Learnings and challenges for Digital transformation. Sergio Olivas - - PowerPoint PPT Presentation

Learnings and challenges for Digital transformation.

Sergio Olivas (AkzoNobel) -May 2019. Digital Manufacturing Conference with Axiom Groupe Barcelona.

A global paints and coatings company

€9.3 bln

revenue

124 manufacturing sites

150+

countries

34,500

employees

Asia Pacific Other regions South America North America Mature Europe Emerging Europe

Key brands:

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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)

Airbus APM Maersk Bosch Dell ExxonMobil GE General Motors Hapag Lloyd HP IKEA Kingfisher Leroy Merlin McDonalds Mercedes-Benz Nokia Philips Samsung Scania Siemens Tata Steel Volvo Whirlpool

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Some of our customers

• 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

Digital transformation: raising supply chain to the next levels.

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CAPEX to OPEX Taylor made products Lack of Resources Aging population Emerging markets Seamless commerce 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

rather than buying them. Software becomes more important than hardware..

• In order to produce customized products, supply chain needs to become more agile (reduced

batch size, closer to customer)

• The drive for sustainability will require to make better use of existing assets with less

materialconsumption and better controlled processes

• Knowledge may be lost because of experienced work force retiring. Digital technologies can help

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 adapted supply chains Suppy chain need to share Iinformation online with customers and suppliers and need to build an agile and consistent supply chain. B2B requirements will be similar to B2C in terms of transparency.

Social and demographic trends

megatrends shape future opportunities & threats for our business…

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Internet of Things/ Industrial Internet Digitization of data, tasks and processes BigData and Cloud enabled tools & services Autonomous control and robotics Predictive Manufacturing and Supply Chain Technology Trends Relevance for Supply chain

• The IoT will enable - through the physical to digital to physical value loop - smart plants,

which operate super-efficiently and are able to deal with small volume manufacturing of customized products

• Digitization of data will facilitate increased insights and overall visibility in the entire supply

chain, including dependencies and opportunities. ISC can utilize this to improve OEE, OTIF, RFT while spending time analyzing instead of searching.

• BigData & other cloud services/analytics, offered now at a significantly lower price, enable

potential to grow internal data science capabilities and make these capabilities within reach

• f 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

to reach a level of advanced automation and autonomy will improve cost productivity and quality consistency, while at the same time reducing HSE challenges

• Advanced tools and augmented technologies will give access to adequate information in the

supply chain to improve asset network utilization and increase process efficiency, including increased insights in customer processes These tools and technologies will also enable utilization of digital market places e.g. in replenishment.

Technology trends

…and five major technology trends will impact our supply chain

Digital strategy build-up:

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1. Understanding where we are in our company: “Digital Maturity assessment”-DMA. 2. Define Supply chain Vision (company digital vision) 3. “Detailed” Roadmap (supported by pilot projects) with- Exisitng digital initiatives and new 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.

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

• nly 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 left.

• The digital assessment needs to be

implemented for different categories meaningul for future implementation and value creation (typically for the different process steps along the manufacturing process and also for the different support 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.

10 20 30 40 50 60 70 DMA <20% DMA 20%- 40% DMA 40%- 60% DMA 60%- 80% DMA 80%- 100%

Digital matuirty % of sites

Not getting lost for implementation and assesing financial value

1-Collect a Big number of ideas from INTERNAL experts, users,..

2-Create a realistic PORTFOLIO MAP: Make it specific: POVs (new ideas) / DOT s (existing digital initiatives )

3- POVs / DOTs, reviewed & prioritized, in reduced number of roll-out clusters that bring value to your business/function

Eliminate duplicates Specify generic ideas Combine similar ideas Focus on value-add. Prioritize Cluster for roll-out

For the digital roadmap follow.

Segmented Rollout and capability development.

Recap Digital Manufacturing phasing Phase 1- diagnostic study and PoV´s Phase 2- Fast Deployment of PoV´s. Phase 3- extend your digital solutions to new POV´S Phase 4- New deployment of new PoV´s Tip: Always financialize the expected value out of PoV´s. Before going to next phase, ensure the savings of previous pahse are achieved and results can be sustained. Tip: Improve your PoV´s with CI and with new digital capabilities in our organization.

Digital plan of the Future. Architecture visualization

Data lake Advanced program interfaces

(+´s)

• Clear Process: Assessment+PoV + deployment+ new Pov´s with Business case upfront.
• Pick “your batltles” and deploy “faster”
• Define your ecosystem for future collaboration.
• Make sure that your digital infrastructure is aligned with CiberSecurity Policies.
• Cloud services :Identify your partners (i.e. Microsoft Azurre/ partnership with Siemens for

DCS-MES). Identify solutions that can provide data for different customers (existing services)

• Ensure and celebrate Success in PoV´s. Change mgt. Is key.

(low lights)

• Lack of anticipation, backlog of investment (we miss the data in our key processes hence it

is normal not to be able to take the right decisions a ). First step is always to get the data in your main operations: manufacturing, transportation.

• Digital maturity in Most of the industries is normally low: equipments, automation,…
• Process harmonization is missing – There are different ways of working
• Internal capabilities missing to drive CI in digital, to deploy. (they need to be created)
• Missing the overall digital company vision (funcitonalized) – top down approach.

To reflect (Take aways from the case)

Questions?

Thank you