Executive Briefings

7 Ways Any Manufacturing Business Can Increase Its Operational IQ

Imagine a global supply chain that connects every human, digital, and mechanical link while also processing millions of bytes of data each second. One in which a vital machine, sensing that it is about to fail, communicates with vendors to send out the repair parts it needs, even texting a technician to install them.

That may sound futuristic, but it is becoming a reality thanks to Smart Operations. Smart operations calls for a higher order of connectivity and collaboration throughout the supply chain, and enables operators to analyze collected data and then make real-time adjustments. As a result, the supply chain works as a cohesive unit rather than a sum of disconnected parts.

Manufacturers have long relied on such continuous improvement disciplines as Six Sigma and Lean Manufacturing to boost efficiency, but new challenges are adding to the pressure on their supply chains.  Customers expect more customized or innovative products for lower prices—with no change in quality or turn times. A shortage of skilled labor complicates things further. These pressures mean that manufacturers must bolster their efficiency to remain competitive.

That is where Smart Operations, and the analytics that fuel it, come in. “Manufacturers using predictive analytics are reducing maintenance costs by 25% and unplanned downtime by almost half,” according a recent CSC Smart Operations report. “Companies are sitting on a veritable gold mine of information they aren't using.”

The Smart Operations advantage

Smart Operations extends beyond the limitations of Lean Sigma toward a real-time, flexible operating model supported by technology, automation, and data management.  It enables organizations to sift through vast quantities of information with advanced analytics—a key advantage. For example, manufacturers using predictive analytics can reduce maintenance costs and unplanned downtime. They can zero-in on quality problems and reduce maintenance costs as well.

Because Smart Operations can offer increased, and more real-time, visibility into inventory, orders and throughput, it can help to reduce the carrying costs of materials and goods. It can also provide a more and timely and accurate prediction of supply chain disruptions.

Moving Toward Smart Operations

Even manufacturers who aren’t consciously aiming towards Smart Operations are, by investing in automation and robotics, moving inexorably in that direction. A June, 2016 report from the Manufacturers Alliance for Productivity and Innovation (MAPI) found “widespread automation investment”:  83% of companies surveyed invested in automation in the past five years; 76% plan to do so in the next three years.

This “fundamental reshaping of the production landscape could eventually have implications for most aspects of manufacturing activity,” the MAPI report concluded. To remain competitive, manufacturers need to take stock of where they are in their evolution toward a smarter supply chain, and move quickly to implement necessary technological changes. Some manufacturers have been slow to adopt more connected and automated operations.  Yet there can be enormous benefits to evolving a digital supply chain, even incrementally. 

Here are seven steps that can help you move forward with Smart Operations:

  1. Assess the relative maturity of your company’s smart operations strategies. If you are at early stages, you are in a similar position as most companies.
  2. Look at your activity relative to your peers. Are you investing more aggressively in five important areas:  connected products, connected assets, supply chain decision-making and buy-side/sell-side value chain integration?
  3. Articulate a strategy for your transformation regardless of your status relative to industry peers. Too many companies are stuck with an uncoordinated set of activities and will find it difficult to make meaningful progress.
  4. Examine supply chain decision-making. How must your company’s decision-making processes change to achieve new levels of operational excellence? 
  5. Set priorities for connecting products in the field and assets in the value chain. The entire value chain need not be instrumented all at once. Focusing on the most critical areas will enable a company to gain valuable insight into the best practices for full deployment, and will also help to improve the return on investment.
  6. Identify strategic suppliers and channel partners for process integration. Bringing suppliers and vendors to the table can help to build the seamless processes needed to ensure smooth implementation and operations.
  7. Leverage the expertise of your logistics provider. Third-party service providers can offer scale, process expertise and knowledge of advanced technology to help increase the speed and scale of your Smart Operations capabilities.

