Digital Transformation: It’s All About the Outcomes

Digital Transformation: It’s All About the Outcomes

Digital transformation isn’t about finding the needle in the haystack of big data – it’s about the relentless focus on deriving new business value from digitizing and optimizing your operations. And leading companies are already proving just how impactful such data-driven business improvements can be.

Digital transformation is helping automaker Ford, for example, manage more than 2 million product variations in real time across its plants. It also gave mining company BHP Billiton a twentyfold increase in access to production data to help increase uptime. And it’s helped PepsiCo achieve a 90% reduction in troubleshooting time.

These companies are giants in their industries, but what they’re doing – connecting their operations, gaining access to relevant data and digitizing processes – can be done by anyone, using modern technologies that are already available.


Opportunities in Your Supply Chain

Most companies are interested in digital transformation for its ability to optimize their supply chains.

In consumer-focused industries, this could mean improving your ability to predictcustomer demand and make the corresponding adjustments in areas like procurement and production scheduling to satisfy that demand. In heavy industries, it could mean meeting demand requirements by delivering the highest possible quality at the lowest possible cost.

Digital transformation makes these optimization opportunities possible by unlocking value that has long been hidden in silos in most enterprises. It enables a digital thread, for example, through which you can seamlessly collect, analyze and share your data. It also allows you to create “digital twins” of your physical assets or processes, so you can test systems before they’re built, evaluate production changes before they’re made, and validate performance at runtime.

These and other capabilities can be applied throughout the production lifecycle, including design and commissioning, operations, maintenance, and R&D innovation efforts. However, most companies need some help when it comes to identifying and rolling out the technologies that are right for them.

Charting Your Course

Embarking on a journey to digital transformation doesn’t need to be a long, arduous venture into the unknown. Those that have already made the journey provide a rough roadmap for you to follow.

In short: begin by identifying the business problems you want to solve. From there, consider getting an outside perspective on what technologies can help you address those problems. Once the solutions are selected, run pilot programs to prove the realization of business value, and then scale and deploy those programs across your operations.

Those that have embarked on a digital-transformation journey also can prove out the technologies that are key to the process. Four successful examples of these technologies in use include:

Software applications for digitization and IT/OT convergence help companies achieve workflow adherence, collaboration and tracking in their plants. Software can scale from focused applications, such as for quality or performance, to industry-specific suites of applications, or comprehensive manufacturing execution systems (MES) for multi-plant rollouts.

Chinese pharmaceutical maker Zhejiang Medicine Co. (ZMC) deployed a pharmaceutical industry-specific software platform to help its new facility go paperless. This software platform integrates production processes from the plant floor to the enterprise, while also digitizing paper records and automating document management. ZMC estimates this will help the company save 5% to 10% in labor costs by eliminating manual recording, while also reducing batch-product-review cycle times by as much as 75%.

Our own digital-transformation journey at Rockwell Automation included deploying a single, multiplant MES to replace the different MES solutions that were in place across our facilities. The flexible MES includes applications that can be used in all our facilities and a common manufacturing platform that can be expanded to different regions and product groups. Its real-time KPI monitoring has helped us increase efficiency and improve quality, including a 50% reduction in parts-per-million defects.

Scalable analytics software helps companies quickly and easily derive value from their data through analytics at every level of their organization. When combined with scalable computing, from edge devices to cloud computing, analytics software can process and present actionable information at all levels of the enterprise including closest to the data source.

Dairy protein producer Milk Specialties used analytics to optimize its operations and meet rapidly growing demand. The company deployed a manufacturing intelligence system that collects and correlates process, business and lab data to create actionable analytics. Now, in-plant scoreboards help workers meet production targets. And at a higher level, the analytics help justify key operational changes, including process improvements that have led to a 7% throughput increase.

As part of our journey, we’ve deployed scalable computing and analytics at the controller level and in the cloud. We use computing in the controller to run real-time analytics that drive real-time actions on the plant floor. In our printed-circuit-board production, for example, we use real-time predictive analytics that can tell operators to slow down production or take other actions to prevent failures. Meanwhile, in the cloud, we collect and analyze data from about 20 plants and use it to bring lagging machines up to the performance level of top-performing machines.

Collaboration and design tools support seamless collection and sharing of knowledge to empower teams with better decision-making. The tools can be used for sharing and discussing information about incidents, devices, alarms, trends and almost anything else that might be useful for improving performance.

Just consider the full lifecycle benefits of a digital twin. When a machine is being designed, for instance, its digital twin can be run in simulation mode. This can help reduce the time and costs associated with commissioning. Using digital twins in operations and maintenance can decrease downtime by allowing users to simulate changes to a process or updates to equipment before deploying in the physical machine. And digital twin technology is being combined with virtual, augmented or mixed reality to enhance visualization of operations and maintenance, and to support operator training.

In our own operations, new mobile apps that seamlessly connect workers are helping improve collaboration on our plant floors. If there’s an alarm on a machine, an operator can use the app to connect to the specialist who knows how to respond to it – even if that specialist is in another time zone. Regardless of where they are, the specialists can see the same alarm display and data as the operator, troubleshoot the issue, and guide the operator to a resolution.

