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Industry Digital Progress
According to industry reports, the vast majority of discrete Manufacturing companies remain reluctant to brave the challenges of going digital. The progress, albeit limited has been different for different areas of Digital Transformation. Most efforts have been towards improving operational excellence both in supply chain management through procurement platforms (excepting tail spend) and in production through ERP systems and IioT and some limited worker enablement with AR. The B2B customer experience has not seen the digital evolution witnessed in the B2C, albeit with limited progress in things such as B2B ecommerce, CPQ, P2P etc. While CRM adoption and omni channel marketing is progressing, manufacturers have been hesitant to make the transition away from legacy wholesale and distribution networks. Some limited business model transformation has also taken place through product as a service models. Overall most of the progress has been the domain of larger corporations with small and medium manufacturers being “onboarded” into digital transformation. As a result the discrete manufacturing sector remains somewhat exposed to potential digital disruption.
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Digital Transformation in the Manufacturing Industries - CASE STUDIES
Arriving to much fanfare, the X-35 concept first took shape in a 1997 government competition. The first F-35A rolled off the company’s Fort Worth production line for testing in 2006 and by 2011, the company was delivering aircraft. The F-35 program is one of the most high-profile in the storied history of Lockheed Martin, and over the past three years the company has faced tremendous internal and external pressure to cut costs and ramp production. Over the coming years, the success of mission-critical business systems on the F-35 production line will determine the program’s ability to deliver for customers
Over the more than 10 years since the initial buildout of the production line, the disparate software packages on the production line have grown to include over 80 homegrown applications for managing quality, maintenance, productivity and human resources among many other areas, forcing users to use multiple screens for a variety of operations, including the manual movement of data from one system to another.
To ramp up production the role of “digital manufacturing fellow” was created. It included responsibility to chart a path forward for the software to jumpstart the ramp up.The first hurdle was that many team members were hesitant to adopt new software and second, the team’s focus on feature and function comparisons rather than overall application and information architecture. As the team members ran into the types of starts and stops that are typical for any MES project, they fell into the classic pitfall of companies first starting with solution selection, when in reality that should be the endpoint. Many did not realize the wide scope of different applications that existed on the shop floor and had to be educated on how to use enterprise architecture to align technology with business goals.
Lockheed Martin senior management also retained LNS Research to define a scope for the project to align with industry best practices and standards for developing an automated interface between enterprise and control systems. The new practice area included business functions and technologies and put MOM software on an even playing field with other technologies like ERP. LNS Research introduced to company executives to its framework for digital transformation and recommended that the Lockheed Martin team should not start with solution selection, but rather take the strategic objectives already defined for the F-35 program and use them as the input for the enterprise architecture process that would provide a roadmap for the solution selection and adoption of both IT and OT, including MOM software.
Over the next year and a half, a grass-roots approach to drive the discipline of Enterprise Architecture across Lockheed Martin was adopted and implemented. With a robust enterprise architecture in place, the company now has the capability to ensure its manufacturing systems helps it get to where it needs to be.
Source: LNS Research
The commercial vehicle industry and especially heavy-duty vehicle companies are experiencing a demographic change in their employee mix, as the experienced workers retire and new millennial workers coming in rather look to ease in serving their customers through more efficient digital means. On the customer side, there is also a shift in traditional loyalties and customer service expectations. Brands can no longer just offer quality but must now also offer easy, reliable and convenient purchasing experiences that customers have become accustomed to in their consumer lives.
To meet the urgency of these shifting trends in their industry, Dana has transitioned to include B2B ecommerce as one of its main channels of distribution by introducing, among other things, DanaAftermarket.com it B2B ecommerce portal using a state of the art CxCommerce solution from PhaseZero, a Digital Transformation advisor to global 1000 industrial and manufacturing companies.
DanaAftermarket.com transforms complex and fragmented legacy systems with a global platform that delivers convenience, visibility, and efficiency, making buying complex parts easier than ever with advanced search features and predictable order timelines. Image searching, concise part descriptions, and location targeting enable Dana’s customers to shop and do business more confidently, adapting Dana’s legacy of exceptional quality for the digital age.
The Yield is an Australian agricultural technology company on a mission to transform food and farming practices by building secure, scalable digital technology to sense, analyse and predict on-farm growing conditions, and then deliver information in a usable format to help increase yield, reduce waste, mitigate the risk and cost associated with soil and weather and inputs. Partnering with Microsoft (Azure) and Bosch, Yield has received several innovation awards from Government and International organizations. Learn More..
- Michelin¹ is a global player in mobility and one of the leading tyre manufacturers across the globe.
