The Urgent Need to Align Business and Smart Manufacturing Strategy

There has been a rising interest in the pursuit of productivity improvements through the implementation of Smart Manufacturing (SM) technologies and CESMII, the U.S. Smart Manufacturing institute, has a national mandate to support and accelerate the adoption of these technologies and techniques. In this article we share key recommendations from the CESMII ecosystem of professionals engaged with manufacturing leaders in their journeys.

A big eye-opener has been that organizations achieving the greatest benefits are treating the Smart Manufacturing initiative as a business transformation journey—a transformation to a data-driven, collaborative, synchronized, agile and innovative organization. These results underscore the need for executives to align the business and technology adoption strategies. However, many are delegating the initiative to their IT team and viewing it primarily as a technology implementation project. Instead, we are recommending the following strategic steps.

The first step for executives is to clearly define and communicate the strategic business goals to the leadership team. The goals should not be a long laundry list or something like “transform operations by adopting additional technology”. There should be two or three goals in business terms that consider customers and revenue streams. For example: double the production rate, increase market share by 20%, or introduce a new product line. They should characterize where the business wants to be five years from now. The strategic business goals establish a “true north” for the leadership team and a framework for the discussion of investment priorities.

The second step is to enlist the leadership team to coach a mindset and culture that drives the desired behavioral outcomes. The Lean Mindset cultivated over the last decades has driven efficiency across many organizations by eliminating waste and focusing on customer value. However, the fast pace of innovation in products, supply chain, and customer services is creating new challenges that are beyond the manual Lean methods of the past. There is a need to embrace a new Digital Mindset without abandoning the Lean Mindset. In fact, studies have documented that when digital techniques are applied along with Lean tactics the projects yield over thirty percent greater improvement. [1]

A Digital Mindset means that employees understand why the organization needs real-time data to stay competitive and deliver enhanced service to their customers. When employees see paper forms they wonder if there is a more efficient paperless way to collect the data. If it takes days to investigate a customer complaint because employees are gathering data manually, they push for having digital data readily available, so root-cause analysis takes hours instead of days.

The bigger benefits of Smart Manufacturing are realized when data flows in real-time throughout the organization as things are happening at the factory. Leaders from Quality, Inventory, Maintenance, IT, and Supplier Management should be part of the leadership team driving the initiative and the desired level of synchronization across all the functions that support production. If they are involved from the beginning, they are more likely to be aligned with the goals and drive the desired outcomes in their respective areas. As the team discusses the potential top initiatives, a clear link to the strategic business goals drives the investment priorities.

The third step is the development of a technology-enabled strategic roadmap. When leadership follows a strategic approach, they avoid two common risks of a strictly continuous improvement approach. One risk is that uncoordinated technology implementation projects achieve performance improvement but do not achieve the process reengineering required to move the business closer to its strategic goals.

We can illustrate the second risk with an example. A project spearheaded by the Maintenance department implements a new maintenance management system that monitors equipment status, maintenance schedules, and downtime. Another project is spearheaded by Operations to implement a new system to schedule production orders and purchase of materials. If there is no thought put into how data will be shared among these different systems, production orders are sometimes scheduled during the times that machines are down for maintenance and the related customer orders are delivered late to schedule. This simplified example illustrates the risk of creating additional disconnected data silos and suboptimization of business processes when the overall strategy is not coordinated.

A strategic roadmap defines a few key strategic improvement programs that implement the solutions and processes needed to accomplish the business goals. The organization can work on some continuous improvement projects in parallel, but it needs to allocate budget and time for the strategic initiatives that are going to move the business competitively forward.

The roadmap discussions require grounding the team on the business goals and a common understanding of the current state of operational processes, systems, workforce, and supply chain. CESMII’s systematic approach to roadmap development is being used by manufacturers to align their team, explore solutions, and prioritize the technical capabilities needed to achieve the desired future state and business outcomes.

Even though most manufacturers are in the early stages of their SM journey, we do not recommend that organizations delay their efforts. Many are looking to invest in the next few years and establish a good foundation of systems and training to help their workforce implement process improvements.  Delaying the SM initiative can put the organization at a competitive disadvantage. Many OEMs are striving for a highly connected ecosystem to improve their products and customer service. They are looking for partners and suppliers that are digitally ready to support those ecosystems.

To learn more about the many resources available from CESMII including the SM Acceleration Roadmap process and ecosystem visit the website.


[1] Digital lean manufacturing – Industry 4.0 technologies transform lean processes to advance the enterprise, S. Laaper, B. Kiefe, Deloitte, 2020

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