Connected services help companies maximize their use of connectivity and production data, especially as part of continuous-improvement initiatives. Services include training and supplemental support of in-house teams, such as through remote monitoring. These services can help companies through their digital-transformation journey by helping design and implement networks, secure smart-manufacturing assets, and provide ongoing optimization support.

When an oil and gas company upgraded the pumping equipment at its offshore oil-drilling platforms and operations, it used a vendor service to remotely monitor the new pumps. The service collects real-time data from the equipment and can alert support engineers of potential issues to help reduce downtime and increase pump efficiency.

In one instance, the vendor was on the phone to discuss the problem with production staff within five minutes after a well tripped offline. The vendor helped staff verify the issue, replace the part and get back online immediately. This saved the company at least six hours of troubleshooting – significant savings considering that downtime can cost the company $100,000 to $300,000 per day.

An Unstoppable Force

Digital transformation is already happening, and it’s inevitable in any organization that wants to prosper in our connected world. But companies shouldn’t undergo digital transformation simply for the sake of doing it. Rather, they should align every aspect of it with specific business outcomes and carry it out as efficiently and cost-effectively as possible using lessons learned from those that have already made the journey.



DHL shifts to Asset Heavy Strategy

Global logistics group DHL is planning to introduce internet-connected trucks and emulate technology-enabled logistics start-up Rivigo Services Pvt Ltd’s driver relay model to improve customer experience and increase efficiency, according to an industry executive with direct knowledge of the matter.

Rivigo currently owns a fleet of over 2,000 internet-connected trucks and operates through a unique driver relay model. Rivigo utilises technology enabled trucks that are fitted with sensors for location tracking. This has enabled Rivigo to reduce their transit time by 50-70% and hence enhance their services.

The company employs multiple drivers on one route and each one typically drives for four to five hours before handing over the truck to another driver at a pit stop, returning home with another truck.Rivigocurrently has at least 70 such pit stops across India.

DHL has been planning to invest over $100 million in supply chain operations in India over the next 3-4 years and is planning to emulate the same model. DHL will need to find ways to leverage their strong customer access and established network footprint to create a differentiated value proposition. Also, asset ownership will be a key decision point for players in the sector.

DHL has traditionally had an asset-light model. On the other hand Rivigo has demonstrated the merits of asset ownership in improving operational efficiency. But owning truck fleets comes at a cost. Rivigo’s annual loss widened to Rs 137.1 crore in the year ended 31 March, from a little over Rs 5 crore in the previous year mainly due to high bus purchase costs.

Given that the logistics space in India is currently very inefficient and conglomerates with good consumer connect and good value proposition for consumers can disrupt it in a big way.

The average distance covered per day by trucks in India is 250-300km, less than half that in the US, where trucks cover approx. 700-800km per day on an average. Therefore, there is a major scope for firms in this sector to leverage technology and provide greater efficiency and performance.


How eCommerce is Changing the Manufacturing and Supply Industry

eCommerce changed the face of retail forever. It’s been a major influencer in shaping how buyers think and what they expect.  It’s no surprise this revolution has spilled over into the arena of B2B commerce. As early as 2013, Forrester noted that B2B eCommerce will dwarf B2C retail eCommerce, $559 billion to $252 billion. Since then the gap has only grown.

Just as in retail, early eCommerce adopters in the manufacturing and supply sectors will gain market share and dominate the landscape for years to come. Digitizing isn’t without challenges, but the benefits are substantial if you know how to choose the right solution.

The B2B buyer has changed
B2B buyers are now eCommerce savvy B2C consumers; and they bring their digital retail expectations to work with them each day. These buyers are changing the B2B purchase journey one transaction at a time. B2B buyers are still proactive, but instead of pouring through catalogues, thumbing through Thomas Register, and making phone calls, they turn to search engines and manufacturer web sites. The self-serve model they love for B2C is driving their behaviour on the job. Manufacturers and suppliers that reward these buyers with an online experience that includes eCommerce will earn their loyalty.

eCommerce Advantage for Manufacturers and Suppliers

Increased sales are a major benefit, but that’s just the start. The right eCommerce platform will support digital marketing efforts, integrate with other business solutions, and free sales and customer service to focus on what they do best: build relationships and serve customers.

Access New Markets. eCommerce fits hand in glove with digital marketing. Scaling into new territories and new markets is much easier and more cost-effective when you go digital. Face it, strategic use of digital boots on the ground just costs less and results are easier to track. Increased reach and greater brand awareness yields more sales possibilities. Those digital boots need not step on the toes of your existing distributors either. Provide your existing distribution chain exclusive offerings and your distributors won’t perceive your eCommerce presence as competition. These offerings can be as simple as unique colors, finishes, or sizes or as complex as exclusive products. Then, additionally tailor your products for new markets and you will increase your reach without competing with your existing network.