- Michelin has 107,000 employees and achieved revenues of €21 billion for period ending TTM 6/15 and an EBITDA of €3.4 billion; margins have increased from 13.8% in 2011 to 16.6% TTM 6/15.
- EFFIFUEL™ by Michelin Solutions was the first innovation in the market targeting increased efficiency in fleet fuel consumption.
- Michelin Solutions makes a contractual agreement to meet pre-defined targets, or otherwise provides a refund in proportion to expenses incurred.
- EFFIFUEL™ is a comprehensive ecosystem that includes sophisticated telematics, training in eco-driving techniques and the EFFITIRES™ optimized tyre management system.
- EFFIFUEL™ provides a “satisfaction or your money back guarantee” by providing the fuel efficiency service risk-free to truckers.
- EFFIFUEL™ encourages careful handling of the truck equipment, leading to extra savings for companies and a potential doubling of pervehicle profits.
- A reduction in fuel consumption of 2.5 litres per 100km represents annual savings of €3,200 for long-haul transport (at least 2.1% reduction in total cost of ownership and 8 tonnes in CO2 emissions).
- Business model shift from selling tyre as a product to a service guaranteeing performance, has helped Michelin achieve higher customer satisfaction, increased loyalty and raised EBITDA margins.
- Michelin initiated the digital transformation internally, but they soon realized that in some critical areas, such as big data analytics or infrastructure they needed to partner with external experts.
- Cultural change was another prerequisite to successfully manage the digital transformation journey.
- The risk of changing the business model was mitigated since Michelin Solutions was created as a standalone entity and the company decided to test the solution by launching several pilots.
Sources: Michelin, WEF/Accenture Analysis
- The LEGO Group¹ engages in the development, production, marketing and sale of play materials. It provides toys as well as experiences and teaching materials for children in approximately 130 countries.
- Founded by Ole Kirk Christiansen in 1932, LEGO is based in Billund, Denmark. It is a subsidiary of KIRKBI and is currently privately held.
- In 2014, LEGO earned €3.8 billion in revenues and €1.4 billion EBITDA, with a margin of 37.1%. It currently employs approximately 13,000 people.
- After a period of expansion (1970-1991) LEGO suffered a steady decline (1992-2004) and by 2004 LEGO was close to bankruptcy.
- Reaching a tipping point, LEGO started restructuring and a digital transformation programme focused on new revenue sources coming from movies, mobile games and mobile applications.
- LEGO’s design capabilities have been increasingly handed over to their fans e.g. through the Digital Designer (a web-based 3D design tool to create own designs). It’s USP towards learning and development differentiates it from competitors and convinces parents from millennial generation about the usefulness.
- LEGO achieved an EBITDA margin of 37.1% in 2014, an increase of 15% since 2007.
- Revenues for LEGO have grown at a CAGR of 20% from €1.6 billion in 2009 to €3.8 billion in 2014.
- In 2014, the first LEGO movie achieved revenues of approximately $468 million with a production budget of only $60 million.
- LEGO has recovered steadily post 2005 and it is now seen as “the Apple of toys”.
- LEGO’s new business group has become the incubator of the company, an open platform that allows fans and partners to experiment with “micro businesses”.
- LEGO was able to transform itself by launching new digital based businesses such as movies, LEGO Mindstorms, video games and applications, connected to their block systems that are more appealing to digitally savvy customer groups.
Sources: Lego Corporate Information, FT, LA Times, Global Toy News, WEF/Accenture Analysis
Intellum is the leader in customer education and employee learning software. The company helped invent the SaaS-based employee learning industry almost 20 years ago, Today, Intellum builds the learning, collaboration and performance software that companies like Google, Facebook, Amazon,
Although Intellum has an incredibly strong customer retention rate at 98%, the team was interested in finding a tool to help them better understand overall customer health.
Intellum chose UserIQ over other tools because, it was more customizable and easier to use
Intellum got 3x the interaction rate on features when they used UserIQ’s tooltips that extra little nudge has made a huge difference.
Today, Intellum uses UserIQ to improve their account and user insights, speed up user onboarding, and assist with driving upsell and cross-sell opportunities. Additionally, by leveraging UserIQ’s integrations with Zendesk and Salesforce, Intellum is able to bring together disparate data points and connect tools and departments across the organization with customer data.
IMPACT & RESULTS
By introducing users to new features using UserIQ’s tooltips, Intellum has improved the usage of those features by 3x on average by letting them learn about those features in real time. With tooltips, this introduction is subtle and non-intrusive, but still ensures users are getting the information they need when they need it.
Sources: Lego Corporate Information, FT, LA Times, Global Toy News, WEF/Accenture Analysis
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