Manufacturing and IoT
In 2015, McKinsey Digital surveyed manufacturing companies and shared the results in a report titled “Industry 4.0, How to navigate digitization of the manufacturing sector”. In this 62-page document, the authors describe how manufacturing companies will benefit from the value they create by implementing digitization methodologies throughout their enterprises.
To make sure we are all on the same page, as they say, here is the basic premise –
“McKinsey defines Industry 4.0 as digitization of the manufacturing sector, with embedded sensors in virtually all product components and manufacturing equipment, ubiquitous cyberphysical (physical-to-digital converted) systems, and analysis of all relevant data.”
Here are the eight value drivers in a typical Manufacturing company, including the McKinsey estimate of the improvements resulting from digitization and examples of specific changes that will yield these improvements. This is what the Industrial Internet of Things is all about.
As you can see, the benefits can quickly become huge!
Why should a service executive care about Manufacturing improvements?
There are two reasons to care about Manufacturing gains:
- You are part of the same company, and Manufacturing costs are a large part of your company’s Cost of Goods Sold (CGS). Any gains help the company’s bottom line (and probably your bonus).
- Changes in production processes will not only directly affect your service business, but Service and Manufacturing share standard procedures, etc., so Service can learn from Manufacturing and enjoy some of the same gains.
Examples of where you can copy Manufacturing to improve your Service business:
- Suppose your company earns considerable savings from reducing equipment downtime using remote monitoring and maintenance. In that case, you should be working very hard to offer those same benefits to users of your products. And for credibility, you can share your company’s experiences as you roll out these new services.
- If your company starts in-house production of mechanical parts using a 3-D printer, then you may be able to copy them and reduce your service inventory. And remember that one of the short/medium term goals of some other businesses, like the UPS store, is to offer 3-D printing so you will not have to own printers.
- As your company improves at using SQC techniques, you can implement similar strategies to reduce customer dissatisfaction and improve your first-time fix rate.
- Staff levels can be predicted using techniques similar to those that will drive supply/demand matching gains. Think about having an excellent idea about how many technicians you will need to provide your committed level of call center service in sufficient time to schedule overtime, reschedule time off, or redirect calls to remote employees proactively.
- Customers will quickly purchase new services because they, and other customers, played a significant role in co-creating and testing them out.
The future
Either the Service Executive or a key senior member of her team should offer to help Manufacturing implement many of these improvements. Not only will you learn about their projects, but you may also create enough goodwill to get assistance when you are ready to move forward on your improvement initiatives.
And it is the right thing to do!
About Middlesex Consulting
Middlesex Consulting is an experienced team of professionals with the primary goal of helping capital equipment companies create more value for their clients and stakeholders. Middlesex Consulting continues to provide superior solutions to meet the needs of its clients by focusing on our strengths in Services, Manufacturing, Customer Experience, and Engineering. If you want to learn more about how we can help your organization create more value for your customers, please contact us or check out some of our free articles and white papers here.