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Digital Transformation
SIX KEY OBSERVATIONS
The digital transformation is underway. Manufacturers from all sectors and of all sizes are adopting disruptive technologies ranging from the Internet of Things to 3-D printing. Like any major business shift, some companies are farther along in their journey than others.
Manufacturers understand the value of digitization, but many companies lack the resources or expertise to fully leverage the digital advantage, according to the 2017 Digital Manufacturing Research Study by IndustryWeek and OpenText.
The report revealed several key factors impacting manufacturers’ digital maturity. Barriers include legacy systems and processes, skill shortages and a lack of enterprise information management (EIM) solutions to collect, store and analyze data.
Here, OpenText presents six key observations from the report and real-world examples of how different manufacturers are addressing their digital challenges.
6 Key Observations
KEY OBSERVATION 1
Manufacturers are Missing Digital Opportunities
KEY OBSERVATION 2
Manufacturers are Overwhelmed by Data
KEY OBSERVATION 3
Digital Transformation Must be Business Driven
KEY OBSERVATION 4
Digital Leaders are More Customer Focused
KEY OBSERVATION 5
Operational Visibility is Still a Big Challenge
KEY OBSERVATION 6
The Digital Skills Shortage
KEY OBSERVATION
KEY OBSERVATION 1
Manufacturers are Missing Digital Opportunities
Innovation leaders know they can’t depend on yesterday’s technologies to keep pace with competitors. Unfortunately, only 26% of business leaders believe their digital investments have contributed to a competitive advantage.
Some manufacturers may fail to adopt digital tools because they believe their existing systems are adequate or fear upgrades are too costly. But legacy systems will eventually lead to increased costs and inefficiencies as manufacturers find themselves constantly updating, customizing and maintaining their existing systems. Even so, manufacturers recognize the importance of adopting or improving their current digital strategies (Figure 1).
Figure 1: Manufacturers’ Digital Priorities
Adelaide Brighton, an Australian building products manufacturer, is one company that realized the benefits of digitization. A division within the company was using an outdated invoicing system that couldn’t keep pace with growth. The company addressed its issues by automating its invoicing process.
CASE STUDY
Adelaide Brighton Streamlines Invoicing
CHALLENGES
Inefficiencies with manual, paper-based processes
Mark Tosolini, Group IT Manager at Adelaide Brighton, explains, “We had a very paper-based process. All 50,000 invoices had to be converted to hard copy if they weren’t already. Though we were encouraging vendors to move to email, we still had to turn the invoices back into hard copy and scan them all. The scanned image was pushed to SAP, but from that point on, it was handled manually. We were using email and spreadsheets. The status of invoices, what problems we had with them, had we paid them, what was overdue—all those sorts of things were managed in a very manual fashion.”
Lack of automation delayed invoice processing
Adelaide Brighton relied heavily on the expertise of the AP staff to manage the manual processes, but this was not sustainable as volumes grew.
SOLUTIONS
OpenText™ Vendor Invoice Management for SAP® Solutions
The VIM solution optimizes and automates the process of receiving, managing, routing, and monitoring invoices and related documentation, and features deep integration with SAP.
OpenText™ Document Access for SAP® Solutions
Another critical requirement for Adelaide Brighton was archiving technology for the AP process. The team selected Document Access for SAP Solutions, which permits storage, management, and retrieval of SAP documents across SAP modules. The company used an established solution for OCR data extraction, which integrates seamlessly with the OpenText solution.
BENEFITS
Increase in productivity and efficiency through digitized process
Total visibility of invoice status at all times
Secure, auditable, and recoverable invoice document storage
Fewer FTE requirements due to automated and streamlined invoice processing
KEY OBSERVATION
KEY OBSERVATION 2
Manufacturers are Overwhelmed by Data
Whether it’s information from IoT-enabled devices or the latest business intelligence platforms, manufacturers are collecting more data than ever. But manufacturers still grapple with basic data management. Nearly 50% of manufacturers say they’re still struggling a little or a lot with the way they collect, store and manage available operational data (Figure 2).
Figure 2: Manufacturers’ Ability to Collect, Store and Manage Operational Data
- Somewhat Achieved 47%
- Significantly Achieved 33%
- Little to No Achievement 20%
The findings suggest manufacturers are missing opportunities to use data strategically, and legacy systems are often the culprit. As companies grow, they often find their existing systems cannot handle the large volume of data they’re generating. This was the case for auto parts manufacturer Delphi.
From intelligent vehicle technology to driverless vehicles, Delphi is working to make its vision for the future of driving a reality. As a leader and innovator, the company continually strives to optimize operations. Delphi recently transformed its inefficient data archiving and retrieval process with OpenText Data Archiving for SAP Solutions to deliver secure storage and immediate access to its archived SAP® data.
