Learnings and challenges for Digital transformation. Sergio Olivas (AkzoNobel) -May 2019. Digital Manufacturing Conference with Axiom Groupe Barcelona.
A global paints and coatings company North America Mature Europe Emerging Europe Key brands: Asia Pacific South America € 9.3 bln revenue 124 manufacturing sites Other regions 150+ countries 34,500 employees
We transform homes and interiors (decorative paints interior and exterior, woodcare, powder, pre deco) We make buildings better (industrial coatings, powder coatings and protective coatings) We help keep the world on the move (aerospace coatings, industrial coatings, marine and yachts coatings, powder coatings, vehicle refinishes) We make the everyday more practical and beautiful (coil and packaging coatings, powder coatings, specialty coatings, wood coatings) We keep the wheels of industry turning (protective coatings and powder coatings) 3
Some of our customers Airbus Leroy Merlin APM Maersk McDonalds Bosch Mercedes-Benz Dell Nokia ExxonMobil Philips GE Samsung General Motors Scania Hapag Lloyd Siemens HP Tata Steel IKEA Volvo Kingfisher Whirlpool 4
Digital transformation: raising supply chain to the next levels. • Supply chain as key differentiator and value contributor . McKinsey research suggests that, on average, companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent — the largest increase from digitizing any business area — and annual revenue growth by 2.3 percent. • We are all familiar with the basic transformation approach : “establishing a vision for the future supply chain, assessing the supply chain’s current state, and developing a transformation road map”. • In a digital transformation, this approach has some new features.The vision will call for a combination of no-regrets improvements as well as more speculative changes that can be pursued over time . The assessment needs to consider whether operations and technology are sufficiently integrated, and whether the company has the talent strategy and organizational structure that will favor innovation and continual improvement. • Furthermore, the transformation road map will have compressed timeframes , given the ease with which the latest digital solutions can be scaled up
Social and demographic trends megatrends shape future opportunities & threats for our business… Non-Tech Trends Relevance for Supply chain of the future. • The shift from CAPEX to OPEX encourages to buy technology as a service, and leasing assets CAPEX to OPEX rather than buying them. Software becomes more important than hardware.. • In order to produce customized products, supply chain needs to become more agile (reduced Taylor made products batch size, closer to customer) • The drive for sustainability will require to make better use of existing assets with less Lack of Resources materialconsumption and better controlled processes • Knowledge may be lost because of experienced work force retiring. Digital technologies can help Aging population capture, reproduce and leverage skills, competence and experience • New markets are developing rapidly but lack the infrastructure and have very different distribution models compared to western countries. Entering and growing in these markets will require Emerging markets adapted supply chains Suppy chain need to share Iinformation online with customers and suppliers and need to build an Seamless commerce agile and consistent supply chain. B2B requirements will be similar to B2C in terms of transparency. 6
Technology trends …and five major technology trends will impact our supply chain Technology Trends Relevance for Supply chain • The IoT will enable - through the physical to digital to physical value loop - smart plants, Internet of Things/ which operate super-efficiently and are able to deal with small volume manufacturing of Industrial Internet customized products • Digitization of data will facilitate increased insights and overall visibility in the entire supply Digitization of data, tasks chain, including dependencies and opportunities. ISC can utilize this to improve OEE, OTIF, and processes RFT while spending time analyzing instead of searching. • BigData & other cloud services/analytics, offered now at a significantly lower price, enable BigData and Cloud potential to grow internal data science capabilities and make these capabilities within reach enabled tools & services of all. These tools are a prerequisite to digitize the end-to-end supply incl. replenishment and customer service • We can use technologies as robotics, virtual and augmented reality and artificial intelligence Autonomous control and to reach a level of advanced automation and autonomy will improve cost productivity and robotics quality consistency, while at the same time reducing HSE challenges • Advanced tools and augmented technologies will give access to adequate information in the Predictive Manufacturing supply chain to improve asset network utilization and increase process efficiency, including and Supply Chain increased insights in customer processes These tools and technologies will also enable utilization of digital market places e.g. in replenishment . 7
Digital strategy build-up: Understanding where we are in our company: “ Digital Maturity assessment ” -DMA. 1. 2. Define Supply chain Vision (company digital vision) “ Detailed ” Roadmap (supported by pilot projects) with- Exisitng digital initiatives and new 3. digital initiatives- Identification of key critical success factors. 4. Small pilots (preferably with end to end scope) with business case upfront. 5. Fast Segmented rollout and capability development. Supply chain digital transformation is about establishing a vision how digital operations wil improve service, cost, agililty and inventory levels aligned with the overall company strategy. 8
Why to start with a digital assesment in our manuf sites? • Despite all the good work in all sites year on year, our today´s operations in the majority of our sites still show nice value opportunities for the challenges ahead (service, costs, capital, Agility) • In general we always can find in most of our existing manufacturing sites : old equipment-not standarized, many screens in production environment and they are not all active, OEE systems switched off, manual work, daily management through many systems via excel spreadsheets, low level of local process visualization ,… • There are always examples of areas that even through lean implementation, we still run in a suboptimal way : “ Production scheduling not connected to ERP systems and managed via Excel spreadsheets, lack of process control and extra testing , lagging OEE automation, excessive paper work ”. More mature digital operations can help to improve service, efficiency, inventory, Agility even when lean principles are in place.
Assessing the digital maturity of your today´s operations Purpose: The assessment gathers input from the different manfuacturing sites: - Get an overview of the current level of Digitalization to all sites. - Get a single source of truth and baseline for future Digitial initiatives implementation. - Check applicability of each POV for the different sites (calculate value contribution per POV and per aplicable site) - Define a deployment plan for the different sites and for the different POV´S Scope: - Evaluate level of digitalizaion of each process step in the Manufacturing processes (different product groups) - Evaluate level of digitalization of the support processes ( quality control, Scheduling, maintenance, Internal logistics ,…) - Current ways of collecting/anaylising data/ systems in place and associated costs. Experience: Digital Manufacturing assesment is a crucial value for delivering Value but it is only a first step. DMA does not cover: Linking and combining cross-functional data (i.e. inventory, shipments and scheduling), uncovering origins of performance problems and provide ERP systems/APO,WH updated info that can be gathered by other dempartments , or forecasted demand and performances with advanced analytics.
Typical Results of the digital assesment on bigger organizations with relevant number of sites.. • The majority of the sites Will show a digital maturity of 20-40% , and overall it Will be showing a normal distribution leaning to the Digital matuirty % of sites 70 left. 60 50 40 • The digital assessment needs to be 30 implemented for different categories 20 meaningul for future implementation and 10 value creation (typically for the different process steps along the manufacturing 0 DMA <20% DMA 20%- DMA 40%- DMA 60%- DMA 80%- process and also for the different support 40% 60% 80% 100% functions:). • Although overall averages are normally rather low in digital maturity, there are always positive deviations in different sites ( Best in Class Internal) that supports the quick roll out as there is the possiblity to learn from each other.
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