Orientation on the way to the digitalized company

Many companies are aware that digitization will fundamentally change their business and the industry. This often results in great actionism in the belief that digitization can be solved by initiating a multitude of activities in this regard. This is not the case! For companies today, it is much more a matter of developing the necessary capabilities as quickly as possible in order to survive and be successful at all in an increasingly digitized world. From Manager Magazin 01/2020

Digitization is not an end in itself

The latest technological leaps have created a potential for the disruption of business models that has probably never existed in this form before. This creates a growing, often still latent danger for companies that their previous business models will no longer be viable in the future. A variety of buzzwords are hailing down on companies, such as digital twins, Internet of Things (IoT), Data Science, artificial intelligence, Block Chain, etc. of which employees and management often have little or no idea, but which all have the potential to have a disruptive effect.

Find the necessary orientation

In this fog of topics and buzzwords, it is necessary to find orientation. To be able to do this, it is necessary to break away from the classic dualistic mindset characterized by the extremes of technology leadership vs. cost leadership and to develop an understanding that products are merely the physical manifestation of a company's performance.

This raises the central question of what performance means for a company in the future. If performance is structured into an external and internal perspective, then it is external performance that must be contoured above all others. To do this, it is necessary to specify what will enable the company to be successful on the market and earn money tomorrow and in the future.

For mechanical and plant engineering, this question can already be answered in part. Tomorrow - today, in fact - mechanical and plant engineering must be able to offer highly customized products within the delivery times and at the price of series products. If this does not succeed, market entry will soon be denied in some markets. For the future, the answer to this question is more complex. In summary, it can be said that mechanical and plant engineering must acquire the ability to provide smart system solutions with a high level of integration capability in converging scenarios.

Integration capability in converging scenarios

The concept of a converging scenario can be explained using the example of vehicle and parking space search. Since no driver is interested in searching for a parking space, a foreseeable expectation of the customer will be that a vehicle will bring the driver to a destination and will be back at this location at the exact moment when the onward journey is pending. This results in an interaction scenario in which the classically separate elements (vehicle, parking garage, parking space) converge, giving rise to new business models and technological scenarios. In mechanical and plant engineering, converging scenarios can arise, among other things, when machine runtime is sold instead of machines or when machines must integrate into higher-level MES scenarios and components of these must be able to run on the machine (buzzword: edge computing).

Shape the idea of performance

In this context, it is the task of the management to answer the above-mentioned question and to clearly form what, in this sense, capability means for the company in the future. The necessary capabilities (in the sense of business process capability) that a company needs can then be derived from this. These capabilities are realized by implementing the necessary digital process patterns. This is easy to say, but challenging to implement, as some process patterns require changes in almost every area of the business. Thus, for the capability, highly customized products in delivery times and at the price of series products to be able to offer the process pattern Configure-to-Order (CTO/CTO+) necessary.

This process pattern requires, among other things, the establishment of portfolio and product management, the implementation of the product line concept, modularization and the establishment of product building blocks, a product structure concept mapped in PLM, ERP and, if necessary, MES, the implementation of line production according to the assemble-to-order (ATO) principle, the ability to maintain inventories at previously clearly defined locations, and the implementation of the product line concept. Customer decoupling points, the avoidance of the phenomenon of increasing variance and, last but not least, the implementation of a configurator both for customers, sales and for the generation of bills of materials. As a basis for these process patterns, it is also necessary to use modern IT systems and to fundamentally adapt the way of working in the previous IT systems.

Make bold decisions and drive the change

The implementation of the necessary process patterns does not succeed by itself, but is a laborious, cross-departmental act of change throughout the entire company. As a rule, it is not to be expected that companies, characterized by their previous way of working, will be able to identify and implement the process patterns they need without outside help.

However, initiating the necessary changes depends on the willingness of the shareholders and the management and also requires courageous entrepreneurial decisions to be taken quickly, including the provision of the necessary financial resources. In addition, staying power is necessary, since the constitution of a company cannot be changed by short-term management measures.

Whether and how this issue is addressed and the implementation of the necessary process patterns succeeds will be the fateful question for many companies and will determine their future viability.

Source of first publication: Manager Magazine 01/2020

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