Capitalizing on Connectivity: The Top 5 Priorities for Industrial Manufacturers

Capitalizing on Connectivity: The Top 5 Priorities for Industrial Manufacturers

Report by Booz Allen Calls for Decision Makers to Embrace Technology and Analytics to Improve Customer Experience, Optimize Operations.

Industrial manufacturing is in the midst of a disruptive shift, with a landscape that is markedly different from even a decade ago. Today’s machines are increasingly brainy and interactive. Sensor technologies, automated controls, and advanced design software are becoming intrinsic to manufacturing. These developments are transforming the way businesses operate, resulting in profound gains in performance and productivity, says Booz Allen Hamilton. At the same time, these opportunities bring new risks.

Booz Allen Vice President Sedar LaBarre, says:

“For hundreds of years, humans and machines have worked together. But something peculiar has happened recently: the machines are now speaking to us – and to one another. While the potential is enormous, the associated challenges could result in manufacturers missing a prime opportunity.”

In today’s Internet of Things environment, manufacturers need a new breed of engineering expertise, the ability to constantly operate in startup mode, actionable insights into the supplier environment, and digitally-focused business models to capitalize on newfound customer intelligence. By understanding their full ecosystem, manufacturers can gain the confidence to move forward and capture opportunities to innovate, differentiate, and leverage existing assets in new ways.

At the Manufacturing Leadership Summit (June 2-4), senior leaders from Booz Allen will discuss the five priorities for industrial manufacturers to consider in FY15—and beyond:

1. Harvest and integrate production data to optimize operations

Everyone recognizes the power of data. Many companies have started to implement sensors across their production environment, collecting reams of new data with the potential to markedly improve throughput and reliability for factory operations. As illustration of the scale, Berg Insight recently reported that the number of connected devices in industrial automation reached 10.3 million in 2014, with that number expected to grow to 43.5 million by 2020. Yet, many organizations are still struggling to reap efficiencies and insights from this data because they haven’t created the proper technical and decision-making structures to organize and analyze data for real business value. The old model of collecting data and waiting for it to provide an answer is insufficient. What’s required now is a focused and pragmatic approach to harvesting and integrating data.

Manufacturers must sort through the noise to find the value hidden within signals and patterns that tell stories of what’s happening or will happen with production equipment. The best organizations are using technology to connect their machinery—grabbing data and turning that into insights to drive decisions around business optimization. Forward-thinking industrial manufacturers are embracing this opportunity. For example, smart tractors today can fight fungus and adjust soil acidity to increase crop yields and save farmers money, while smart cities can leverage digital inputs from citizens to improve traffic and pedestrian flow, thereby reducing congestion and saving valuable resources. Not only are today’s best connected products easily integrated into local architectures, but these architectures can now evolve in real time as they analyze new data. The future lies in leveraging this information to optimize internal processes and drive toward higher margins.

2. Use real-time analysis to improve the customer experience

Large manufacturers have traditionally faced challenges in collecting reliable data to understand and adjust to the needs of end users. While surveys have been common in the industry, the data that was collected was expensive, difficult to acquire, and frequently unreliable. What’s more, the time required to collect such information made it unlikely that a company could incorporate any lessons learned into its current production cycle.

Today’s data analytics capabilities represent a new frontier for customer satisfaction. The ability to collect and analyze customer usage data in real-time allows manufacturers to make quick adjustments that improve their products and the customer experience. For example, remotely collecting usage data on farms from deployed windmills can reveal shifting wind conditions and immediately allow a remote operator to optimize the degree of effort that specific windmills are exerting within those farms. These metrics allow companies to not only fix current products but also add new features to products that customers want—even if they haven’t said so. Companies that understand this paradigm, invest in the capabilities to enable data capture and analysis, and work with customers to ensure its value will thrive in this new environment.

3. Design a dynamic cyber program to match your connected environment

The manufacturing industry is transforming, with innovations in speed, autonomy, quality, and customization. Leaders increasingly rely on embedded technologies, connectivity, and automation to make smarter factories a reality and provide more intelligence and precision than ever before. In addition, Information Technology (IT) and Operational Technology (OT) environments are more intertwined, as connections are made to meet business needs. These connected capabilities present profound revenue potential, but they also require a new level of trust with your customer. A strong cybersecurity program protects that trusted relationship, enabling the promise of the connected product. This isn’t just about compliance; it’s about realizing business opportunity.

In short, don’t simply defer to the cyber experts. Successfully managing cyber risks in today’s increasingly connected industrial environment cannot be achieved by adopting traditional IT approaches alone. Your cybersecurity approach should be custom-fit to your unique requirements. It requires a combination of industrial and technological know-how, plus a collaborative, multi-disciplinary mindset to protect both the “right” physical and data assets. Industrial manufacturers must develop a cybersecurity strategy to holistically address the people, processes, and technologies that are unique to your business, and in a way that is agile enough to respond to the shifting landscape in which you operate. In the end, your customers are buying your product, your brand experience – not your approach to cybersecurity. A strong cybersecurity program working in the background keeps the focus where it most benefits your business.

4. Work directly with suppliers to reduce cyber threats

Supply chain functions have traditionally been seen as internal operations, but that’s starting to change in today’s connected society. As we’ve seen in several major breaches, such as those in the retail industry, supply chains represent a significant cyber threat, with potentially damaging business impacts. Today’s suppliers are interconnected digitally with the companies they supply, with a network of software and hardware components that are sourced from a broad global market. If your supplier networks become infected, you become infected, and possibly your end customers, as well.

Without high-confidence visibility into your supplier tiers and security levels, it is difficult—if not impossible—to understand whether inbound materials or systems have been compromised. While addressing supply chain cybersecurity should include a risk and maturity assessment, it ultimately begins with understanding your supplier network. By building relationships with your suppliers, you can work together to track key risk factors—such as ownership, manufacturing locations, supplier relationships, and the available attack surface. You can begin to implement continuous monitoring throughout the product lifecycle, perform deep multidimensional analytics with open source tools, and eventually expand your scope of vetting to include subcontractors. Ultimately, these new processes help protect your end users and set up your business for long-term success.

5. Close the skills gap to compete with high-tech

As manufacturing evolves and business models become more connected, this creates the need for a new breed of talent—one that embraces computer science as much as mechanical engineering. The next generation of manufacturing talent must enable digital factories to flourish, protect supply chains from cyber intrusions, and bring high-end embedded analytics to products deployed in customer environments. But manufacturers face strong competition from high-tech companies in recruiting this talent, posing a significant risk to the future of the industry.

To compete today—and in the future—industrial manufacturers need a talent management strategy to recruit, develop, and retain the workforce of tomorrow. Leaders must transform the manufacturing brand to be more attractive to the new generation of talent, build a culture of innovation to celebrate forward thinking, and foster employee engagement to create an environment that allows individuals to thrive. Industrial players who think boldly and take action now will outpace their competitors—both traditional and emerging. One prominent trend is how certain automakers are establishing dedicated points of presence in Silicon Valley, with a focus on re-branding legacy images and also getting involved in venture financing of emerging technologies that may shape the future driving experience. With so much convergence and disruption, manufacturers need to grasp this opportunity to re-cast legacy images and make their environments appealing to coveted high-tech talent.

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