WILL THE DIGITIZATION JOURNEY ON WHICH MANY manufacturers are now embarking be a truly transformational process, enabling fundamentally new business strategies? Or does digitization represent a more modest, tactical change, a chance to accelerate improvement of existing processes?
Manufacturers seem of two minds on this important question. Many manufacturers expect digitization—what we call Manufacturing 4.0—will bring far-reaching strategic opportunities and fundamental changes across the manufacturing enterprise. Members of the Manufacturing Leadership Council, as part of their annual exercise to identify the most critical issues they face, have said M4.0 will “transform the rules of competition, how work will be performed, how companies will be organized, and how leadership must lead.”
On the other hand, other manufacturing leaders persist in approaching M4.0 much more tactically, tending to focus on implementing individual technologies in isolated, uncoordinated ways.
As the ML Council’s latest research suggests, that, thankfully, is beginning to change. More manufacturing leaders are directly tying M4.0 to their business strategies and seeing digitization as a fundamental competitive lever.
Leaders at one such large manufacturing company recently presented their path to a more strategic M4.0 approach to fellow members of the ML Council. This company, which has 300 plants around the globe, has created what it calls a Manufacturing Applications Governance Council composed of key information technology (IT) and operational technology (OT) leaders. The council is tasked initially with compiling an inventory if existing systems, developing standards for emerging technologies, and rationalizing new projects. But the group also reports to and gets strategic direction from a steering committee of senior business leaders. Over time, this governance structure is expected to lead to a M4.0 roadmap that is directly linked with company strategy.
Ideally, this is a model for how many other manufacturers will make their M4.0 initiatives more strategic in recognition that this is a change that will affect every part of the enterprise and one th at will enable significant new strategies and business models.