An article in the Harvard Business Review (August 7, 2017) titled “Success with the Internet of Things (Iot) Requires chasing more than the cool factor”, claims that inter-connectivity and a partner ecosystem is a precursor to leveraging the benefit of IoT. Harley Davidson is reported to have connected their information technology (IT) systems with their operations to generate an “IoT enabled plant”. The reported savings include “reducing the production schedule from 21 days to 6 hours, operating cost savings of $200 million, improved production efficiency and reduced downtime”. What are the challenges to integration of the IT system and operations to generate savings ? What are the challenges associated with the creation of a successful ecosystem across companies ? How should incentives be adjusted to enable real-time collaboration ?
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Global Supply Chain Musings 
One of the major challenges I see would be integration of the IT systems with suppliers. HD likely has thousands of suppliers. Creating an IT system that can work with such a large supplier base would be a major challenge. Successful integration of an ecosystem across the supply chain likely involves changing the reward system for suppliers to allow them to receive some rewards has higher and higher levels of integration are achieved. These levels of integration ultimately lead to cost savings for HD and drive operational costs down
Well I guess as a first step my focus would primarily be on production line improvements isolating myself from vendors
An IoT driven operation is great until there is an unexpected event for which the algorithm is not defined or partially defined and we have the operation doing exactly opposite of what is intended. As long as the external environment surrounding the operations are stable and that the down side risk of uncertainties are minimal there are no major challenges.
The major strength of an IT system is the internet never sleeps. It doesn’t complain or request wage increased. It doesn’t ask for a promotion nor does it tire. The integration of an IT system can create challenges though especially if they are basing most of their operations of their website which do go down at times. Challenges (among others) that could come about utilizing an ecosystem could simply be changes in policies and personnel (leadership and managerial positions) within companies. How will the suppliers continue to be compensated and will there be an equal playing field for all partners involved? Proper communication would be critical to ensure everyone within this ecosystem equally feels compensated and collaboration to remain successful.
Integrating an IT systems takes a lot of resources that may not be available based on other projects on the horizon for Harley Davidson. Creating a successful ecosystem across companies requires a strong project lead and willing collaborators across companies. All companies that partner with Harley will need to find the resources to support the creation of the ecosystem. Potential negotiations for real-time collaborators could include incentive or rebate payments for meeting the deliverables and quicker turn times that will be required from other vendor partners because of the shortened production schedule.
It’s imperative of every business to learn and innovate, an ecosystem allows them to have access to resources that they can collaborate and compete. Successful business are those that evolve rapidly and effectively. Digital technology and connectivity enable key business processes, which in turn contributes to growing of value, effective networking, collaboration.
The biggest challenge in integrating IT systems and operations is the lack of training by operational employees in necessary IoT skills. Most ERP/IT systems are very capable of capturing huge amounts of data that could be used to generate savings. Unfortunately, there are often disconnects between those trained in analyzing the data with individuals that are best able to provide the data. The disconnects can happen from both sides, IT/Data Analysts not understanding operations and operations not understanding the IT capabilities. Bridging the gap from both sides seems to be critical for successful IoT implementations.
The key here is IoT is about data collection alone but in the overall scheme of things we need process specialists who can help map out the behavior and AI components that shall be be built
Challenges to integration would include “Damned interface ain’t working.” and “You ain’t the boss of legacy.” HD is certainly dealing with both of these. No machine runs exactly to specs, at least not more than a week after it’s installed. Older devices/machines may still be considered too useful to replace vs. cost of replacement. Getting their IoT to talk to these machines will be an issue to some degree. Heaven help them if, for some unknown reason, some ancient doodad had been chugging along just fine on a parallel port. Human conflict will also play a role. In many companies, IT often has problems playing well with the other children, and when IT “intrudes” onto the demesne of ops, that’s a slap fight waiting to happen, particularly if they have two very different cultures. Challenges across companies would include all of the above on steroids. HD also runs the risk of unintentionally coming off as a bully if the partner companies aren’t as up to speed on this process and/or if human-to-human communication isn’t all being read from the same sheet music. This could lead to additional friction and slowdowns. Incentives need to be tied directly to the successful use of the IoT structure, which is not necessarily the same thing as conventional incentives for rapid delivery, quality materials, etc. HD will need to essentially invent a “you did it with the IoT” incentive system, with rewards tied specifically to performance through the IoT. They should also explore phasing out or at least phasing down incentives not tied to IoT integration.
