How to properly kick-start a company's digital transformation

The COVID-19 pandemic has highlighted the challenges of doing business in a global and volatile economy. The coronavirus crisis and its aftermath have highlighted the need for manufacturing and logistics companies to transition to flexible and digital operating and business models.

The state of emergency has required adapting normal operating procedures to the new situation inside the company (the need to maintain social distancing) and outside it (disruptions to supply chains). Under the influence of extraordinary circumstances, consumer behavior has also changed significantly almost overnight.

Many companies have failed to respond to the prescribed anti-epidemiological measures in a timely manner. As a result of the lack of flexibility of operating models, they have had to close their doors, which has put production operations into an unwanted state of hibernation.

Companies that have managed to adapt key business and operational processes to the new situation have found themselves in the opposite situation. This applies in particular to companies that, thanks to the deployment of customer portals or the change of the original distribution model – from B2B to direct-to-consumer deliveries – have faced an onslaught of orders.

The global pandemic is one of the many factors in today’s globalized world that can significantly affect the normal operation of any business. In addition to public health threats, businesses must prepare and adapt business processes to operate effectively in an environment that is shaped, among other things, by:

• geopolitical events with direct business consequences (such as Brexit),
• economic conflicts between great powers (the Sino-US trade war),
• and climate change.

The gateway to digitalization

There is no single panacea for ensuring operational efficiency in emergency situations. However, there are tools that can help a business respond adequately and quickly to various changes or market disruptions. Ultimately, most businesses that have managed to keep operations running during the corona crisis (some even thrived) have been greatly assisted by digital technologies.

Digital technologies are currently the carriers of an innovative approach, and many manufacturing, trading and logistics companies are already using them to achieve strategic goals more effectively. A crucial prerequisite for meaningful digitalization and embarking on the path of intelligent automation is to adopt the approach of viewing processes and managing them through data.

Every business needs timely and reliable data for the proper functioning of its regular operations. Digital transformation makes it possible to extract even greater value and benefit from the data obtained.

The gateway to successful digitalization of a company is therefore access to data and the tools for processing it. Data digitization is also becoming the basic starting point for building an agile company and deploying artificial intelligence technologies.

Digitalization in industrial production and logistics represents the transformation of traditional processes into more efficient digital systems, thereby improving several indicators of production, supply and other functions of the company, such as:

• increasing performance,
• shortening production and delivery cycles,
• increasing quality and eliminating errors,
• reducing waste (for example, by dematerialization),
• optimizing operating costs,
• improving user experience,
• more efficient supply chain management.

If a company is not building a new operation, but intends to digitize existing processes, it can start with the digital transformation by choosing a suitable pilot project. The digital transformation plan can therefore be based on a project that is relevant to one of the functional components of the company or operation. In this case, the company will create added value relatively quickly and at the same time can operationally scale and expand the pilot digitalization project to other processes in the corporate environment.

If the company does not yet have a defined digital transformation development plan, then the most meaningful first step regarding functionality and return on investment will be to implement production process monitoring. This solution should be deployed as a priority for material flow monitoring, which is also confirmed by practice.

The availability of fast and correct data at every level of management is becoming a necessity for the sustainability and efficiency of operations, especially in times of reducing production batches and increasing variability of customer orders.

Strategic priority of data

The engineering company TOMARK, which specializes in machining, forming, and cutting of metal materials and components for the engineering industry, has also taken the same path. Key customers include one of the largest European manufacturers of truck trailers, the German concern Bernard Krone, for which TOMARK produces the basic metal structure.

“Everything is done here, right up to export, we have all the latest technologies, robotized welding workplaces, but also the high responsibility of our experts,” says the founder, owner and CEO of the company Daniel Tomko.

“We make sure to use the latest technologies in the field of burning, bending and forming the necessary metal materials, welding, measuring, and checking, so that not even a millimeter “runs away,” explains TOMARK’s marketing specialist, Daniel Varga.

In 2006, the company expanded its production portfolio to include aviation with the TOMARK Aero division. The engineering company currently produces two types of all-metal aircraft – the Viper SD4 low-wing aircraft (awarded as Engineering Product of the Year 2011) and the Skyper GT9 high-wing aircraft (Engineering Product of the Year 2014).

“The company’s long-term goal is to build a modern, competitive company by investing in the latest technologies and in the development of employees as the company’s most important resources,” adds the CEO and owner.

