resetting the manufacturer's playing field | accenture

Industry X.0: Time for digital reinvention of the manufacturing industry.

THE MANUFACTURERS’ PLAYING FIELD

RESETTING

RESETTING THE MANUFACTURERS’ PLAYING FIELDACCENTURE BUSINESS JOURNAL FOR INDIA 2018

2RESETTING THE MANUFACTURERS’ PLAYING FIELDACCENTURE BUSINESS JOURNAL FOR INDIA 2018

As digital redefines the rules of the game, Indian manufacturers have a unique opportunity to compete against global giants. The time is ripe for manufacturers to make the most of their digital reinvention journey, gain a competitive edge and lead in the new.

The world is more connected than ever. There are approximately 6.4 billion data-communicating devices globally, and by 2020, this figure is expected to reach 20 billion. This data and connectedness explosion is transforming business models and enabling new customer experiences in every part of the world, including India.

The manufacturing sector in India underwent a huge revolution through the 1990s in response to economic liberalization. As companies looked to establish successful foundations in a market-driven economy, many of us who worked as operating managers or as consultants to the manufacturing sector, in that timeframe, saw a dramatic rise in focus on productivity and throughput improvement in core manufacturing and supply chain functions.


The advent of digital technologies today provides Indian manufacturing companies a new set of powerful tools to reinvent their manufacturing and supply chain operations. Our experience with and research on the manufacturing sector shows that most companies understand the potential of digital technologies to deliver value. However, most of them are struggling to define programs that link investments to acceptable levels of returns. Why? While Indian manufacturers have intensified their focus on business growth, they are overlooking the most crucial opportunity that these digital technologies offer—the transformation of their existing operations.

To create value with digital, Indian companies need to seize the opportunity to transform their current operations, reinvent their operating models and target new growth opportunities to become what we call Industry X.0 businesses.

An Accenture survey found that less than one-third of executives in India want to use digital to transform their current operations for greater operational efficiencies. That’s a small number when compared with the three-quarters (76 percent) of executives who want to leverage digital for new, experience-driven revenue growth.


INDUSTRY X.O

SMART

SMART

B2B B2C

CONNECTED

LIVING

Employees

Startups/ Partners

Service Network

Supply-chain Channel Partners

Vendors

GET THE INDUSTRY X.0 ADVANTAGE In their most evolved form, Industry X.0 businesses will exhibit four distinct characteristics (see Figure 1):

• Smart: Every product and production process is self-monitoring, data generating and aware of its ever-evolving business context.

• Connected: Communications are end-to-end and multi-directional, while data sharing among people, products, systems, assets and machines happens in real time.

• Living: There is an enterprise-wide cultural capability to act with speed, focus and agility to meet needs and seize opportunities.

• Learning: Adaptive interactions help create increasingly relevant and valuable user experiences over time.

FIGURE 1: FOUR DISTINCT CHARACTERISTICS OF INDUSTRY X.0 BUSINESSES


ANALYTICS-POWERED MANUFACTURING OPERATIONSA leading Indian iron and steel manufacturer launched an advanced analytics program to transform into an “insights-driven enterprise,” by deriving value from data and inculcating a cultural change in the way people make decisions using data.

The program focused on realizing value from identified manufacturing operations and maintenance use cases over three waves.

• Wave 1 focused on creating a strong data/technology/ organizational capability foundation and driving a few analytics projects end-to-end, till benefits were visible.

• Wave 2 focused on validating the template and expanding the footprint of operating issues addressed through advanced analytics.

• Wave 3 focused on creating internal ownership for the analytics template and governance process.

Besides delivering tangible business benefits in core manufacturing operations, the program brought down the average time to complete an end-to-end analytics project from four months in Wave 1 to two months in Wave 3. It also helped in rapidly scaling up the analytics team from single digit to close to 250 members in 18 months.

The journey to this Industry X.0 Nirvana for Indian companies needs to start with leveraging digital to transform their core operations to drive improvements in throughput and productivity. This will help them see clear returns on their investments and help them fund sustained investments in new digitally enabled products and business models that create new revenue streams.

A leading Indian steel manufacturer is doing exactly this, by focusing on leveraging analytics to unlock trapped value in its core manufacturing operations.

6

IOT-ENABLED COFFEE MACHINES BREW SERVICE IMPROVEMENTS

The other major objective is to drive revenue up by leveraging sensor and machine data to generate actionable information related to consumption patterns (time of day, day of week, flavor preferences, consumption rate and potential out-of-stock situations).

