Digital Transformation Efforts Fail Without Vision

“Why would Coca-Cola own an electronic componentry business?”

That was Mike Giresi’s first thought before inquiring about the chief digital officer position at electronics manufacturer Molex, a Koch (pronounced “Coke”) company.

Molex manufactures cable assemblies, connectors, fiber optics and industrial sensors among other products, largely for the aerospace and defense, automotive, industrial automation, med tech and telecom industries.

In 2019, Giresi took the chief digital officer job to lead a comprehensive, companywide digital transformation effort covering product ideation, design, tooling commercialization and customer experience. Before the transformation process could begin, however, the company needed a new organizational structure to guide its efforts.

“We didn’t really have what I would call a manufacturing and operations vertical. The plants were integrated into our business units and the business units more or less led those plants,” Giresi says.

To torture the soft drink/electronics company metaphor, it would be like Coca-Cola putting Pibb Xtra bottling under the control of Pibb distributors instead of developing centralized expertise in all forms of bottling.

Sustainable Change Comes from the Top

CEO Joe Milligan made significant changes to Molex’s global leadership team. The business leaders with the most successful manufacturing teams were drawn together into a new manufacturing and operations vertical, led by Giresi, to provide a centralized hub for Molex’s transformation program. The team created new roles for product development and customer experience within the new vertical.

“Joe really believed in the vision that we created. He believed that this was the only way we were going to get meaningful traction. But the key thing is that we’ve taken that leadership team and said, ‘You are accountable for manufacturing, so you own that, but you have to think horizontally across the organization.’ It’s not just about the vertical, the value for the customer is how we horizontally execute,” Giresi says.

Jaehoon Lee, senior vice president and president of global operations capability, wanted his plant leadership on the floor with operators, not just reporting the news to superiors but actively involved in everyday operations. Employee experience and accountability perspectives, with digital teams standing side-by-side with operational teams, had to drive Molex’s transformation.

“I can certainly help with how we should be thinking about [digital transformation], the strategies we could use, the technology we could put in place, the talent that we need, the different ways of working. I’m all over that stuff. But I’m not an operator. I haven’t sat on the line and done this on an everyday basis…so if someone’s going to do this, they need to be comparatively advantaged and an expert in this space, and that’s what we did,” Giresi says.

“This is nowhere near our biggest opportunity from a cost optimization or performance improvement [perspective]. We have products that are much higher demand, higher profit margin, higher AUR [average unit retail], but we couldn’t get the traction with those teams to [pilot the new TQM system] and we weren’t going to spend a lot of time trying to convert the unconvertible,” Giresi says.

Traditionally, operators on the twinaxial cable manufacturing line captured information on pen and paper during their shift. The data was reformatted into a standard form after the shift. Supervisors reviewed the information and took appropriate action, often too late to affect any manufacturing problems during the shift in question. Inspections also took place at the end of the production run, literally on the ends of the cable reels.

“By the time we got the information that something wasn’t where it was supposed to be from a quality control perspective, it was too late, and you had to rerun the batch, rerun the entire schedule to make up for the inadequacies,” Giresi says.

To add to the challenge, the Guadalajara plant faced a significant amount of employee turnover, owing to the large number of plants in the area and constant supply of new job opportunities. Training new operators in manufacturing procedures as well as the analog data capture and analysis system took time. Novice operators created opportunities for error.

Coordination between the digital development and data team and the physical manufacturing operations team was essential to getting the new TQM system right. Molex needed to find manufacturing teams open to the possibilities Industry 4.0 could accomplish and struggling with operations. The twinaxial cable manufacturing team fit the bill.

“Everything we’ve tried to do…is to solve real problems. Let’s not just spin up a whole bunch of tech because we can. Let’s focus on real, hard pain points where we have people who are excited about making progress against them,” Giresi says.

He adds, “But, give them the accountability. … We can certainly stand up the architecture, the security, the infrastructure, the resiliency … but you need to tell us what great [performance] looks like, because I can’t tell you what it looks like. I can show you examples of greatness in other areas, and if that helps you think about it, but you have to own it. This team in Guadalajara wanted to do it.”

Yield on the twinaxial cable manufacturing line increased from 94% to 98% and inspection times dropped by 50%. Plant leadership could also afford to run the more-efficient, less-error-prone lines faster than ever before, to meet customer demand more quickly.

Real-time feedback allowed operators to increase the speed with which they interacted with equipment to address quality issues. This meant developing expertise in equipment operation more quickly than before. The new level of expertise allowed operators to function more efficiently as trainers for new hires. Average onboarding times dropped by 15%.

The new level of detailed operator feedback enabled by the TQM system also makes it easier for Molex to recognize good work much earlier and more consistently than before, which leads to improved operator pay  – something it calls its “marginal value creation” compensation philosophy – and therefore, higher  morale.

Once the TQM system proved so successful on the twinaxial cable line, installing the technology across the shared plant proved relatively simple. Operators from the twinaxial cable line could serve as TQM system trainers across the plant, easing the expansion. Molex has since also installed the TQM system into its Philippines plant.

“We’re now seeing that type of performance across multiple product lines, and product lines that have much greater demand and a higher degree of volume than the TwinAx product,” says Giresi.

Managing Transformation’s Expansion

It’s common in manufacturing for the success of one industry 4.0 deployment to spark a clamor of requests for tech deployments elsewhere. Giresi says that some obvious manufacturing improvements like the TQM system don’t require exhaustive review.

Cross-functional transformations, on the other hand, require careful consideration as to whether and how leadership needs to adopt and drive change.

“Planning is a huge opportunity for us. How we plan our business, both in terms of our demand signals through supply side all the way through the plant floor…and we are now attacking that. It’s complicated because it doesn’t all roll up to one individual. It’s disparate throughout the organization. It’s complicated in terms of how it’s evolved over time, but it has a massive impact on our business. If we get better at this, we are going to reduce cycle times exponentially, and we’re going to be more cost effective,” Giresi says.

Breaking through Molex’s 85 years of legacy, the decades of tribal knowledge and ways of doing things that evolved slowly and iteratively over time, to make decisive changes presents the biggest challenge for Giresi and his team.

“From an engineering perspective, we’re trying to change how we design and develop product. It is by far the hardest part of the transformation. It is incredibly hard to get engineering to change how they do something, not because they’re unwilling, [but] because they’re super busy. We have a tremendous amount of demand rolling through our commercialization process. They have a way of working, and we’re asking them to change it,” Giresi says.

Changes that equally add value to the customer and benefit how Molex does business ultimately prove sustainable.

“Who cares if we actually can’t pull it into a commercialization process that shows up faster for the customer? So everything we do is around that, that mental model, everything, and we’re getting better and better at it.”