page_container_1 w:612.0 h:792.0

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater
Transparency and Responsiveness

February 2022

Written by: Lorenzo Veronesi, Associate Research Director, IDC Manufacturing Insights

The Need to Evolve from the Status Quo

Shifting Manufacturing Processes Require Shifting Mindsets

Digital operations that are transparent and responsive enable manufacturing organizations to be more agile and respond to market and customer requirement changes in a timely, flexible manner. The systems supporting manufacturers need to be:

» Transparent, because visibility and traceability both vertically and horizontally within and across the organizations (and across production) will be the foundation needed to adapt to changing conditions quickly.

» Responsive, because uncertainty related to potential economic, environmental, political, or social disruptions requires the ability to adapt operations quickly within the organization and the ecosystem.

» Digital and scalable, because those types of systems enable customer-centricity, a key value driver for manufacturing organizations to stay relevant to their customers and to be able to constantly drive accelerated customer value.

Back to Basics: A New Attitude on the Plant Floor

The pandemic exposed the importance of factory operations to deliver customer value. IDC research showed how, in 2020, companies that invested in their operations and achieved "best-in-class" results (as measured by IDC) reported far less disruption than their peers and were able to anticipate ongoing issues with higher degrees of precision. 15% of best-in-class companies reported little or no disruption to their operations compared with nearly no disruption in the other performance groups. Also, only 13% of them reported a lack in ability to understand the impact of the pandemic on their processes compared with nearly 30% in the other groups. Unsurprisingly, operations was among the top areas of focus for manufacturing companies when it came to improving supply chain and operational processes (see Figure 1).

In fact, as plants were seen as supply chain and production bottlenecks, they became the primary targets for new smart manufacturing investments. Companies realized that business process reinvention and business model transformation

As industry complexity increases, manufacturing organizations are feeling the pressure to align factory floor targets with business goals. To gain a holistic picture of the entire operation, manufacturers must invest in integration efforts to ensure that the data across all devices is captured.

AT A GLANCE

KEY STATS
The top 3 areas manufacturers are targeting
for supply chain improvement in the next
12–36 months are:
» Digital/smart manufacturing — 63%
» Manufacturing execution systems — 51%
» Sales and operations planning — 50%

page_container_2 w:612.0 h:792.0

must be enabled by solid plant capabilities and a "back to basics" attitude supported by modern technology that treats operations as a key contributor to a company's value proposition.

FIGURE 1: Top Improvement Targets for Manufacturers

Q What will be the key focus areas for improvement for your supply chain over the next 12 – 36 months?

n = 816

Source: IDC's Worldwide Supply Chain Survey, April 2020

In this context, the following are key initiatives operations leaders should focus on:

» Ensuring operational continuity. This means enabling new ways to secure factory operations in spite of disruptions. It also entails process restructuring to ensure operations can be managed from anywhere as well as maximize the effectiveness of remote workers' contribution through plant connectivity and collaboration tools.

» Enabling integrated fulfillment. Today, global value chains are gradually being turned into value networks, defined as nodes that represent people or roles with associated deliverables (rather than simply as a linear value chain), to embrace the concept of working in a more open ecosystem that extends beyond traditional industry boundaries. In this context, factories should be seen as integrated in a value network rather than just "black boxes." Information coming from factory processes has to be used and distributed to a wide audience of stakeholders in the value network, including supply chain leaders, innovation and R&D, and even customer service representatives. This means achieving real-time visibility of everything in the production process from material status — including WIP — to production processes.

» Ensuring quality, traceability, trust, and compliance. Trust is the currency of dynamic value networks. Companies need to prove to their customers and partners that they can deliver, no matter the condition, to meet the agreed-upon quality metrics and be fully compliant with strict customer and industry requirements and regulations. Meeting requirements and regulations is particularly relevant as manufacturers are increasingly differentiating on the basis of green credentials that have to be maintained along the value chain.

