Sponsored by: Plex
Building a Quality Culture to Drive Manufacturing Differentiation
January 2022
Written by: Reid Paquin, Research Director, IDC Manufacturing Insights
Continuous improvement is a mindset that the industry has embraced for decades with much success, and leading manufacturers understand that this holds true for quality management as well.
Introduction
The impact of the COVID-19 pandemic is one that cannot be overstated; many manufacturers continue to struggle with supply chain disruption, evolving government/regulatory requirements, and shifting production capabilities to meet demand for their goods and services. Lean and other types of continuous improvement philosophies used by operations teams in factories and plants will always be important.
While these methods have certainly benefited companies as they pushed for operational excellence, companies are rethinking their lean targets based on a fundamentally more disruptive operating environment. In IDC's June 2021 Future of Operations Survey, we asked manufacturers to list the top operational challenges they currently face – costs, quality, supply chain management, talent/labor, and risk stand out:
» Production costs– 37.5%
» Quality management– 30.6%
» Supply chain management– 25.1%
» Staffing and talent– 22.9%
» Risk management– 21.7%
While all these challenges cross various areas of a manufacturing company, each has a direct link/connection to quality management. Indeed, product quality specifically is a top product life cycle priority for 56% of manufacturers, according to IDC's 2021 Product and Service Innovation Survey. Scrap or waste increases production costs, supplier performance impacts final quality, evolving regulatory requirements or the prospect of a recall poses significant risk to any business, and human errors can lead to non-conformances. The importance quality has on customer satisfaction is the most important driver to consider– it takes only one quality issue to potentially lose a customer for life. One of the most cited reasons why manufacturers still have issues when it comes to quality management can be traced back to the systems
AT A GLANCE
KEY STATS
» 45% of manufacturers stated that digital technology played a major role in their product quality improvements.
» 56% said that improving product quality is critical to their ability to manage product life cycles, the pace of innovation, and overall business performance.
KEY TAKEAWAY
Every manufacturer's quality journey is in different stages, but no matter where you are, progress is always achievable.
IDC TECHNOLOGY SPOTLIGHT
Building a Quality Culture to Drive Manufacturing Differentiation
they have in place, which are often manual or paper based. This results in information being difficult to access, analyze, and share, hindering the ability to make the most effective decisions in the necessary time frame.
When a manufacturer implements a manual system to manage a quality process, it is at best a reactionary process and stopgap measure put in place to try and capture quality information in case an adverse event/non-conformance occurs and needs to be investigated. In fact, IDC's February Future Enterprise Resiliency and Spending Survey showed that the top 2 automation use cases for manufacturing were the monitoring of assets/processes and quality assurance. The importance of moving off legacy systems and manual quality management cannot be overlooked; it is the first step every manufacturer should take if it truly wants to improve and to get control over its quality data and processes.
Digitization has long been the backbone of operational effectiveness for manufacturers. IDC's recent Digital Manufacturing Study of 680 manufacturers highlighted the clear advantage that accrues over time for organizations that embrace digitization. Over the study's six-year period, digital manufacturers benefited from a 26% increase in their revenue performance index (RPI) and a 27% increase in their profit performance index (PPI). During this same time, nondigital manufacturers experienced decreases of 9% (RPI) and 2% (PPI) (see Figure 1). While it is no surprise to see the industry as a whole experience a dip in performance for 2020 with COVID-19, digital manufacturers were less impacted by this disruption as a result of their digitization efforts.
FIGURE 1: Digital Initiatives Impact the Top Line and Bottom Line
Source: IDC's Digital Manufacturing Study, 2021
However, the biggest takeaway from the study is how the gap between the two groups only continues to increase over time. There are many companies that have already acted, using digital technology to make better decisions, and they are reaping the benefits. The widening of this gap has accelerated as a result of the COVID-19 pandemic and its myriad disruptions, and manufacturers with digital investments already in place were able to adapt much faster than those without. The question nondigital manufacturers need to ask themselves is: How much longer can we wait? The more
Manufacturers with digital investments already in place were able to adapt much faster than those without. The question nondigital manufacturers need to ask themselves is: How much longer can we wait?
