Why Technology Strategies Fail to Deliver
It’s becoming mission critical for large organisations to have a holistic Industry 4.0 strategy, one that leverages Industry 4.0 principles and properly addresses the specific opportunities and challenges they face.
I’ve been surprised coming back to the UK that some billion-pound businesses still haven’t prioritised Industry 4.0 and digital transformation in their strategic outlook. Granted, the electronics, automotive and aerospace sectors are leading edge in this area, but for many others it’s a standalone approach and not linked to any existing Continuous Improvement and Operational Excellence maturity strategy.
They have separate technology, sales, sustainability and quality strategies, when what they really need is one, fit-for-purpose methodology looking out over the next 2-5 years that allows them to benchmark internationally and standardise deployments across all sites.
It should also be capable of focusing on their biggest priority issues - whether reducing lead time, decreasing costs, reducing the reliance on scarce labour or ensuring supply chain continuity.
Rather than inventing their own framework to assess against, which can be very time consuming and labour intensive, multinational companies should be considering the Smart Industry Readiness Index (SIRI), which is the internationally recognised standard for Industry 4.0 planning and endorsed by the World Economic Forum. SIRI measures a business’ current maturity and prioritises the Industry 4.0 dimensions that will have the greatest impact on the company, aligned to its strategic priorities.
Source: INCIT
Critical success factors
The outcome is a Smarter 4.0 roadmap and data analytics pathway with definitive focus areas that deliver measurable benefits towards priority KPI’s, primary costs and critical success factors. This in turn creates an aligned leadership team with a clear vision of how to adopt the right Industry 4.0 principles to increase competitiveness and take the company forward and in the right direction.
The SIRI framework comprises three layers - the topmost tier identifies three fundamental building blocks of Industry 4.0: Process, Technology and Organisation. A company’s strategic plans must touch on all three to harness the full potential of digital transformation.
Source: INCIT
A second layer breaks these three building blocks down into eight pillars, which represent the crucial aspects that aspiring businesses must focus on to become future-ready organisations, while the third comprises 16 dimensions that should be referenced when evaluating the current maturity levels of corporation facilities.
Learning the key concepts is an essential first step in any transformation journey, but larger companies must properly evaluate the current state of all their manufacturing facilities, before they can identify areas of improvement. The SIRI Assessment Matrix establishes their standing across 16 key dimensions and then the Prioritisation Matrix is used to identify high-impact elements for further action, but in a systematic fashion that is both robust and comprehensive.
For multinationals especially, finite prioritisation is a critical exercise in formulating effective Industry 4.0 roadmaps and plays an increasingly important role in closing the awareness-implementation gap.
The Prioritisation Matrix formula comprises four key factors: the planning timeframe, their current maturity level, costs, top KPI categories, and a company’s proximity to the industry best-in-class. Each is weighted based on how much it influences the company at the point of the prioritisation exercise.
Source: INCIT
Prioritisation Matrix
To identify the top-priority SIRI Dimensions, the Prioritisation Matrix formula processes the four weighted factors to calculate an Impact Value for each of the 16 dimensions. It then quantitatively identifies the areas to prioritise, by comparing the Impact Values across them.
To develop a holistic Industry 4.0 transformation strategy and roadmap, it is important that organisations consider all three building blocks of the SIRI Framework (Process, Technology, and Organisation remember). Therefore, the Prioritisation Matrix will recommend at least one SIRI Dimension, the one with the highest Impact Value, from each building block.
Plus, when prioritising where to focus, SIRI also requires larger organisations to select a planning horizon. This helps the algorithm select the most appropriate focus area to deliver the desired results.
There is a Tactical one for businesses, SMEs particularly, which lack the resources and risk appetites to commit to transformation plans beyond two years, while the Operational planning horizon should be adopted by companies that are under pressure to deliver quick, short-term returns against certain cost factors.
Most multinationals, in fact 85% of best-in-class organisations are selecting a Strategic approach and planning out over five years in relation to the future factory.
Strategic planning horizon
The Strategic planning horizon accords the highest weightage to the KPI factor and those that reference it are often large corporations that aspire to keep pushing the boundaries and maintain a lead over their peers, or those that intend to make a deliberate push to overtake their closest rivals.
High-level planning gives a clear understanding of competitive advantage and clarifies critical success factors, plus what needs to be better moving forward. With priorities defined, the vision of a future Industry 4.0 operation becomes tangible and means potential solution providers and appropriate digital technology can be investigated.
Have a clear business case developed with expected ROI, scope of work and requirements for the transformation, as this means solutions can be evaluated in a logical way, without getting distracted by some of the other functionality. Also, it’s not just about digital technology adoption; the people and process pillars need equal focus if the change is to be successful. Indeed, adopting Industry 4.0 principles is a change management exercise, so follow a structured plan by:
Evaluating the impact on people, process, stakeholders
Communicating why and what is going to happen and how it may affect people
Engaging staff in any trial with opportunities to have input and raise issues
Regular communications throughout and celebrating successes
Formal end of a pilot review to capture learnings and standardise the process
Scaling up fast across the business and moving onto the next focus area
In a world of scarce resources, information overload, and pressures to deliver short-term results, having a clear vision and leveraging Industry 4.0 principles is essential for large companies to embrace real transformative projects and a longer-term framework for sustainable change. SIRI helps by benchmarking current levels of maturity and revealing the best-in-class per industry versus a best practice framework that prioritises the Industry 4.0 dimensions to focus on for achieving specific strategic objectives. This ultimately facilitates a design of the factory of the future with key principles and priorities built in, with the future state outlook over 5 years out, but visible now!
About the author: Alastair Crawford of LMAC was the first certified SIRI assessor for the UK - based on five years of market leading expertise in Australasia, as the New Zealand Government especially strengthened its economy via efficiency, quality and process improvements based on the latest Industry 4.0 principles. Having originally honed his skills and expertise in the world-class lean methodology environment of Toyota, he is passionate about supporting industrial/manufacturing take up and adoption of leading-edge digital transformation and sustainability practices to improve productivity.
References
The Goal (Theory of Constraints) by Eliyahu Goldratt and Jeff Cox
For more information on the Official SIRI Assessment and the evaluation scope, please refer to: Singapore Economic Development Board, The Smart Industry Readiness Index, 2017
Smart Industry Readiness Index
Dr Andreas Hauser, Director, Digital Services, TÜV SÜD