0% 10% 20% 30% 40% 50% 60% 70%

Digital/smart manufacturing
Manufacturing execution systems
Sales and operations planning
Inventory planning and optimization
Demand planning and forecasting
Design tools
Production scheduling
Supply planning
Transportation management systems
Warehouse management systems
Customs and supply chain compliance systems
Enterprise asset management
Control tower/digital twin

(% of respondents)

In 12 months
In 36 months

page_container_3 w:612.0 h:792.0

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater Transparency and Responsiveness

» Balancing speed, agility, and cost. The key is moving from a focus on efficiency, or "just in time," which has been

under heavy pressure, to a new approach in which predictive capabilities allow for greater flexibility and agility while limiting the risk of carrying excessive inventory.

» Accelerating time to value. In times of greater disruption, manufacturers must be able to increase their production

velocity and ramp up innovation to capture emerging and changing market opportunities.

» Digitizing, automating, and evolving processes to overcome manual errors and lack of skilled employees. In this

journey, digitizing the operations environment is critical, from automating data entry and quality enforcement to delivering real-time inventory management and enabling poka-yoke (mistake proofing) processes. These capabilities drive greater efficiency and help offset the shortage of skilled workers. A digital environment will enable manufacturers to introduce and empower plant floor workers and more efficiently onboard new unskilled workers with AR/VR and intelligent applications that interact with the data and connected machines in this environment, achieving productivity gains and creating more attractive work environments.

A New Vision for the Factory

The Factory of the Future: The Key Principle

IDC defines "smart manufacturing" as follows:

The continuous process by which enterprises leverage cyber-physical convergence and digital skills to develop the production capabilities necessary to compete in the modern economy. Faced with today's business complexity, and the need to balance factory capability with volatile demand across elongated and dynamic supply chains, manufacturers need to harmonize, supervise, and coordinate execution activities across the company's and its suppliers' manufacturing operations — with a greater level of real-time visibility.

The "factory of the future" transformation is information driven and, therefore, user centric. Every asset produces a wealth of information that must be accessible, managed, and reconciled with production processes and workers' activity management. Data is being created and captured from numerous sources in the factory: material, products, production tools, and assets, and workers across numerous workstations, assembly lines, and plants. While data is abundant, the problem that most companies face today is that data needs to be aggregated and contextualized to drive key insights and allow leaders to make real-time/rapid decisions.

Operators on the front line of the execution process need the right information at the right time, and scripted at the right job level, to be able to transform the way they work and drive operational improvement. Creating an engaging and "consumable" information experience drives technology adoption rates, which maximizes the business impact of digital transformation projects in the factory.

The Role of Technology

Technology Enabler #1: Edge

Operational equipment instrumentation has increased over the past few years. Plants are also becoming more connected. In other words, the success of future operating models is dependent on data management and, in particular, on managing closer to the data source : the operations equipment.

page_container_4 w:612.0 h:792.0

Page 4

#US48818122

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater Transparency and Responsiveness

Edge technologies, such as low-power computing and IoT edge gateways ("light edge") and integrated/converged platforms ("heavy edge"), help reduce the complexity from real-time process data analysis. These also add benefits, such as expanded IT automation and increased collaboration opportunities, but keep latency in data exchange low, while allowing for process control and collaboration. This combination of low latency with high availability allows manufacturers to take advantage of cloud scalability while combining that with edge performance.

Edge opens enormous opportunities to create a data fabric that can be used by business applications to drive business value. Operational performance is by far the single most significant benefit that manufacturers are witnessing from their edge implementations. Additional positive business outcomes are cost containment and innovation. This finding is quite significant because it highlights how edge technologies can monitor operations and drive efficiencies while also being a catalyst for process innovation. This can happen because edge is a key component of the operational infrastructure that can be scaled across production sites, enabling IT and OT systems protection and the ability to pull and move data securely from its source to the datacenter or cloud. With the stumbling block of secure data management out of the way, users can focus on data-driven operational performance improvement and business reinvention.

The key takeaway for manufacturing companies willing to invest in edge technologies is that this foundational technology not only enables a more efficient management of the data produced by operational equipment but also enables a series of beneficial use cases that can have a direct impact on business results (see Figure 2).

In particular, "light edge" technologies enable a journey toward pervasive asset visibility, while "heavy edge" technologies allow for increased and distributed computing power to digitally govern factory processes and even allow machines to autonomically adapt their behavior based on the changing circumstances (software-defined manufacturing).

