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"Getting our head out of the sand" ... an Industry 4.0 Journey!

Updated: Oct 24, 2023

ABC Manufacturing followed a multi-year roadmap to develop the organizational competencies needed to successfully navigate the 4th Industrial Revolution and become a data driven organization.


Background


ABC Manufacturing is a high volume machine shop based in the Upper Midwest, US and was established in 1965. ABC provides comprehensive services including material management, machining, grinding, assembly, warehousing and distribution. They design and build all of their machining and assembly fixtures in-house. The business started with one CNC lathe and today, ABC operates over 70 CNC machine tools and has over 200 employees. ABC has customers in several industries including automotive, construction and defense. Core capabilities include milling, lathing and grinding.



Inspiration

ABC's inspiration to begin their Industry 4.0 Journey was two-fold. One driver was a a competitive situation and the other was strategic. Their biggest direct competitor was based overseas but was building a greenfield production facility in the Southern US. For ABC to remain competitive, they would need to address inefficiencies related to quality inspection, material movement, work holding and equipment compatibility.


Strategically, ABC wanted to transition their business model from a low volume/high mix machine shop to a higher volume contract manufacturer. To accomplish this, ABC needed to recapitalize in order to transition from 100% family ownership. In order to realize a high valuation to attract investors, ABC needed to improve operating margins by leveraging technology to automate processes and augment the existing workforce in order to improve productivity and throughput.


Looking back in time after several years of the journey, The CEO reflected that "ABC initially had their head in the sand". We had heard about Industry 4.0 but largely chose to ignore it until we realized that we were unlikely to survive if we could not become more lean, efficient, agile and profitable within the near term. Becoming more data-driven was the common thread to enable these business goals. (Click here to learn more about the Ostrich Persona).



Education

Once ABC had sufficient organizational inspiration for change, they turned to i4iQ to help educate the workforce and create an Industry 4.0 Roadmap. The goal was to assess the competency, alignment and sentiment of the organization relative to Industry 4.0 readiness. Twenty employees across diverse functions, organizational levels, career levels and gender within the organization were invited to address the 5 Key Questions below. Every Wednesday for five weeks, the 20 employees would meet to discuss the results of each survey over pizza. Each pizza lunch conversation focused on specific conversations highlighted by i4iQ based on scoring patterns and comment analysis.

The 5 Key Questions

Business Strategy

Once the organization became more educated regarding Industry 4.0, it was important to make sure that the roadmap was aligned with the business strategy. As part of the initiative to improve valuation and transition to a contract manufacturing business model, ABC prioritized business goals as follows. Each business goal improvement also enables a corresponding opportunity to grow revenue. Prioritizing the business goals is a critical lynchpin which connects the business strategy to the system architecture which Industry 4.0 solutions will plug into.


Business Goals Revenue Opportunity

1) Reduce costs > New orders from existing customers

2) Improve on-time delivery > Attract new customers

3) Improve quality > Enter new industries

4) Accelerate time-to-market > Offer new products

5) Increase agility > Develop new business models



System Architecture

With the strategic business goals in place, ABC turned it's attention to it's system architecture. ABC had grown into it's current system architecture in an ad-hoc approach over many years. The current information flows were largely a collection of data silos connect by spreadsheets, meetings and tribal knowledge. Every spreadsheet gave birth to it's own process, which drove costs and time delays in decision making. The information flow diagram below illustrates a collection of individual solutions installed over many years which were not well integrated within common system architecture. The result was significant manual data entry and re-entry.

ABC System Architecture - original state

Based on the organizational conversations driven from the i4iQ survey results, ABC improved their system architecture through better integration of their ERP system with a paperless shop floor information system which gathers SPC and production data while providing operators with inspection and work instructions. The shop floor system was configured for automated data transfer to and from the ERP system.


Solutions

Having navigated the first four milestones of their journey, it has became much clearer which solutions make sense to plug into the new system architecture to achieve the business goals. While the system architecture modernization still on-going, ABC is moving forward with solutions related to people, processes and technology.


People

ABC moved from approaching workforce training and development from an opportunistic basis (i.e., invest only when grant money or free training was available) to a more strategic approach based on the top 3 organizational competencies below, identified as critical to Industry 4.0 success by i4iQ. (Click here to learn more about the 9 organizational competencies to consider).

  1. Data Analytics

  2. Leadership

  3. Data Governance


Process

Over the years, ABC had lost many of it's lean practices through retirements and resignations. Going forward, workforce teams became self-led regarding continuous improvement including 5S, PDCA, TPM, kaizens, etc. Also, OEE (overall equipment effectiveness) reporting was transitioned from a complex collection of spreadsheets to an integrated solution leveraging the ERP system and shop floor data collection system.


Technology

To improve control of manufacturing processes on the shop floor, ABC replaced their manual gauging (e.g., calipers, go/no-go gauges and bore gauges) with a flexible gauge system, designed to provide speed, repeatability and ease of use for manual or automated applications. ABC also invested in add-on automation components like pallet loaders, part feeders and CNC robot arms.




Organizational Conversations


i4iQ is designed to provoke specific conversations about Industry 4.0 that would otherwise not happen within an organization. These conversations are triggered by 4 situations that emerge from the data, Below are two examples of the organizational conversations that were prompted by the i4iQ


Conversation Triggers

  1. Lowest competencies

  2. Benchmarking gaps

  3. Demographic scoring patterns

  4. Organizational scoring inconsistencies




Conversation 1 - "Where to become more connected by organizational level."

In ABC's case, there was a lack of alignment in how this question was answered based on the participants organizational level. Individual Contributors scored Man & Machine as the only two information loop opportunities to focus on. Mid-level Managers scored Methods as a big opportunity but not Metrics. Senior Leadership scored Metrics as a big opportunity but not Man. (Click here to learn more about the 5 information loops to consider).


Benchmark database ABC Manufacturing



Conversation 2 - "Which organizational competencies to develop"

There was a strong alignment across all of the participants that ABC was behind the benchmark database on all 9 of the organizational competencies. The lowest scored competency was Continuous Process Improvement at 2.2. This also was the largest gap to the benchmark database which scored at 3.9.




What's next?

ABC is in year 4 of their journey and continuing to work on their system architecture and also continue to develop organizational competencies around continuous process improvement, workforce development and systems integration. ABC recently updated the assessment and raised their i4iQ from 2.9 (Ostrich) to 7.1 (Mice).


CLICK HERE - to download a sample report.


CLICK HERE - to get started on your journey.


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