Lots of our clients, when we first begin working with them in the creation of a process of ongoing improvement (POOGI), find themselves struggling to make headway in any real transformation. Instead, despite their best efforts and the investment of no small amount of time, energy, and money, they find little is gained—especially when measured in terms of bottom-line growth.
The letter below was written to such a client.
The contents of the letter refer to “Manufacturing 4.0” or “Industry 4.0.” This is a reference to the four stages of the Industrial Revolution, which can be outlined as follows:
- Industrial Revolution 1.0 – the original: transformation from hand-crafting to mechanization with water and steam power
- Industrial Revolution 2.0 – transformation to mass production, the assembly line, and the use of electrical power
- Industrial Revolution 3.0 – transformation to computerization and advanced automation in manufacturing
- Industrial Revolution 4.0 – transformation to cyber-physical systems
This letter talks about the importance of transformational leadership in getting to the place where benefits can be reaped from any significant transformation within an organization or supply chain.
In light of our discussions during my last visit to your site, I found an article entitled “Transformation to 4.0” in Automotive Design & Production to be on-point and worthy of further consideration.
The article features a discussion with Fred Thomas, DELMIA Apriso Director of Discrete Manufacturing Industries at Dassault Systémes (www.3ds.com).Thomas has observed what we, too, frequently find to be true. “It’s easy to forget that Excel is the tech of choice in plenty of plants.”
I often point out to our clients that, if Microsoft Excel stopped working tomorrow, nearly the entire U.S. economy would slowly grind to a halt. The position in which you find yourself today, with the heavy lifting for data management and planning being done by a series more-or-less interrelated and connected Excel spreadsheets, is not at all unusual. However, the fact that it is typical does not, by any means, suggest that it is optimal.
Fred Thomas goes on to point out another truth in today’s typical enterprise: “[N]o one [says], ‘I don’t have enough data.’ What they don’t have is insight into the data.”
The article continues: “And what they need, Thomas says, is a business case that will convince them that… change makes economic sense: ‘You have to see real dollars in the value proposition.’”
For an organization that is capable of growing its top-line well into the future, like your own, the key to growing the bottom-line is being able to sustain and support significant growth in Throughput (revenues less truly variable costs) while holding the line on growth in operating expenses. If an organization has to keep adding support staff because underlying systems are too inefficient, ineffective or wasteful, then bottom-line growth falls way behind top-line growth. You may have already been experiencing this.
Using slightly different terms, our discussion held many parallels to the final few paragraphs of the “Transformation to 4.0” article:
One of the things that gets little attention in all of this discussion of The Future of Manufacturing is something that has been key in 1.0, 2.0, 3.0, and, yes, 4.0: leadership.
Thomas says that it is fundamental for there to be an understanding of the technology, for there to be a strategy and a vision that will elevate an organization “to the next transformational level in manufacturing.”
Thomas points out: “That has to be led and pushed by an executive sponsor. Companies need a leader who will push the vision and the strategy.”
Without it, there may be a lot of tech. But as advanced as it may be, its effectiveness is likely not to be what it could or should be, regardless of what it’s called.
I must say that I am pleased and encouraged by you and your firm’s renewed energy and excitement about moving forward with the consummation of your POOGI implementation in the coming few months. I hope we can work together to sustain the new-found enthusiasm.
Please let me know your thoughts. I look forward to hearing from you again soon. Thank you.
How about your comment? How would you reply?