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Industry 4.0: Towards a value-stream organization

RFID Source: Bosch

While discussing the results of our market study with manufacturing experts, we were asked a very good question:

“In terms of organization, are there any studies about redesigning the processes? Most organizations are structured vertically, yet Industry 4.0 processes require horizontal structures and process-oriented organization. Do companies know this?”

Local optimization is already proving beneficial

When we start working with a customer to implement Industry 4.0 solutions, we primarily consider what we refer to as “point information”. Our aim is to help the customer to optimize a specific manufacturing process by first providing an overview of the entire process and then helping them to find more efficient ways to carry out the necessary production steps. As a general rule, local optimization is carried out only within the confines of a plant.

Optimization along the supply chain, however, involves suppliers, plants, logistics, customers, and other factors. Connectivity poses no challenge, as RFID and other technologies are mature and available (ready-to-use). We discovered that applying RFID technology in one of our plants and optimizing the entire system could potentially reduce stock by 30 percent. This calls for taking things one stage further by switching the focus from optimizing single steps in the value chain to investing more in optimization of the entire value chain. Allow me to explain how.

Value chain optimization – what’s in for organizations?

Horizontal connectivity, which involves connecting the complete supply chain or value chain across a company, is something we foresee in our projects as a second or maybe even third step. Today’s highly optimized manufacturing industry offers so much potential, for instance through lean production methods. Fully connected value chains still carry a lot of progress potential that can be leveraged. At the top end, we are even talking about fully connected ecosystems. But that’s something we should address in a few years…

Think big, start small

For your project to be a success, I recommend you set out with the fully connected value chain in mind, but begin with a specific process that achieves immediate results. There are several technologies and methods available that have proven themselves in practice, and that will help you to get started with first steps paying-off immediately. Once you’ve learned in practice what works best, you can integrate these technologies into your bigger Industry 4.0 picture.

There are two tools in particular that I recommend you consider when seeking support to make your first projects a success: rules technology and big data processing. The key feature is that both can be used by domain users: production managers and manufacturing experts. Watch out for model-based approaches. Rules technology and data analysis can help your experts to apply their domain knowledge without having to be IT specialists. Also, they don’t need to wait for the IT experts to be available in order to start – a real competitive advantage in this context and phase of the Industry 4.0 market.

Sketch showing production rules models.

Besides these tools, we have had excellent experiences with the following approach for identifying the right project from the outset: The idea is to start with a regular value stream analysis, help the customer to identify those issues that have the highest leverage and then suggest how software can help most effectively to improve these within the value stream.

Sketch showing value stream mapping.

In our experience, this approach works best whenever organizations are ready and eager to benefit from Industry 4.0 solutions but don’t exactly know where and how to start. “Nothing new there,” you might say. Well: Industry 4.0 brings software technology into play that supports continuous improvement, for example based on value stream mapping. Naturally, these continuous improvement processes are set up in all our manufacturing plants – and software and IT can help to speed up the rate of progress and improvement…

What do you think? How far have we come today on the path towards value stream organizations? To what extent can software help to speed up improvement?