Sponsored by: Plex
The Importance of Manufacturing
Automation for Digital Transformation
January 2022
Written by: Reid Paquin, Research Director, IDC Manufacturing Insights
Introduction
Customer and market expectations for more personalized products, deliveries, and services — as well as unanticipated events and sudden demand shocks such as COVID-19 — are driving change. This change in turn creates opportunities for a company to transform how its operation stays aligned with its markets. Lean and other types of continuous improvement philosophies used by operations teams in factories and plants will always be important. These methods have benefited companies as they pushed for operational excellence. However, the key to success for organizations moving forward will be to become more innovative, market driven, and customer focused. Balancing these new priorities while also ensuring operational predictability and resilience will be the hallmark of best-in-class manufacturers.
The rapid pace of change has led the industry to start defining its future success by how well it can react to market disruptions, which IDC calls operational resiliency. This is achieved by providing employees with near-real-time information, detailed insights on performance, and analytics to improve the decision-making process across the manufacturing value chain. However, some manufacturers have already made investments in modernizing their operations and offerings, improving their ability to respond more effectively. As a result, a "digital divide" exists between early adopters and those just now modernizing, with digital manufacturers feeling less of an impact and further along in their recovery efforts (see Figure 1). These manufacturers are further ahead than their peers and can focus more of their time on innovating and trying to capture market share, while nondigital manufacturers are still executing their road map or, even worse, are still in the planning phase.
Competition has never been higher in manufacturing, and outside factors can cause major disruptions overnight. Succeeding in this challenging environment will require a foundation of manufacturing automation to enable true transformation.
KEY STAT
Less than 25% of manufacturers identified the importance of a digital-first strategy prior to COVID-19.
KEY TAKEAWAYS
» Connect business processes to eliminate silos and leverage analytics.
» Contextualize data to remove bottlenecks.
» Empower workers to make confident, timely decisions.
AT A GLANCE
IDC TECHNOLOGY SPOTLIGHT
The Importance of Manufacturing Automation for Digital Transformation
FIGURE 1:
Digital-First Strategy in Response to Disruption
n = 144 Source: IDC's Future Enterprise Resiliency and Spending Survey, September 2021
Benefits
Manufacturing has been focused on its fourth revolution over the past decade, but many organizations have overlooked the foundational elements and still possess manual or paper-based processes across the enterprise. These processes often result in errors, delays, and inefficiencies and are present across manufacturing organizations— maintenance, quality, engineering, or service departments. Manufacturers turned to these manual systems for reasons such as perceived capital savings, flexibility in process changes, and knowledge of existing solutions. However, as a manufacturer grows and innovates, these systems cannot scale with the business.
Digitalization has long been the backbone of operational effectiveness for manufacturers. IDC's recent Digital Manufacturing Study of 680 publicly traded manufacturers highlighted the clear advantage that accrues over time for organizations that embrace these modernization efforts. 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% in RPI
0 10 20 30 40 50
We see no need to adopt a digital-first strategy
Disruptions triggered by the pandemic highlighted the need to shift to a digital-first strategy, but we are still figuring out how
Our organization recognized this prior to the pandemic and had already changed our technology and business priorities
Responding to the pandemic forced us to quickly shift to a digital-first strategy, which we continue to extend
Disruptions of the pandemic highlighted the need for a digital-first strategy, which we are starting to execute
(% of respondents)
Manufacturing
All industries
Digital manufacturers benefited from a 26% increase in their revenue performance index (RPI) and a 27% increase in their profit performance index (PPI), whereas nondigital manufacturers experienced decreases of 9% in RPI and 2% in PPI.
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IDC TECHNOLOGY SPOTLIGHT
The Importance of Manufacturing Automation for Digital Transformation
and 2% in PPI. The importance of digitization and automation is clear when looking at the industry's plans over the next two years (see Figure 2).
FIGURE 2:
Top Automation Focus Areas Over the Next Two Years
Monitoring/diagnostics of physical functions (warehouse, factory, transport, hospital, farm)
Quality assurance and continuous improvement functions
Digital sales processes (commerce, channel management, account signals, persona enrichment)
Provisioning of logical workspace for employees (apps, data sources, security)
Supply chain functions (payments/invoicing, order fulfillment, picking, packaging)
Customer support and service (chatbots, self-service, intelligent advisor)
Manufacturing
All industries
n = 144
Source: IDC's Future Enterprise Resiliency and Spending Survey, September 2021
Determining and prioritizing the processes to start with can be daunting tasks, and there are many variables to consider (manufacturing segment, company size, geography, etc.). The most common processes across manufacturing that are prime candidates for automation include:
» Machine health and maintenance. Manual machine maintenance is tedious, time consuming, error prone, and not real time. Making the rounds with a clipboard is still part of the job description for many maintenance technicians across the manufacturing industry, and many technicians still rely on paper-based checklists and forms to complete their work. Digitizing maintenance processes, including measuring machine performance, allows maintenance technicians to make the best decisions possible by having access to accurate information in real time. The speed at which maintenance employees can respond will allow a company to become more proactive rather than reactive. Digitization also allows maintenance data to be viewed through mobile devices, providing relevant information to workers no matter their location and allowing them to record information directly into the appropriate systems — once.
