Industrial operations such as critical infrastructure, manufacturing, warehousing, and logistics have a lot of moving parts—literally and figuratively. To keep everything on track, successful operations depend on many factors from handling raw materials to running equipment and coordinating human resources. This description may be simplistic, but if you’ve spent any time around manufacturing and infrastructure, you know the complexities of successfully orchestrating processes, people, materials, and equipment.
Now, what happens when you add industrial ‘digital’ transformation of a facility and production process into the mix?
Well, disruption is inevitable, especially given that organizations vary widely in their IT/OT maturity levels. Additionally, there will most probably be some—if not a lot of—hesitation, which is understandable. This might be especially true for industries with labor-intensive processes and tight profit margins. These companies are often reluctant to invest in new technologies, fearing technical complexity, risk, and operational disruption. As a result, they may quickly dismiss even high-impact solutions, unsure of the long-term benefits.
In fact, just thinking about clearly defining what industrial transformation means for your organization, getting cross functional alignment and buy-in from stakeholders, and then commencing the journey can be quite overwhelming for any company.
We get that. But we also know there will be significant payback.
So, what can you do if your organization is considering or is ready to embark on digitalization? How can you ensure a successful industrial transformation? Approach your industrial transformation with a narrow focus and limited scope which includes several basic steps. I’ll explain.
Start with a Narrow Focus & Limited Scope
This approach has significant benefits. It allows you to learn and assess your future needs, so you can start with new digital capabilities that create a beachhead for supporting broader transformation efforts (steps 1 and 2 below). No matter the level of maturity or cultural readiness, all companies need automation technology as a foundation to enable their digital transformation. But technology for technology's sake is not enough to get your company over its digitalization finish line.
It is equally important to engage with the right ecosystem of industrial transformation experts who understand your pain points. These experts have the experience and know-how to determine and design a digital path forward to solve your problems, and they can guide you all the way through your facility and/or process digitalization. Therefore, you can ensure your industrial transformation success with a team composed of internal subject matter experts and an ecosystem of external partners with technology and business expertise (step 3 below). Let’s see what these steps look like.
Step 1: Use the SMKL Method to Assess Your Digitalization Needs
The first step is to assess your digitalization needs which involves figuring out where you are digitally, aligning with company initiatives, and determining where you want to be. Then the team of industrial transformation experts you partnered with can start mapping out your company's digitalization path.
A simple method to assist you is the Smart Manufacturing Kaizen Level (SMKL) method. SMKL is Mitsubishi Electric Corporation’s method to guide customers through the process of assessing their industrial transformation needs and the subsequent implementation of the digital solutions that fit those needs. Additionally, the SMKL method helps customers to visualize the next steps in their digital transformation journey.
At a high level, the SMKL method revolves around a simple matrix as shown in Figure 1 below. The SMKL matrix consists of the scope of your work on the x-axis, whether that be a single machine or an entire facility, and the digital stage of your company on the y-axis, whether that consists of collecting data or visualizing, analyzing, and optimizing your process.
You can learn more about the SMKL method by reading our whitepaper:
Digital Transformation Guide | ICONICS Software Solutions
Step 2: Define Your Value Levers
Once the team of digital transformation experts has assessed your organization’s digitalization needs, the next step is to define—or align with—your existing value levers. These levers often depend on your type of manufacturing and your role within the organization. Let’s take a closer look at how different stakeholders approach value levers, starting with manufacturers.
Manufacturers
If you're responsible for manufacturing operations, your primary focus is likely on meeting production commitments and delivering high-quality results efficiently and on time—all while maintaining a safe and sustainable environment. To achieve this, you can break down broad objectives into smaller, prioritized focus areas such as:
- Maximizing production capacity by optimizing operational efficiency with existing equipment.
- Extending asset life through improving reliability and optimizing maintenance practices.
- Driving quality improvements by reducing scrap and rework, recapturing opportunity losses, and improving unit margins.
- Reducing both direct and indirect labor costs by addressing frontline worker shortages and high turnover rates.
These focus areas are key to improving industrial operations internally, but looking beyond your facility to the broader supply chain is just as critical. Most industrial environments have operational metrics tied to five general categories where digital improvements can drive both hard and soft dollar impacts:
- Compliance – Regulatory compliance ratings, audit findings, documentation accuracy, and training compliance.
- Safety – Total recordable incidents, lost time injuries, near misses, and safety-related training and certifications.
- Quality – First pass yield, defect rates, return rates, and process capability.
- Efficiency – Utilization rates, cycle times, throughput, labor productivity, energy and resource intensity, and equipment efficiency.
- Delivery – Lead times, fill rates, backorder rates, shipping accuracy, and on-time delivery.
Technical Stakeholders
If you’re a technologist within your company, your focus is likely on the capabilities and features of new technology, along with how well it integrates into your existing landscape of IT and OT systems. While upfront acquisition costs are an important consideration, it’s the long-term lifecycle costs and the right business model—one that aligns with your organization’s capabilities—that truly enable transformative initiatives.