TOMARK is also successfully fulfilling its plan to build and innovate the company by investing in digital technologies. The company is focusing on the robotization of production, for example by purchasing a robotized welding workplace using laser targeting.

With the same determination, TOMARK became part of the fourth industrial revolution when the company began to implement Industry 4.0 technologies and principles into its processes. The initial impetus for launching the digitalization project was the effort to increase the flexibility of operational processes, which would also be reflected in the flexibility and better responsiveness of business procedures.

TOMARK's customers and purchasers often changed delivery times or adjusted the quantities of products already ordered in partial orders. Therefore, it was quite difficult for the company's salespeople to plan the shipment and precise delivery of individual orders. One of the first projects that started digital transformation and intelligent automation at TOMARK was the monitoring of the status of orders in production.

ANASOFT, as a developer and supplier of information systems, and at the same time a project integrator, implemented the Smart Industry solution EMANS into TOMARK's business processes. Sales representatives of the engineering company thus gained access to the current status of customer orders through one of the functionalities of the modern system. Employees can thus plan delivery times more precisely and flexibly.

The basis of the solution was the introduction of electronic work signing-off at individual production workplaces and for all prescribed tasks in production. This is done through the intelligent EMANS information system designed for autonomous production and logistics management and their mutual effective coordination.

Monitoring the material flow also includes recording all components entering the production process, as well as all manufactured semi-finished products and assemblies that occur in the processes. An immediate benefit for employees and managers in the production operation is an immediate and accurate overview of the fulfillment of the production plan and the current status of individual orders.

In addition to tracking customer orders, the EMANS system creates a genealogy of manufactured products based on the collected data. TOMARK sees the exact history of the creation of each product, i.e. what components and materials were used to construct it, which parts were connected to each other, which components were created from the input material, including accompanying data (for example, the dates of individual production operations).

In the aircraft manufacturing operation, an even more detailed digital “birth certificate” is created for each aircraft produced, which captures all installed components together with the relevant technological data in great detail.

Data acquisition, analysis and processing are one of the basic pillars of the digital transformation of any company. The engineering company TOMARK, as well as other manufacturing and non-manufacturing companies, gained a greater overview of the ongoing processes and factors that had a direct impact on several business and process indicators.

Extracting information from the volume of diverse data obtained during production operations and material flow monitoring provided the company with detailed overviews of business processes that the company did not have before the digitalization project.

Data and analytics are key to successful digital transformation and are a strategic priority in digital technology implementation projects. Data obtained from production and supply processes reveal broader connections and correlations between individual operations and procedures at the facilities.

Data obtained from product birth certificates and the production process helped TOMARK identify and localize the causes of reduced quality. Based on this reliable data, the company was able to implement effective and targeted measures that were also preventive in nature.

Thanks to this, the company managed to eliminate the causes of error rates and ensure the maintenance of high quality standards, which also had an impact on the overall increase in the quality of processes, shipped parts and components.

The collected data and processed operational data also serve as a versatile tool for ongoing analysis and optimization of production processes, as well as internal supply, quality control, and last but not least, maintenance.

However, the transparency in production processes and the overview of hidden processes that data and relevant analyses provide to the company do not have to be used only for the implementation of preventive measures.

Companies can very accurately uncover bottlenecks in their processes and tune the performance of processes and technological equipment based on the analysis of relevant data.

This is another way in which operations can ensure continuous progress in:

• optimizing overall operational productivity,
• efficient use of resources,
• increasing quality,
• even in cases of production of products with high variability and an increased degree of personalization of delivered goods.

Ultimately, the project of digital material flow tracking with the Smart Industry solution EMANS in the engineering company had an impact on the overall improvement of performance. Monitoring the production status in real time provides the company with a more flexible organization of tasks and work on individual orders. Additionally, managers can more efficiently regroup order entry into production and thus plan sales logistics more accurately.

 

Accelerating the Building of a Digital Enterprise

In the case of implementing material flow tracking, it is a digitalization project that is technologically and financially undemanding to implement. It is not necessary to make any invasive interventions in existing processes or in the technological equipment of the operation.

This type of project is not difficult to integrate and at the same time:

minimizes the negative impact on the productivity of the production process,
rapidly reduces the occurrence of errors and degraded quality,
and optimizes operating costs.

To obtain data from production and supply processes, it is possible to use affordable:

• mobile devices for reading bar or QR codes,
• RFID technology,
• or various types of localization systems.

