IndustrialTransformation: Reimagining Continuous Improvementwith Digital

• LNS Research Overview

• The Digital Transformation Framework• Business Case Development

• Operational Architecture

• Operational Excellence

• Reimagining Continuous Improvement with Digital Tools

• Recommendations©LNS Research 2018

Agenda

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Our differentiators:

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About LNS Research

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Sample Members: Spans Discrete, Batch, and Process

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Analytics that Matters Research

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Industrial Transformation

IIoT is no Longer Hype

60%+ of companies have launched or are planning formal  Industrial Transformation initiatives.55%

22%

7%

16%

48%

27%

8%

19%

36%

24%

15%

24%

0% 10% 20% 30% 40% 50% 60%

No Plans

Planning to Adopt

Budget Established

Implementing

IIoT Technology Adoption Plans

2018 2016‐2017 2014‐2015

©LNS Research 2018

Digital Transformation Framework

Are companies setting themselves up for failure?

©LNS Research 2018

Business Case Development Framework

There are many similarities and common points of failures across industrial transformation business cases.

©LNS Research 2018

Similarities across Business Cases

• Time Frame: 3‐5 Years

• Return: $300MM+

• Justified mainly through associating specific cost savings and productivity improvements to traditional areas of operations

©LNS Research 2018

Business Case Gaps

• Depends on step change in effectiveness of Continuous Improvement initiatives.

• Possible only if value chain can be holistically optimized in the context of financial performance.

©LNS Research 2018

IT‐OT Convergence and Operational Architecture

• Multi‐Faceted: People,Process, Application, and Data

• Data Issues to Consider• Cloud, On‐Premise, Edge

• Type of Analytics Model

• Type of Data

• Application Issues to Consider• Role of Platforms

• Suites vs. Point

©LNS Research 2018

Cloud, Edge, and On‐Premise

Slightly ahead on cloud and behind on Edge.

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Industrial Analytics Types

Slightly behind on AI/ML.

©LNS Research 2018

Industrial Analytics Sophistication

No correlation between AI and Predictive.

Prescriptive well behind predictive. 

©LNS Research 2018

Understanding Operational Excellence

• Brings together people, process and technology capabilities

• Includes Management Systems, Metrics Programs, and Continuous Improvement Processes

• Drives Change Management and Corporate Culture

©LNS Research 2018

Reimagining Continuous Improvement with Digital

Process industries have a Digital Disconnect for Continuous Improvement.

Reimagining Continuous Improvement with Digital

©LNS Research 2018

Digital DMAIC

A common operational data infrastructure and workflow to drive holistic continuous improvement across the enterprise

©LNS Research 2018

Digital Shift Meetings and Kaizen

Moving from whiteboards, to point software, to enterprise wide mobile enabled applications that enable information handoffs, root cause analysis, and optimization.

©LNS Research 2018

Virtual Gemba Walk

Management and subject matter experts can’t always be onsite. AR/VR can make walking the floor a reality from anywhere.

©LNS Research 2018

Harmonized OEE and Other Operational Metrics

Eliminate differences in metric calculations and data quality across sites, enables accurate benchmarking across the business

©LNS Research 2018

Impact of Digital CI on Analytics Sophistication

Digital CI is highly correlated with Analytics Sophistication

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Impact of Digital CI on Cloud and Edge

Digital CI is highly correlated with Cloud and Edge

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Impact of Digital CI on Metrics Improvement

Digital CI is highly correlated withprocess improvements

Average Metric Performance With Digital CI

Without  Digital CI

Successful New Product Introduction 78% 70%

Net Profit Margin 25% 20%

Improvement in Cycle Time 30% 11%

Improvement in Change Over Time 32% 14%

Improvement in Throughput 29% 17%

Improvement in Yield 26% 10%

Recommendations

• Start on the Digital Transformation Journey

• Leverage a framework to manages the process and align strategic initiatives, operational excellence, and architecture.

• Avoid the common business case pitfalls: local optimization and not engaging culture change.

• Use investments in new architecture and Digital to reimagine Continuous Improvement

©LNS Research 2018

Recommendations

Thank You!!

Matthew LittlefieldPresident and Principal Analyst

LNS Researchwww.lnsresearch.com

101 Main Street, 14th FloorCambridge MA 02142

TEL 413-374-1817matthew.littlefield@lns-global.com