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6 Key Actions for a Successful Smart Manufacturing Strategy

July 16, 2021

Contributor: Swetha Venkataramani

Smart manufacturing strategies are still nascent. To capture the benefits, manufacturing operations leaders can start with six key actions.

Relatively few organizations have yet turned the potential of smart manufacturing into sustained action. It’s time they did, especially with the pandemic as a catalyst to accelerate and reprioritize smart manufacturing initiatives.

Smart manufacturing combines technology, data, processes and human interactions to disrupt and transform production’s role in a digital business, making it the foundation for reliable output from smart factories. 

What’s needed, though, is a rigorous end-to-end approach — from knowledge gathering and strategy development through piloting and testing to implementation and then a fully deployed strategy. And success requires a candid assessment of both the benefits and challenges.

“Organizations must realize — and quickly — that smart manufacturing requires synchronizing activities for capability building, capability enablement and empowering people. It’s not just about putting in place the right technology,” says Simon Jacobson, VP Analyst, Gartner. 

Also read: The Gartner Supply Chain Top 25 for 2021

Execution of smart manufacturing lags

The 2020 Gartner Smart Manufacturing Strategy and Implementation Trends Survey shows that less than 50% of manufacturing leaders are implementing or have a fully deployed smart manufacturing strategy, even though many tout its importance:

  • 86% agree that smart manufacturing is an integral component of their digital supply chain strategy.
  • 84% agree they expect smart manufacturing to increase their competitiveness.

To develop successful smart manufacturing strategies, corporate leaders need to understand both the potential benefits and challenges upfront. Otherwise they risk celebrating tactical wins at sites that can create costs and constraints that limit competitive advantage elsewhere.

Smart manufacturing ensures reliable output from smart factories 

Manufacturing leaders see a range of actual or expected benefits from smart manufacturing, including agility, flexibility and optimization. The common denominator is operational excellence. which delivers reliable supplies from smart factories.

Many supply chain professionals see benefits from smart manufacturing in delivering reliable supply from efficient operations.

It’s easy to measure operational excellence at specific sites through cost and quality improvements. Indeed, use cases that combine workflow, data management, and enabling technologies for real-time equipment or process monitoring offer strong return on investment (ROI). But such tactical gains at sites should line up with initiatives to align the new capabilities that make factories smarter with delivering end-to-end supply chain advantage.  

Too much site-centricity can inadvertently create excess constraints and complexity elsewhere and undermine sustainable performance improvement across the business. Pushing the benefits of smart manufacturing beyond the factory walls enables the supply chain to focus on its primary mission — the effective fulfillment of demand. 

This underscores the importance of knowing which smart manufacturing benefits are desirable and realistically attainable at each phase of your strategy. It also forces organizations to know their obstacles, too.   

Change management is holding back smart manufacturing 

Technology or solution immaturity is much less of a challenge than many might expect. Our study shows it’s not technology or poorly educated leadership that’s constraining smart manufacturing. “It’s a matter of rightsizing your tactics and being able to change the wheels on a moving bus,” says Jacobson. “Our survey respondents cited cybersecurity, access to skills and competition for resources as “substantial challenges” to deployment.” 

Organizational complexity, integration and process reengineering are the most prevalent obstacles to executing smart manufacturing initiatives. These challenges together reflect the largest change management obstacles.

Notably, “leadership commitment” isn’t considered to be an issue: 83% of manufacturing leaders agree that their organization’s leadership understands and accepts the need to invest in smart manufacturing. But, says Jacobson, “That isn’t any indicator that the majority of leaders understand the magnitude of the change in front of them in terms of both technology and talent.”

6 key actions for a smart manufacturing strategy

To move smart manufacturing strategies and roadmaps from aspirational to actionable, and to set realistic expectations for resources and funding, here are some key actions:

  1. People come first. Smart manufacturing should improve and enhance how people do their jobs. The shifts in organizational design will blend stakeholders across information technology (IT), operational technology (OT) engineering technology (ET) and supply chain. This convergence and alignment is a paradigm shift that emphasizes culture, decision making and governance ahead of technology in many instances
  2. Prepare to integrate continuous innovation with continuous improvement. Synchronizing initiatives is meant to enhance core operations of today’s processes with future innovation and process capabilities. This helps to manage change and avoid resource constraints.  
  3. Shift performance management from efficiency to speed. Improving operational excellence is the burning platform and not the destination/endpoint for smart manufacturing. Focusing on speed will improve order cycle times and service levels while identifying opportunities for digitalization and automation.   
  4. Expect to execute gradually. Pilots aren’t disruptive in and of themselves — it’s their deployments that are disruptive. Each factory has a different blend of equipment, systems, processes and workforce capabilities. Even when scoped in advance, it may be more challenging than expected to manage the challenges of reengineering processes and avoiding hidden integration costs.  
  5. Be realistic about your expectations at each stage. Knowing what benefits to emphasize and de-emphasize at different stages is critical. As demand for new technologies and improved ways of working increases, the limited benefits in some early stages can be the most beneficial later.    
  6. Create a roadmap. A dedicated smart manufacturing organization can identify the roadmap and tactics essential to maintain ongoing engagement and consistent execution from factories up through leadership, sequencing initiatives and managing the potential disruption. It also helps to ensure that budgets don’t underestimate the costs associated with activities such as process reengineering or integration.

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