Back in early February 2020, the Institute for Supply Management (ISM) announced that the Purchasing Managers Index (PMI) registering a decrease of 0.9% in December from the previous month – the fifth straight month it has been down. January’s figure showed a slight increase, which led to a (short) belief that the tide had turned. Little did we know how much this announcement would foreshadow what would soon emerge in March! The point of this reflection is that the future is never really known. We can look to market reports and economic indicators and feel confident our forecasts are accurate. But, at the end of the day, the organizations that can best adapt and change are the ones that can better navigate uncertainty, so they will be the winner in the long run.
The digital transformation that has been part of the strategic investment road map by today’s manufactures has been justified, in part, by improving an organization’s ability to adapt faster to change. This has been the case in many industries. Today, we might be seeing this in the automotive industry.
According to an article published in USA Today, Ford, General Motors, and Tesla are now exploring the possibility of transitioning some of their production capacity into making ventilators and other medical products. Below is a link to a video that provides an overview of this announcement suggesting that excess capacity exists and that these manufacturers have a lot of manufacturing expertise. However, the FDA will need to be involved, which includes a new level of regulatory compliance that doesn’t currently exist in the automotive manufacturing industry.
Regardless, as the world fights the coronavirus, it is quickly becoming evident that “business as usual” no longer applies. New business models will be evaluated, and massive “pivots” will be needed to meet the evolving needs of our society. The Digital Enterprise, seamlessly connected with a digital thread, can be defined as an organization that has achieved a digital transformation across all operations and systems integration. This type of organization is best poised to be part of the new “non-normal” environment we now operate in.
Read more here: What is a Digital Thread?
Here are three ways this transformation has become extremely critical to organizations today seeking to better navigate uncertainty.
Real-time Visibility and Access to Analytics
Many in the Aerospace and Defense manufacturing industry were taken by surprise by the sudden downturn of the PMI index in January. Some were still viewing the market through the prism of years of manufacturing growth and projecting a rosy future. More than a few were in the midst of ramping up their production lines.
Those organizations that are the furthest along on their digitalization journey, on the other hand, were the least surprised by the sudden downturn. They have also been able to better navigate uncertainty. The difference between the two? Analytics. Those able to view parameters across the enterprise in real-time or near real-time were alerted quickly about the change in order volume. That put them many months ahead of those struggling along based on quarterly reports.
Digital Systems Across Operations
The capabilities of analytics intelligence, though, are severely limited by a lack of a holistic ability to manage operations, including production, quality, maintenance, and overhaul/sustainment activities. It takes data pouring in from all systems to be able to operate at Internet speed. Granted, end-to-end integration can be a long process. But manufacturers who commit to a digital strategy soon begin to reap the rewards quickly.
At first, only one or two systems are digitalized. But those systems can then send data to analytics engines. Gradually, data from more and more digital sources can be compiled and drawn upon to gain a better understanding of what is happening now, how things changed from last week or last month, and what to expect in the months ahead.
The convergence of IT and OT
Continuing the theme of systems integration, it can’t stop with just operations. A vital ingredient of digitalization is bringing together disparate systems across the enterprise. IT must be integrated with operational technology systems. Production, scheduling, engineering, and new product development systems must all be unified and linked with other enterprise applications.
Many organizations have already begun their digital journey. But that journey has just begun for many others. Much has been done to streamline and simplify this process. Platforms now exist that tie together data from these enterprise applications that can effectively accelerate the digital transformation process so they can begin to take root.
These platforms are often an ideal place to start on a full-fledged digitalization program. New capabilities can be quickly added or removed. Or, in the case suggested above with the automobile industry potentially producing medical device products, the transformation of an entire production process to include new regulatory compliance reviews and audits by the FDA. After all, each production process is simply a sequence of steps to be produced, approvals to be validated, and then the distribution of final goods to end-users.
Together, we as a manufacturing industry are capable of an entirely new business model with a much higher level of diversified products while being better able to navigate uncertainty. That need didn’t exist before, but now it is a top of mind priority. The digital enterprise is the one that can best accomplish this new need.