Key takeaways
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From horse and buggy…to Henry Ford…to a bucket of thermoplastic?
Global clothing manufacturer Zara can develop, manufacture, and ship a new product in two to three weeks that would take their competitors over six months. They use digital tools to respond almost in real time to consumer preferences while focusing on internal speed and collaboration. With over 2,000 stores in 88 countries, Zara is the world’s largest fashion retailer. Their success is due largely to their position as a frontrunner within the new era of agile manufacturing.
Industry 4.0, digital manufacturing, agile manufacturing, “digital thread”—these are all terms that describe the way we are making some things now and will make almost everything in the future. The digital thread touches product design, the factory shop floor, the supply chain, plus marketing, sales, and services. It allows all of these areas to respond quickly to customer input, customer feedback, customer use data and open source, industry-wide information on quality, cost, behavior, and forecasts.
Digital manufacturers are organizing from an outside-in mindset that starts with the customer, and looks to deliver creatively on market opportunities, whatever they happen to be, however they will be delivered, and whoever will deliver them. Profits are seen as the consequence of providing value to customers, not the goal of the firm.
Soon, when you walk into your mechanic’s shop to replace a broken fender, he will not need to order the replacement part from overseas and call you back in three weeks. He will take some measurements, step to an attached room with a 3D printer and make your new fender on the spot, revised to attach more firmly and with accent trim to update the style.
A living example of digital thread in action
Spain-based Zara, mentioned above, is the leading brand of the global clothing manufacturer/retailer Inditex. Its operations are defined by agility. As Harvard Business Review notes, “The company can design, produce, and deliver a new garment and put it on display in its stores worldwide in a mere 15 days. Such a pace is unheard-of in the fashion business, where designers typically spend months planning for the next season.”
Zara manufactures half of its production in-house, and outsources a quarter to Asia. Instead of relying on outside partners, Zara manages all the functions of design, warehousing, distribution, and logistics itself. Zara deliberately leaves extra manufacturing capacity so it can respond rapidly to unexpected demand, rather than driving its factories to maximize output.
Instead of…
- …producing only the designs it needs, Zara’s designers create 40,000 new designs annually, from which 10,000 are selected for production.
- …cutting out all redundant labor, Zara intentionally runs three parallel but operationally distinct product families.
- …separating design from manufacturing, Zara’s designers sit right in the midst of the production process to facilitate communications.
- …aiming for economies of scale, Zara manufactures and distributes products in small batches.
- …shipping clothes as cheaply as possible, Zara ships clothes in racks with price tags already on them, so that they can be displayed immediately. Zara sometimes leaves large areas of its expensive retail shops empty so that it can respond flexibly to demand.
- …cutting costs in each activity of the firm, Zara optimizes operations for the performance of the firm as a whole.
Despite the struggling Spanish economy and an industry characterized by unpredictable, impulsive customer demand, Zara is flourishing. Its parent company (Inditex) has become one of the two largest clothes retailers in the world.
Digital vision is really a new set of glasses
To start on the road to digital manufacturing requires tiny baby steps including the whole company, top to bottom. To get there from here (in my opinion) does not necessarily require a new leader, but it does require a new kind of leadership—one that involves “digital vision.” Digital vision is a high-level roadmap for digital transformation spanning internal organizational units and management levels. Only 1 in 3 manufacturing companies has a digital vision. Digital vision is a high-level roadmap for digital transformation spanning internal organizational units and management levels.
Manufacturing is moving from an analog, linear orientation to an integrative, iterative, agile orientation. Digital transformation, though it involves empowerment, flat collaboration, and communication throughout the organization, has to start with digital vision and urgency at the top. Leaders must allocate adequate funding for transforming the organization; actively promote a digital vision; engage all stakeholders in digital initiatives; and systematically drive a cultural change.
Moreover, they must invest in developing the required skills in their organization. This is a critical transformation measure, since digitization will entail radically new capability and skill profiles.
Manufacturing has become agile. And it’s about time….
An outside-in orientation that maximizes customer value requires an agile organization to implement it. Steadily delivering additional value to customers, rather than just fine-tuning the value chain for the existing portfolio of products and services, requires the organization-wide capability to deal with unexpected shifts in the marketplace. Solving customer problems means being able to adjust what the firm produces, what it sells, how it sells it and even who sells it.
This degree of agility lies beyond the performance envelope of the hierarchical bureaucracies that prevail in most large manufacturing organizations today.