Yes well looking at the numbers 26 hrs to 6 and millions of $ in savings someone really wants that to happen. good luck harvey
I dig your response. It’s colorful and interesting. Nice work.
One of the challenges of integrating the IT system to operations to generate savings would be time – capital investments to move to new technologies are neither insignificant in terms of resources or project duration nor have an instantaneous ROI. Additionally, integrating a new IT system with existing production that is continuing to operate at scale requires careful thinking and planning. Even a minor mistake could have significant adverse consequences. Given that Harley Davidson potentially operates with a number of suppliers and channel partners, coordination across all these entities to create a successful ecosystem would require their buy-in to the integration, commitment to the process and continued support. To enable this collaboration, Harley might consider passing on a portion of the profits (due to savings on operations) to show how much they value the partnership.
The above mentioned improvements to the production schedule from 21 days to 6 hrs seems quite aggressive. Is it really possible to achieve a reduction of production time by a factor of 84? It implies that there would be a high cost of integration of these systems-from equipment replacement to training of individuals. As mentioned in above posts-the ability to standardize these systems across an entire industry of suppliers and other collaborators would require significant dedication on the behalf of Harley. They would also have to anticipate that the majority of collaborators would be likely to participate prior to making initial investments in the project. I would imagine that if they are saving $200 million a year, that some predetermined amount of discount or incentive would occur to get the buy-in of their collaborators.
First and foremost, interoperability into existing systems and processes can always pose a challenge. A lot of times, existing processes have to be re-engineered and/or created. Depending on how drastic of a change it is to do so, cultural buy-in becomes a challenging cascading effect as well. For a company like Harley, this would be a very large enterprise change that could be challenging to implement with franchises that may do business a little differently. The other aspect Harley needs to consider is how does this new system align with its current operations. From Accounting, we learned that Harley reports an inventory turnover rate of approx 60 days. So if this system is strictly being implemented to create efficiency in the manufacturing arena, it doesn’t really align well with a 60-day turnover cycle. In this case, it seems like Harley really wants to focus a lot more on information sharing and team collaboration. So, incentives should be modified to promote team-based performance goals.
It seems Harley Davison has hit on something quite useful for their operations. By taking a step toward integration of operating activities and IT, they have reduced operating cost significantly. One of the biggest challenges going forward will be communication with all departments. When change of this degree is implemented, departments will resist and will want to find ways to work around the system. Two things to help ensure success will be the degree of “ease of use” and the platform’s technical support. Without an easy navigable platform for companies to access Harley Davidson’s new operating structure, some companies may decide not to do business with Harley Davidson at all. I’ve seen implementations first hand in which the initial support and enthusiasm to maintain are very high. As time progresses, other initiatives take priority over dedicated resources to continue ensured success. These ecosystems are a living breathing process that can continue to improve and become more dynamic over time. To enable real-time collaboration, Harley Davidson needs to do one simple thing. They need to reward partnerships that support this new vision with discounts or other monetary benefits.
Integrating the IT system with operations can be a real challenge as it requires bringing new technology within the operations industry. It will also require a culture change within operations which not be successful unless you have the support of the people within operations. Poor change management is often the culprit of failed initiatives.
Some of the challenges bringing IoT across companies is giving away business secrets and technologies. By “opening your doors” to work with collaboratively with other companies, you may be exposing yourself to more risk if the company decides to leave your partnership and work with your competition. This can also be a real challenge if you have many companies you work with, such as all of Harley’s suppliers, to produce your product. All the companies would be at different levels of technologies which may prevent successful IoT with various companies.
