Make This Revolution Work

By October 8, 2019Power of the Profession
191001 October Cover

Revolutions cause dramatic and wide-reaching changes for the way something works or is organized, reshaping ideas and beliefs. They impact social order, governance and systems.

Revolutions are idealistic. There is a beautiful sense of liberation and freedom, a romance of the future potential. People feel unbridled enthusiasm for what can happen and what the world can look like — the art of possible.

Romance eventually fades, giving way to fanaticism. It is an extreme enthusiasm that is devoted to a specific interest or activity. Fanaticism can attract and suck people in, but it can become dangerous as fanatics become blind and erratic.

Throughout history revolutions (and fanaticism) have been contagious. Today is no different.  Manufacturing operations is teetering on the brink of “digital fanaticism.” The Fourth Industrial Revolution and the concepts it has introduced all point to the digitalization of manufacturing operations to create new opportunities to apply technology in factories in ways not possible before. Industry 4.0 is a global concept — in some cases catalyzing several industrial policy initiatives in China and other Asian nations.

The romance of this revolution is inspiring business model transformations across industries and value chains. Supply chain leaders have changing expectations for the role manufacturing operations will play in the businesses. The new expectation is matching value creation in the factory with the value created for the customer.

Revolutions are struggles between the past and the future — whether this manufacturing revolution can meet its objectives or not is uncertain.

The romantic visions of zero lead time and zero-touch supply chains are now being met by very tactical improvement projects. These projects are focused on removing paper, modernizing technology and ultimately creating some form of smart factory capability. Most “revolutionary projects” drive value from improvements in asset utilization or variable cost reduction — as opposed to equaling the value matching scenario described earlier — and instead only perpetuate the cost center past that leaders strive to get away from.

Breaking from tradition to place big bets on an uncertain future is a big leap out of the comfort zone for those leading their organization’s manufacturing strategy.

Revolutions Need Structure  

Revolution as a collection of disconnected projects won’t succeed. Revolutions fail when there’s no support or clear coordination of activities.

Throughout history, the revolutions with staying power are those that create some form of structure that strikes a balance between romance and fanaticism. For example, the American Revolution provided the Declaration of Independence in 1776, idealizing freedom and equality. That was the first step. The United States Constitution was ratified in 1788, and finally the Bill of Rights came in 1791. Other revolutions — French, Russian and Chinese — have resulted in some form of structure as well, along with ramifications.

Today’s manufacturing revolution is far less violent, yet there will be casualties should supply chain leaders not successfully translate the shifts in business models and designs back into manufacturing operations.

Modernizing the production system to connect ways of working in and across manufacturing operations will create this foundation. Production systems are a harmonized set of common, core practices and management philosophies that synchronize activities and behaviors across people, processes and technologies. This provides a structure for reliable and profitable product supply in manufacturing operations.

Today, only 46% of companies have a production system deployed across all of their factories. Those deployed systems are steeped in lean and continuous improvement methodologies. They are not equipped for agility imperatives. Save for some point solutions, they are not fully integrated (let alone connected) to an organization’s digital strategy. Supply chain leaders who leverage their production systems are in an advantageous position to coordinate various projects and achieve a future level of performance for the customer, preventing “digital anarchy,” which causes unsustainable results and costly failures.

The Revolution is Far From Over

Alexis de Tocqueville said, “In a revolution, as in a novel, the most difficult part to invent is the end.” Only 18% of companies report completing their digital journeys, signaling that manufacturers are still in charge of their destinies.

Take hold of your future:

  • Reinvest in the core of your operations — Digitization without standardization of process results in failed projects. Standard work cannot be overlooked. Stability and consistency must come first. Second should be the application of digital as a tool to transform those processes, with a clear understanding of what benefits can be realized, and when.
  • Reshape your corporate society to drive innovation — Both Airbus and Ford Motor Company have shifted organizational designs to accelerate the introduction of breakthrough technologies to their factories. Ford created an advanced manufacturing organization seeded with both technical experts from within the company’s engineering and operations skill teams as well as next-generation thought leaders.
  • Connect the production system with the operating system for the supply chain — Johnson & Johnson, Nokia, Procter & Gamble, Schneider Electric and Unilever have evolved their manufacturing excellence programs from a specific “methodology,” integrated them with the end-to-end supply chain and have been successfully coordinating the digitalization of their manufacturing operations.
  • Avoid your Waterloo — Craft and articulate a vision for the organization five years from now and be present in making it happen. Do not assume or delegate.

What are your thoughts about revolution? I welcome your comments.

Simon Jacobson,
VP Analyst,
Gartner Supply Chain
[email protected]

 

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