The digital mode of production (apologies to Karl Marx)

Mark Gardiner

Helping customers implement the future

Published Jul 11, 2023

How do you reconcile an average investment cycle of ~7 years with the need to innovate and be agile? This is the challenge that the manufacturing sector is facing currently and a clear priority for leaderships teams within manufacturers of all shapes and sizes.

Covid-19 was ‘credited’ with forcing organisations to digitise more rapidly than many had planned or foreseen, yet UK manufacturers have seen continued disruption following the end of the pandemic. Factors outside of their control – geopolitics, energy prices, post-Brexit barriers – have created a perfect storm of challenges. In days past, it might have been the Production Director who would lead the charge to face these challenges. Today, it is more likely to be the ‘IT Director’.

First, let’s address that point. If, as a business, you still call your board level technology leader an “IT Director” you probably have many more problems than the ones discussed here. If your most senior manager is restricted to the day-to-day operations of IT (aka keeping the lights on) and is not central to strategic planning, process improvement and innovation, there may be an argument for some more fundamental changes that need to take place.

And indeed, people are central to successful digitisation and technological advance in the manufacturing sector. More specifically, the right skills and capability. Whilst automation, robotics and ultimately AI will impact the ‘traditional’ manufacturing and industrial jobs, digital skills will come to the fore. Whilst robots can be more accurate, faster and more productive than human workers, there is a need for the sector to address the skills shortage. Universities have responded with a plethora of courses focused ‘advanced manufacturing innovation and skills’, although there are plenty of critics that don’t see significant change in the education sector over the last generation or two. That said, any changes that have been implemented will take time to filter through to the marketplace.

The wider shortage of digital skills in the market is an issue for all, as highlighted eloquently by Microsoft earlier this year. But I believe manufacturers can win this war for talent by appealing to those people who want to make change and leave a lasting impact. Joining a manufacturer going through a digital transformation surely is more exciting than just tweaking a home page.

Aligned to new skills are new ways of working with technology advancement. As businesses continue to leverage the cloud, APIs further allow ERP, production, and supply chain systems to integrate seamlessly. This should not be restricted to internal integrations but also extended to customers and supply chain partners. But the elasticity and agility of the cloud can only be fully embraced if this technology transformation is partnered with business transformation. We often see cloud adoption stalling when organisations fail to evolve. Deciding to move to the cloud is not a strategy; the journey you choose to get there is. Experience tells us that cloud adoptions face significant risk of failure due to unrealised business value (e.g. cost-out, increased speed-to-market) and cultural incompatibilities with cloud-enabled ways of working.

Whilst Gartner predicts that you are unlikely to see a replacement laptop until 2024 with reduced spending on ‘devices’ in recent years, software spend is on the up and CRM is leading the way. However good your product, production has no commercial consequence without sales, and sales are transient without customer service. Buying habits have changed and expectations have risen. You may produce a world leading widget in the most efficient way imaginable, but if you do not fully understand your customer and have a single source of truth, your hard work will not be sustained. IDC tell us that the top technology priority for the C-suite is “improving customer-focused digital experiences”. The ability to offer customers – including B2B customers – a steadily improving digital experience is essential for competitive advantage. Every B2B buyer is also a B2C buyer outside of offices hours and the bar has been set in that landscape.

And the bar is being raised still further with the impact of Generative AI and what that will mean for a customer experience. We are seeing early adopters in the B2C space start to embed Generative AI into their customer facing architecture, B2B and manufacturers will follow suit. There are some great starting points for manufacturers to face into – discovering services, making experiences exceptional, providing consistent knowledge and handling exceptions – in this article. In addition, Digital Assistants and Digital Co-Pilots with Generative AI will support a range of activities within a manufacturing setting.

Data. Where to start? Where to end? We talk at Slalom about companies needing to have a Modern Culture of Data and we could write pages on this topic alone. Suffice to say, data underpins everything. It is the foundation of the whole concept of Industry 4.0, with advances in IoT devices enabling the capture of data throughout the production process (and indeed supply chain). This data can drive greater efficiency, identify faults and support predictive maintenance, reducing costs. Building on those foundations, can your data create additional value and drive new revenue streams?

If data shines a light into the dark corners of inefficiency, process optimisation and process excellence can take centre stage in the production. And you won’t need an encore, as you embed continuous improvement into everything you do. But who (or what) is the villain in this play? Integration… or more precisely, the lack thereof. In my Shakespearean analogy, the amalgam of legacy systems was maybe conceived “not of an age, but for all time.” Sadly, the tragedy is that dislocated applications and the lack of a single source of truth will hamstring any business.

In addition to memory foam and cordless vacuums, (although NOT Velcro I discovered when writing this blog), NASA has also given us the Digital Twin. Whilst we will avoid jokes about rocket science, those clever folks at Siemens Power and Gas estimate they have cut development-to-production lead-times for gas turbines by around 12 weeks by exploring and exploiting the virtual benefits of digital twins. And it’s not just creation, testing and building; the digital twin can also support remote diagnostics. The powerful combination of IoT sensors, data capture/processing and cloud compute has unlocked manufacturing and engineering in a way that James Watt could never have imagined as he watched a kettle boil…

Coeus Consulting offered a great quote in an article last year: “Industry 4.0’ was born in Germany and, like all things German, can be perceived as high quality with a high price tag. Industry 4.0 may seem an aspiration that is beyond the reach of many manufacturers and hence doesn’t make it into their strategic thinking.” But like any new model of a high-priced German car, Industry 4.0 is already being replaced by the very latest model – Industry 5.0 (not the most exciting branding, but we all understand the naming convention). This next phase of industrialisation will see humans working alongside advanced technology and AI, powered by robotics and intelligent automation to further enhance workplace processes.

We all need to be ready. If we are going build better tomorrows for all, the manufacturing sector, policy makers and the whole ecosystem needs to dream bigger (and move faster) to modernise and be competitive on a global scale. Start with a vision; develop a strategy; innovate; be ready to pivot.

Whatever you do, don’t stand still.

Maybe begin by talking to the team at Slalom who are currently helping the leadership teams of other manufacturers ensure that technology and digital is central to their business strategy, and/or helping them adopt innovative technology, or optimise their existing processes.