Blogs

Are manufacturing companies leveraging IT the right way

The role of Information Technology (IT) in the manufacturing industry is as pivotal as it is in other industries across the world. No matter the size of a company, IT is the growth engine that can help manufacturing companies to drive consistent and sustainable growth at scale with reduced efforts in a short time. The IT industry, having been established for several decades, has evolved significantly over time and continues to disrupt industries worldwide every two to three years. Post-COVID, it’s impossible to ignore the benefits of IT and dismiss the urgency of accelerating the journey towards its adoption. Agree? The COVID-19 pandemic significantly disrupted the manufacturing industry, bringing challenges such as supply chain disruptions, workforce shortages, and shifting consumer demands. However, it also accelerated innovation, digital transformation, and the adoption of new business models.

As we conclude and reflect on our journey in 2024 and make grand resolutions for 2025, let’s have a look at the IT adoption stories of two manufacturing companies.

Company A is a market leader that provides world class construction equipment to address India’s infrastructure and mining needs. It has manufacturing plants in various states of India and is known for using state-of-the-art-technology and world class manufacturing. The company has an efficient ERP that seamlessly manages its robust supply chain network. However, their production had dropped significantly this year. Any wild guesses for the potential reasons?

The primary reason was the ineffective management of communication regarding production issues. The shopfloor staff, comprising management, machine operators, maintenance engineers, third-party employees, and contractors, faced challenges in effectively communicating critical issues with each other and key stakeholders. Their only shared and quick communication platform was WhatsApp, which limited efficiency and clarity. Anyone who notices an issue simply takes out their mobile phone, snaps a picture, and shares it in the appropriate official WhatsApp groups. Active group members take action or forward it to the appropriate person. Critical issues invite lengthy and sometimes casual discussions resulting in a flood of messages in the WhatsApp groups which lead to missing out on calling out the key action points. This haphazard process of reporting production issues leads to internal conflicts. Consequently, this resulted in higher MTBF (Mean time between failures), higher MTTR (Mean time to repair) and higher MTTA (Mean time to acknowledge). The seriousness of this can be understood by recognizing the number of missed issue reporting opportunities across all plants operating in various states of India.

How do we solve this problem? The IT team could quickly develop a mobile app to address this issue, but is that a practical solution? Creating an app is straightforward, but getting the shopfloor staff, who are not typically tech-savvy, to adopt it is a humongous task. In the meantime, the company will continue to suffer production losses which will continue to impact the Top Line.

Considering all the pros and cons, Dexian suggested a solution that is quick to implement without having to develop a full-fledged mobile app. It suggested the use of RPA bots that can create tasks from the conversations in the WhatsApp group and send trigger emails to the appropriate authorities. Sounds cool, eh? However, the proposal was heavily resisted by the IT team due to security concerns and the curse of being a legacy organization. Are we missing out on the bigger picture here? A classic example of leveraging IT for oversimplifying the problem.

Now, lets read about Company B.

Company B manufactures capital equipment. Considering the current scale of the business, the management has consciously decided to delay the start of their IT adoption journey. All their documentation including payroll processing is done manually. This approach has been impacting their business significantly. Procedural knowledge is lost as the employees continue to churn. Documentation related to goods transportation is also done manually. Consequently, erroneous entries have led to high penalties by various government bodies. Losses from these penalties have been a major blow to their PCL. It’s not only a lot of cash burn but also a loss of productivity. These losses are 3x of the amount the company would spend in implementing basic IT infrastructure required for their business.

Again, are we missing out on the bigger picture here? A classic example of underestimating the benefits of IT at a time when Artificial Intelligence (AI) is making waves.

Leveraging IT the right way means utilizing information technology strategically and effectively to achieve business goals, improve operational efficiency, and drive innovation. It involves aligning IT with organizational needs, ensuring its integration into core processes, and harnessing the power of emerging technologies to solve problems and enhance performance.

The bell curve below can serve as the guiding framework throughout your organization’s IT adoption journey.

The technology adoption curve is a model that shows the stages through which individuals and organizations adopt new technologies. The curve is based on research by social scientist Everett M. Rogers and his book Diffusion of Innovations. The five stages of the technology adoption curve are:

technology adoption life cycle for manufacturing industry

Innovators: (2.5%) These are the people who are eager to try and adopt new products.

Early adopters: (13.5%) These people enthusiastically embrace new products and services.

Early majority: (34%) These people adopt new technology after it has been validated by early adopters. They are more cautious and need more proof before making a purchase.

Late majority: (34%) These people adopt a new product only after seeing the majority does. They are sceptical about innovation and usually have constrained budgets.

Laggards: (16%) These are the people who are the last to adopt new technologies.

The chasm on the Technology Adoption Curve refers to the significant gap or barrier between the early adopters and the early majority in the process of technology adoption. This concept, popularized by Geoffrey A. Moore in his book Crossing the Chasm, highlights the challenge of transitioning from selling a new technology to visionary early adopters to gaining widespread acceptance among the pragmatic early majority. By addressing the needs of the early majority, companies can move past the chasm and achieve sustainable market growth.

Dexian is determined to help you solve business problems, discover hidden opportunities and bring about the change that matters.