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100 100
102.6
115.7
124.1
125.7
121.4
99.0
107.0
112.2
103.2
98.7
0
20
40
60
80
100
120
140
2015 2016 2017 2018 2019 2020
(Revenue Performance Index)
Digital manufacturers
Nondigital manufacturers
100 100
105.0
118.2
127.0
125.6
120.7
107.0
115.5
122.6
106.7
99.4
0
20
40
60
80
100
120
140
2015 2016 2017 2018 2019 2020
(Profit Performance Index)
Digital manufacturers
Nondigital manufacturers
IDC TECHNOLOGY SPOTLIGHT
Building a Quality Culture to Drive Manufacturing Differentiation
time that passes without taking any actions, the more of an advantage their peers experience. In today's highly competitive manufacturing environment where disruption can occur at any moment, companies cannot risk inaction.
Benefits
Effective decisions are always based on data analysis and information – this is no different for quality-related decisions. Automated data collection is the basis for creating the real-time enterprise and is usually a telltale sign of a successful manufacturer versus a poorer performing one. The speed and complexity of manufacturing operations is increasing faster than ever before. Relying on manual processes to manage quality can no longer be accepted among manufacturers today. The ability to automate through a digital quality system is invaluable as the market and compliance requirements continue to evolve. Successful manufacturers have realized this fact and, as a result, are reaping the benefits (see Figure 2).
FIGURE 2: Importance of Digital Technology to Drive Operational Results
Reliability of equipment/operations
Productivity/efficiency of operations
Product quality
Environmental metrics
Agility and resilience
12.9%
11.2%
13.3%
15.4%
12.9%
37.5%
41.9%
44.7%
41.8%
45.2%
52.3%
47.7%
44.9%
44.3%
43.4%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
No / Minor Role
Moderate Role
Major Role
Percentage of Respondents
Source: IDC's Future of Operations Survey, July 2021
Companies that have made this shift have seen reduced errors/costs but have also freed up worker time by eliminating manual data collection/entry that was conducted in the past. This is particularly important in the current labor environment where manufacturers are experiencing both high turnover and a shortage of workers. Turning rote tasks over to digital tools means greater employee productivity. These employees can now spend more of their time on higher-value activities such as proactive data analysis. Having better and more robust quality controls in place will help to prevent less experienced operators from making mistakes and impacting product quality.
Ingraining Quality into the Culture to Truly Differentiate
Historically, many manufacturers have approached quality in a siloed manner– letting quality groups handle any issues or non-conformances and not giving it much additional thought or exposure. This siloed approach limits a manufacturer's
ability to continually improve across the business; however, this mindset is changing. To be successful, every employee must be bought in and dedicated to contributing to improving quality. In fact, successful manufacturers (top quartile of maturity) are the ones leading the charge when it comes to breaking down quality silos — and as a result were 38% more likely to report large improvements in product quality performance over the past two years (source: IDC's Future of Operations Study).
Data-driven decision making is an essential part of building a quality culture or mindset in an organization; workers feel empowered to make a difference. As employees identify issues, drive improvements, and are acknowledged for those improvements, they will become even more invested over time. Digital technology combined with an enterprisewide culture focused on quality ultimately provides the foundation for continuous improvement, ensuring that value continues to be provided even in a rapidly changing business environment.
The following are additional capabilities that successful manufacturers are more likely to have in place:
» Continuous improvement teams formed and focused on quality processes across operations and suppliers
» Operations and supplier audits performed regularly and benchmarked to improve quality performance over time
» Mock recalls performed regularly and benchmarked to improve quality performance over time
» Analytics used to provide predictive insights based on captured quality data
» Quality considered throughout the customer life cycle, including quotes, orders, production, issues, and responses
It is important to keep in mind that a culture of true quality extends beyond the "four walls" of a manufacturer. It is critical to consider the supply chain and how to properly work with suppliers to make quality a differentiator. The least mature companies only care about receiving the products on time and at the lowest cost possible, while leading manufacturers view suppliers as strategic partners for delivering superior quality. Companies looking to take this comprehensive approach to supplier management should focus on how everyone involved can perform better. The ultimate goal that every manufacturer should aim for is to have a pervasive quality mindset across the value chain, one that allows the business to become more proactive rather than reactive.