The necessary technical equipment is often already installed in operations.

Ideally, a company can choose a scalable system, because it is not necessary to implement a flow tracking solution at once for all workplaces of the operation. Considering the calculation of the return on investment, it is possible to start with a pilot project, which can be implemented for one selected section of the material flow in the company.

Subsequently, the company can continue to expand to other workplaces, sectors and zones. With such a solution, the company is already engaged in the advanced building of its digital ecosystem.

Every company that wants to innovate its processes through digital technologies must have basic data and information in electronic form. The vast majority of companies successfully mastered the first wave of digital transformation when they replaced pen and paper with various types of information systems.

Data recording and work with them have accelerated and business processes have been simplified. Thanks to the digital form of data, relevant workers have immediate access to it, so they can work with it more flexibly, thereby creating additional added value in existing processes.

The mass replacement or introduction of information systems, regardless of their complexity, from simple office software for creating text files and spreadsheets to more complex industrial control systems, has led to a change in operational and process models and their adjustment to new standards of functioning.

The next phase in building a digital ecosystem of a company is to obtain data from sources that the company does not yet monitor, and to obtain additional added value by connecting them.

This was also the case of the Slovak engineering company TOMARK, in which the collected data from various parts of the production process was connected to the information system. Based on this volume of data, the Smart Industry system creates a virtual image of physical processes – a digital twin.

The virtual copy of processes created by a digital twin brings clarity and transparency to operational processes. This monitoring of material flow and production processes also allows key business parameters, such as equipment effectiveness (OEE) and human labor (OLE), to be evaluated and further worked with.

A comprehensive picture of business resources and the functioning of equipment and technologies in operation, created by digital twins, brings companies expanded knowledge about what is happening in the operation. In addition to accelerating the decision-making processes of executives, the company can effectively and accurately identify:

• bottlenecks,
• resource overload,
• and reasons for downtime based on this technology.

By reliably identifying and localizing risk factors, companies can quickly and effectively implement corrective measures. Operations will thus gain a tool that will help them with partial optimization of supply and operational procedures.

In addition, the acquired and processed data can be used to integrate other operational processes, such as connecting intra-company logistics with the overall digital ecosystem of the company. Deploying a Smart Industry system to monitor transportation and warehouse activities will provide the company with a detailed overview of their status.

Key indicators include information on:

• stock levels,
• readiness of customer orders for shipment,
• location of materials in the warehouse or components in intermediate warehouses.

The digital material tracking solution has enabled TOMARK to have basic inventory monitoring functionality, as the system allows employees to quickly search for the location of components in the warehouse and track their movement throughout the operation. The results were almost immediate in the form of a radical reduction in downtime and the elimination of unproductive employee time when locating the necessary material.

As part of a project monitoring inventory levels, semi-finished product movements, and readiness of finished parts and products for shipment, a company can use the collected data to automate warehouse management. Advanced Smart Industry platforms have WMS [Warehouse Management System] warehouse management functionality or enable its uncomplicated integration. Implementing WMS functionality will help a company streamline supply flows and reduce inventory management costs.

Warehouse space utilization can also be optimized in an effective way. A storage strategy based on dynamic inventory slotting assigns warehouse positions to individual items based on an analysis of current demand or according to production plans. Based on forecast models or plans, the system evaluates which type of material needs to be picked first and assigns that type a warehouse position as close as possible to the point of collection.

Dynamic slotting significantly reduces unnecessary movements of warehouse workers and logistics personnel in the warehouse, as well as excessive material handling, even in the case of increasing volumes and increasing turnover of the relevant items. The dynamic slotting strategy is particularly suitable for managing the picking of large volumes of orders with a lower number of highly variable items (a common situation in e-shop and retail warehouses).

Allocation of warehouse positions based on demand is one of many examples of digital optimization that can be achieved if a company has the right data. The basic prerequisite for maximizing performance and implementing intelligent automation is data-driven process management, i.e. adopting a "data-driven" approach to decision-making and process management.

In addition to making warehousing more efficient, a WMS [Warehouse Management System] allows you to adjust the picking strategy, which makes the supply of production sites more flexible (for example, with JIT deliveries). At the same time, it significantly shortens picking cycles and reduces the rate of incorrectly picked materials.

In the case of more complex intra-company and production logistics, a company can proceed to an even higher form of automation by implementing the dynamic supply system Milk Run [Milk Run 4.0].