Smart Operations can be a game changer. The steps required will take time — a sustained and deliberate effort over several years. But in the emerging digital economy, Smart Operations promises to be one the fastest and most efficient routes to operational excellence and growth.

That may sound futuristic, but it is becoming a reality thanks to Smart Operations. Smart operations calls for a higher order of connectivity and collaboration throughout the supply chain, and enables operators to analyze collected data and then make real-time adjustments. As a result, the supply chain works as a cohesive unit rather than a sum of disconnected parts.

Manufacturers have long relied on such continuous improvement disciplines as Six Sigma and Lean Manufacturing to boost efficiency, but new challenges are adding to the pressure on their supply chains.  Customers expect more customized or innovative products for lower prices—with no change in quality or turn times. A shortage of skilled labor complicates things further. These pressures mean that manufacturers must bolster their efficiency to remain competitive.

That is where Smart Operations, and the analytics that fuel it, come in. “Manufacturers using predictive analytics are reducing maintenance costs by 25% and unplanned downtime by almost half,” according a recent CSC Smart Operations report. “Companies are sitting on a veritable gold mine of information they aren't using.”

The Smart Operations advantage

Smart Operations extends beyond the limitations of Lean Sigma toward a real-time, flexible operating model supported by technology, automation, and data management.  It enables organizations to sift through vast quantities of information with advanced analytics—a key advantage. For example, manufacturers using predictive analytics can reduce maintenance costs and unplanned downtime. They can zero-in on quality problems and reduce maintenance costs as well.

Because Smart Operations can offer increased, and more real-time, visibility into inventory, orders and throughput, it can help to reduce the carrying costs of materials and goods. It can also provide a more and timely and accurate prediction of supply chain disruptions.

Moving Toward Smart Operations

Even manufacturers who aren’t consciously aiming towards Smart Operations are, by investing in automation and robotics, moving inexorably in that direction. A June, 2016 report from the Manufacturers Alliance for Productivity and Innovation (MAPI) found “widespread automation investment”:  83% of companies surveyed invested in automation in the past five years; 76% plan to do so in the next three years.

This “fundamental reshaping of the production landscape could eventually have implications for most aspects of manufacturing activity,” the MAPI report concluded. To remain competitive, manufacturers need to take stock of where they are in their evolution toward a smarter supply chain, and move quickly to implement necessary technological changes. Some manufacturers have been slow to adopt more connected and automated operations.  Yet there can be enormous benefits to evolving a digital supply chain, even incrementally. 

Here are seven steps that can help you move forward with Smart Operations:

  1. Assess the relative maturity of your company’s smart operations strategies. If you are at early stages, you are in a similar position as most companies.
  2. Look at your activity relative to your peers. Are you investing more aggressively in five important areas:  connected products, connected assets, supply chain decision-making and buy-side/sell-side value chain integration?
  3. Articulate a strategy for your transformation regardless of your status relative to industry peers. Too many companies are stuck with an uncoordinated set of activities and will find it difficult to make meaningful progress.
  4. Examine supply chain decision-making. How must your company’s decision-making processes change to achieve new levels of operational excellence? 
  5. Set priorities for connecting products in the field and assets in the value chain. The entire value chain need not be instrumented all at once. Focusing on the most critical areas will enable a company to gain valuable insight into the best practices for full deployment, and will also help to improve the return on investment.
  6. Identify strategic suppliers and channel partners for process integration. Bringing suppliers and vendors to the table can help to build the seamless processes needed to ensure smooth implementation and operations.
  7. Leverage the expertise of your logistics provider. Third-party service providers can offer scale, process expertise and knowledge of advanced technology to help increase the speed and scale of your Smart Operations capabilities.

Smart Operations can be a game changer. The steps required will take time — a sustained and deliberate effort over several years. But in the emerging digital economy, Smart Operations promises to be one the fastest and most efficient routes to operational excellence and growth.

Discover how to reach new levels of excellence in the UPS white paper: The Rise of Smart Operations.