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Jump-starting digital transformations at low-volume, high-complexity manufacturers

Mass-market, assembly-line environments aren’t the only places where digital is transforming manufacturing. Makers of complex, tailored products are also seeing major impact.
Erik Sjödin

Creates lasting transformations for leading companies across the construction value chain, with a focus on construction digitization and suppliers, such as construction-equipment OEMs, rental companies, material manufacturers and distributors, and retailers

Low-volume, high-complexity manufacturers—for example, companies that make agricultural or construction equipment, highly customized aircraft components, or industrial machinery—face barriers that have thus far slowed their adoption of digital technologies. These companies construct products with very low levels of repeatability, leaving few tasks that would be well served by automation, for example. Understandably, leaders in these organizations are often under the impression that only bespoke digital solutions will be effective in their operations, and that there’s nothing on the market to support them.

These factors mean that although most manufacturers in this category understands they need to embrace digital, they usually lack a well-developed business case to justify the necessary investments. Large-scale corporate programs to champion digital manufacturing projects rarely take off. Instead, such solutions are more commonly identified and implemented by single business units or in single plants.

Despite these barriers, many players have a sense of urgency to implement digital solutions, feeling that they will fall behind the competition if they do not integrate digital manufacturing into their production. They’re right: the potential impact of digital technologies is significant. We estimate that low-volume, high-complexity manufacturers could improve annual output by 5–20 percent by harnessing these solutions, with integrated operations as the enabler for substantial savings. Furthermore, the large volumes of unused data that these organizations are now producing could hold the key to productivity improvements.

How digitization can transform operations

Digital solutions can directly address specific challenges that low-volume, high complexity manufacturers currently face. The secret lies in applying digital to integrated operations rather than single functions. In our experience, three areas hold significant potential.

Quality and reliability. The reliability of products in the field is a key selling point and top priority, so predictive analytics and remote maintenance could be incorporated into equipment to increase uptime and limit disruptions to operations. Manufacturers could establish remote access to monitor product health and build predictive models, using field data to optimize it. An agricultural-equipment manufacturer, for example, could equip controllers with a mobile data connection for remote access. The same concept can apply to the manufacturer’s own equipment, with digitization improving the efficiency and effectiveness of maintenance, reducing unneeded downtime.

Demand volatility. High volatility and unpredictability in production and the supply chain makes determining demand difficult, yet doing so is essential for decisions ranging from production planning to inventory management and staffing levels. Data-driven demand prediction can provide manufacturing leaders greater insight—for example, through statistical models that link production demand forecast to external data sources. A maker of mining equipment could estimate demand for its products based on metal-market forecasts.

Production variability. Almost by definition, low-volume, high-complexity production means managing a large number of product variants, a wide range of production tasks, and close collaboration between manufacturing with engineering. Digital standard operating procedures (SOPs) and performance management can significantly improve an organization’s ability to manage the complexity. For production, manufacturers can establish remote access for SOPs from tablets, and then link jobs to SOPs to automate performance management. For example, displaying customer-specific options on devices such as Google Glass can increase efficiency and lead to better decision making.

Speeding the implementation of digital solutions

A lack of familiarity with specific applications can prevent executives from imagining the impact that already-existing digital technologies could have on their organization. But recent conversations with industry executives have highlighted six steps that can accelerate a digital transformation.

  1. Complete a digital-capability scan. Manufacturers should assess their current digitization capabilities, culture, strategy, and organization.
  2. Generate a transformation incentive. By rethinking their budgets, business units can capture the benefits from transforming into digital businesses and use surpluses for further digital transformations.
  3. Broad skill-building. Companies should consider launching a “digital academy” that offers digital learning courses for all functional areas. In parallel, a two-year intensive training program exposes top talent to digital solutions.
  4. Create a digital backbone. A digital implementation team consisting of IT, strategy, and functional specialists should be assembled and tasked with ensuring that each business unit and location develops and strengthens a digital backbone.
  5. Showcase the new way of business. Companies should identify around ten business opportunities or processes and use them as “digital lighthouses”—examples of how digital solutions can enhance operations to inspire the organization.
  6. Crowd-source digitization. Companies across industries have had success in asking employees to submit ideas for high-impact initiatives, and some have even held competitions for the best suggestions.

Of course, these steps may make sense on paper, but operations executives well understand that the real challenge can be in translating new ideas to the shop floor. Their skepticism is often justified.

That’s where an experiential approach to learning about digital technologies can help leaders make real breakthroughs. Take the concept of a “digital waste walk,” which exposes the waste in a company’s existing digital processes—such as rework when software incompatibilities cause procurement teams to reenter data received from product designers. Learning how to conduct these walks in a real-life, risk-free environment of a model factory is far more effective than reading about it. Yet it’s also far less daunting than trying to do so on a real, working operation where mistakes could have lasting consequences.

The resulting insights have helped executives recognize the likely gaps at their companies, and spurred them to action. “The idea of a digital waste walk is new to me and very helpful—I will do this tomorrow,” one executive said. Another went further: “We have unused potential in all our plants. We need to decide if we want to be leaders in our industry or lag behind.” And a heavy-equipment manufacturer has taken the first step, with workshops held in the safe environment of an external site to lay the foundation for digital-manufacturing pilot projects that can help define its future strategy.

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