The journey to intelligent operations for industrial
March 5, 2021
Our recent research on intelligent operations shows that when it comes to being ready for the future, industrial companies are behind other industries, such as insurance, high tech, automotive, consumer goods and services or banking.
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Industrial companies operate in markets that are historically quite cyclical. For many, when a down cycle was imminent, they would use various tried-and-true methods to respond to the environment that was in front of them. This approach would often require brute-force cost reduction or, in some cases, any necessary actions that would ensure supply was available to meet demand, no matter the consequences. But, in today’s digital world, these methods may not get the job done any longer, or at least they will not allow industrial companies to respond efficiently to their customers and stakeholders.
Instead, to stay relevant, industrial companies need to embrace a shift in mindset, from a manual, brute-force approach, to a forward-looking one with human+machine orchestration, where insights and predictions drive artificial intelligence and analytics-fueled operating decisions. To catch up with the times, they will need to leverage data, attract and utilize talent with analytical skills, and invest in technology platforms that bring these insights to life. Changes need to happen now, at scale.
Let me expand on this:
1. Data makes the world go round.
“The world’s most valuable resource is no longer oil, but data,” The Economist said. Never has this become more evident than during the challenging conditions of 2020. This was a change that Mike Cuddy, Vice President IT and CIO at Toromont Industries, discussed in our inaugural Industrialist Live series.
As Mike noted, creating value for the customer based on new digital capabilities has become even more crucial during the pandemic. Companies needed to leverage the vast amount of data available to them to help them predict what will be coming down the road so they can meet and exceed customer expectations that are as high as they have ever been. As Mike commented, this is a shift from simply selling a product, to selling the outcomes that a customer expects and delivering those outcomes exactly when the customer needs them.
Data is now available like never before. Not just operational data from ERP systems or customer data from point of sale systems, but the broad sets of external data that companies may never even think about when trying to predict demand patterns and prepare supply to meet these patterns. For example, finding leading indicators from what is happening at the consumption end of value chains could provide invaluable information to predict when demand can take off for industrial products. This kind of creative thinking about KPIs and business outcomes indicators (BOIs) will allow industrial companies to proactively fire up their supply chains and avoid last minute surprises.
And yet, not all industrial companies implicitly rely on and leverage data at scale. Many of them currently operate under the strain of legacy back office support entities, which can be slow, reactive and focused on reporting on what happened in the past vs. predicting what will happen in the future. Yet, some leaders in industrial companies are pivoting. They are creating support entities that are forward-looking service providers to their business partners. All industrial leaders need to follow their example.
In addition, there is a difference between collecting the data and knowing how to use it for insight-driven optimization and growth. Many industrial companies struggle with this. Only 4% of the surveyed industrial companies use data at scale today (See Figure 1). This is indicative of the fact that, for many industrial companies, data is siloed, fragmented and inconsistent, and scattered across many ERP systems.
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There is good news, however. As Figure 1 also shows, in the next three years, all industrial companies surveyed intend to move towards better data management and mining, with up to 40% of respondents indicating the desire to move to using data at scale.
2. Mind the talent gap.
The question on the minds of so many industrial companies is how to turn all of the data that they have at their fingertips into valuable insights and the right set of actions? This migration from data to insights and actions can be tricky. This is why having a well thought out talent strategy is so important.
Having access to resources with experience in analytics and data science will help industrial companies to differentiate between noisy data and real, informed actions that are necessary. Many companies are retooling talent. Others are looking at the market to bring in new talent. And some are working with ecosystem partners to access insights as a service. Regardless of the approach taken, it is important to make sure that the right talent is in place. This is even more important than getting access to the data.
3. Leveraging technology can make all the difference.
This is all great. The data is out there. Organizations are pivoting to be more forward looking and predictive. There are options to access the talent that is needed. In addition to all of this, industrial companies need to think about the role that technology plays in getting them to truly have “intelligent operations.”
For many companies, while the data is out there, it is siloed and fragmented across numerous ERP systems. Rationalizing and consolidating ERPs and other systems is certainly part of the story. However, these journeys take a long time. Given the expectations that customers have today for speed and responsiveness, coupled with the volatility that exists in the global market, industrial companies cannot afford to wait.
Today — as we discussed in our recent point of view The Cloud Imperative for Industrial Companies — cloud and data/insight platforms can help with managing the complexity of the fragmented data with some urgency. Together with intelligent operations, these cloud solutions can co-exist with the current legacy ERP environments and can serve as a data platform to enable industrial companies to become more forward-looking and predictive.
Since the pandemic has accelerated change and created urgency for industrial companies to act fast, manual processes and brute-force approaches to optimization will not trigger the needed changes fast enough. A key to winning in today’s industrial marketplace is focusing on intelligent operations, and for that, industrial companies should focus on a shift in mindset to a adopt a new industrial culture that leverages data at scale, includes an agile workforce, and benefits from a sustained investment in technology.
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"The time to act is now, operations can be a catalyst for competitive advantage, transformational value and growth, but this only works if industrial companies think big — transforming how the work gets done across data, technology, processes and people."
Yanis is the global lead for industrials at Accenture Operations. In his 21 years at Accenture, he has worked across a number of industrial sectors including aerospace, defense, communications, media and technology. He leads a group of Operations architects shaping complex multi-tower transformational solutions and is the France and Benelux market unit lead for the Accenture Operations Service Group. Reach out to Yanis via LinkedIn.
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