Leveraging digital transformation (DX) can fundamentally change how companies operate, produce and deliver products.
DX is a high priority for global manufacturers and can help to overcome challenges in operations, workers and the end product.
All engineering departments face the same challenge: creating high-quality products quickly with high margins. Add competition with other companies, supply chain disruptions and external market pressures to the mix and these challenges are amplified. Staying adaptable to change and adopting advanced technologies helps companies stay competitive in this landscape.
1. Align with Financial Goals
Every company outlines its financial goals in annual reports, which significantly influences investors and collaborators. The three main areas impacting financial goals for manufacturers are revenue, operating margins and asset efficiency. Beginning DX should start with a thorough value assessment of financial goals.
Engineering errors may lead to subsequent expenses during the product development phase. If products fail to function properly, service teams can incur significant expenses, leading to time and effort spent installing and repairing new products.
Considering these factors, companies must analyse key metrics such as equipment performance, operating costs and service and maintenance expenditures to gauge return on investment. This analysis will facilitate decision-making about the success of transitioning to DX.
2. Identify Value Drivers
Manufacturers must focus on a variety of value drivers to improve chain collaboration, reduce costs and increase performance. Establishing continuity across the value chain is crucial, beginning with the engineering department.
These value drivers include equipment availability and performance, employee availability, product quality, equipment performance and energy consumption.
Design efficiency
New product design can be categorised into two main areas: streamlining the design process and optimising product efficiency. By integrating product design with the manufacturing process, companies can reduce the costs of goods sold, quality defects and time spent on introducing a new product to the market (NPI). The emphasis on innovation, sustainability and attention to detail all enhance design efficiency.
Overall equipment performance (OEP)
Monitoring equipment performance and availability is a critical key performance indicator for factory managers. OEP can be measured on a scale - a target of 40-60% is a good baseline to strive for to drive cost savings effectively.Teams can create more innovative products by using fewer, more sustainable materials which also improves product quality.
Employee availability
Maintaining high levels of overall labour efficiency (OLE) poses a challenge for production facilities. Implementing continuous improvement is crucial to enhance employee performance and reduce costs associated with unscheduled labour events and changeovers.
Supplier collaboration
Bringing suppliers closer to the design process ensures product requirements are met effectively. Real-time communication fosters synergy between product lines, factories and suppliers, leading to improved efficiency and faster time to market.
Service-related value drivers
Other value drivers to consider include first-time fix rate (FTFR) and mean time to repair (MTTR). When products malfunction, companies must assess activity to gauge how efficiently technicians can fix issues through remote customer issue resolution.The industry average FTFR stands at 75% but companies leveraging DX can open up doors for remote issue resolution to help reduce costly truck rolls. Moving to digital assets also helps to upskill workforces so complex issues can be quickly fixed.
3. Select High-Value Use Cases
Once companies identify financial goals and value drivers, the list of use cases comes into view. Leveraging strategic use cases with a trusted DX partner ensures high-impact outcomes.
Configuration management
As products evolve to incorporate physical and digital elements, a standardised development process becomes essential. Configuration management provides a uniform platform for managing and connecting product information across all departments.
Change management
The rise of mass customisation creates pressure on traditional product development processes. Change management facilitates engineering data control through the product lifecycle, ensuring tasks are assigned to the right people. This improves efficiency and speeds up time to market.
Automation
Automated processes such as predictive maintenance can further reduce costs by providing manufacturers with product performance insights. Leveraging the Internet of Things (IoT), companies can reduce service and maintenance costs as faults can be predetermined.
Augmented processes
Digital augmented work instructions streamline training processes for new employees. This lifts the pressure on experienced staff who may not have the capacity to provide in-depth training.
Asset monitoring and utilisation
Manufacturers may struggle to gain visibility into operations and processes. With better asset monitoring, they can gain real-time shop floor visibility over equipment availability, performance, status, health and utilisation.
4. Measure Operational Impact
Organisations must take a data-driven approach to measuring the impact of DX on business performance. The key areas of focus should be return on investment and customer satisfaction.
Comparing progress before and after digital implementation helps to determine the success of the rollout. Key metrics such as first-time fix rates (FTFR) and mean time to repair (MTTR) identify the value of the move to DX. Keeping track of the number of truck rolls called out can also determine how frequently repairs are needed.
Assessing such data allows companies to adapt their strategy to drive better results in areas that may be lacking. Staying innovative and adaptable to change is crucial to remain ahead of the curve in the digital landscape.
5. Determine Financial Outcome
After measuring operational impact, companies can determine the overall financial outcome. Large-scale metrics such as equipment costs, service repairs, staff costs and replacement parts can be compared against revenue, operating margins and asset efficiency to determine the return on investment of moving to DX.
There’s a clear value in implementing DX across engineering and manufacturing companies. Adopting a future-ready mindset ensures businesses can stay competitive in the digital age and adapt to changing market dynamics.
Contact our team to begin your value-led DX journey today.