Incentives should be adjusted to create a win-win between collaborations. Successful IoT improves the bottom line for your company. Your collaborators, in turn, should also benefit from their efforts in advancing the technology.
In our case there are very conservative limits on data that can be shared. However there is certain common data elements like when nitrogen is in chamber and pressure above 800 something then in the next step people who added media 1 compared to media 2 have had better results
An issue I see with the integration of the IT systems are data integrity issues with many of the ERP and MES systems involved. Companies really struggle with their data integrity issues and instead of periodically cleansing the information or taking a significant pause to clean it up, you could be creating a digital twin and factory that DOES NOT represent reality.
Challenge for the creation of ecosystems across companies, lies within the maturity level of the IT department and management at each of the companies. If your IT department is strong, but managerial presence is weak, then the IT department could be wasting their breaths and efforts in areas that won’t be beneficial. Conversely, if the managerial ranks are strong, and there a strong change agents, but the IT department is lacking the capacity or skillset to make the initiative happen, you will find yourself at a set back, having to recruit, hire, and train the correct talent for the job.
Incentives should be kept to a limited scope to test out the feasibility. Also, establish what the “sense of urgency” is to the implementation and successful project. Clearly describe and communicate to all parties (employees, managers, customers, and suppliers) as to why this integration is so important (more facts, less emotions if possible).
One of the inherent challenges of the integration of the IT system is the ability to implement change into a workforce that has operated in traditional manufacturing processes. My assumption would be that the company is interested in improving quality and driving throughput for their product, so what changes are made in the organization prior to launching the new IT system. In addition, I am also interested in how they set forth a strategy to promote change throughout their organization regarding people development, organizational structure, and a launch glide path for the IT system.
There are a multitude of opportunities to capture savings with the very aggressive reduction of the production schedule from 21 days to 6 hours. The improvement to their production schedule may cause a few ripples in the supply chain for their vendors in regards to lead time and other factors involving logistics.
Developing a ecosystem across companies can be extremely rewarding for HD and difficult for companies to maintain without accruing additional cost or overhead. This in turn may turn off suppliers of business collaborators over time.
One of the biggest challenges of introducing such a complex IT tool is ensuring you gather the requirements first and do so without missing any requirements than can render the tool useless or a hindrance once it is implemented. In the Quality world we always say “Don’t put the cart before the horse.” This happens all too often when designing and implementing IT solutions. People get a head of themselves and don’t clearly define a comprehensive set of requirements for the tool that is being created and implemented. The result is a tool that is not intuitive, slows down the organization, and even limits the organization from achieving their goals. It is very important that HD look at their requirements, then their processes and lastly look at the tool they are buying or building or else they will end up with something that doesn’t work.
In looking at such a tool and having it interface across different companies some challenges come to mind. These challenges first start off with sharing terminology and units of measure between companies. If this is not aligned prior to going live on such a system things can get very messy and confusing. Second and even more challenging is change management. How do continually change suppliers and data in such a tool without having an adverse impact? This is a timely and costly endeavor with thousands of suppliers in a company such as HD.
Finally, having such a tool in place can really drive Just In Time (JIT) delivery from suppliers. HD can keep minimal inventory on hand and the tool can automatically re-order from suppliers based on thresholds set by HD. This will provide HD’s suppliers with a steady stream of regular orders and allow them to operate in smaller batches and also have less inventory on hand. This allows both HD and their suppliers to operate more effectively and efficiently, with little or no carrying costs – a huge financial incentive.
