Digitalising the industrial machinery sector
17 December 2018
At a breakfast meeting at the Goring Hotel in central London, hosted by Siemens, 15 senior business leaders gathered to discuss the future of the industrial machines industry and how it’s being transformed by digitalisation.
In essence, digitalisation involves capturing, processing and sharing data more easily, more quickly, and more effectively. Ultimately, business processes become more efficient.
But while cost is often the main driver of digitalisation, with organisations using technology to implement savings through just-in-time inventories or predictive machine maintenance, technology is more powerful when it is used to enable businesses to develop stronger products and services.
Obstacles to digitalisation
However, despite the accepted benefits of digitalisation, there are considerable obstacles to its implementation. This is shown by the low demand for “Industry 4.0” in the UK compared with France and Germany. Why is this?
Weak use cases
The use cases for digitalisation are often little explained. Decision makers must be able to visualise real end-customer benefits. Case studies are needed that demonstrate successful investments. In the UK, unfortunately, we seem reluctant to share our experiences.
Short-termism is another problem, with investment committees in the UK frequently demanding a positive ROI on technology investments within, say, two years. This is surprising given that money is currently very cheap.
Another problem is managerial mindset. Managers are often focused on ‘traditional’ working methods, they fear technology may displace them. They associate technology with risks, such as cyber breaches; managers don’t want to be blamed for problems caused by technology when using established processes is less risky.
The lack of appropriate engineering skills may also be an issue. For instance, mechanical engineers may understand the significance of a particular set of data, but may lack the ability to use that data to improve a system’s performance by integrating the data within the system. There is a strong need for engineers with a more cross-functional skill set, such as those provided by mechatronics courses.
Making a success of digitalisation
Manufacturing represents 11% of the UK’s Gross Value Added and is responsible for 44% of our exports. To maintain and improve this position, making a success of digitalisation is essential. How can this be achieved?
The right objectives
Digitalisation should be thought of as creating value rather than reducing cost. Businesses need to think about how they can use technology to make products better, rather than more cheaply.
Data visualisation techniques can be used to explain the benefits that accrue from technology. And the wider organisational effects should be illustrated, with a picture painted of greater competitive strength, not just an increase in sales.
The right incentives
Management incentives are also important. Where managers are incentivised to solve today’s problems, they will focus on quick fixes rather than on the longer-term opportunities derived from technology.
Collaboration across roles should be encouraged. No one person can ever have a complete picture of what is happening in a business. If pragmatic solutions are to be found for real life problems, collaboration across roles is essential.
For digitalisation to succeed a culture of innovation must be fostered. So how can innovation be encouraged in organisations?
- Filter effectively. Innovation programmes can deliver large numbers of ideas. These need to be filtered so that only a few of the very best ideas are selected for further development
- Fail fast. An important part of innovation is recognising when an idea is unlikely to bear fruit. This can only work where failures are regarded as experiments that add to the body of knowledge
- Trust people. Innovation thrives when people are trusted. Give them the tools to experiment with new ideas and get rid of unnecessary governance
- Be open minded. Innovation frequently challenges “the way we do things round here”. So being prepared to take new ideas, irrespective from where they come from, is essential
The right skills
The UK needs to develop the right skills that will allow digitalisation to thrive. We need to start this at primary school, encouraging an interest in technology by demonstrating how simple machines work. Toys such as Lego and Meccano can teach children basic engineering skills, while they play.
And we need to continue at secondary school. Innovation is key in all of business. Why then do we ‘teach out’ innovation at secondary school by forcing children down predefined channels, focusing on knowledge retention rather than problem solving?
And of course, tertiary education is also key. Happily, the obsession with degree level education is waning. Being an apprentice is an excellent start to a career and many business leaders started as apprentices.
But where young people do go to university, their courses need to be relevant to a digital world. This is especially true in engineering subjects where we seem to be teaching students to compete with computers rather than collaborate with them. At least as important as engineering knowledge are team work, communication and creative problem solving, skills that are often ignored at university.
UK engineering and the industrial machinery sector has been a success story for many years. Digitalisation will help keep it so. But there is a reluctance to invest in digital technology. Rolling out digitalisation across industry, especially the SMEs that make up such a large part of our economy, is essential. And with the right support and the right approach to innovation, we can succeed in maintaining the UK’s leading place in engineering and machine design.
For more information visit www.siemens.com