Digital Transformation Assessments are a Waste of Money, Try this Approach Instead
In this post, we’ll discuss three approaches you can implement for a significant ROI in about two weeks–and after spending only around $10,000. Would you rather watch the video version of this post?
Two Weeks + $10K = ROI
Why two weeks? A two week sprint is common in agile software development. In this short period of time, a team can build and release a feature or a small product. Once users have the software, they will provide feedback, and our team can start to iterate and improve on it. Agile has been a proven strategy in the software industry for decades, and helps teams efficiently build products on schedule and under budget. This is a great way to approach the software development process and since digital transformation involves a lot of software development, it’s puzzling that more manufacturing companies don’t choose this approach to digital transformation.
Instead, many companies are spending a lot of time and money with consultants like McKinsey and Deloitte for digital transformation assessments. After about six months and a half million dollars they’ll likely end up with a “top 10 hit list”, a bunch of deliverables describing what they need to implement, and a path forward which will still require finding vendors to do all the work. Instead, at Corso Systems, we recommend taking an agile approach. What we all learn from trying a small digital transformation project up front allows your team and ours to gain experience, learn what works best for your company, and move forward even faster!
Growing Beyond Fear
Companies are spending a lot of money—from $50,000 to half a million dollars or more—on these assessments. Why are organizations spending money on assessments rather than doing a small digital transformation instead? A likely reason is that they’re scared—in the same way that some operators on the plant floor are afraid that automation and robotics will steal their jobs. Similarly, executives and management personnel sometimes fear that a digital transformation will expose inefficiencies in their business—along with how they have failed the company in optimizing and innovating how they do business. They're also worried that their roles will be replaced if digital transformation does a better job than they can.
Company culture issues are an all-too-common reason that digital transformation projects fail. Without a culture shift alongside digital transformation, you will be trying to digitally transform your company without changing how you operate. You'll simply be doing business the same way as before—and you'll get the same results. Without a culture change, every part of the company will revert back to the same old processes, procedures, and technologies. Unfortunately, we’ve seen this happen when an executive comes in with a digital transformation assessment report ready to go and starts choosing vendors before they have buy-in from their staff. If there’s no buy-in and the culture stays the same, you’re at risk for scenarios where your team simply won’t use the new technology. Maybe they weren't consulted properly or their ideas weren't heard as part of this process, but regardless of the reason, we’ve seen this pattern time and again.
Leadership’s Role In Digital Transformation
Digital transformation requires a lot of work from a company’s leadership. Leadership needs to buy into it, and they need to get everyone working at their company committed to it—from the top floor to the shop floor. The operators need to be involved. This is one more reason Corso Systems approaches Digital Transformation by staring the process with your team on a small project instead of working up a massive report and plan before we really work together. This way, we can implement something together and find any failure modes fast. From there we’ll understand what went wrong, learn, grow, and do it better the next time. This is how we approach everything at Corso Systems, including our successful digital transformation projects.
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Win with a Small Digital Transformation Project Instead of Paying for Six Months With Expensive Consultants with No ROI
You will learn a lot by undertaking a digital transformation project—whether you do the project first or after six months to a year of working with a consultant for a digital transformation assessment. Instead of spending all of that money up front with a consultant, Corso Systems recommend trying a small digital transformation project first.
There are plenty of small digital transformation initiatives you can do really quickly and easily with Corso Systems. This approach can also start the learning process for your organization and gently begin the necessary culture shift. You’ll be able to get buy-in from everyone along the way by building something small. When your team experiences a little bit of an improvement in their day-to-day experience, they’ll quickly get on board. This can happen without fully upending how they do business.
A year from now, after you've fully implemented many small digital transformation projects, your company will look a lot different than it does today. Your processes and procedures will look very different from these gradual changes. But if you had tried to do it all at once, then it would have been much more difficult, especially in the context of changing your culture.
In this article we will explore three small project examples. While there are more options out there, we’re choosing these three because they can be implemented in about two weeks (with some upfront work) before you begin the actual implementation. They also will require about ten thousand dollars in labor and software licensing. The three small digital transformation projects we can help you implement for a 10-day, $10K ROI are: OEE, production scheduling, and production dashboards.
Option 1: An OEE Starter Project
Understand that this is not OEE for an entire enterprise across hundreds of production lines across multiple facilities. Instead, we’ll start with a piece of equipment or one production line with just a handful of machines. This will let us understand the process flow, when machines are starved or blocked or when there are maintenance issues. The upfront work we need for OEE include: your downtime reasons and the design throughput for your line and equipment. If you have a good quality system, we can implement that too, but if not we can save it for another phase. In either case, you can work with a vendor like Corso Systems, work internally to implement OEE in Ignition.
