Digital innovation in manufacturing

Consumer products manufacturing could be transformed through digital innovation. But many organisations are failing to embrace this opportunity.

Digital technology: it is easy to talk about the opportunity for innovation. Automation, machine learning, cobots, big data analysis. These are all familiar buzz words and it’s easy to imagine how they might change manufacturing.

But it’s not enough to dream dreams. You need to do more than have blue sky ideas about the ways digital technology might be used sometime in the future. True innovation is about having commercially realistic ideas about how organisations can change, ideas that you can implement to increase the profitability of your manufacturing capabilities.

What is digital innovation in manufacturing?

Innovation sometimes has a bad name. It can be associated with impractical ideas where people focus on solutions to problems that don’t exist, ignoring hard problems that need solving today. And done badly, innovation programmes can achieve exactly that. Which is why they need careful management.

Innovation is crucial to business success. The world is changing rapidly. Consumer expectations evolve and opportunities to deliver better-for-less increase. There are undoubtedly major opportunities for digital innovation in manufacturing.

But that doesn’t mean everyone welcomes innovation. Sometimes there is a feeling that innovation is only something that small, agile manufacturers can employ. Larger organisations are simply too big to be able to afford the investment that digital innovation requires.

In contrast, some smaller manufacturers felt that digital innovation was firmly in the ‘too difficult’ box: they simply didn’t know where to start but they suspected that it would be well beyond their capabilities.

The reality, though, is that innovation doesn’t need to be high risk and expensive. There are opportunities that organisations of any size can grasp, providing they have a vision of what they want to achieve. An example of a manufacture embracing innovation is Siemens, whose digital factory in Congleton designs and manufactures variable speed drives for motors. The factory uses automation, integration and data analytics to deliver flexible and highly efficient manufacturing processes.

Innovation drivers

In some cases, a desire for digital innovation can be a response to ephemeral, short-term trends. Something has caught a decision maker’s eye. “Why aren’t we doing that?” they say. “That” might be using a new tool such as a smart wrench, or capturing a new set of data to analyse, or even building an artificial intelligence algorithm.

And there is nothing wrong with those ideas. So long as they are part of a vision for digital technology that is driven by real business opportunities, such as long-term shifts in consumer spending patterns. Real innovation has to have a useful result, such as a more competitive offer, more flexible outputs, or a more efficient process.

And while innovation can be sparked internally by financial or productivity drivers, such as a desire for increased efficiency, or even by regulatory requirements, increasingly innovation happens as a result of conversations with end users such as retailers and consumers. Conversations that generate ideas where a strong need to go to market quickly in order to establish a, probably temporary, point of difference in the market.

Making innovation work

Any innovation strategy needs purpose. There should be agreement about what digital innovation is designed to deliver, where and when it should be used. It is of course impossible, or at least very difficult and highly risky, to transform a whole organisation in one go. So the purpose of innovation should not be something grandiose, such as digital transformation, but something modest and achievable (although still important and still difficult), such as ‘connecting the labelling system to the internet to enable real-time changes to label designs’ or ‘trialling predictive maintenance on the production line’.

How will you find a suitable modest purpose? There are at least two ways. One is to start with a known problem and for ways that digital technology could provide a solution. And another is to identify a critical system and look for ways that this could be improved using digital technology. Always, though, you should avoid the ‘innovative’ technology for the sake of it. And avoiding innovations that simply cannibalise existing products is also sensible.

Successful innovation also needs process, a technical backbone for collecting and filtering ideas that includes a ‘gated’ system where ideas at various stages of development can be reviewed, and either passed for further development, or put aside. The development process should be made as low-risk as possible. One useful technique is to create models or ‘digital twins’ of new machines and systems, models that can be tested under different situations without the expense of commissioning new physical machinery.

Another essential of good innovation is data. You need data to identify opportunities for production improvements, to analyse and respond to consumer preferences  and to identify whether innovations are successful when launched.

What will success look like?

Success with innovation can never be guaranteed. By its very nature innovation  is untried and, in turn, carries risk. And for that reason, it’s important not to over-invest in a new idea, especially if it seems to be failing. But more often than not, carefully planned and nurtured innovations will succeed.

To know if an innovation has succeeded you will need to have set goals and KPIs around the project. For instance, if the aim of one project is to get a new systems ‘right first time’ by developing and testing it with a digital twin, then success can be seen if the new system in commissioned successfully without major redevelopment.

You will need to measure costs of implementation, as well as the benefits and judge whether these are proportionate. How much time and investment did the new idea take to develop? Does the innovation add value elsewhere in the organisation or is it causing unexpected problems? To do this there is a need to look at innovation from an end-to-end perspective, from the point that raw materials are sourced to the point that the end product is in the consumer’s hands.

And you need to take an organisation-wide perspective, too. A new way of working may only have a marginal benefit in one area of your organisation. But what would the total returns be if the innovation were implemented across the whole organisation?

To succeed with digital innovation, you need a road map and a strategy; and you need patience and willingness to learn from failure as well as from success. But armed with confidence, common sense and robust plans, innovation can start you on your path to a successful digital future.  

Originally published in Business Reporter