Swimming against a tide of shop floor IoT information: Making the most of Industry 4.0 data
Author : Baris Kavakli, Portera B.V.
19 November 2023
Too often, manufacturers embark on data-driven strategies full of hope and expectation. Yet, an inability to make sense of the data collected and use it for valuable insight means IoT-based projects often falter.
Industry 4.0 has had a profound effect on modern manufacturing. Advances in sensing, connectivity, and cloud-based analytics have given organisations much better insight into activities on the shop floor. The result has been new methodologies in areas such as real-time monitoring and anomaly detection, predictive maintenance and more automated decision-making.
The latest statistics prove the impact of Internet of Things-based activities in manufacturing. The market is predicted to grow from $209 billion in 2022 to $252 billion in 2023, with further expansion to $461 billion in 2027.
However, despite this investment, many manufacturers remain at the earlier stages of the transition to Industry 4.0 – and lessons are still being learned. While engineers can see the value in more connected production activities, it can be difficult to derive tangible benefits in the near term.
These challenges are indicated by the relatively short shelf-life of the Chief Data Officer – a crucial individual who should be at the heart of digital transformation. Statistics suggest that the average tenure for a CDO in manufacturing and other sectors is around 18 months to 2.5 years – compared to five years for a typical C-suite role. So, what is going on? If data is critical to business growth in industrial environments, why is the CDO so commonly at risk of redundancy?
The answer, in short, comes down to a matter of expectation. Increasingly, manufacturing companies have invested heavily in data management and digital transformation to drive advances in areas such as predictive maintenance, but have not been structured around data as an organising principle, so therefore they struggle to reap any tangible rewards. Rightly or wrongly, the CDO is seen as the face of this failure and deemed unable to deliver in the role.
Why data officers are under threat in modern manufacturing
That brutal assessment is often unfair. While manufacturers might think that now is the time for CDOs to deliver, those in the position often encounter complex and multi-faceted challenges. For example, lines of responsibility can be unclear. Should the CDO be a board-level appointment, or should the incumbent report to the directors? Should the CDO have budget responsibility? What data do they own? Many organisations interpret the role as that of an “operator”. In some cases, data is treated as a cost centre and not a growth driver, which effectively makes the CDO into a glorified accountant who reports to the CFO.
Also, the lack of a clear mandate and a restrictive brief often results in data management becoming siloed from other business functions, which in turn devalues what should be a business-critical resource. Being kept separate from the rest of the organisation means the CDO can drown in data but remain thirsty for insight.
Baris Kavakli, Managing Director, Portera B.V.
And the remit of the CDO is often anchored to the building of specific technologies, rather than being solutions-focused. Technology is just one piece of the puzzle, and being wedded to a particular platform or software without considering the broader context can cause significant problems, from vendor lock-in, cost inefficiencies, under-utilisation and more.
New thinking on data management
In truth, then, the short average tenure of a CDO in manufacturing is often a reflection of having been set up to fail. With data touching so many critical aspects of a business, a more multidisciplinary approach is needed to support the role by ensuring that the needs of one business function are not placed above those of another.
The potential for siloed thinking isn’t just an internal challenge; companies choosing to outsource their data management function can also run the risk of too narrow a focus for success. A predominantly IT consultancy will view data management through the prism of IT, while a sales consultant is likely to prioritise customer loyalty and demand-generation aspects.
Successful data management – and ultimately the career prospects of the CDO – relies on assessing the data requirements of the entire business, and then ensuring that these are met. This is the approach we take at Portera.
In our experience, it is critical that business functions are enabled to own their data; but this has to be part of a wider education program backed by appropriate governance to ensure the quality and integrity of the data being collated. Cultural alignment is crucial for success, because your people need to be motivated and inspired by the possibilities.
They not only need to understand their role in collating, inputting, analysing, and applying data across the business, they need to appreciate how they will benefit personally from the outputs. Putting in place the infrastructure that supports every function, and avoids the duplication and expense of multiple systems, is the final piece of the jigsaw.
This holistic approach provides data quality assurance, so the data on which critical business decisions are based can be trusted. It assesses and identifies the most appropriate data interrogation tools and picks the most cost-effective option for your business.
Learning from other industries
Manufacturers can learn the lessons of successful data management from other industries. One of our clients was a major food retailer wanting to gain better insights into consumer behaviours. To facilitate more effective data-driven decision-making, our team designed a workflow that included requirement gathering and scoping, analysis, data modelling, development testing and a final review and publication.
We met with stakeholders to identify high-impact areas before running analysis and designing specialised visualisation reports. The insights gathered enabled us to create a central set of questions that would test the strength of current marketing strategies and identify what was impeding seamless data and insight flows between systems and teams. This analytical workflow allowed us to accurately assess our client’s business use cases and create a DataMart. This solution simplifies the process of comparing acquisition, conversion and retention metrics, as well as breaking down different consumer types, insights, and actionable recommendations.
Another of our clients was investing millions into projects aimed at connecting and aggregating data systems to provide sales teams with more valuable data and insight. Despite these efforts, the company found itself unable to demonstrate the value and business impacts of these programs to stakeholders. The Portera team proposed a solution that consolidated the company’s martech stack and sales database. We developed a project workflow to achieve this goal within 15 weeks, including the creation of a new insights dashboard. This solution has helped our client more effectively analyse its sales value, orders, digital engagements, marketing spend and revenue per customer. These insights are now fully integrated into its media planning and key reporting processes.
While the industries may differ from manufacturing, many of the principals and solutions for effective data management remain the same.
Choosing the right partner
Most manufacturing organisations today are making major efforts to turn data into a source of competitive advantage. But the struggles of the CDO show that this process can be fraught with difficulty. Success requires new thinking, processes, governance, and capabilities that span people, processes, and platforms. A multidisciplinary consultancy like Portera can make sure that data is fully connected across operations and functions in industrial environments – unlocking value, increasing revenue, and providing a good return on investment. Ultimately, that is good for the business – and good for the CDO’s career.
For more information and case studies, visit: www.portera.nl.
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