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Is digital the way to world class?

The potential to improve productivity in NZ is enormous and the early adopters of the right digital technologies will be the big winners.

- Ian Walsh, Partner, Argon & Co

 

I am pleased to say that over the last couple of years there has been a growing interest in the use of digital techniques and tools in NZ. However, it is imperative that we build this understanding rapidly so good decisions can be made.


The potential to improve productivity in NZ is enormous and the early adopters of the right digital technologies will be the big winners.


There’s been a lot of confusion regarding the terminologies and descriptions that come with digital adaptation. Industry 4.0, Lean 2.0, Internet of Things (IoT) and suchlike being used to describe it, and with all this jargon it’s no wonder that a lot of decision makers are scratching their heads.


But the questions they are asking are quite simple: What is it? What does it do? How will that help my business? What does it cost? How hard is it to implement and maintain? These actually are the same questions most businesses would ask about any initiative or capital purchase.


As with many shiny toys to ‘upgrade’ our businesses we sometimes get lost in the features rather than the benefits. Being able to collect data in real time might be cool, but if it does nothing other than add cost to your bottom line then it is also waste! We’ve all heard a story of excessive spend on IT with little to show for it. Hence why the uptake has been so slow, with business owners wanting to understand the benefit before committing any capital.


The fundamentals are still the same. Having good continuous improvement framework, process understanding, and business structures are the cornerstones of a successful digital journey. As with more traditional Lean methods you must understand the customer and the value they will pay for, then align your initiatives with delivering that value faster, at a lower cost and more reliably.


It’s then easy to determine what technologies and approaches might be best throughout your value stream and the cost/benefit equation to prioritise them, test and scale rapidly. For example, we installed a process data capture system on a production line in under 2 hours, and could have extended to 20 lines in a day. 20 years ago, that would have taken months and the data would have been hard to report or use. Now it comes in preconfigured graphs and templates.


But while that sounds great, if you don’t use the data to solve problems, de-bottleneck processes and drive improvement, then it’s still no use.


However, it is imperative that we build this understanding rapidly so good decisions can be made. The potential to improve productivity in NZ is enormous and the early adopters of the right digital technologies will be the big winners. [As a business manager, you will have to take charge of that journey yourself because even though we know there are benefits there is not much Government support in NZ with only $20m in the budget for the next 4 years to fund digital technology growth. That will hopefully change in early 2023 as the drafted Digital Technologies Industry Transformation Plan is finalised.]


So here is the high level approach for a digital continuous improvement journey:

  1. Assess your process maturity (do you have good process maps, management structures and CI framework in place?)

  2. Have you done customer research on value as perceived by customers (why do they choose you versus your competitors, what do you do better? Think about why most people fly Air NZ on main routes)

  3. Develop a value stream map and identify the constraints/bottlenecks/problem areas

  4. Review (ideally with a digital business partner) what technologies will help (artificial intelligence, machine learning, process automation, data capture automation) etc

  5. Build a cost/benefit analysis for each of these

  6. Build a timeline, resource, budget for each of the viable ones

  7. Prioritise the initiatives

  8. Engage a business partner to help and review funding options

  9. Start

  10. Check and adjust (as with any CI program plan, do, check and adjust as per my last article)

The best time to start this journey is now, even if you need to do some groundwork, as the gains can be very significant and in our now labour-constrained environment, improving productivity is a must for any business owner.


Argon and Co, is in Gartner’s top 2 digital consultancies globally.

Want to know more, drop an email to scott.adams@argonandco.com or mobile 021 389 426


Read this article, as published in NZ Manufacturer

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