FIGURE 2:

Multiple Options for Edge Deployments in Manufacturing

Source: IDC, 2022

Technology Enabler #2: Cloud

Until recently, cloud has often been a taboo word for many companies, especially when being considered for mission-critical processes such as those on the plant floor. However, today we are witnessing a digital transformation, and the process of connecting products and creating smart factories is generating new opportunities for modern organizations.

Cloud has many benefits that manufacturers have come to enjoy, including enabling easier and cost-effective technology procurement, deployment, and updates. Other benefits include better security and uptime as well as the ability to

• Gather real-time information about machine status
• Use data to analyze process performance
• OEE improvement

• Real-time predictive maintenance activity
• Continuous uptime to ensure process never fails

• Gather machine data to synchronize production process
• Generate process digital twins for simulation
• Full visibility of machinery

• Real-time visualization of operational KPIs
• Understand bottleneck production failure
• Resource optimization (raw material, time, people)

• Recommendations about "automatically generated tasks"
• Sensor-based coordination between different machines
• Continuous, intelligent re-sequences

• Autonomous interaction of systems across factory
• Equipment behavior modeling
• Autonomically adapt to demand and capacity

Heavy Edge

—

Toward Software-Defined Manufacturing

Light Edge

—

Toward Pervasive Asset Visibility

Complexity

page_container_5 w:612.0 h:792.0

reapply resources to higher-value areas as organizations can focus on manufacturing and leave the software and delivery to the experts. But ultimately, when it comes to the plant floor, cloud has many additional benefits. In fact, cloud is the fabric that makes operational data relevant because it creates the following decision-making environment required to manage the factory of the future:

» According to IDC's 2021 Future of Operations Survey, both discrete and process manufacturers rated cloud as the top investment priority for the next five years, followed closely by artificial intelligence (AI) or machine learning (see Figure 3). Other questions in the survey established the importance of operational data availability and access to improved performance; cloud is the logical platform for delivering that availability and access. In this context, the synergy between cloud and AI, amplified by the widespread distribution of mobile tools (and access to the full suite of enterprise data using mobile tools), will prove to be key.

» Manufacturers realize the short-term opportunity of using cloud as the fabric to establish a companywide platform to analyze data coming from the plant floor and converting it into actionable information for enterprise decision makers. Companies have also realized that the configurable best practices offered by cloud solutions help them avoid unnecessary local customizations to achieve enterprisewide standardization, data governance, and insights.

» Manufacturers are also trying to achieve a continuum of computing capabilities from the machine to the edge, to the data lake, and to the cloud. Continuity is central here because AI models must be trained with large amounts of data that can be shared across silos.

FIGURE 3: Top Investment Priorities for Manufacturers

Q What are your organization's top 3 technology investment priorities for the next five years?

Augmented and virtual reality
3D printing
Robotics
Mobile technology
New sensor technologies
Edge/IIoT devices to capture operational data
Advanced analytics/predictive analytics (but not artificial intelligence [AI])
Wireless connectivity (5G, SD-WAN, Wi-Fi, etc.)
Artificial intelligence (AI) or machine learning
Cloud technology

0% 10% 20% 30% 40% 50%

Process manufacturing
Discrete manufacturing

(% of respondents)

Source: IDC's Future of Operations Survey, August 2021

page_container_6 w:612.0 h:792.0

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater Transparency and Responsiveness

Technology Enabler #3: Manufacturing Operations Platform

Operational processes must be supported by user-centric, business-relevant information, infusing intelligence into people and processes in a holistic way. How do manufacturers connect and synchronize all this information? IDC proposes establishing a manufacturing operations platform to enable operational resiliency. A platform-based approach to operations solves the key issue of bringing all right decision makers onto the same page, enabling standardization and consistency across units and processes and even among players in an ecosystem while retaining the necessary user flexibility — in one user interface — to deploy relevant solutions on a case-by-case model and integrate capabilities such as the following:

