Get answers to your digital thread questions from TBM Technology and Supply Chain Practices Vice President, Ken Koenemann.
By now you’ve probably heard the word ‘digital thread’ a time or two, or perhaps the phrase ‘digital twin.’ As a mid-sized manufacturer, if you’re wondering what it means and how it applies to your businesses, you’re not alone. The good news is that if you are using technology to digitally capture data on your processes, then your digital thread is already in the works. Taking the next steps and using the thread you’re weaving to support continuous improvement and better decision making throughout your organization is simply a matter of knowing where, when, and how to use the information stored in that thread to drive the greatest business value.
To help shed some light on the topic, Technology and Supply Chain Practices VP, Ken Koenemann, answered some key questions around this emerging topic.
Is the digital thread a specific technology or software solution?
No. It’s a framework for creating a pathway for communication and data sharing up and down all phases of a manufacturing process (Design, Source, Make, etc.) and the value chain. Instead of having employees at different phases in the process working in silos, it’s about making the big picture and critical information available to those who need it, when they need it. In other words, it’s about having the right information, in the right place, at the right time—a concept that TBM has been advocating for decades.
Do digital threads apply only to products?
The idea of the digital thread is based on the product lifecycle. It’s what enables digital twins, or virtual proxies of actual physical products, to be created. But the framework equally applies to manufacturing processes. It is entirely possible to simulate processes virtually in order to better understand them; to evaluate potential changes to your processes, equipment, and capacities; and to ultimately use the information to improve upon all phases of the process.
Why is the digital thread important for middle market manufacturers?
The digital thread is going to become more and more important for middle market manufacturers for a variety of reasons. First, the digital thread is the underlying foundation for a digital implementation of any kind. Without it, you cannot be truly digital.
Second, the thread is the catalyst to understanding where to invest future digital dollars and where automation or digitization can have the most impact on your business. Internally, it allows you to visualize the entire manufacturing process and identify bottlenecks, or processes that eat up too many resources or lead to too many defects. It also lets you see up and down your supply chain, shining a light on weak links or vulnerabilities, such as limited suppliers for critical raw materials or components—an issue that has become all too tangible for many manufacturers during the pandemic.
This level of visibility into your operations and the value chain helps companies spot opportunities and create the business case for digital change. In other words, it allows leaders to determine if a digital investment is worth it or not. For example, automating or digitizing a process to save one hour of downtime only matters if it translates into adding one less hour of overtime (saving money) or adding more volume (increasing revenue). On a grander scale, investing in 3D modeling technologies makes sense if the tools can help identify alternative materials that reduce your dependency upon difficult-to-access or high-cost supplies. Such insights could potentially be game changers for your business by improving your ability to consistently meet demand while dramatically reducing your costs to serve.
How many different technologies does it take to achieve the digital thread?
To create a digital thread, you need different technologies all along the value chain that should each be evaluated based on real value that can be created from using them. Ideally, the digital thread extends from the design or engineering phase of a product all the way through to production and delivery to the end user, and it can even include information related to the customer’s experience post-sale. At each point along the way, individual technologies help to streamline processes while collecting data that informs other processes both upstream and down. These functional technologies may include:
- Product Lifecycle Management (PLM): Handling of a good as it moves through the typical stages of its product life (development and introduction, growth, maturity/stability, and decline). 3D modeling is an example of technology that is typically integrated within a PLM system.
- Supplier Performance Management: Measure, analyze, and manage the performance of a supplier.
- Transportation Management System (TMS): Plan, execute, automate, and optimize shipments and improve communication with supply chain stakeholders.
- Enterprise Resource Planning (ERP) System: Track and interpret data from critical business activities to facilitate business flow and improve management of raw materials, production capacity, purchase orders, and more.
- IIoT / Automation: Track and analyze manufacturing and distribution data from factory floor systems and equipment.
- Manufacturing Execution System (MES): Track and document the transformation of raw materials to finished goods and identify problem areas along the way.
