Digital Operations

Revoltuion
in the engine room

Digitization offers a great deal of potential in the area of Operations. New technologies are automating time-consuming business processes to make value chains fully transparent and allow them to be proactively managed, as well as facilitating new service possibilities. Organizations are becoming more agile, working more quickly and focusing more closely on customers. Process excellence and intelligent, predictive management as well as dovetailed strategic and operational planning play a key role in achieving this.

A rapid acceleration of throughput times from order entry to product delivery; tailored services; individualized customer interaction on all channels and in real time – digitization is bringing about major changes, and customers continue to be ever more demanding about availability, speed and customer experience. In addition, global supply chains and fragmented supplier structures are making value creation more complex, and necessitating comprehensive Supply Chain Risk Management. Competition is also intensifying, as start-ups and agile platform providers that concentrate on digitization from the outset challenge traditional business models.

At the same time, the burgeoning computing power and smart technologies that digitization brings are presenting new opportunities to make business processes more efficient and develop new products, services and business models. An adverse effect that should be noted at this point though, is that increased connectivity is also making processes more vulnerable, and this issue is the most pressing priority for the Operations sector. Solutions such as supply chain integration and business-driven planning, or specific applications such as predictive analytics, Robotic Process Automation and process mining open up huge potential for Operations – the “engine room” of value creation. In particular, these new tools and methods allow for integrated planning and excellent operational processes, which both represent significant drivers for the Operations of the future.

The TRUMPF Group, headquartered in Ditzingen near Stuttgart, ranks among the trailblazers when it comes to digitization, and is one of the leading global specialists in machine tools and laser technology. It is a long time since the company began examining its internal and external processes for potential to reduce throughput times, increase efficiency and improve customer satisfaction. It has since networked its machines installed at customer sites by means of a service cloud that creates a constant overview of the machines’ status. The information from this overview enables TRUMPF to install spare parts and replace wear parts in good time, thereby preventing downtime for customers, increasing productivity and facilitating intelligent business models.

MASTERING DATA AND TECHNOLOGIES

Digital excellence is essential for the future of Operations, because it allows companies to respond instantly to changing conditions and customer requirements. It won’t be long before having the best production facilities will not be the prerequisite for success, and it will instead be those organizations that have mastered data and technologies which take the lead. There are already smart tools that can create, process and make profitable use of large volumes of data: High-performance computers, machine learning and advanced analytics tools can be used to generate valuable information and business value from complex, unstructured columns of figures.

Digital excellence allows companies to respond instantly to changing conditions and customer requirements.

By connecting machines, processes and products, the Internet of Things (IoT) is also set to revolutionize value creation. For example, IoT makes it possible to identify the best possible route through the production process for a component, with the aid of status reports on capacity, utilization and scrap. Decisions concerning machine utilization can be automated based on real-time data.

In addition, robotics solutions will take over time-consuming manual processes, relieving employees of simple, repetitive routine tasks and thereby increasing efficiency and creating scope for value-added activities.

BETTER CONTROL THROUGH TRANSPARENCY

Modern technologies not only save time, but also create a clear, comprehensive and transparent view of the entire supply chain, making it possible for all processes to be controlled proactively. This is particularly decisive as a success factor for international companies with growing product portfolios and complex value chains. For example, data-based analysis using process mining uncovers any weak points in business processes and deviations from the process standard, which can then be remedied.

The full overview that is needed for corporate management and performance optimization is provided by an Operations Control Tower; a platform of this type brings together analytical, predictive and real-time applications and integrates existing operational systems. This makes it possible to trace all processes along the value chain and detect disruptions at an early stage. The Operations Control Tower also provides all the information needed to solve problems quickly, cost-neutrally and without negative effects on the customer, for example by reprioritizing orders. Within the supply chain, this can mean prioritizing delivery points and accelerating transports, or reducing process times in service operations and ensuring customers are satisfied more quickly.

Modern technologies provide extensive transparency and allow for the proactive management of all processes.

A NEW PARADIGM IN PLANNING

Transparency, integrated processes and business divisions as well as a value chain under constant management are the prerequisites for a new kind of corporate planning that is markedly more integrated, more automated and more decision-oriented because it is based on innovative technologies and methods. It means operational and strategic planning are effectively dovetailed, which not only reduces outlay but also improves planning quality overall.

By means of this integrated thinking, strategic goals become plans that are cross-functionally devised and successfully implemented thanks to excellent operational processes. When it comes to predictive demand planning, forecasting and analytics methods provide a precise picture of how quantity structures, demand patterns and other factors will develop in the future. With these methods, all planning alternatives can be mapped and evaluated in model scenarios, to derive statements about their feasibility and financial success and so to facilitate fact-based corporate decisions. A complete financial and operational evaluation can be performed on the basis of rolling business plans over a horizon of 24 to 36 months.

This requires a strategic planning process that covers the entire value chain, and operational processes that are controlled using a system- and data-based approach. To this end, the systems must continually collect and transmit data about the current status, using IoT technologies and cloud-based communication. This information provides an impetus to control business processes automatically – using artificial intelligence and self-learning systems for example, which constantly improves planning quality.

PROCESS EXCELLENCE MATTERS

So in addition to digital expertise, organizations also need operational process excellence for their transformation. Although digital technologies can make business processes faster and more efficient, a process that is itself bad will remain inadequate even if digitized. As such, the following should be adhered to when developing processes with an eye on both digitization and excellence: Ideal processes are structured and lean, integrated and digital or automated, transparent and controllable, effective and efficient as well as self-regulating.

In order to achieve process excellence and provide best-practice processes for digitization, all business processes must be optimized on a continuous basis. Organizations would be well-advised to create clear organizational responsibilities and put together a dedicated unit; this ensures an integrated approach is taken to fully exploit potential. There are numerous basic concepts that can be explored for a process optimization approach, and this decision should precede the introduction of a new IT system. Organizations often want to use the opportunity to create a customer-centered, end-to-end process layer and eliminate waste, weak points and errors. Other significant approaches include automating, rearranging or accelerating processes, or becoming more agile overall through the use of process innovation.

Process excellence, combined with integrated strategic and operational planning, optimizes all value creation levels.

To ensure that digitized processes can be seamlessly integrated into the existing IT landscape, they need to be extensively structured and improved. So effective process optimization requires not only an understanding of technology, but also well-founded knowledge of business processes and value chains. Strategic consistency and perseverance are also called for – professional change management may offer effective support here, and should not be underestimated.

A BOOST FOR ALL VALUE CREATION LEVELS

In any case, the effort is worth it. Integrated strategic and operational planning and performance management, in combination with process excellence, generates a boost for all value creation levels. On the one hand, units that have previously largely conducted planning on an individual basis are dovetailed together on a top-down basis; on the other hand, processes are optimized from the bottom up. Integrated planning facilitates dramatic improvements in delivery services as well as other areas, and makes it possible to accurately predict the number of employees that should be on hand, meaning idling and low utilization can be avoided. At the same time, process excellence anchors the optimized business process within the company in the long term.

This opens up considerable potential with regard to the range of services and the cost basis. Better product availability and a higher service level increase customer satisfaction, and the targeted use of resources gives rise to more efficient cost structures. In competitive markets in particular, these are significant competitive advantages, which become a unique selling point and can ultimately determine the overall success of the company.

Further information is available at www.horvath-partners.com/digital-operations_en

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Interview with Dr.-Ing. Mathias Kammüller, TRUMPF

“We want to become 30% more effective”

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