In my current program we are doing something similar in bio processing sector. The first step was to develop a connected eco system of devices which talk to a orchestration layer. In the second step we are already aware of threshold levels but with this huge amount of data available to us we would be creating predictive analysis to provide guidance to scientists on outcomes. A lot of people have raised concerns on getting the right data and the right feedback well I think it is an iterative process and we keep learning on the way. As a third step our company will use the repository of data collected at device levels to create patterns that can be applied in a generalized way to all new systems and then the systems will learn over due course of time
from our experience the key challenges have been to integrate the previous generation of machines with the new platform. These machines are costly to replace and therefore specific bridging components along with system software upgrades are required. There are customers who use 1 or 2 devices as compared to some who use many devices a big challenge is with smaller consumers because they want integration between their multiple devices therefore to create an integrated ecosystem, we have to work with some other manufacturers to develop common apis what this eventually means is that we will all start using the same language and then the only difference would be on quality of predictions which again would vary from customer to customer
On incentivization, I spoke to our marketing director who is working with a large beta customer and as per his feedback at least in highly scientific industries this excess information is welcome as the scientists will have more data points quantitatively to make progress. In manufacturing again one of the examples I have seen is predicting failure of machines based on patterns. Supervisors and maintenance folks would be happy to know such valuable information upfront to take actions proactively
Well, the implementation cost and learning curve up front would be hard to overcome in the first year or two so all parties have to have bought in, and that is not easy with new technologies. But if they were successful in reducing the production schedule from 21 days to 6 hours that cost savings of $200M would make it up quickly, you still have to be able to survive the short term pain and it hard to tell who would be able to do that today, I don’t think HD could. Incentives could pool in some way almost like an IPD project structure or delivery method. It would take the efforts of all for all to be incentivized.
One of the major challenges when it comes to technology is trying the “next trendy thing”. Many companies jumped on open office design based on some limited research, now we are learning it may actually have an opposite effect in many situations. I believe anytime you step forward in technology such as IoT in any environment is to first identify why you are making the step and understanding the ROI. The next concern when looking at the entire enterprise is a never-ending upgrade loop. Once you being in enhance technology in one location it can begin to cause expense in areas that weren’t previously identified. I am a huge proponent of upgrades and using technology, however, I have seen too many times companies run in blindly expecting results that may not be achievable. Lastly, the incentive structure is a challenge as automation increase. Production is increasing automated while the human element is maintaining the system. Uptime and cross-functional integration should be the primary target of incentive programs in this environment.
I would expect one of the key challenges to be integration of the legacy systems for collection of accurate data. One of the areas we struggle with in manufacturing as we want to move to more advanced data analysis is integrating and updating legacy systems to collect the desired data, as well as being able to report the data from the IT systems in a useful way. There must also be a strategy identified for what the data will be used for and decisions to be made/actions to be taken (vs collecting data for the sake of having data).
A successful ecosystem implementation is also important, in particular where business units within a company (as well as suppliers/partners) may utilize different MES and ERP systems.
A culture change will be needed to drive successful implementation. Often, different areas within a business have metrics that conflict. Establishing unified metrics will be needed to ensure collaboration for implementation, as well as to drive appropriate decisions being made from the real time data/dashboards.
Technology and People – turning data into meaningful insights and actions would be a tough goal. As the number of players in the ecosystem increases, the variables and the complexity would increase.
– Connectivity and interoperability are essential to the success of an IoT ecosystem, and it requires real-time connectivity and communication. Ecosystem integration to allow endpoint communication between IoT devices would be complex and technology intensive.
– Collection and interpretation of data have to be contextual to create meaningful insights and actions. This would be costly, intensive, as it requires SMEs in both technology and operations.
The way a company integrate and uses IoT events/data meaningfully to generate savings is critical to success. Most of the firms are not equipped with such skillset and has limited knowledge of their products than the ecosystem. Though cloud and consultants provide options, companies still have to engage and train employees on how to interoperate and trigger actions between the devices.
Partners in the ecosystem should all adapt to the same interoperability and security standards, which makes it tougher. Incentives shall be based on collaboration and how an IoT device communicates seamlessly and effectively with the rest of the ecosystem and also shall be based on the value a partner adds to others in the ecosystem. Incentives shouldn’t be based on individual cost savings alone.
