Starting from Scratch: An Auto Supplier Shares Its Digital Transformation Learnings
This is a lessons-learned article about how digital and automation transformation in manufacturing organizations is a continuous project with an open ending. It focuses on the experience of a plant manager of a midsize automotive supplier.
The company, a Tier 1 maker of complex welded components, is headquartered in Germany and operates worldwide. It has about 900 workers. In 2018, the general manager (whom we’ll call “the GM” from here on) initiated the organization’s first digital transformation (DX) strategy. At the time, the company had no guidelines or methodologies to direct its digitalization.
The GM’s Key Takes
The DX initiative consisted of 21 individual projects, and real implementation proceeded very slowly at the outset. The main reason? The initiative was just one of the many tasks that managers were responsible for as part of their daily activities.
The GM offers the following advice to make the initiative run smoother and boost the odds of success:
Have a dedicated digitalization manager. This individual is responsible for keeping the initiative cracking at a vigorous pace. It should be a full-time position that can be called “digital projects leader.”
Define the sponsor. This should be a real person who has decision power, respect and engagement — ideally, a C-suite executive. The GM should be the transformation driver and leader of the plant.
Create a digiteam to drive the transformation process. In our situation, the team included the GM, CFO, IT manager, business unit manager, manufacturing engineering manager, chief programmer (of shop floor assets), HR manager and SAP key user (responsible for SAP user support).
Actively work on the project plan. Combine the waterfall and agile approaches. Establish a DX meetings routine that results in clear outputs (including meeting minutes).
Establish concrete leaders of each project level. In our case, relevant business unit managers provided progress reports on a weekly basis.
A crucial element of the project was to increase the digital capabilities of the internal workforce. Training was developed jointly by the digiteam and HR, with a special focus on DX and its impact on the company’s day-to-day operations.
Each DX element that affects a worker needs to be properly explained and communicated. We recommend using both digital and non-digital communication channels to promote the initiative, including TV panels, internal newsletters, town hall meetings, the company intranet and corporate apps. Focus on benefits for employees. Work hard and have fun with your achievements — celebrate them!
Connecting the Dots
It is critical to determine whether your in-house capabilities span all the elements of your DX program. This includes both project leadership and project management. As the GM, you must stay focused and make DX your personal and company priority.
Each initial phase should include clear benchmarks. Be open to leveraging benchmarks outside your industry. Retail or ecommerce companies may be good role models when thinking about IT infrastructure or IT and operational technology data management and data security. Consider working with external professionals that can help you develop the DX elements aligned with the company’s strategic goals.
Results
Between 2019 and 2022, the GM and his digiteam were able to deliver 16 industrial automation projects — together having an estimated ROI of 1.5 years — and 10 digitalization projects, including implementation of a new manufacturing execution system (MES).
Thanks to the DX and automation acceleration programs, the GM’s plant was able to improve its competitive status among other plants operated by the company. The GM’s plant has been awarded new production programs from car-making customers that are expected to utilize the plant for at least another 10 years. According to the GM, this is just the start.
My Observations
No company is an island. Succeeding simultaneously with business and DX requires organizations to build or be part of an ecosystem. The inner circle of the ecosystem should include technology vendors, service providers and independent advisors.
Leverage the innovation and creative potential of start-ups. Admit them into your inner ecosystem and benefit from their out-of-the-box thinking.
Having technology leaders as trusted partners can provide organizations with new technology firsthand. This can help you gain an “early adopter” attitude that can be leveraged for competitive advantage.
Partner with your customers and suppliers. Many are going through a DX process as well. The time may be ideal to align with them on data exchanges, business models, transparency and sustainability efforts.
This one is a classic but still critical: Corporate-level top management must be fully on board, ready to support investment and transformational changes at the site level. In large organizations, especially those with multisite footprints, DX can be framed on a corporate level. But there may be situations where local sites can have the freedom to select solutions or build use cases individually.
This, however, puts extra responsibility on local management to demonstrate that the strategy is working. It is thus important to have a connection to the highest level of corporate management to actively manage the risks and expectations.
To survive and thrive in a constantly changing world, organizations must adopt a learning culture across the board. Improving technical, digital, and social capabilities doesn’t just support a resilient workforce — it improves affinity with new technology and ways of working.
The most successful organizations foster creativity across the workforce. Technology is ubiquitous, but there are many ways to use it. Organizations must support employees in pushing tech to its limits to create unique use cases and find additional value.
Be ready for the unexpected. Industrial organizations have been continually challenged in recent years. Organizations that were able to establish a solid and safe IT infrastructure, an innovation culture, energy efficiency and market intelligence have outperformed those that lag in one or two of these areas. Building a resiliency and sustainability shield around business and operations, reinforced with data, must become a cornerstone of corporate business strategy.
Jan Burian is senior director, head of IDC Manufacturing Insights EMEA and leader of Europe: Future of Operations Practice.
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