CASE STUDY
Delphi Frees Data for Faster Access
CHALLENGES
Inefficient, manual data retrieval process via IT support
In some situations, it could take weeks to find data, hours to generate a report, and the resulting data might be incomplete, requiring business users to initiate the process again.
Business did not want to have data archived
Over time end users became less willing to have data archived, resulting in an increase in the database size and impacts on system performance.
SOLUTIONS
OpenText Data Archiving for SAP Solutions
The solution helps manage the size of the SAP database and ensures continued access to historical data. It securely stores data on a long-term archiving platform and, most importantly, when users need the data it is accessible directly from within the SAP user interface. The solution is fully integrated with SAP applications and extends the value of standard SAP data archiving.
BENEFITS
Efficient use of IT resources
Business users and auditors have immediate access to data
Secure, compliant archived data storage
Online data retention period reduced
Reduced the size of Tier 1 storage
Utilizing cheaper, yet high-availability storage for archived data
KEY OBSERVATION
KEY OBSERVATION 3
Digital Transformation Must be Business Driven
Who’s leading the digital transformation? Is it IT support staff or key business decision makers? A true digital transformation starts at the top. Manufacturers that demonstrate the most success with digital implementations have buy-in and support at the management and executive levels. Poor leadership and collaboration across the organization are the primary reasons why digital strategies fail (Figure 3).
Figure 3: Top Reasons Why Digital Solutions Fail to Reach Their Full Potential
Oftentimes, manufacturers have difficulty collaborating because they have disparate IT systems across the organization. This was the case for Swiss fragrance and flavor manufacturer Givaudan. The company defined a strategy for a single solution and a single source of accurate information.
CUSTOMER STORY
Givaudan: Streamlining from the Top Down
CHALLENGES
- Content spread across multiple, disparate systems hindering a single source of accurate information
- High costs of support and maintenance of legacy IT systems
- Need for greater and more efficient collaboration within and across teams
- Growth of uncontrolled document distribution via email attachments
SOLUTIONS
- OpenText Content Suite Platform (formerly CLM)
- OpenText Extended Collaboration
- OpenText Web Content Management
- OpenText InfoFusion
BENEFITS
Single source of accurate information reducing burden on email and removing uncontrolled document distribution
Major cost savings through system consolidation, eliminating support and maintenance costs for legacy systems
Greater collaboration and knowledge capture for teams at multiple global locations
Records management disciplines applied to all content types
KEY OBSERVATION
KEY OBSERVATION 4
Digital Leaders are More Customer Focused
Leading manufacturers are building new business models around IoT-enabled products. These smart products typically have onboard sensors that record vast amounts of performance-related data. The information, often delivered in real time, allows manufacturers to offer ongoing services to their customers rather than a one-time transaction. In fact, 60% of manufacturers say digital solutions have helped them create a new, data-specific line of business (Figure 4).
Figure 4: How Digital Solutions Have Helped Manufacturers
• Digital leaders • Others
A successful product-as-a-service model depends upon the accuracy of the information, accessibility of the data and depth of analytical insights. The data provides manufacturers with powerful insights about product performance and the operating environment.
The Knorr-Bremse Group, based in Munich, Germany, is the world’s top manufacturer of braking systems for rail and commercial vehicles, such as freight trucks and metro lines. Knorr-Bremse has developed its iCOM (Intelligence Conditioned Oriented Maintenance) platform, providing advanced diagnosis and maintenance for both large and small rail and truck fleet operators. iCOM is an IoT application framework for innovative fleet management, monitoring and analytics.
CASE STUDY
Knorr-Bremse Enhances IoT-Enabled Predictive Maintenance
CHALLENGES
Customer demand for improved, self-service reporting
“Our customers wanted the ability to perform greater analysis of their data, for example to predict when components would fail, to extend the life of a component, or to understand the causes of failure,” says Martin Steffens, Project Manager and Software Architect for Digital Platform, iCOM at Knorr-Bremse.
Increasing volumes of data to provide deeper analytics
The iCOM platform uses on-board sensor units and about 30 subsystems, such as brakes, heating and ventilation, wipers, and doors to collect data. They continually generate data that is wirelessly transmitted to the iCOM platform.
SOLUTIONS
OpenText Analytics
“Using OpenText Analytics, we can provide state-of-the-art visualizations and heat maps of condition-based events, such as over-heating brakes on a specific incline. This helps our customers put measures in place to reduce component failures, extending component life, and ultimately saving money,” says Dirk Seckler, Global Head of Sales at Knorr-Bremse.
