Striving for ROI with digital manufacturing investments

Why return on digital investments eludes manufacturers

From machine learning to automation and artificial intelligence (AI), digital enablement will soon change the way consumer manufacturing companies think about manufacturing. While this sounds compelling, for those companies that embraced digital early, the expected benefit has frequently fallen short. The question is why.

The best digital strategies will align workers, technology and processes into a singular strategic vision based on delivering value and solving business problems. Start by defining how you want your organization to change. Are you undertaking comprehensive transformation, incrementally building your business or setting out to change the way your industry will operate?

Set a strategy against that definition, considering both technology needs and operational systems requirements. Review production goals within your vision and start planning which digital tools, training of employees and process changes will need to be initiated to meet them, as well as the KPIs you’ll use to measure progress.

Bring your vision — what the organization is doing and why it’s important — together with the crucial steps needed for change into one comprehensive roadmap for digital transformation.

Make sure you’re thinking about organizational structure as well as operating models, as both must be aligned for success, particularly as ongoing advances in technology will soon drive unavoidable operational change. As part of the roadmap, it’s important to review future roles to determine where resources must be added, built or reallocated.

A digital transformation can’t be successful without full alignment of leadership and business units across the organization. As manufacturers begin their digital journeys to boost production capabilities and create efficiencies, they should:

• Set up a transformation and value capture office within the organization, including cross-functional representation.
• Define governance and work processes (e.g., should a line worker be able to, or permitted to, turn off the overall vision system for production?).
• Seek ways to further integrate business units across the company by mixing personnel and skill sets from cross-functional teams.
• Define and communicate to all team members the guidelines and responsibilities owned by each and set reporting mechanisms for accountability.

As consumers increasingly shift away from traditional tobacco products, a legacy tobacco industry manufacturer sought ways to reorient its supply chain and production logistics to rapidly scale innovation and capabilities around introducing new products. An EY team began looking at different points of entry and, taking a broad approach, created eight proofs of concept for client consideration. The decision was made to create a digitally enabled shop floor that would improve employee satisfaction and productivity and create greatly enhanced data processing efficiencies.

The transformation program included digitizing all shop floor documentation, creating accessible and visualized data to improve production standards, and building operational excellence as a foundation for rolling out new processes across the organization. In all, digitization initiatives are expected to reduce manufacturing costs by $63 million over five years and realize a year one capital deferment of $21 million.

It is important to realize that the next phase of digital transformation doesn’t necessitate changing every manufacturing process or technology. Effective enablement of technology, processes and people should improve weaknesses and capitalize on strengths in increments. Those organizations that integrate digital tools to create or enhance people-first workplaces will be best positioned to find efficiencies, drive high adoption of new tools and deliver an increased return on investment.