» Harmonization of global manufacturing operations: Unifies environments for all plants globally to automate decision making and consistency across lots of all sizes in all locations as well as driving the governance, rigor, and automation of processes

» Manufacturing intelligence: Gains a higher visibility of manufacturing operations to achieve more control over manufacturing capabilities

» Operational visibility: Leverages progress in asset instrumentation and integration to achieve machine-level visibility

» Seamless integration with corporate business applications: Enables bidirectional integration of manufacturing operations processes and data with corporatewide ERP systems and other applications

» Connecting design and manufacturing operations: Links as-designed bills of materials and routings to improve new product introduction and engineering change processes

» Improvement of fixed asset utilization: Improves maintenance management to increase plant availability and reduce unplanned downtime, reduce operational costs, and minimize capital expenditures

» Compliance and reduced environmental footprint: Reinforces regulations and lessens the environmental footprint of manufacturing operations

» Faster time to value: Enables additional processes and locations to come online more quickly after the platform is implemented (Companies spend less time integrating disparate systems and more time generating business value and ROI.)

Challenges Ahead

Before being able to put this vision into action, and to leverage the benefits provided by the available technology, manufacturers will need to clear the following hurdles:

1. Lack of vision and organizational complexity. Building a solid plant floor digital transformation road map is a complex process for the average manufacturing company because of the heterogeneity of the vendor ecosystem and the need to tightly align technology with business results. This entails focusing the stakeholders within the organization on the steps needed to successfully implement change, from sponsorship to clear messaging and proper accountability.

page_container_7 w:612.0 h:792.0

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater Transparency and Responsiveness

2. The need to integrate very complex production environments. The reality is, only a fraction of smart factory projects happen in greenfield environments. Hence, when it comes to technology implementation, evolution and revolution must coexist. As such, a key issue lies in rolling out technologies such as IIoT, edge, cloud, and AI in the context of existing (and aging) technology and production processes.

3. Cybersecurity. This is the stumbling block that freezes all innovation. While bringing technology into the factory can enable higher productivity and business effectiveness, it also comes with risks. Smart sensors and sophisticated analytics are bringing OT into the 21st century, improving production and supply chain efficiencies. But this connectedness leaves manufacturers exposed if they don't design their system with cybersecurity risk in mind. In particular, remaining on legacy and/or outdated systems poses an even greater challenge.

2021 saw a proliferation of high-profile ransomware attacks that leveraged the weaknesses of OT and the lack of organizational threat awareness. In addition to these external threats from highly motivated and well-funded bad actors, a continuous onslaught of well-meant regulatory requirements for data privacy and protection is also adding significant cost and complexity to companies.

To ensure that security does not become the stumbling block of shop floor innovation, manufacturers must make it the cornerstone of digital initiatives. When looking at solutions, manufacturers must consider the security programs and certifications that vendors have, as well as published uptime, which demonstrate the ability to protect data and maintain uninterrupted communications and production, lowering business risk (e.g., making sure there is a clear understanding of the factory vendor's cloud stance, including SOC-1/SOC-2 documentation and ISO 270001 certifications).

Considering Plex

Plex Systems offers a single-instance, multitenant SaaS platform for manufacturers that includes manufacturing execution, quality management, 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, including data security, value, ease of integration, and frequency of new feature releases, compared with the average scores of other ERP vendors. You can find the full report here.

Whatever a manufacturer's needs are today, they will change tomorrow. Plex scales with those requirements to eliminate the need to implement a new platform every time change is needed. Built to adapt and grow as the business changes, the Plex Smart Manufacturing Platform can power part of a manufacturer's business — or run the entire enterprise. Plex customers, therefore, benefit from a solution that can evolve with the business with full coverage from the plant floor to the top floor.

The Plex Smart Manufacturing Platform can power part of a manufacturer's business— or run the entire enterprise.

Page 7

#US48818122

page_container_8 w:612.0 h:792.0

The Plex Smart Manufacturing Platform is known for its resiliency and reliability. Plex received an "A" security rating from SecurityScorecard and, according to the company, consistently exceeds its SLAs, delivering greater than 99.99% uptime (uptime available publicly at status.plex.com). These factors ensure that Plex customers have a highly secure and highly available environment for running their business with confidence.

