigned its service contract and employed three key principles when re-evaluating vendors:
Modifying sourcing governance. Tagal drew on lessons that it learned from 10 years of outsourcing. Its new service provider contract contains more penalty terms; for instance, the provider now must refund the outsourcing fee in any month in which it does not fix two system errors within an agreed time period.
I recently had the opportunity to spend some quality time with NetSuite in San Jose at its customer forum — SuiteWorld. The event gave me a long, overdue deep-dive into their current strategy and the chance to speak with many of their customers one-on-one.
The big announcement from the event was the availability of its manufacturing solution. The evening before the event started I had a good conversation with our Sourcing Analyst Liz Herbert — who spends a lot of her life focused on the SaaS providers — and asked her why NetSuite was not growing more quickly. Her response was that its lack of a manufacturing solution is partly to blame. So when it was announced by CEO Zach Nelson the next morning, it certainly helped to fill me with confidence about its future.