Feeds:
Posts
Comments

cultural shiftIn our prior post we noted how a panel of noted manufacturing and technology experts convened by the editors of Industry Week see the winds of change blowing in a manufacturing sector that all too often is unprepared for or resistant to the cultural change necessary to understand just how fundamentally manufacturing itself is changing.

We noted the recent explosion in the importance of data… of robotics and the Internet of Things… and how operational excellence in the coming years will shift to a greater focus on data, collecting it voraciously in order to better connect with customers and suppliers, to predict and reduce the occurrence of plant floor errors and to improve overall innovation.

So what is the cultural shift required, and how will companies manage it?  (For brevity’s sake, see our prior post for a list of esteemed panelists at the Industry Week confab held earlier this month.)

As we noted at the start of our prior post, most companies simply don’t have the “tech culture to stitch it all together.”  The shift is substantial.  Today we often see that consumer technology is “digitally delightful” in the words of the Manufacturing Institute’s Jerry Jasinowski whereas the shop floor operator’s experience or that of the operations manager in a B2B environment is often notably lagging.

Quoting directly now from MSDynamicsWorld’s article on the conference (by editor Dann Maurno):

“It comes down to management commitment,” says Knoben. He views the typical control charts at manufacturing plants as marketing tools, used more to show a customer “we’re cool” versus drive operational excellence.  But with the transformation and automation of data, “It has to change from a marketing tool to an embedded strategy of how to live life, and that requires management commitment over the years.”

Said Pisano, “A leader has to have a feel and appreciation for technology.” Leadership at a manufacturer that is behind in technology must adopt a whole new skill set and mentality.” That leadership will be critical because of the long-term commitment to a new strategy and path. “But the job of leadership is to push against inertial forces”: to experiment with digitalized technology without being completely risk averse (and there will be failures.) “It’s critical in terms of culture as well as strategy.”

Panelists noted that companies more tied to consumers seem to be making the shift, to a much larger extent than manufacturers, which just “haven’t made that shift yet.”

Pierfrancisco Manenti, VP of Research at SCM World points out that more technology can boost productivity.  He goes on to point out: “You have to manage people still. You can’t go a day without reading how ‘devil robotics’ will rob our jobs; I don’t believe the hype.” In fact, he cites statistics that 24% of people believe automation is an opportunity to bring back manufacturing jobs; but they won’t be the same jobs, and they will require a different type of skill set.”

Finally, Microsoft’s Knoben points to China’s doubling of its labor growth and concludes: “We see clearly as this change happens, we are reevaluating automation in much different ways. We’re starting to automate more basic processes that operators could do in the past. Where the tradeoffs and benefits are, are not just in labor but in automation,” he said. Automation can be applied to every point in the value chain, from the vendors’ vendor to the customer’s customers (consider electronic billing and payments and vendor performance analytics).

In the end, one must conclude, it will require that cultural shift in mind-set we opened our discussion with, to ensure that the changes are pushed through from the top down in a world that is fast becoming interconnected, and a manufacturing sector that must – and if history is any guide, will – adapt to it.

 

data“Most CEOs I know don’t have the culture on digital or technology to stitch it all together. [A company has to become] a mosaic, a horizontal, creative culture that looks at doing things differently. That culture then reinforces the analytics which reinforces the rest. The cultural change required in most manufacturing is substantial.”

So says Gary Pisano, Professor of Business Administration at The Harvard Business School of Business at a forum this month moderated by Industry Week called Manufacturing: State of The Industry, as reported by MSDynamicsWorld here.

The panel moderator had pointed out the repeated “deaths” of manufacturing, reminding attendees of Japan’s alleged burgeoning manufacturing dominance in the 1970s… how the service sector would overtake manufacturing in the 1980s… how the Internet would drive it under in the 1990s… and how globalization in the 2000s would deliver the knockout blow.

Today’s new manufacturing, panelists made clear, is about service as well as producing products, and data is the “new currency,” a fact that may be lost on many of today’s companies.  The truth is, today production has been revolutionized.  There are a quarter-million robots in use, and 3D manufacturing builds prototypes, in some cases even finished goods, from the ground up, quickly and cheaply.