Considering Plex Systems
Plex Systems offers a single-instance, multitenant SaaS platform for manufacturers including manufacturing execution (MES), quality management (QMS), enterprise resource planning (ERP), supply chain planning (SCP), asset performance management (APM), production monitoring, process automation, and manufacturing analytics capabilities. In September 2021, Rockwell Automation completed its acquisition of Plex, further expanding Plex's reach globally and into new markets. The Plex Smart Manufacturing Platform is designed for configurability, extensibility, and integration, enabling organizations to tailor the system to meet the unique needs of a production line and individual plants while maintaining enterprisewide control and insight.
Customers surveyed in IDC's latest SaaSPath Survey rated Plex's SaaS solution highly in a number of areas when compared with the average scores of other ERP vendors including data security, value, ease of integration, and frequency of new feature releases. You can find the full report here.
The Plex Smart Manufacturing Platform aims to connect employees, technologies, and machines together to create a complete, connected view of the entire business. Plex's platform is cloud native and built to adapt and grow as a business changes, delivering application modularity that can address individual business processes or full integration end to end to run the entire business. The goal is to become the digital system of record and engagement that can improve visibility into what's happening, what's about to happen, and what just happened.
An example of Plex's modular capabilities is Plex Quality Management System (QMS), which offers manufacturers increased quality visibility and real-time data capture to ensure repeatability and predictability and help process and discrete manufacturers meet strict industry and customer compliance with a closed-loop digital system of record. Plex QMS makes it possible to digitally manage quality with accurate, real-time quality content aligned to industry and product requirements. And manufacturers gain increased operational excellence.
Security and reliability are top priorities for Plex, achieving an "A" security rating from SecurityScorecard and consistently exceeded its SLAs, delivering greater than 99.99% uptime, according to the company.
Challenges
As industry complexity continues to increase, manufacturing organizations will be under tremendous pressure to become more innovative, market driven, and agile. Like any digital transformation project that can start within a manufacturer, being caught in "pilot purgatory" is always a challenge to consider. Plex will need to help its customers manage this complexity while delivering value and support to numerous functional groups/stakeholders across manufacturing. The recent acquisition of Plex by Rockwell provides Plex the opportunity to further grow and expand through Rockwell's large manufacturing footprint and ecosystem.
Conclusion
The manufacturing environment is changing faster than ever before, and companies cannot risk standing still. Every manufacturer's quality journey is in different stages but no matter where you are, progress is always achievable. Each step of the way, from digitizing quality processes to extending quality beyond the four walls to finally ingraining a quality culture across the enterprise, value is generated. Continuous improvement is a mindset that the industry has embraced for decades with much success — leading manufacturers understand that this holds true for quality management as well.
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IDC TECHNOLOGY SPOTLIGHT
Building a Quality Culture to Drive Manufacturing Differentiation
About the Analyst
Reid Paquin, Research Director, IDC Manufacturing Insights
Reid Paquin is Research Director for IDC Manufacturing Insights responsible for the IT Priorities & Strategies (ITP&S) practice. Mr. Paquin's core research coverage includes IT investments made across the manufacturing industry and manufacturers' progress with digital transformation. Based on his background covering the manufacturing space, Mr. Paquin's research also includes an emphasis on the technology enablers that help manufacturing executives make better-informed operational decisions.
MESSAGE FROM THE SPONSOR
More About Plex
Plex Systems, Inc., a Rockwell Automation company, is a leader in cloud-delivered smart manufacturing solutions, empowering the world's manufacturers to make awesome products. Our platform gives manufacturers the ability to connect, automate, track and analyze every aspect of their business to drive transformation. The Plex Smart Manufacturing Platform, a system of record and engagement that serves as the central nervous system of manufacturing operations and is comprised of a broad suite of applications, including Manufacturing Execution Suite (MES), Enterprise Resource Planning (ERP), Quality Management System (QMS), Supply Chain Planning (SCP), Production Monitoring, MES Automation & Orchestration, and Asset Performance Management (APM). This modular approach provides manufacturers with a range of entry points to connect people, systems, machines, and supply chains, enabling them to lead with precision, efficiency, and agility.
Learn more at www.plex.com.
The content in this paper was adapted from existing IDC research published on www.idc.com.
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