Innovative business strategies and agile operating models

One of the goals of digitalization is to obtain the most complete and comprehensive virtual picture of processes in operations, which is related to the acquisition of relevant data. The Smart Industry system can thus begin to assist in decision-making first and then ensure effective coordination of operational processes.

Digitalization is no longer the exclusive domain of large companies and concerns that invest in strategic innovations and complex automation technologies. Current intelligent control systems increase efficiency and expand added value even in medium-sized and smaller companies that do not have such a high degree of automation as large industrial enterprises.

 

By defining rules and conditions, it is possible to set algorithms in the control system that will automatically process and evaluate information about the current state of production. These algorithms can make simple decisions completely autonomously and immediately.

More complex decisions would still remain the responsibility of a specific worker (production supervisor), to whom the system pre-processes the relevant data and makes the necessary information available (for example, in the form of a clear visualization). In this way, the reaction time is shortened and, thanks to accurate data, the authorized worker can make truly qualified decisions.

Regardless of which variant the company decides on, it should first focus on processes whose digitalization will help it to better achieve its goals, namely, primarily strategic operational processes. At the same time, it should set a transformation plan so that it can further scale digitalization without significant restrictions. If necessary, this will make it easier for the company to continue flexibly with further digital and intelligent automation.

If employees have access to relevant and correct data, they can participate in the continuous innovation and tuning of production processes and supply procedures. Both employees and the company will be able to respond faster and more appropriately to more fundamental changes and adapt to new situations. Similarly, as happened during the outbreak of the global coronavirus pandemic.

Readiness and willingness to seek new solutions even in unprecedented situations and adapt to new circumstances are becoming a basic prerequisite for the successful functioning of a company. And a necessary condition for the sustainability of the operability and competitiveness of a company. That is why it is possible to use data obtained by digital technologies as tools for change.

Digital monitoring of material flow is an important development stage of the operation for the introduction of digital automation. From the perspective of the long-term perspective of the company, it also represents an inevitable strategic step towards the introduction of new technologies and artificial intelligence (AI) tools.

The project of digitalization of material flow monitoring is also becoming a basic prerequisite for a generational change of production and logistics environments – the transition to more agile and intelligent operation.

In the new management model of the company, work procedures, production priorities and supply are already largely coordinated by information systems that evaluate relevant parameters in real time, such as:

• expected delivery time,
• order priority,
• production volume,
• demand forecasts.

The solution for material flow monitoring is therefore suitable as an introductory project of the digital transformation of the company. Financially and technologically undemanding implementation makes it the fastest way to start meaningful digitalization of the company and process automation. A similar project is also the first significant step that a company can take towards the concept of smart production and logistics – “smart manufacturing”.

Implementing smart manufacturing and building a digital enterprise requires the right setup of enterprise data management. This will enable the company to collect and process high-quality data necessary for process management across other departments and operations.

The Smart Industry system deployed for digital material flow tracking already has methods for standardizing and conceptualizing the collected data. These, as one of the decisive factors of smart production, are necessary for building the connectivity of systems, technologies and employees.

Data collection at TOMARK's production sites and operations through the Smart Industry solution EMANS led to the connection of machines, operational resources and integration with other enterprise systems. The digital enterprise ecosystem thus built in TOMARK subsequently made it possible to expand the functionality of the digital enterprise by scaling and adding additional modules.

In addition to managing work orders, tracking OLE, streamlining work operations at relevant operating stations, monitoring energy consumption by equipment, and automating selected administrative processes (attendance, aircraft testing), TOMARK decided to deploy a maintenance module that enabled:

• digital recording of maintenance interventions on company equipment,
• monitoring maintenance operations on technologies,
• monitoring failure rates,
• sending notifications in the event of equipment outages or shutdowns.

The current concept of smart manufacturing is based on connectivity, automation, data management, and data analysis. These principles also contribute to the creation of interconnected ecosystems that enable companies to create innovative business strategies and agile operating procedures.

The development of smart management requires a unified approach of business and technological views on business processes, which leads to maximizing process flexibility.

Investing in digitalization is not only an investment in technology, but also in employees, workflows and, last but not least, in the future of the company and its growth.

Just as many drivers already use the capabilities and intelligence of their vehicles today, such as road sign recognition, parking assistance, and adaptive cruise control, the time has come to start using the available capabilities and functions of digital technologies in production and logistics.