And, finally, it plans to launch a mobile app linked to the above ecosystem to drive consumer engagement through tailored offers and promotions.

This is a fitting example of an integrated approach to lowering costs while creating revenue upsell opportunities and building consumer engagement.

RESETTING THE MANUFACTURERS’ PLAYING FIELDACCENTURE BUSINESS JOURNAL FOR INDIA 2018

The connected coffee machine by a leading consumer goods company in India is another good example of leveraging digital technologies to optimize costs, while looking at increasing revenue and higher consumer engagement opportunities.

The company is using IoT, mobility and analytics to create a connected coffee machine for the Indian market that will help track machine location and health to proactively manage availability and uptime through machine health analytics. This will help achieve one of its key objectives of reducing operations, maintenance and service management costs by optimizing the number of visits, reducing the number of emergency visits and predicting specific spare parts that need to be carried by the service technician.


Our research also reveals six strategic imperatives Industry X.0-driven businesses must address to digitally reinvent their industries. Many Indian businesses are already experimenting with these to become Industry X.0 ready.

1. TRANSFORM THE CORE:Industry X.0 companies build core product design, and engineering and production systems around digital technologies that drive new levels of efficiency.

Mother Dairy, a manufacturer and seller of milk, milk products and other edible products, for instance, has equipped its supply chain with various digital technologies. In addition to being an early adopter of technologies such as virtualization and cloud computing, the company deployed mobile apps for order collection and invested heavily in the Internet of Things (IoT) for tracking the location of its milk trucks and monitoring storage temperatures at its warehouses.1 Further, the company deployed a host of new software programs to remotely operate shop floor machinery to record and retrieve production and process data, and to generate performance dashboards for production control systems. Through detailed, real-time reporting, these software programs have helped Mother Dairy improve the visibility of its operational-process parameters and enhance product traceability by severalfold.2

2. FOCUS ON EXPERIENCES AND OUTCOMES: Industry X.0 companies invest cost savings in driving hyper-personalized experiences for customers. First, they design and deploy products, services and platforms that constantly adapt to meet changing customer needs. They then use big data as the foundation for real-time insight generation and decision support. And, finally, they enhance customer experience throughout the product lifecycle through smart, digital touchpoints between the customer and the company.

BECOMING INDUSTRY X.0 READY: SIX STRATEGIC IMPERATIVES


A leading Indian carmaker is looking to completely transform the sales experience by harnessing digital and connectivity. It already has a mobile app that allows customers to avail themselves a variety of post-sales services such as booking service appointments, paying service bills, tracking service status and using 24-hour on-road assistance. To add to that, it is launching its first set of revamped technology-enabled showrooms. These showrooms will feature interactive touchscreens for customers to browse through product catalogs. They will also have designated areas where customers can digitally choose the customization options for their cars and add accessories according to their needs.

3. INNOVATE BUSINESS MODELS:Industry X.0 companies use a combination of digital technologies to create new business models to drive differentiated customer value propositions well beyond the point-of-sale interaction. Connected and intelligent products are designed from scratch, allowing companies to monetize product-user interactions via software-based services and pay-per-use revenue models.

Mahindra Tractors, a subsidiary of the Mahindra Group, launched Trinngo, a farm equipment-sharing platform that offers tractors and other equipment on a pay-per-use basis. The platform lets farmers reserve tractors from a fleet that includes both company-owned tractors and those owned by other farmers. Launched in June 2016, the platform is already serving 50,000 farmers and clocking more than 40,000 total hours of use. The company plans to extend its services to more than one million farmers in India.3

4. BUILD A DIGITAL-READY WORKFORCE: Industry X.0 companies recruit, train and retain talent with skills for the digital enterprise and encourage collaboration between people and machines. They redesign roles to encourage active collaboration within workforces with varying levels of digital awareness and appreciation. They will eventually need to plan for the co-existence of humans and autonomous robots and machines, while equipping workers with software engineering and machine learning skills.


Tata Steel, an iron and steel major, has made substantial progress in refocusing its internal culture to build a digital-ready workforce of the future. The company has fostered one-to-one relationships between millennial workers (employees aged under 30) and the more experienced leadership team through a reverse-mentoring program, where younger employees spend part of their time bringing senior leaders up to speed on the latest digital trends and technologies. This serves to motivate millennial employees through exposure to senior leaders and provide an avenue for experienced employees to keep pace with rapidly evolving digital trends.4

5. BUILD NEW ECOSYSTEMS:An Industry X.0 company builds an ecosystem of suppliers, distributors, startups and customers, which allows it to scale new digital business models rapidly. Such businesses obtain and develop ideas for new products or services from a wide variety of sources, both internal and external to the firm. All this while nurturing innovation clusters that design and prototype early-stage technology use cases.