Shifting to agile manufacturing is not just a matter of adopting one or two particular management tactics. Agile requires driving toward:
- Total focus on delighting the customer,
- Working in self-organizing teams,
- Coordinating work in short cycles driven by customer feedback,
- Values of trust and openness, and
- Horizontal communications.
A single fix is not enough: companies need systemic change.
Industry 4.0 is also referred to as agile manufacturing. The concept of “agile” was developed for the manufacturing industry in 1991 and conveyed an industry-led vision for a fundamental shift in the manufacturing paradigm.
Originally agile was defined as a manufacturing system…
- …with extraordinary internal capabilities including hard and soft technologies, human resources, educated management, and information
- …to meet the rapidly changing needs of the marketplace including speed, flexibility, customers, competitors, suppliers, infrastructure, responsiveness
- …that shifts quickly among product models or between product lines, ideally in real-time response to customer needs and wants .
But the concept was actually adopted first by the software industry, not manufacturing. Agile software development comprises a set of management practices and values based on customer focus achieved through iterative and incremental development, and where requirements and solutions evolve through collaboration among self-organizing, cross-functional teams and their customers. And now the software industry is defining manufacturing 4.0.
Wherever you are on the spectrum from traditional manufacturing to industry 4.0, the concept of agile provides some good entry points to upgrading.
Success looks like many little failures:
Much like waterfall vs agile software development methodologies, traditional manufacturing puts everything in perfect and somewhat rigid place and then hits the Go button, whereas digital manufacturing lives on incremental, iterative, and continuous development, testing, analyzing, modifying, refactoring, and over and over….
“Fail fast, fail forward” applies to digital manufacturing just as it does to agile software development. This is a new mindset and a new approach to success for those in the business of making stuff. Critical steps include:
- Identify pain points: what will digital do to help your company?
- Start small: Collect a number of small ideas that fit with your digital vision and run a number of digital sprints—a series of experiments that address the earlier identified pain points or opportunities and that try to solve a problem in non-conventional ways.
- Fail fast: The notion of failed experiments conjures up thoughts of disastrous consequences, ensuing legal actions, and the end of a promising career in a traditional manufacturing environment. However, by experimenting in a controlled manner, failure allows you to prove or disprove the validity of certain digital concepts and approaches. The key is to fail fast with minimal investments and to learn from the failures.
- Iterate and pivot: Experiments require several iterations before a call can be made about whether they’re successful or not. And sometimes experiments lead to alternative ideas or solutions that wouldn’t have been obvious without a hands-on test.
- Scale fast: By this time, the proposed digital solution has a quantifiable business case with successful validation in one or more pilot implementations. You can invest in a rollout across the enterprise, using the learnings from the process to accelerate the execution, and, if warranted and required, to selectively rewire legacy IT systems.
Code: a logical place to start
Given that Industry 4.0 embodies agile manufacturing, and agile is already the de facto method of software development, a logical first step in your own journey toward digital transformation would be to look at the software supporting your existing manufacturing operations.
- Are you running legacy software?
- Is your IT department agile?
- Have you transformed your existing software to meet digital manufacturing needs?
If you answered “yes” to any of the questions above, you have a good jumping off point. Because implementing agile software successfully requires the exact type of organic, comprehensive, collaborative environment that agile manufacturing does. If you can implement agile in your software, you have a critical feather in your cap. Many small successes will lead to a completely digital manufacturing environment. Why not start with software?
Digital manufacturing is for everyone. Henry Ford defined more than just how a Model T was made; he changed what we do and how we do it. Similarly, manufacturing 4.0 is more than a bucket of thermoplastic molded on the spot into a replacement fender. It defines how we interpret and respond to each other.
If you need some agile software engineering talent to facilitate execution of your digital vision, contact me here.
About the Author
Yousef Awad joined Integrant in 1997 after a successful career in programming, database administration and project management. He is responsible for establishing the company’s wholly owned development centers in Amman, Jordan and Cairo, Egypt. With over 130 full-time employees, Integrant specializes in providing custom software development, offering clients outsourced teams that allow IT departments to stay in control of their projects and expand their software development teams effortlessly. Beyond Integrant, Yousef’s passion is to bring an understanding of the power of programming to children and young adults. Yousef is working towards giving younger children access to coding classes that provide real-world, hands-on mentoring.