As Harvard’s Pisano went on to point out, today innovation is the differentiator in manufacturing, along with creative and inventive management and business models.  “If you want to be a good product innovator, you must be excellent at manufacturing and new technologies will enable that,” he noted.

DynamicsWorld’s editor Dann Maurno quotes Microsoft Corporate VP of Marketing Jerry Knoben in expecting the definition of operational excellence to shift over the next three years to focus on data, which Knoben describes as “the new currency.”  Says Maurno, “Operational excellence will be based on how companies manage data flows, automate production floors on data flows, and connect data from customers to factories to suppliers.”  With over 600 suppliers, Knoben notes that the challenge to manufacturers is to combine supplier data with the manufacturer’s and customers’ in order to be more responsive and increase the pace of the organization.

“Operational excellence,” notes Knoben, “defines how we use the data.”  Utilizing modern tools like BI (Business Intelligence), along with the burgeoning new world of IoT (the Internet of Things) which enables the interconnectedness of machines and data, allows the plant floor to provide a steady stream of information which can be used to predict and prevent production problems from occurring.  Your hardware then “becomes the conduit for your data, or nodes on your network,” according to Jerry Jasinowski, Past President, National Association of Manufacturers and Founder and Past President of the Manufacturing Institute.

But the cultural shift we mentioned at the outset that is required to manage this change does not come easily.  We’ll see what the panel of experts had to say about that in our concluding post on Thursday (next post).  Stay tuned…

 

 

six sigmaIn our March 31, 2016 post we discussed how the tool set known as Six Sigma can help firms save a lot of money by enabling continuous improvement throughout their production (and other) processes.  We noted then that by utilizing Six Sigma’s tools to reengineer your business processes to the highest standard (of lowest defects) you can then let those processes drive your ERP implementation.  In other words, you let your business drive your ERP software, rather than the other way around.

Today we thought we’d enlist some added Six Sigma input from our friends at Panorama Consulting, whose President Eric Kimberling wrote a recent post describing a few key ways that Six Sigma can increase ERP benefits realization.  These include:

Six Sigma supports a broader business transformation beyond ERP software. Notes Kimberling, “The most successful ERP software initiatives are those that are managed more as business transformations rather than technology initiatives.”  By beginning an ERP implementation with clearly defined and well-designed business processes – a hallmark of Six Sigma initiatives – you allow your business to drive your ERP software implementation.

Six Sigma provides the performance measures required for any successful change initiative.  Here Panorama reminds us: “It’s widely known that if you don’t measure it, you won’t achieve it. Unfortunately, too many organizations neglect to define the specific performance measures and metrics that will be used to drive and manage business benefits moving forward.”

Six Sigma makes for a faster and cheaper ERP implementation.  While it may sound counterintuitive, the fact is “having clearly defined business processes up front avoids much of the ambiguity, inefficiency and ineffectiveness common in most ERP implementations.”

Six Sigma enables effective organizational change management.  Says Kimberling, “Not much helps enable organizational change management, training and employee communications as much as the tangible business processes and performance measures afforded by Six Sigma tools.  Well-engineered business processes, thorough process documentation and clear performance metrics all help drive adoption and accountability.”

The process improvements and the ‘leaning out’ that come as the direct benefits of Six Sigma (as defined and discussed in our earlier post here) are the very same thinking companies need to apply to early-stage ERP implementation.  Whether you hear that message from us, or Panorama, or anyone else, it’s a message worth careful consideration.

 

 

linkedWhen looking for the right partner to implement your ERP system, a recent article from Panorama Consulting makes a good point: While criteria like the number of installations performed, or the certifications and credentials held by a consulting firm (or reseller’s) staff are certainly worth consideration, these can be fairly superficial.  Often, what really matters can be the ‘cultural fit’ of your potential ERP consultants.

