Investing in technology
You need a business strategy
Investment in technology is too often seen as an end in itself. Economists and policy makers encourage manufacturers to invest more, expecting productivity to improve and provide a boost to economic growth. But they rarely point out what’s in it for manufacturers, or the potential risks.
It’s not uncommon, on the other hand, for manufacturers to invest in a new piece of equipment or a new software system and rarely use it. Indeed, there are a lot of 3D printers sitting idle today.
In fact, according to a recent Statistics Canada survey, a quarter of Canada’s manufacturers invested in some form of advanced technology over the past three years without any clearly defined business objectives in mind. Another 30% to 40% didn’t achieve their business objectives.
Companies that invest in technology without properly defined needs, business objectives, necessary skills and a system to manage the technology, will be very lucky to get a competitive payback.
Business strategies and models need to be reviewed and recalibrated on a frequent basis.
Customers, governments and stakeholders are more demanding than ever. Competition is intense, political and market risks are high and, technological capabilities are rapidly becoming more sophisticated. Business models, supply chains and entire industries are being disrupted by digital technologies; however, they’re offering manufacturers new opportunities to improve competitiveness and grow their businesses.
That’s why it’s surprising only 7% of Canadian companies regularly benchmark against their competition. It seems like a pretty good place to start understanding the competitive challenges, and how advanced technologies could be used to develop new, improved products and processes, and entirely new lines of business.
But technologies are only an enabling tool. The critical questions are: What are they intended to do, and how does that contribute to business competitiveness?
Manufacturers may have a number of different business objectives in mind when they invest in technology, such as cost reduction, process improvement, new product development, quality control, and improved health, safety and environmental practices. Identifying and customizing the most appropriate solutions to meet objectives in a way that maximizes value for customers while minimizing associated risks and costs is an important and challenging step.
Lean principles provide the best methodology I know of to define objectives and the purposes that determine how technology is deployed in a systematic way. Understanding what drives value for customers is crucial for developing new or more individualized products and services, and in determining non-value-adding activities that must be eliminated to attain peak operating efficiency.
Virtual design and simulation systems optimize products, processes and entire production systems; speed up product development and testing; enable greater product variation and operational flexibility; and engage customers in product and service design. Sensors and IoT networks enable data collection and real-time monitoring of operational performance. Computing power offers unprecedented capabilities to analyze data while harnessing algorithms to develop new products and services and predict performance. Automation and robotics eliminate bottlenecks, enable workers to focus on higher value tasks and speed up complex production systems. And smart materials used with new additive manufacturing, biotechnology, nano- and micro-manufacturing processes are enabling a new generation of complex, smart products and, some say, ushering in the next industrial revolution of the human-technology interface.
But technologies will deliver the best results only if manufacturers are aware of what customers value and how those technologies improve the way value is delivered. Lean is an effective guide for technology deployment and provides a framework for demystifying and assessing the potential of digital technologies in manufacturing. It helps determine the types of new products and services that provide a better solution for customers, the processes and systems that need to be reconfigured to eliminate constraints and optimize performance, the most important data to collect and analyze, and the skills and management systems required for successful execution.
It’s all key to unlocking the exponential value of advanced technologies and meeting business objectives.
Jayson Myers is the CEO of Next Generation Manufacturing Canada. The award-winning business economist and advisor to private and public sector leaders was president and CEO of Canadian Manufacturers & Exporters between 2007 and 2016. E-mail email@example.com. Visit www.ngmcanada.com.
This article originally appeared in the September 2018 print issue of PLANT Magazine.