For example, Bangalore International Airport (BIAL) handled more than 24 million passengers in 2017. BIAL is building a new terminal to handle more than 45 million passengers and has turned to a wider ecosystem to accelerate digital adoption and related innovation. While BIAL leverages internal ideas generation via the Ideascale platform, it also taps into external service providers, customers, distributors and niche startups for ideation and execution. BIAL’s innovation center has opened avenues for new ideas to flow in, which are evaluated, prioritized, piloted and scaled up on a systematic basis. This is helping BIAL find multiple pathways for a given problem, identify unconventional ideas to improve customer experience and experiment with new technologies that could be relevant now or in the future.


6. PIVOT WISELY:Industry X.0 companies are moving into the future. But they need to carefully balance investment and resource allocation between the core business and new businesses to synchronize innovation and growth. Companies pivoting wisely create shared performance metrics that not only monitor traditional performance outcomes but also track levers that can disrupt such outcomes. They systematically and continuously inject digital technologies into mainstream operations through the buy-in of a leadership team that is passionate about and can envision the use of digital in strategic and tactical initiatives.

Several large enterprises in India are carving out venture funds, running digital accelerators and acquiring niche startups to help incubate and invest in early-stage business ideas that will help them identify strategic bets for the future. The range of companies cuts across sectors—from industrial product companies to consumer durables to drug manufacturers—all which are looking to leverage the startup ecosystem to identify and nurture strategic bets that may transform their industry or product offerings. While this is still in initial stages, we clearly see this as an emergent play, where enterprises look to co-create new experiences for their customers and develop new, differentiated product-service offerings that can be scaled up into viable businesses.

The emerging Industry X.0 paradigm will unleash new energy into the world of industrial products and services. To be a viable player in the digitally contestable future and sustain a profitable growth trajectory, Indian manufacturing companies need to plan and calibrate their Industry X.0 journey. Companies that embark on this journey in a holistic manner today will emerge as the digital leaders of tomorrow.

ARE YOU READY TO STEP ONTO THE PLAYFIELD?

AUTHORSRAGHU GULLAPALLI Managing Director and Lead – Industrial, Asia Pacific and Africa, Accenture

ERIC SCHAEFFERSenior Managing Director and LeadIndustrial & Global Products Industry X.0, Accenture

REFERENCESExcerpts from: REINVENT YOUR BUSINESS WITH INDUSTRY X.0 https://www.accenture.com/in-en/insight-reinventing-manufacturing-with-industry-x0

1 http://www.cio.in/cio-interview/mix-iot-mobility-and-big-data-will-transform-way-we-function

2 https://cio.economictimes.indiatimes.com/news/internet-of-things/how-plant-automation-drives-efficiency-at-mother-dairy/57533208

3 http://www.mahindra.com/news-room/press-release/mahindra-trringo-witnesses-a-60-percent-increase-in-farmer-flow

4 http://reports.weforum.org/digital-transformation/wp-content/blogs.dir/94/mp/files/pages/files/wef-dti-mining-and-metals-white-paper.pdf

https://www.accenture.com/in-en/insight-reinventing-manufacturing-with-industry-x0

https://www.accenture.com/in-en/insight-reinventing-manufacturing-with-industry-x0


ABOUT ACCENTUREAccenture is a leading global professional services company, providing a broad range of services andsolutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With more than 449,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

DISCLAIMER

This report has been published for information and illustrative purposes only and is not intended to serve as advice of any nature whatsoever. The information contained and the references made in this report is in good faith, neither Accenture nor any its directors, agents or employees give any warranty of accuracy (whether expressed or implied), nor accepts any liability as a result of reliance upon the content including (but not limited) information, advice, statement or opinion contained in this report. This report also contains certain information available in the public domain, created and maintained by private and public organizations. Accenture does not control or guarantee the accuracy, relevance, timelines or completeness of such information. This report constitutesa view as on the date of publication and is subject to change. Accenture does not warrant or solicit any kind of act or omission based on this report

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resetting the manufacturer's playing field | accenture

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