When producing high-quality products is a high priority, Plex will help make these production processes more precise and efficient. Plex improves the speed and accuracy of operations while helping reduce waste and excess inventory. Because all information and data are centralized in the cloud, Plex's solutions reduce the time companies are forced to spend meeting industry requirements such as audits— often from weeks to mere hours. That, in and of itself, gives manufacturers a high degree of control and efficiency unavailable with legacy software systems.

Among the many components of the Plex Smart Manufacturing Platform, Manufacturing Execution Suite (MES) has a particularly prominent role. Plex MES is a comprehensive manufacturing software solution that provides real-time, paperless production management to drive enterprisewide compliance, quality, and efficiency. Plex MES enables companies to take control of their plant floor with full visibility into the production life cycle and full connectivity to Plex's ERP or to an incumbent manufacturing ERP solution. Plex MES puts better connectivity, increased automation, more precise tracking, and deeper data analysis within reach and opens the door to smart manufacturing by delivering a solution that unites all the domains required to engineer, manufacture, and deliver top-quality products.

Challenges

Customers positively evaluated Plex MES' cloud-native business model, which delivers rapid deployment and real-time updates (versus forced periodic upgrades) as well as the depth of out-of-the-box functionalities. Combined with the flexible pricing model and easy-to-use interface, the cloud-native business model makes Plex Systems a very accessible and complete IT system for companies with limited resources. The greatest challenge for Plex Systems moving forward will be the ability to continue to differentiate in the cloud space. In the past, cloud-first, cloud-native MES solutions were offered by only a handful of providers of, but today we see a proliferation of cloud-based MES or MES-like solutions offered by traditional incumbents as well as new entrants.

Conclusion and Guidance

As industry complexity increases, manufacturing organizations are feeling the pressure to ensure they align their factory floor targets with their business goals. To gain a holistic picture of the entire production process, organizations must invest in integration efforts to ensure that the data across all devices is captured. Under these premises, an MES can provide valuable insights based on the data that it collects. But to ensure that that these insights are fed back into the value chain, manufacturing organizations must deploy a system that is organic and ensures interoperability.

In this context, there are two main ways that a provider such as Plex Systems can provide value to manufacturers. First, Plex can provide value as a key source for everything from ERP, to MES, to supply chain planning, to automating machine and plant health management. This approach is suited for companies that may want to replace an existing system with end-to-end, ready-to-use functionalities. Another approach, often selected by larger companies, is to complement legacy ERP systems with Plex's modern cloud MES. This allows companies to drive standardization and a modern MES platform onto their shop floor where transparency, responsiveness, and scalability are paramount.

page_container_9 w:612.0 h:792.0

IDC TECHNOLOGY SPOTLIGHT

Digitizing Production Processes for Greater Transparency and Responsiveness

About the Analyst

Lorenzo Veronesi, Associate Research Director, IDC Manufacturing Insights

Lorenzo Veronesi is an Associate Research Director for IDC Manufacturing Insights EMEA. In this role, Veronesi leads the Worldwide Smart Manufacturing research program and supports all the IDC MI research services for EMEA by looking at Digital Transformation drivers in multiple manufacturing industry sub-verticals. He is also often involved in consulting projects across the world for end users, IT vendors, and public authorities.

MESSAGE FROM THE SPONSOR

More About Plex

Plex Systems, Inc., a Rockwell Automation company, is the 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.

IDC Research, Inc.
140 Kendrick Street
Building B
Needham, MA 02494, USA
T 508.872.8200
F 508.935.4015
Twitter @IDC
idc-insights-community.com
www.idc.com

This publication was produced by IDC Custom Solutions. The opinion, analysis, and research results presented herein are drawn from more detailed research and analysis independently conducted and published by IDC, unless specific vendor sponsorship is noted. IDC Custom Solutions makes IDC content available in a wide range of formats for distribution by various companies. A license to distribute IDC content does not imply endorsement of or opinion about the licensee.

External Publication of IDC Information and Data— Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason.
Copyright 2022 IDC. Reproduction without written permission is completely forbidden.

Featured Resources