BENEFITS
Scalable solution capable of handling very large data streams
Rapid development and deployment makes Knorr-Bremse more competitive
20% reduction in customer maintenance costs
Dynamic analytics for easier interpreted visualizations provides competitive differentiator
KEY OBSERVATION
KEY OBSERVATION 5
Operational Visibility is Still a Big Challenge
Each step in the manufacturing lifecycle generates large data volumes — from product development to production to service and replacement. Typically, in the product lifecycle different departments across the organization use various applications to support their roles and contribution. This creates data silos across the organization and visibility challenges (Figure 5).
Figure 5: Operational Visibility: Where Data Silos Exist
EIM capabilities, such as enterprise content management, business process management and analytics can be combined to create a view of information across the business to provide more insightful visibility. North Star Bluescope Steel combined data from disparate systems such as ERP, asset management and spreadsheets, and replaced inefficient spreadsheet reporting.
CASE STUDY
North Star Makes Costing Clearer Through Analytics
CHALLENGES
Replace Microsoft® Excel® with a less manually intensive solution to report on and analyze costing data
Costing was still being managed through Microsoft® Excel®, in a time-consuming process that saw disparate areas of the enterprise manually collecting data in a file so large and inefficient, it could take up to 10 minutes just to open.
Facilitate month-to-month costing comparisons, as well as weekly analysis and cost-per-minute impact analysis
“There was really no window into that vehicle for month-over-month comparisons,” says Malcolm Edge, Director of Technology with North Star BlueScope Steel. “If you wanted to look at May, you had May. To look at January through May, you literally had to go through five different spreadsheets and combine that information manually.”
SOLUTIONS
North Star Solution
Analytics reporting was used to replace resource intensive and time-consuming forecasting by spreadsheet. A greatly enhanced solution was delivered where data was drawn from multiple sources, including MES and ERP systems, analyzed and presented to end users via self-service on-demand dashboards.
BENEFITS
A deeper analysis of costing data, pinpointing higher profit potential and upselling prospects
A better understanding of customer trends and needs
Quicker, more intelligent, decision making, inspired by accessible data
KEY OBSERVATION
KEY OBSERVATION 6
Digital Transformation Bridges the Skills Gap
The talent shortage is an ongoing source of frustration for manufacturers. Smart technologies require skilled workers to operate the new systems, interpret the data and analyze potential outcomes (Figure 6). However, some technologies can help manufacturers gain more value from their existing talent pool. These solutions free workers from time-consuming administrative tasks so they can focus on their core responsibilities.
Figure 6: Analytical Skills Shortage Persists Manufacturers are having difficulty recruiting and hiring people with the following skills:
At the KUKA Group, paper-based contracts can hinder business processes and ultimately even cost money through missed termination deadlines, expired maintenance contracts and changes in payment conditions not being communicated. For this reason, the robot specialist has switched to digital contract management based on OpenText™ Extended ECM for SAP® Solutions.
CASE STUDY
KUKA Achieves Faster Contract Searches to Meet Deadlines
CHALLENGES
Excessive search times and lack of transparency due to paper contract documentation needed to relieve pressure on strategic purchasing
“Our task in Strategic Purchasing is to actively manage contracts and agreements with suppliers,” states Sabine Knecht, Head of Indirect Material at KUKA Roboter GmbH, who initiated and manages the OpenText project. “In particular, if maintenance contracts have to be extended short term, fast response times and a good overview are very helpful.”
SOLUTIONS
OpenText Extended ECM for SAP® Solutions
The OpenText-based solution allows contracts to be filtered as desired. “For example, I can press a button and display all rental, lease, and consultancy contracts, analyze them, and compare them with one another. This is active supplier management and thanks to the full text search, I can find contracts whenever I need them—in 30 seconds at most, rather than the 30 minutes it used to take before the OpenText solution was introduced,” says Knecht.
BENEFITS
Contract management costs and time reduced
Active order management due to transparency
Pressure relieved by globally standardized information
FINAL THOUGHTS
The world is in the midst of a 4th Industrial Revolution, and manufacturers understand the value of Digitization. Data is driving this business transformation. In manufacturing, Industry 4.0, or IIoT, will generate data at unprecedented volumes and velocities. Still, many manufacturers struggle to maximize their investments or even implement these technologies in the first place. In many cases, they’re lacking EIM tools that can help them attain a 360-degree view of big data and analytics. An EIM strategy helps manufacturers streamline organizational workflows, increase the quality of information and create integrated user interfaces for end users within a single-source platform.
To learn more about how manufacturers are leveraging the power of EIM to achieve their digital goals, visit OpenText at www.opentext.com.
Additional Resources
Special Research Report
Digital Manufacturing Webinar