More Efficient Operations. With all of those new sales to handle, you’ll be glad that your eCommerce site can improve back-end efficiencies. An effective eCommerce solution should easily integrate with your ERP, CRM, PIM and any other alphabet soup of systems you use. Seriously, solutions that don’t integrate aren’t solutions at all. So, it’s important to plan for integration during the platform selection process to maximize the potential of digitizing.

Customer Centric Focus. Your forward-facing operations benefit from eCommerce as well. When customers are free to order online and check the status of an existing order whenever and wherever they want, you don’t waste time taking orders and answering order status questions over the phone. The customer service and sales functions can focus on nurturing leads, building relationships and providing true customer service, sales, and warranty support. Digitize the freight quoting process and let shipping focus on getting orders out the door and off the loading dock. As a bonus, when you eliminate the need to rekey data into an order system, fulfilment and shipping errors are decreased dramatically.

Online shopping e-commerce concept mobile shopping man holding smart phone credit cards vector set

Leverage the Power of Online and Mobile for an Omnichannel Experience

By 2015, nearly two-thirds of Americans owned a smartphone.  B2B buyers rely heavily on mobile search. According to ComScore, 72% of those phones have a Facebook app on them, almost 60% have Google Search, and 45% have Instagram. Why is this relevant? 84% of C-level and VP level buyers are influenced by social media. 75% of tech buyers rely on search and 40%‘s buying decisions have been influenced by mobile ads. Where tech buyers lead, other buyers soon follow. Clearly B2B buyers want an omnichannel experience that includes mobile and online options. Major manufacturers are figuring this out. You should too. For example, Sweden’s Volvo AB is testing direct internet sales of its autos in Belgium and in the U.S., Ford Motor Company is working with dealers to create multiline showrooms to achieve economies of scale and revolutionize their brick and mortar operations. All of this after they began selling cars online in Britain.

It’s not enough to have a website, it must be mobile friendly as well. Buyers want to look on-line and call if they have questions. Click to dial is a must-have feature if you want to provide a seamless omnichannel experience. Global players such as Jimi Electronic Company, a China-based manufacturer of GPS and wireless communication equipment, pair their own eCommerce site with global marketplaces such as EC21 to meet the buyers desire for self-serve wherever they are. On desktop or mobile, on an eCommerce platform or at a marketplace, you must be prepared for today’s buyer.

Myth busting B2B eCommerce

It’s clear that B2B eCommerce provides the experience buyers want. So why are manufacturers and suppliers slow to implement?  There are many myths that provide stumbling blocks. We’re here to tear them down.

Complex Ordering Process. Too many manufacturers believe that because no two orders are alike, orders can’t be processed on-line. The myth: price lists and catalogs personalized by customer and the RFQ process just can’t be handled on-line. It’s just not true; but this myth did come from somewhere. In the beginning, B2B sellers tried to use B2C eCommerce software to do the job. It was ill-prepared to handle the complexities of B2B eCommerce and required extensive and expensive customization. Today, B2B eCommerce platforms are built from the ground up for B2B transactions. Products like OroCommerce provide customizable workflow engines for multiple, complex scenarios.

Multiple Decision Makers. Many B2B sales are the result of a process that includes multiple decision makers. The myth: eCommerce can’t handle this level of complex approval. Debunked! B2C isn’t up to the job, but a solution with robust account management allows the buyer to configure their own corporate account structure. Customer users define roles and authorities and create purchasing rules for their own account depending on roles.

Ordering and Re-ordering is Slow. When it comes to repeat purchases, most buyers know what they want. It’s just easier for a buyer to upload a file with SKUs and quantities to place an order. The myth: on-line repeat and bulk ordering is tedious as you must search to populate the order form. If your eCommerce platform can’t handle bulk orders and re-orders easily and efficiently, you’ve got the wrong platform. As a matter of fact, Forrester reports that 44% of companiesthat receive orders through an on-line portal experience higher average order values.

Payment Terms. Most B2B purchases aren’t made with a credit card or PayPal. Buyers need to check out a shopping cart with terms. The myth: eCommerce doesn’t provide for PO processing, net payment terms, or credit applications.  Once again, this might be true for B2C platforms, but a B2B platform should have a flexible workflow engine and integrate to handle a variety of check-out scenarios. Also, look for platforms with technology partners to help extend terms or process payments.

Choosing the Right Solution
As manufacturers and suppliers began to develop eCommerce sites, B2C platforms tried to adapt their systems to meet the need for B2B. Unfortunately, they missed the mark and were unable to build the scalable and customizable solutions that the B2B marketplace needs, mainly because B2C platforms don’t provide a customizable workflow engine.

When evaluating B2B solutions, look for true B2B capabilities, time to market, total cost of ownership, flexibility and scalability, support and a healthy partner ecosystem. It’s not a decision to be made lightly. Luckily Frost & Sullivan researched B2B eCommerce platforms recently and their findings can help you make an informed decision.

Oro provides open-sourced business solutions for B2B eCommerce and CRMthrough its products OroCommerce and OroCRM. With over 150,000 active installations, it has a strategic global footprint with features and tools made for B2B companies going online.