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    June 3, 2021

    Digital Transformation in Manufacturing: How to Break the Binds of Tradition

    Manufacturers run complex operations, juggling supply chain, operational and financial functions that must work in harmony to deliver on promises to businesses and consumers. Some manufacturers have already upgraded one or two business functions, like finance, with technology, but most haven’t truly transformed their business or their manufacturing process.

    Digital transformation has marked benefits in the manufacturing industry, including greater productivity, better informed forecasts, improved customer experience and clearer visibility. And when you work with a trusted, knowledgeable partner like Enavate, you can be confident your decisions will actually help you achieve your goals.

    We asked Enavate experts Abhi Ghatak, Mathieu Goodman and Donna Hoenie about their experiences working with manufacturers, and what digital transformation could mean for this $5.6 trillion industry.

    Here’s what they told us.

    Donna: I’ve always thought of digital transformation as taking technology solutions, mainly Cloud, applying them to the repeatable business processes and making them work for you. The goal is to improve accessibility to business information, to solutions and serve as an avenue for end-users to get information out of your system. It should be something that’s fluid that people can control, done digitally and not locked away with a bunch of paper recording.

    Mathieu: It’s easy for companies to get stuck in cruise control, or worse, slowed down, because of their current digital systems. And digital transformation is about looking at these digital systems, their current digital infrastructure and updating them to allow for growth and efficiency across the board.

    Abhi: In manufacturing, it means enhancing revenue or the bottom line through the creation of net new products, services or business models, both for existing and for new or adjacent markets. It provides continuous optimization across processes, departments and ecosystems of a hyper-connected age where building the right bridges is the key to business accomplishment.

    “Manufacturing CIOs must address and exploit disruption in their industry, which requires a futuristic view of technology, business models, customers and the workforce.”

    Donna: It’s not for everybody. It’s difficult for a company that is stuck in the 20th century to look at digital transformation and process how they would deploy that in their business. They have to have the ability and willingness to change, and to look at how they would redesign and re-engineer their business to take advantage of the value proposition digital processes bring to the table.

    Abhi: Manufacturers are slightly behind the digital maturity curve. We’ve been talking with a manufacturer; they basically use paper to do everything, from quality to production. They can’t be reactive as their industry is changing. Without a digital supply chain, they run three shifts when they could run one shift because they’re making something and the changeover is too long. You’d be shocked how many manufacturers do that. They’ve achieved digital transformation in finance but operations typically lags behind.

    Donna: The early adopters, they are at least using some digital tool for their system, but not always for manufacturing. They’ll deploy a finance system; they may deploy a CRM solution. When it gets to production, that is lagging severely behind. They’ve invested in a manufacturing system – those were never cheap. They’ve got a long life. It’s hard to move away from those old MES (manufacturing execution system), and manufacturing solutions are usually difficult to get data out of.

    There are components of manufacturing you can’t just overlook and let it build some history to get going on. You need to know how long it takes you manufacturing in your current process and every single step of that process to be able to put it into an MES. That’s not easy data to get out of a system. With digital transformation, you have to recreate all of that and it’s all custom. You have to get to the minutia.

    Abhi: Manufacturing is a process where it’s difficult to piecemeal. It has a lot of hierarchy. Let’s say I want to digitally transform my supply chain. What does that mean? I need to know supply and demand. What’s demand? Demand is sales orders. It’s a forecast, it’s my website. If those things are not digital, how do I get the data to transform the next process, which would be planning and supply chain?

    You start with a top-down approach. I’ve seen a few companies start with a bottoms-up approach, where they’ll buy a plant and equipment and then try to push that information up the chain. But sometimes there isn’t a home for them to process that information.

    “I could have the most automated factory in the world that’s producing loads of data, but if I have no way to analyze that data and turn it into actionable insights, what’s the point?”

    It's not just a technology implementation. It's a business transformation. Software is only one component of it. They have to look at their business holistically.