0 10 20 30 40
»
Quality management. Product rework, high amounts of scrap, noncompliance, costly recalls, and damaged customer loyalty are all consequences of poor-quality products. These pressures are driving many manufacturers to question the efficacy and approach of their current quality system. However, the reality is that most manufacturers rely upon inefficient manual or paper-based systems to manage their quality information, including communicating changes across multiple plants often in multiple geographies and languages. Because of this, the first step all manufacturers should take if they truly want to improve quality is to get control over their data and processes through automation. Collecting historical and current quality data can have many uses; manufacturers can utilize dashboards to monitor data in real time, allowing action to be taken if set thresholds are exceeded. This value can be further increased by conducting statistical analysis — turning collected quality data into actionable insight. Analyses such as statistical process control (SPC) or failure mode and effects analysis (FMEA) can be undertaken on historical and live data to improve the reliability and control of manufacturing processes.
»
Environmental health and safety (EH&S). The need to reduce costs and stay productive is constant for any company, but compliance and the risk of an adverse event are still top of mind. Investments in safety are more than just cost avoidance measures. Today, safety must be considered vital not only to the health of employees but also to the health of the business. However, many EH&S processes are still manual or paper based; manufacturers conduct inspections and audits using clipboards and never look at the information again unless there is an issue. One of the main safety processes within EH&S is recording and tracking incidents. To promote continuous improvement, manufacturers must record and investigate all incidents and take actions to prevent or reduce the reoccurrence of incidents. Automating incident management lets a manufacturer set up and centralize records of all incidents and collect the information needed to conduct investigations into those incidents.
»
Labor/talent management. Talent is a hot-button issue for most companies, but manufacturers are feeling the pressure more than most. How manufacturers can effectively leverage technology to solve this problem is a question with evolving answers. In fact, 53% of manufacturers stated that automating low-value work (manual tasks, workcenter setup, data collection, etc.) is the top action they are taking in response. Eliminating this type of work frees up workers, allowing them to focus on higher-value activities to further drive improvements. Manufacturers will also turn to knowledge management systems and collaboration tools, but the successful implementation of these systems and tools requires the digitization of operational information. In addition, process automation allows manufacturers to produce visualizations of machine data, making it easier for employees to see what's happening in real time and make better decisions.
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.
IDC TECHNOLOGY SPOTLIGHT
The Importance of Manufacturing Automation for Digital Transformation
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.
The Plex Smart Manufacturing Platform aims to connect employees, technologies, and machines together to create a complete, connected view of 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. Plex's platform is cloud native and built to adapt and grow as a business changes. The Plex Smart Manufacturing Platform can be used by a single part of a business or run the entire enterprise. The applications can be implemented as standalone solutions or combined into an end-to-end solution. Security and reliability are top priorities for Plex, which achieved an "A" security rating from SecurityScorecard and consistently exceeds its SLAs, delivering greater than 99.99% uptime.
Plex's Manufacturing Automation Suite comprises Plex Production Monitoring, Plex MES Automation and Orchestration, and Plex Asset Performance Management (APM) applications. The Plex Manufacturing Automation Suite is focused on automating processes and connecting data at the plant level to eliminate manual errors and maximize uptime.
Plex Production Monitoring provides connectivity to machines on the plant floor to drive continuous OEE improvements with user-friendly dashboards to measure key KPIs in real time. Plex MES Automation and Orchestration connects Plex MES to the plant edge to control information flow, processes, and workcenter setup, adding efficiency, saving costs, and eliminating manual errors.
Further, Plex Asset Performance Management measures and tracks machine performance using a host of inputs — sensors, PLCs, people — and leverages analytics to provide a much deeper understanding of efficiencies and of potential failures before they impact production KPIs.
Challenges
As industry complexity continues to increase, manufacturing organizations will be under tremendous pressure to become more innovative, market driven, and resilient. While investments in automation have been proven to deliver value, capex (which can be significant) is still required to get these projects underway. Plex will need to help its customers build out their automation road maps and ensure that value is delivered every step of the way to prove out long-term ROI. As with any merger or acquisition, ensuring the smooth integration of Plex and Rockwell Automation and maintaining commitments in the near term will be critical.
Conclusion
The speed and complexity of manufacturing operations are increasing faster than ever before, and manual processes are no longer acceptable for manufacturers. The ability to simplify and optimize processes through digitization and automation will be invaluable over time to manufacturers focused on operational predictability and resiliency. The key takeaway is that successful companies not only are digitizing at higher rates but also are utilizing digitization across a wider variety of operational processes. Successful manufacturers have realized the rewards of technology automation and, as a result, are reaping the benefits. If you are among the manufacturers that have not begun a digital transformation journey, the time is now to use this information and take the first steps toward adoption and change.
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IDC TECHNOLOGY SPOTLIGHT
The Importance of Manufacturing Automation for Digital Transformation
About the Analyst
Reid Paquin, Research Director, IDC Manufacturing Insights
Reid Paquin is Research Director for IDC Manufacturing Insights responsible for the IT Priorities and 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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