The drive for change in manufacturing
When thinking about everything that goes into transforming a traditional manufacturing plant into a smart factory of the future, there are several factors that determine its success—or failure. Forbes recently reported up to 84 percent of digital transformation initiatives are likely to fail.1 When trying to determine how to create success, it is easy to focus on the technology and the cost, when often the largest single factor is the people and their buy-in.
Corporate culture drives the organization and its actions. It reflects on how leaders lead and how employees think, act, and feel. To better understand how culture impacts change, let’s dig into the mindset of manufacturing companies.
Manufacturing has always been an industry focused on “keeping the lights on.” They have an aversion to vulnerabilities, and for good reasons. The average cost of unplanned downtime is $532,000 per hour or $172 million per plant annually.2 With a single warranty or recall costing manufacturers as much as $600 million,3 these organizations are hyper-focused on quality and understand their brand reputation is only as good as the products they create.
As a result, the culture of manufacturers has previously been comfortable with the status quo such as legacy systems, processes, policies, and operating procedures. It has protected the IT/OT divide and resisted cultural changes needed to implement connected smart factories.
So why change now? The pandemic, competition, and external forces are pushing manufacturers to reevaluate their “tried and true” ways for several reasons:
- Collaborative hybrid work. With the pandemic, remote or hybrid work in manufacturing exploded through increased use of digital collaboration tools, cloud, and wireless technologies. And it is not going away. In a Manufacturing Leadership Council survey, 85 percent of respondents expect increased use of digital collaboration to be permanent.4
- Competitors going digital-first. Consumers accustomed to buying online expect to do the same for business-to-business (B2B) buying from manufacturers. IDC projects 50 percent of industrial manufacturing companies will engage in B2B digital commerce by 2024.5 This implies the need for integrating digital processes across all of manufacturing.
- Exposed vulnerabilities. In 2021, manufacturing became the most attacked vertical, dethroning financial services and insurance for the first time. Ransomware attackers tried to “fracture” the backbone of manufacturing supply chains,6 demonstrating that legacy network and data security systems are not strong enough.
Overcome barriers to manufacturing evolution with Business Critical Services
Evolving culture to enable change
Bain & Company asked a group of pharma manufacturers for the largest barriers to manufacturing digital innovation. The top three responses were effort to implement change, behavioral changes required to do something different, and lack of required skills among employees to transform from their old ways.7 Conversely, companies that focused on culture were five times more likely to achieve breakthrough performance than companies which neglected culture.8
To focus more on changing culture and running the business, manufacturing leaders may need some help to offload some of their technology and change management responsibilities. They must balance protecting their legacy operations with accelerating transformation, while at the same time evolving worker behavior and practices to enable ongoing change.
Let Cisco Business Critical Services be the change for good
Cisco Business Critical Services can help manufacturers evolve your culture and your factory. Relying on capabilities like our security expertise, automation and AI-powered insights and best practices, advisory services (e.g., architectural, engineering), and training can help make your organization more resilient and adaptive to change while working to transform your business.
Reach out to Cisco Business Critical Services or your Cisco partner representative to work with your IT team to evolve your culture from one of traditional manufacturing to a true smart factory.
- CMS Wire, 2020
- Automation, 2021
- trievr Recall Management, 2021
- Manufacturing Leadership Council, 2021
- IDC FutureScape: Worldwide Manufacturing, 2021
- Intelligent CIO, 2022
- Bain & Company, 2020
- CMS Wire, 2020