Operational optimisation is nothing new. As far back as the 1960s companies were using machines and data to streamline various processes. But the world has moved on since the days of paper-based systems, early computers and the emergence of manufacturing resource planning and enterprise resource planning systems.
Now the cloud and the internet allow us to stream vast quantities of data instantly, from and to any global location, and not just from computers and machines connected to the internet of things, but from external sources, for example, weather patterns that facilitate more accurate forecasting. Add to this the global connectivity that now exists on an unprecedented scale, driven by 5G networks, which achieve speeds much faster than the internet of even five years ago.
Combined, massive data and hyper-connectivity enable systems within an organisation to not only make better decisions, but to automate them, setting the scene for intelligent automation or digital operational optimisation.
At IFS we are embedding machine-learning, robotic process automation (RPA) and operational optimisation within our application to enable the automation of more processes and to allow those processes to make more sense of what we do. For example, we are helping food companies to better predict what they will actually achieve in terms of accuracy and forecasting, seeing outcomes of a 13 per cent or more improvement over their current forecasts.
The real game-changer in operational optimisation will be the ability to digitally duplicate the entire business operations, creating a digital twin
Operational optimisation can be applied to any process, not just the manufacturing processes of making things, but within every aspect of an organisation’s operational ecosystem, from business planning to the way you serve your customers.
A good example of this is Jotun, a coatings manufacturer headquartered in Norway, whose biggest market is the coating of ship’s hulls. The company installs software on the vessel to measure its performance by tracking relative changes in the relationship between the power delivered to the propeller and speed through water over time. Knowing exactly when the ship needs to be taken out of service to be painted is critical and Jotun has optimised this process to deliver a much more efficient performance per cost, a major win-win for the company and its customers.
The business world needs to accept that this is the way forward, yet a study by IDC1 found 47 per cent of manufacturing companies are not embracing any of this technology, which is difficult to understand. MIT research2 has shown business that do adapt to a digital world will be 26 per cent more profitable and deliver 9 per cent greater revenue, which is what operational optimisation is all about. An IDC survey3 revealed that simply by using our solution, IFS customers across the board achieved an 18 per cent net productivity increase. That is hugely significant.
We have the tools and the capability to optimise our business operations like never before and there is no logical reason for not embracing these to improve revenues, reduce costs and create a competitive advantage.
Some companies have concerns about the costs of investing in these technologies, even though heightened connectivity and readily available high volumes of data have made many of these digital optimisation solutions more affordable.
There are other more important business cases for adopting digital operational optimisation. Issues such as climate change, carbon reduction, sustainability, transparency and traceability sit right at the top of the business agenda and are integral to the entire operational structure.
If you don’t demonstrate these things from a tangible operational point of view, by implementing digital optimisation technology, you will find it harder to secure investment and attract talent, let alone trade your products in markets where sustainability targets apply. If you are not continually trying to optimise what you are doing as a business, you will be overtaken by others who are. And as this technology evolves, the gap between adopters and non-adopters will only widen.
We have some amazing technology underpinning operational optimisation, including 3D printing, co-bots, smaller more flexible robotics working alongside humans and nanotechnology that can track materials using near-field communication networks to sense products automatically, dispensing with the need for barcodes. We are also seeing hyper-automation, where all RPAs are connected, with amazing results.
However, the real game-changer in operational optimisation will be the ability to digitally duplicate the entire business operations, creating a digital twin, and that is just around the corner. A food company, for example, could model the following week’s production schedule. They have the costs of the raw materials, the costs of the manufacturing process and can model the variables, such as a sudden spell of warm weather or potential transport disruptions, to see the impact on output, staffing and the balance sheet.
We are optimally automating all processes and connecting them now. The ability to model the whole business accurately, not just today, but several days ahead, is in effect optimising in the future and the reality of that is not very far away.
1 https://www.superoffice.com/blog/digital-transformation/
2 http://ide.mit.edu/news-blog/blog/digitally-mature-firms-are-26-more-profitable-their-peers
For more information please visit www.ifs.com