    Donna: They focus on the application too much. They don’t talk about, “How would I re-engineer my business?” You’re going to have a structure that’s totally different. It looks like it’s more work but it’s a transformation. It’s something a customer should get excited about.

    I lead with process. I don’t lead with solution. We’re going to ask them to relook at their business process. I have to set the expectation with the client that there’s going to be a level of design work.

    Abhi: Buying a new machine or a new piece of equipment is not digital transformation, even though it's digital front panel. Digital transformation, if we go right back to the beginning, what does it really mean? At the end of the day, it means continuous optimization through a hyper-connected age. We've seen companies that get complacent because they're the market leader. They have margins, and then someone comes along and eats their lunch.

    The human being is resistant to change. Manufacturing is tradition-bound. We see that even when we're trying to implement our ERP systems. You ask, "Why are you doing it like that?" And you get, "That's how we've always done it." Culture blocks change. People do not want to change. Digital transformation holds people accountable. It holds processes accountable. People don't want to change that culture and go there, especially in manufacturing.

    Mathieu: A coffee roaster embraced innovative tech in the sense that not only did they choose NetSuite as their ERP, but they were fully open to customizing it for the coffee-roasting industry, for their specific needs. They were willing to invest in the technology to get it to a point where they were as efficient as possible.

    Abhi: For them, the biggest thing that digitally transformed them was traceability. There is a new set of food regulations in the U.S., the Food Safety Modernization Act (FSMA), forcing a lot of traceability requirements. We pretty much automated it.

    Donna: This is a wonderful example. It is a company that had a great business model 15, 16 years ago as coffee became such an integral part of our lives. You used to buy Maxwell in a can. Now, coffee’s become not only a lifestyle, it’s a point of entertainment. A way people break out of their shell and have someplace to go. They embraced that, saying, what if we step up and provide better quality coffee and make it small and boutique?

    Their concept from day one was high-quality coffee in a boutique environment where they do limited roasting, and they roast the day before.

    “They go from the beginning of the manufacturing process all the way through packaging and shipping in less than a 24-hour period. And they guarantee your coffee’s going to be there no less than two days after it was manufactured.”

    They were doing everything manually and got to the point where they couldn’t produce to fulfill the needs of their own coffee shops, so they couldn’t enrich and expand their business to consumers. They also couldn’t manage the roasting process in two locations, West Coast and East Coast. They had a myriad of problems.

    We knew it would require them to re-engineer their entire business, from the marketing concepts, how the sales reps sold, what the sales reps sold, how the sales reps committed to their customers, what they were going to get, what the recipe and design process would be in the coffee bar.

    They taste every roast to make sure it has the right attributes. There are 97 attributes and each one had to fall within a certain metric – and it was all manual. They needed to find a way to integrate that and then switch out inventory to get the right blend. We needed to take all those things and make it so we can make those changes on the fly, update the system, different cost basis, different inventory, lot sizing. Everything has to be lot numbered. It all has to meet FDA compliance; we have to provide FDA regulatory reporting. They also grew organic and needed to be able to capture roast time and burn-off to eliminate any non-organic product.

    “We had to walk them through how they would re-engineer, starting with what NetSuite can do now, the process, and how to marry the two. It really has changed their business.”

    They really did get to re-engineer the whole process. And more importantly, the thing they never thought they would do is re-engineer the sales process. They knew they would have to do manufacturing, but we literally turned their sales process upside down.

    At Enavate, when we work with manufacturers to digitally transform their business, we don’t simply throw solutions at individual problems. We take a holistic look at their business and processes, guiding them toward the best initial investments and transformations to set themselves up for continual optimization.

    Our experts understand your industry – and they understand business. They’ve helped companies transform even in the most complex scenarios. If you’ve been told it can’t be done, try us. We’re up for the challenge. Talk with one of our Enavate experts about your goals for transformation.

     

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