Now, you’re basically tracking downtime and throughput–and if your downtime reasons are detailed, then you’ll quickly see an ROI. If the downtime reasons are only that a machine or stopped or running, then we’ll need to implement more reasons. But, you will still have an understanding of when the machine is down and when it's running–and you can still get an ROI by starting to reduce downtime even by 30 seconds or a minute. Even with these small numbers, you will start to see an improvement on your bottom line because you're producing more product without spending any additional money on hardware or staff. You will just be making your machine work more efficiently.
Get started with a small but powerful
OEE Digital Transformation
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Option 2: Production Scheduling
The next option is production scheduling–and this could even come right after OEE very easily. The ROI from production scheduling comes from not missing orders because you are making them on the schedule and the finding inefficiencies where the schedule slips–either due to operator error, supply chain issues, or other issues you will now be able to find. You will be able to see where the inefficiencies in your process lie.
For example, in our Blommer Chocolate case study, when changeover from making milk chocolate to dark chocolate on the production line, they must do an allergen flush. If a production scheduler isn't aware of the required allergen flush, they might schedule running milk and dark chocolate alternating all day long–and having to add an allergen flush between each change.
If you understand the production schedule and have tools to properly implement and track how it’s run on the plant floor, you could run milk chocolate for an entire shift, and then do one allergen flush between shifts and then run dark chocolate for the second shift. That will immediately give you an ROI by allowing you to produce more product on your existing equipment. And all we had to do was replace a paper or Excel production schedule with a solution integrated with your SCADA system. Now, the operators can see the real-time schedule on the plant floor, and you can probably implement this with data and information you have.
Implement a Production Scheduling Digital Transformation with Corso Systems
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Option 3: Production Dashboards
If your facility already has some automation in place, your next move could be production dashboards. Adding production dashboards after OEE and production scheduling will give you even more opportunity for ROI. If you have multiple shifts, production dashboards can encourage friendly competition between shifts! For example, if first shift has a really great day and produces 120% of what was scheduled, second and third shift won’t want to be left behind! They’ll hustle to try and meet or exceed the first shift’s score.
Production dashboards layered on top of production scheduling and OEE will help your operators running the equipment see efficiencies in the schedule that the production scheduler might not catch. They’ll run that information up the chain so that the production schedule can get updated—and they might even be able to run an additional batch that day. If they start to see downtime on the line because you're tracking OEE reasons (because we implemented that first) they can find ways to get the right materials where they are needed to go faster if the machines are being starved or blocked. When your plant floor teams have acceess to the information they need on production dashboards, they’ll also know right away if a machine is down for a maintenance reason, or the line is slowing down because of how an operator is running it. Your operators are really smart, and they'll figure out how to maximize your production if you give them an incentive. Production dashboards are a really easy incentive for getting your shifts to compete with each other.
Power up with Production Dashboards
from Corso Systems
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Doing > Assessing
I hope we’ve convinced you that doing is better than assessing, and that you can see that part of the “doing” will be an ongoing assessment to provide plans for your next steps. We won’t need to spend a year or half a million dollars up front to tell you what the final vision of your product could be. Instead, by working through a continuous improvement cycle with your digital transformation initiatives, we'll implement projects to test our hypotheses—and we’ll see if they give you the ROI that you want.
Together, we’ll learn the impact these projects have on your business, and if they help you innovate the way that you’re doing business. If so, we’ll work on what we can do next on top. Or if not, we’ll learn how to attack the problem differently to get the ROI you want more quickly.
Once we have these tools, we can assemble them like Lego bricks–OEE, Production Scheduling–Production Dashboards–to get work order integration, digital work order instructions, integrate customer service, and integrate the ERP system. We can start building an enterprise level SCADA solution one project at a time rather than going through and reading all of the instructions from a digital transformation assessment.
Avoiding Sunk Costs
Another big problem with digital transformation assessments is if you end up with a half a million dollar report that you spent six months of your life dealing with–and you need to show some sort of ROI. This will be incredibly difficult if what you’ve learned about how you do business is that you need to shift your culture and what you need to do to become a digitally transformed company contradicts that report. Now, you have a sunk cost and a lot of headaches if you need to go against this report. You might even need to spend even more money to have the consultants to update the report to reflect what you learned. Instead you could have learned the same things by trying a small digital transformation project and implementing an iterative process up front. You could altogether avoid a sunk cost by starting a $10k, 10-day project.
Your Next Steps
Are you ready to begin a Digital Transformation project (big or small)? Contact us with your project information, or skip the line and schedule a meeting with Cody Johnson in sales, immediately!