Leapfrogging Barriers in Industrial Innovation
Industry 4.0, which has democratised manufacturers’ access to advanced technologies, is paving the way for the rise of “smart factories” underpinned by real-time cyber-physical systems that monitor processes and communicate with internal stakeholders across the value chain. Asia’s manufacturing industry, in particular, is seen to plunge into smart factory adoption, as diverse customer demands drive manufacturers to shift from the traditional mass production paradigm to a mass customisation approach that leverages digital transformation.
According to a 2018 study by PwC, Asia Pacific manufacturing companies are leading the way in the digitisation and end-to-end integration of their operations. Asian manufacturers were found to have introduced digital products and services and connected new technologies across their organisations at a faster rate than that of companies in other regions. Based on PwC’s study, 32% of Asian companies plan to implement mature digital ecosystems in the next five years, compared to 24% and 15% in the Americas and Europe, the Middle East and Africa (EMEA) respectively.
While automotive and electronics manufacturers are at the forefront of digitisation according to PwC, textile manufacturers are likewise embracing digital transformation and displaying Industry 4.0 leadership. What was once one of the oldest trades in Asia has now become an industry receptive to deploying technologies such as the Internet of Things (IoT), predictive analytics, machine learning and artificial intelligence (AI) to keep up with the increasingly digital world.
Asian textile manufacturers’ digital transformation journey, however, is laden with several roadblocks. In an industry that is built upon the finer details, textile manufacturers are plagued with two main challenges: achieving operational efficiency and integrating technologies across the various parts of the business.
Achieving Operational Efficiency
As a top priority for manufacturing companies, operational efficiency should remain the core of the textile business. Any textile manufacturer needs to focus on producing quality products cost-efficiently and fast—in other words, making manufacturing faster, better and cheaper.
Pacific Textiles, a leading manufacturer of customised knitted fabric, is an example of a textile industry player that wanted to streamline operations, support international expansion and their overarching growth plan, and become an Industry 4.0 front-runner through digital transformation.
However, the manufacturer was largely bogged down by a basic mainframe-based legacy system that not only lacked agility, but also failed to provide an end-to-end view of all processes, which simply caused disconnection and fragmentation across the organisation’s multiple systems. Consequently, synchronising business activities across functions – from sales, engineering, planning and procurement to manufacturing execution, warehousing, quality control, cost controlling, and finance – has become a mounting challenge.
Modernising Legacy IT environments
Pacific Textiles’ first attempt to modernise their legacy IT environment involved implementing enterprise resource planning (ERP) software solutions to streamline operations. However, the implementation of ERP has led to integration challenges, which simply caused to-be processes to be disconnected further from each other.
Today, majority of manufacturers still continue to grapple with legacy ERP systems that are not well-integrated, cost-effective, or user-friendly. More worryingly, these systems generate large amounts of unstructured data and are unable to meet the complex needs of digital transformation, leading to ‘digital deadlock’.
Modernising the legacy IT environment is the only solution for manufacturers to break away from their ‘digitally stuck’ state and increase operational efficiency. Take for instance the case of Pacific Textiles, which eventually took a platform approach to digital transformation. Since modernising their legacy IT environment, the company has been able to address integration challenges associated with legacy systems and deploy technologies such IoT, machine learning, AI and big data that are able to work together seamlessly in less time.
Industrial IoT and Smart Manufacturing
Digitising and integrating end-to-end business processes is pivotal in driving the manufacturing industry’s industrial innovation. The next step for manufacturers, then, is to look at how they can continue to disrupt and change the manufacturing process, potentially leveraging industrial IoT, which is increasingly seen as a core Industry 4.0 component in smart factories across the globe.
A study by IDC has found that Asia Pacific will emerge as the region with the largest IoT expenditure in 2018, with the Asia Pacific accounting for $312 billion of the $772 billion global IoT expenditure. Identified as one of the top spenders, the manufacturing industry is now embedding old and new machinery with sensors, switches, and intelligent controls to improve the efficiency and productivity of manufacturing operations, resulting to smarter factories.
Sensors, for instance, play an integral role in a factory’s maintenance plan and operational efficiency through predictive maintenance. Through real-time machine monitoring and continuous analysis of real-time equipment sensor data, companies are able to precisely determine when maintenance will be required, as well as intercept possible failures and provide immediate fixes to avoid downtime. According to a report by Accenture, the ability to predict when a machine needs servicing could reduce overall maintenance costs by about 30%, and potentially lead to nearly 70% fewer breakdowns.
Putting People at the Center of Digital Transformation
The digital transformation journey does not end with modernising legacy IT environments and embracing Industry 4.0 through the adoption of technologies such as IoT. While this is undoubtedly a step in the right direction, manufacturing companies should also factor in efficient change management, which can help prepare employees for their organisations’ digital transformation roadmap. A change management strategy can consist of the following steps:
•Understanding and communicating the benefits of IoT: First of all, business leaders need to have a firm understanding of how IoT can help end users across all levels of the company. Only then can they effectively convey the benefits of using IoT solutions to employees.
•Providing holistic training: Businesses often commit the mistake of spending a lot on IoT solutions, to the point of inadequately investing on training. However, this simply sets these businesses up for failure at the start of the IoT implementation. While training programmes and resources are an additional investment, businesses need to understand that these are essential if they want to prevent or minimise implementation failures and lack of end-user adoption.
•Being open to feedback: Employees should be able to easily reach out to point persons whenever they have concerns and problems during the rollout. Business leaders are also advised to be receptive to feedback. By encouraging employees to share their concerns, organisations can establish a culture of transparency and trust in their workforce, which will significantly lessen employees’ resistance to IoT adoption.
•Implementing IoT gradually: Roll out IoT gradually, and choose initial test environments where more tech-savvy employees will be able to provide feedback around possible challenges and issues users will potentially face. This will not only help determine whether the technology is working as intended but also help in building advocates for this technology within the workforce, resulting in a trickle-down effect to more employees within the business.
At the end of the day, business leaders need to realise that change management and digital transformation are not mutually inclusive initiatives. C-suite level executives must take it upon themselves to lead by example and inspire employees across all levels to embrace digital transformation without compromise through helping them successfully adopt and realise changes and transitions across the organisation.
(Attributed to Anneliese Schulz, Vice President, Asia, Software AG)