- Computerized Maintenance Management System (CMMS): Schedule, organize, track, and optimize maintenance.
- Warehouse Management System (WMS): Support and optimize warehouse functionality and distribution center management.
- Inventory Management System: Track inventory levels, orders, sales, and deliveries.
- Customer Resource Management (CRM): Manage relationships, interactions, and transactions with customers and potential customers.
- Point of Sale (POS): Capture direct merchant transactional data for insight into consumer demand and purchasing habits.
How do you activate the digital thread?
Assuming you are using functional technologies at some points along the value chain to digitally capture data, then the pieces of your digital thread already exist. The key is bringing everything together so that the information can be viewed and analyzed holistically as opposed to in silos, giving business leaders, decisions makers, and employees an end-to-end picture of the business. In other words, your digital thread is the collective output of all the functional technologies you already use. But you need a platform to extract, collect, unify, and, ultimately, apply all that data to inform daily business decisions in order for the digital tread to live up to its potential.
For us, a key enabling platform is a digital management system. A digital management system is your sight-line into your digital thread. It gives people at each phase visibility up and down the supply chain to help make sense of what’s happening across the business. For example, production or manufacturing data can flow back to engineering and design, and decisions can be made early in the process that help eliminate stumbling blocks further down the road. Ultimately, decisions at every phase are based on optimizing your process from end to end and the entire operation works collaboratively to improve your ability to profitability meet customer needs.
If manufacturers are using digital technologies, is their digital thread already started?
Today, as the cost of solutions to enable the digital thread is decreasing and technology is evolving, most companies have already started to weave a digital thread, whether they realize it or not. The key issue, however, is not if companies have a digital thread, but whether or not they are using it in practical ways to drive financial benefit and create value for the organization.
What are the immediate benefits of the digital thread?
We know from our implementation of digital management systems that companies can generally see a 5% to 15% improvement in productivity by providing a view of performance across the value chain. One client we worked with to implement the TBM digital management system, Dploy Solutions, realized a 25% productivity improvement, driven primarily by labor savings as well as scrap reduction. The company used the system to unite all departments around six key metrics related to safety, quality, delivery, and cost. By putting everyone on the same page and clearly defining expectations in these areas, the organization was able to work collectively to identify opportunities for improvement and then quickly capitalize upon them.
Is there a moment where I can say, “I’ve achieved the digital thread?” Or is it more an idea like “operational excellence,” where you are constantly in pursuit of more and better?
I equate the digital thread to operational excellence. Zero defects is an aspirational goal, but it must be evaluated and applied strategically. Drive revenue or increase gross margin! If it does not achieve one of these two things, it is a waste of money.
During the pandemic, a lot of manufacturers have had to pause operations, but others have actually had to ramp up production while somehow enforcing social distancing measures. Would having a digital thread in place help manufacturers facing either of these situations?
Yes. But, it’s not just the existence of a digital thread that’s helping manufacturers manage through the pandemic. Rather, it’s where they move that data and what they do with it. Manufacturers with digital management systems have used the technology to activate their digital threads and enable communication between leaders, managers, and employees while working remotely and sometimes even to serve as a proxy for daily meetings. They’ve also had success with more quickly and accurately identifying production problems and supply chain vulnerabilities, which can help those operating at or over capacity to keep up. For manufacturers that had to bring operations to a halt, the digital thread will be a major source of information and insight in ensuring the restart goes as smoothly as possible.
With the digital thread, everything about your manufacturing processes stands to improve.
If the idea of digital thread still feels very factory of the future to you, it’s important to remember that the future will be here sooner rather than later. In fact, the pandemic has made some level of digital transformation a requirement for future survival. It’s also helpful to realize that your digital thread likely already exists in some state, shape, or form. It’s how you use the information you already have—or that you can easily gain through incremental investments in new technologies—to drive improvements and create sustainable competitive advantage for your business.