MPI Insight: John, you work with manufacturers around the world on digital transformation. What surprises you about what you’re seeing on the ground?
John: Digital transformation has been one of the fastest management revolutions we’ve seen in manufacturing.
MPI started studying Internet of Things (IoT) and Industry 4.0 adoption among manufacturers in 2015 — because 46% of US manufacturers told us in another MPI study that they had never heard of an IoT strategy.
What happened next was incredible: In just three years or so, we went from almost half being unaware of IoT to significant percentages of manufacturers profiting from IoT.
But many companies still aren’t doing much with IoT. And the biggest surprise over the last year— as we’ve been working on the Digital Transformation for Manufacturers program, completing digital maturity assessments — is that many companies have hidden Industry 4.0 or IoT capabilities that they’re not using.
MPI Insight: They’re not aware that they have the capability?
John: It’s not that they’re unaware, it’s that they’ve come by these capabilities accidentally.
Say a company needs a new piece of equipment. They’re not trying to start a digital transformation, they just need a new machine. But when they buy, it comes Industry 4.0-ready, with IoT capability already embedded within it. It’s the same as if you buy a new car: you don’t say, “Hey, I’ll take a brand new car, but give me the radio from 10 or 15 years ago, the one with CD maps and no Apple CarPlay.” No, you just buy the new car, along with all the latest technology.
We keep visiting manufacturers where they’ve purchased this included Industry 4.0 capability, but they don’t use it. They may not be aware of how inexpensive and simple it would be to connect the machine’s IoT capabilities; sometimes it’s a matter of a few thousand dollars to hire a programmer.
All of which means that there’s a huge, untapped reservoir of hidden Industry 4.0 capability across manufacturing, just waiting to be leveraged.
MPI Insight: You mentioned the Digital Transformation for Manufacturers (DTM) program. Can you talk a little bit about the program and what it entails?
John: We’ve been fortunate enough work with the Manufacturing Extension Partnership (MEP) nationally and in Ohio to create a program that helps manufacturers with digital transformation. It starts with a free online assessment, which gives manufacturers an instant data readout on their digital maturity, how they compare with other companies, and where their best opportunities are for profitable digitization.
The DTM website also has resources on how to run digital improvement projects: best practices, templates, step-by-step guides, etc. The website also has resources to help decide which digital projects to prioritize.
MPI Insight: What have you learned doing these assessments, looking at the data?
John: Two things. One, while the highest score you can achieve on the maturity model assessment is 5, the average score so far has been around 1.5. Kudos to manufacturers for being honest about this, because a digital maturity assessment isn’t a test. You’re not trying to figure out, am I an A student? F? There’s no grade. You’re benchmarking your company, and the goal isn’t to discover how great or terrible you are, but to learn: How are we doing? And how can we get better?
Two, the biggest mistake in digital transformation is magical, all-at-once thinking, the idea that “We’re going to fix everything!” That never works, in any aspect of life. Success in digital transformation, as with anything else, is most often a step-by-step, iterative process.
MPI Insight: The MPI Manufacturing Study in 2021 looked at data from 2019 to 2020, offering a picture of the impact of the pandemic — and what recovery might look like. Now you’re preparing for the 2023 version. What will you be focusing on?
John: We’ve conducted the Manufacturing Study every two years for two decades. We’re eager to get back in the field because we saw two worrisome trends in the 2021 Study.
First, the use of training and best practices for continuous improvement — whether via lean or another methodology — declined during the pandemic. It’s understandable — many companies were overwhelmed by trying to keep the doors open and workers safe — but it’s not a path to long-term profitability. I hope that manufacturers are reinvesting in training and continuous improvement efforts.
Second, we’ll also be looking at increased interest among manufacturers in green practices and environmental impact. We’ll measure not only what manufacturers are doing internally, but also the role of green practices and circularity in the supply chain.
MPI Insight: I know that manufacturers are looking to technology to help with labor shortages. What’s your take on how automation will impact jobs and manufacturing going forward?
John: This is always a fraught question, because on one hand, everybody wants improved products, improved efficiency, and improved safety —and you can achieve much of that with automation. The difficulty is that you have employees who learned how to do a job, and then suddenly they don’t have that job anymore, because technology has shifted, and that is incredibly disruptive — sometimes tragic — for individuals, families, and communities.
But on the other hand, every time a technological advance appears, it creates new employment opportunities — and often better-paid opportunities. That means it’s imperative for companies to not only avail themselves of new technologies, but to also include workers at the table to strategize about how their jobs may change — and how we can all adapt with the change together. It’s important to remember, too, that when you automate, you’re often transforming an employee activity that’s repetitive, difficult, and perhaps dangerous into a machine activity — allowing the employee to perform higher level activities that are safer and better compensated. That’s the goal.
But: change is not smooth; it’s often lumpy, stop-and-start, and uncomfortable. It is, by definition, disruptive. We need to support disrupted employees, but we ignore progress and the future at our companies’ — and our employees’ — peril.
The Digital Transformation for Manufacturers Program — the result of a NIST MEP cooperative agreement award to Ohio MEP — is a collaboration of Ohio MEP, Ohio Department of Development, Ohio Manufacturing Institute, and The MPI Group.