When evaluating your organization’s internal capabilities, it’s crucial to assess resource availability. Technical stakeholders need to consider the capacity to define requirements, as well as to design, implement, commission, and sustain systems in a structured, programmatic way. Having this clarity helps in identifying and selecting the right ecosystem partners—those who can provide the technology and services needed to support your industrial transformation goals the most effectively.
Operations Management & Executive Stakeholders
For operations managers and executives, the focus is on achieving corporate or site-level goals that align with key operational metrics. Performance measurement is critical, but ultimately, profitability remains the top priority.
Step 3: Build a Partner Ecosystem That Understands What Your Success Looks Like
A partner ecosystem that will drive success will consist of companies and experts that focus on outcomes and value. They do this by:
- Asking about your problems and challenges.
- Explaining how digital enablers such as automation software can help solve your current issues and provide new value in the future.
- Establishing a solid, trustworthy relationship with you by clearly showing that they want to help you and get you to your future digital state.
Moreover, they will:
- Understand your situation and will talk to you about all the available options, so you can create a sustainable implementation plan, maximize your return on investment (ROI), and empower your industrial workforce.
- Recognize other areas of your operations where you can benefit from technology and process change.
- Refer to industrial transformation as a multi-phased journey and acknowledge very early on that the true benefits of industrial transformation are enabling human resources to achieve more by using technology to do their jobs more efficiently and effectively.
Here’s a real-world example to illustrate this: A prominent vehicle manufacturer with a production facility in Mexico was able to significantly improve facility and energy efficiency, resulting in substantial cost savings. This transformation was made possible through a professional services partner with deep expertise in manufacturing, automation, and software integration.
By leveraging their industrial transformation and automation know-how, the partner helped the manufacturer incrementally expand the manufacturer’s software technology investments over time—delivering lasting value and results. Let’s take a closer look.
Use Case – Digitalizing a Car Manufacturing Facility
How a Car Manufacturer Expanded the Applications of Their Automation Technology with the Help of Experts
A leading global vehicle manufacturer built a new production facility in Mexico and initially invested in automation technology for a building management system (BMS). The primary goal of this technology was to support corporate sustainability initiatives by tracking and reducing carbon emissions and water consumption per vehicle produced. However, with the guidance and expertise of automation professionals, the manufacturer gradually recognized the broader potential of their technology investment and expanded the BMS to include:
- Monitoring and controlling paint shop power usage and ventilation.
- Managing the pretreatment of facility water and wastewater.
- Capturing and analyzing facility effluent data.
With enhanced visibility and a solid baseline of operational performance, the manufacturer was able to make strategic adjustments that delivered both financial and sustainability benefits. For example, they optimized energy consumption by:
- Leveraging onsite microgrids for peak shaving.
- Adjusting production schedules to nighttime during the summer months.
These strategic moves resulted in hundreds of thousands of dollars in savings—savings that would have been unattainable without automation technology and the expertise of their services partner to scale and optimize the system.
This phased digital transformation didn’t just optimize operations; it also empowered employees at all levels to harness technology in new and impactful ways. The company's ability to take this incremental approach was made possible by capital investments tied to the facility's construction.
More importantly, their success was driven by a professional services partner who had the foresight to see the bigger picture and the expertise to expand the technology for broader applications. In the end, the significant ROI far exceeded the cost of deployment, proving the long-term value of a well-executed industrial transformation strategy.
The Biggest Industrial Transformation Challenge: Getting Started
We know that “transformation” implies major changes to organizational design, business processes, and existing technology. Given this, the concept of industrial transformation can be scary and easily dismissed as too:
- Risky
- Expensive without supporting justification
- Complex and unlikely to ever garner the necessary internal alignment, cross-functional support, and executive sponsorship
But don’t be one of the organizations that gets hung up on this fear and therefore gets left behind in your respective market. The biggest challenge is getting started. And it’s crucial to understand that existing operational excellence and continuous improvement initiatives provide a “proving ground” for broader digital efforts.
A few examples of where new technologies can be introduced and tested incrementally while aligning with longer-term roadmaps include “point solutions” that address high value uses cases with:
- Industrial robotics
- Machine vision
- Off-the-shelf software that replaces custom apps
- Paper-based workflows
Moreover, the SMKL method assists in defining the phases in a roadmap. The lessons learned from initially implementing high value “point solutions” in early phases help with planning, refining, and successfully executing a broader transformation program.
Getting started is the hard part, but approaching industrial digitization with the right partner ecosystem will enable accomplishable phasing with supporting financial justification, program definition, and organizational change management.
As you can see from the information covered in this blog, a successful industrial transformation is well within your reach. Now, it’s time to start; you've got this.
Ready to get started?
Contact us. ICONICS has more than 35 years of enabling successful industrial digitalization and a proven track record of automation expertise, experience, and technical support to help you along your digital transformation journey.
Also, for more insight into how ICONICS approaches its technical and customer support, read our blog:
ICONICS Global Tech Support and Services Program Crucial for Automation Project and Operational Success | ICONICS Software Solutions