Managing transformation in smaller enterprises

Managing manufacturing processes through thoughtful, informed leadership is at the core of how small- and medium-size enterprises can leverage transformation in the aerospace supply chain. That was the theme of the recent Pacific Northwest Aerospace Alliance (PNAA) annual commercial aerospace conference.

Numerous speakers throughout the three-day event discussed topics familiar to our readers: Industry 4.0, digitalization, and data analytics. As PNAA Chairman Ted Croft noted in his welcome, “Key enablers of this transformation require the integration of aerospace technologies with products and services commonly associated with the information technology (IT) sector.”

This can be daunting for contract manufacturers without large IT departments, but experts offered practical guidance and success stories showing smaller companies benefiting from transformation.

Management consulting firm McKinsey and Co. Engagement Manager Charles Cassidy argued the information-driven fourth industrial revolution is not going away. “Embrace Industry 4.0 or be left behind.” Beyond the stark warning, Cassidy offered numbers on how Industry 4.0 – also called digital manufacturing or the Industrial Internet of Things (IIoT) – is driving value. He gave examples of product design and development taking 20% to 50% less time to market, 85% better forecasts of supply chain capabilities, and 10% to 20% reduction in costs associated with ensuring manufacturing quality.

The return on investment is persuasive, but many companies have difficulty scaling-up pilot programs to capture the full value of innovative technology. Cassidy and Kevin Goering, McKinsey associate partner, summarized an action plan with three questions to ask: Is the digital strategy driven by measurable business needs (and not because it is exciting)? Do you understand your organization’s digital capabilities and have a plan to fill any gaps? And, do you have the technology to scale-up, such as having the machines, automation, quality assurance, and distribution capabilities to take advantage of Industry 4.0 productivity improvements? Faster production is squandered if finished parts stack up in the shipping department.

In a presentation titled “Rewarding Courage,” Ignacio González-Blanch Fernández, executive director of Airgrup S.L., explained how a 75-year-old manufacturing company became 100% digital. Seville, Spain-based Airgrup, which makes pipes and tubes for aerospace hydraulics, transformed using digital workflows and advanced analytics. Fernández can boast that his company has reduced paperwork to one page per part, from raw materials to finished goods, despite generating 2 million data points per day.

“I can trace a part’s status at desk level throughout the company,” Fernández reported, noting 8,000 SKUs can be tracked in 2,500 possible routings through 100 workstations.

To implement the plan, Fernández took small steps as his team built a layer of the business’ logic into a web-based enterprise management database. By customizing dashboards at each workstation and – ironically – limiting indicators and leaving most data for later analysis, he was able to win over people wedded to paper spreadsheets. The rewards: understanding defects/non-quality sources, easier identification of bottlenecks and ways to reduce costs, and sustained higher performance. Convinced of the benefits, Fernández is constantly looking for opportunities to go digital, capitalizing on data to differentiate his company from the competition. His example demonstrates how embracing Industry 4.0 isn’t only for big companies. – Eric