While certifications can measure the level of your consultant’s training, many college graduates receive such training and certifications shortly after graduating, they point out.  But what about years of real-world experience, a bias for a collaborative approach or knowing that your consultant has a methodology by which to determine how to make a system best fit for you?  To address these ideas, Panorama puts forward three thoughts on the matter, which we’ll summarize here:

  1. Team and collaboration approach. As they (and we) have learned, while the notion of having one crack-shot consultant come in to solve all your woes sounds appealing, the truth us, “the most successful projects are ones that employ a team-based approach.”  The best projects draw on the individual strengths of the consultants’ team members, but then they also apply the same logic to the customer’s key team members too.  Win-win.  Collaborative approaches will yield the best total solution in the end, as we’ve seen time and time again.
  1. Methodology and process fit. As you’re putting together the specifications for your project, it’s important to know that your consultant has a methodology for discovery, for working through your workflows, and later, for bringing your project to life through the implementation phases.  Whether your provider represents one software solution, several, or none at all – they can (or at least should) all be effective at mapping your workflows and then matching the software’s capabilities to your specific needs.  In fact, this is the one are where vendors who DO represent one or more products have an edge on the software-agnostic consultant: they can take the results of discovery and transfer that into the actual implementation with the major advantage of really knowing the solution they are about to implement. 
  1. Business model fit. What sort of business model does your consultant use?  Are they a one-size-fits-all operation, with little vertical expertise in your industry, while trying to be everything to everyone?  Are they too subjective or too focused perhaps on a single product to have a wide industry purview?  Do they understand your industry and business model?  These are questions to ask and discuss with your advisers before making a final decision on your consulting choice.  In the end, it’s about comfort – with the communication between you, with the knowledge level and collaborative approach of your chosen partner, and with your perception of their ability to stick with you until through the various future phases of your implementation. Remember, you’re starting a relationship with a partner, not just a vendor.  Make sure it feels like a comfortable fit for the long haul.

Rick_Cook_ PicA co-worker passed along a great little article worth reprising in capsule form here today, on the merits and mistaken expectations that come with upgrading your ERP system, which all companies must inevitably do (and which, for many, may we dare suggest, is long overdue).  The comments we reprise today come from an original article by Rick Cook, whose bio notes that he “has been involved with computers since the days of punched cards and magnetic drum memories. He has written hundreds of articles on computers and related technology as well as a series of fantasy novels full of bad computer jokes.”  His article can be found here.

Cook reminds us that ERP systems have a finite lifespan, and typically require upgrading every 5 to 7 years just to keep up with changing tech trends and business practices.  In the long run, he notes, this is good as the upgraded system “will be significantly easier to use and more powerful.  Further, it will provide much greater support in areas such as analytics which are becoming increasingly important in modern business.”

But in the short run?  Not so much, he quips.  There’s all the associated expense and pain, and even if it’s your second (or fifth) upgrade effort, there is still pain and expense associated with the process.

And so, Cook notes, it’s particularly important to approach the process with the right attitude.  You have to manage your collective expectations.  So, Cook says aptly:

“There are two common mistakes in expectations when upgrading your ERP system. The first is expecting a major improvement in business processes without re-engineering the business. The other is to expect the implementation to be an IT project with minimal disruption of the other parts of the business.”

Cook points out what we all should remember: that an ERP upgrade represents a prime opportunity to improve not just your ERP system, but the overall functionality of your entire business.  Take into consideration changes that have occurred within the business since your last upgrade.  Also note the changes that ERP vendors have wrought in term of the huge strides made in improved functionality and features.

As well, be sure to take the time to review your business processes.  An ERP upgrade is the absolutely perfect time to do so.  Too many companies blow this opportunity.  It’s the perfect time to analyze each process and then “lean out” all you can.  You can look at existing procedures and take advantage of new features and advanced capabilities of your new software, and marry them together.

And remember that as processes change, and software too, so do people.  Take time to talk through the changes with your team, and earn the full company buy-in.  Doing so will ensure that you are maximizing that ERP investment and ensuring that in the long run it will have been a very profitable move for the company.  And that, notes Cook, puts you well on the way to a “positive experience for the company.”

We couldn’t have said it better.

 

andy groveThat’s what the late, former Intel CEO Andy Grove contended – six years ago.  Bloomberg BusinessWeek editor Jim Aley interviewed Grove in 2010 when Grove discussed ways of reviving the U.S. job market.  Grove argued that the U.S. had frittered away its workforce and along with it much of its manufacturing expertise.

Grove further espoused the notion that the country had a misguided belief in the power of startups, and that the only answer to persistent unemployment was ‘scale-ups, not start-ups,” that is, big, sustainable companies that hired people by the thousands.

Grove thought, according to a more recent BusinessWeek article by Aley, that “what the U.S. needed was some flat-out government intervention to allow companies to create jobs” [Aley’s paraphrasing of Grove’s thinking].  To many, Aley notes, including most Silicon Valley boardrooms, such broad interventionism, or protectionism even, is heresy.

Aley told Grove: “You’ll be attacked for being some kind of communist!”  Ironic, of course, since Grove in his youth had escaped both Nazi occupation and later communist government in his homeland Hungary, before finally fleeing to America, with $20 in his pocket, in 1956.

Grove responded that he didn’t care.  “If people think I’m a protectionist, fine,” he retorted.  He went on to point out that prior to his arrival in the U.S. he “witnessed firsthand the perils of both government overreach and a stratified population.”  He went on: “[In] 1932 thousands of jobless veterans were demonstrating outside the White House.  Soldiers with fixed bayonets and live ammunition moved in on them, and herded them away from the White House.  In America!  Unemployment was corrosive.  If what I’m suggesting sounds protectionist, so be it.”

Grove was using his sharp intellect to address a systemic failure – in this case, chronic unemployment – that threatened dire consequences, writes Aley.  Grove was arguing for applying logic to “understand the causes of that failure and devise a plan to eliminate them.”

In the end, his words and article generated a lot of controversy, to Grove’s glee.

Andy Grove died last month.  The title of his epic book, “Only the Paranoid Survive” became this writer/business owner’s personal mantra through many of the years I built our firm.  Grove was not afraid to confront inconvenient truths head-on, consequences be damned.  Given the success of Intel, it’s hard to argue with his logic.  Today, we are told to “look at the data” to make the business case.  Grove was never afraid to do just that, wherever that would lead.  Even when it was unpopular or beyond the conventional pale.

R.I.P. Andy Grove.

 

vulnerabilityWe all know, or should know, that the more prevalent our digital connections in an increasingly internet-dominated world, the more we leave ourselves open to the associated security risks.  On a large scale, take the example of two Ukrainian power companies that were simultaneously targeted in December by what were likely Russian hackers.  They succeeded in knocking out power for several hours to more than 80,000 customers.

The authorities were able to restore electricity within just a few hours by resetting breakers by hand.  As a recent article in Bloomberg BusinessWeek notes,”in the age of cybercrime, the best insurance may be analog.”

With today’s complex interconnected protocols from power plants to thermostats connected to the internet, “you’re buying a capability, but at the same time you’re buying vulnerability,” notes former secretary of the Navy and now Johns Hopkins senior fellow Richard Danzig.

Danzig’s argument is winning converts: “If your main system is digital, you’re stronger if your safeguard is analog.”

And that’s a lesson we should all take to heart – never more so than today, when increasingly we’re talking about cloud software running our businesses.

Anything that’s controlled by a computer or connected to a network has the potential to be compromised.  In the digital realm, even when you have “layers” of protection, really, it’s all still in a sense just one layer.  Penetrate that, and you may not have to worry about other layers.

In manufacturing, a particular vulnerability lies in programmable logic controllers, or PLCs.  These boards have been around for decades, and they were never really built with security in mind.  They simply control machines, and of course, therein lay their vulnerability.  A growing chorus of experts today, BusinessWeek notes, is calling for the development of new analog logic controllers.  Here’s the idea: “The PLC of a piece of equipment wouldn’t need to be hooked to a network vulnerable to cyber-attack.  Its instructions could be changed only by manually inserting a new circuit board, which can now be made quickly using a 3D printer.”

While such analog PLCs are more expensive and less adaptable than the all-purpose PLC, they can provide a much-needed layer of ultimate protection in mission-critical situations.  Doing this across, say, the U.S. power grid might be prohibitively expensive, but that’s a mission-critical situation.  In most other cases, notes cybersecurity expert Michael Assante “for 95% of applications, digitizing and interconnecting will get you more benefit than not.”

But that bring us back to the security risks, and in business especially, back to where analog backup becomes worth serious consideration.  Each company must decide for itself what it’s going to do to ensure the integrity of its systems and its data.  But the larger point may be that doing nothing is no longer an option.  And we all have that uneasy feeling that it’s not getting any easier.

 

Follow

Get every new post delivered to your Inbox.

Join 119 other followers