Integration of IT system needs a lot of efforts in educating different people across the organization. Above all, to fully automize the system needs a lot of research. You cannot change all the systems at once, you have to create a pilot project which will follow the rest.Future lies with data and that should be the key approach in making a system automated. We need to collect all the possible data scenarios first.
The major challenges will be related to the adaptation of the new systems by the existing employees.Overcoming that issue will lead to the knowledge base of the mass of the people. To make the system successful we need to create a detail documentation of all the steps and arrange repetitive training sessions for our employees.
Indeed automating the system will save a lot of money and increase the productivity of the company but that will lead to laying off certain number of employees. But it will increase the incentive prospective of other employees who will quickly adapt the system and helped in decreasing the operational cost of the company.
The first issue that I see with integrating an IT system into a manufacturing environment would be adaptation. Many non exempt employees struggle to adapt to changes in technology. Cost savings may arise from this change, but what could possible happens to quality? It is very difficult to create a successful ecosystem internally when a company has multiple, global locations. When implementing this IoT with external suppliers, many issues would arise as well. Incentives should be adopted on an operation by operation basis, not on cost savings alone.
A major challenge is going to be addressing internal ‘legacy’ thoughts and processes. They will need to ensure they have the right team developing the foundation of the program. They’ll be looking for flexibility for future changes as suppliers, products, etc. change.
With this level of integration there will need to be significant effort drawing the rules of engagement. There will also need to be a high level of trust with partners as you’re sharing core data to your operations with ‘outsiders’.
incentives will be lower working capital throughout the entire value change. Each party should be able to carry lower inventory and have better turns. Additionally, each participate should be able to better forecast plant utilization and plan accordingly (capex or operationally). One last incentive would be better planning in terms of shipping/freight, particular with a tight trucking market,
One of the issues with integrating IT with operations or any personnel departments is typically adoption and training. The initial investment of capital is is only the first step, if you cannot get buy in from those who will be using the system every day, you will be dealing with issues and failures on a daily basis. You need buy-in from top to bottom and extensive training to ensure the implementation is successful.
Creating interconnectivity between different businesses, even those who work to supply you can be difficult if there are major upgrades or updates that have to be done to implement the changes. It takes a major time and capital investment. Convincing them to make those kinds of changes would require incentives and/or additional contract terms to make it beneficial for the other firms to take part in the changes.
Regarding incentives, I would start with the the implementation process and follow up with cost and time savings. If they meet deadlines and goals potential bonuses could be enough to ensure their buy-in to the implementation as well.
Integration of IT system needs a lot of efforts in educating different people across the organization. Above all, to fully automize the system needs a lot of research. You cannot change all the systems at once, you have to create a pilot project which will follow the rest.Future lies with data and that should be the key approach in making a system automated. We need to collect all the possible data scenarios first.
The major challenges will be related to the adaptation of the new systems by the existing employees.Overcoming that issue will lead to the knowledge base of the mass of the people. To make the system successful we need to create a detail documentation of all the steps and arrange repetitive training sessions for our employees.
Indeed automating the system will save a lot of money and increase the productivity of the company but that will lead to laying off certain number of employees. But it will increase the incentive prospective of other employees who will quickly adapt the system and helped in decreasing the operational cost of the company.
Integration of IT system needs a lot of efforts in educating different people across the organization. Above all, to fully automize the system needs a lot of research. You cannot change all the systems at once, you have to create a pilot project which will follow the rest.Future lies with data and that should be the key approach in making a system automated. We need to collect all the possible data scenarios first.
The major challenges will be related to the adaptation of the new systems by the existing employees.Overcoming that issue will lead to the knowledge base of the mass of the people. To make the system successful we need to create a detail documentation of all the steps and arrange repetitive training sessions for our employees.
Indeed automating the system will save a lot of money and increase the productivity of the company but that will lead to laying off certain number of employees. But it will increase the incentive prospective of other employees who will quickly adapt the system and helped in decreasing the operational cost of the company.
Integration of IT system needs a lot of efforts in educating different people across the organization. Above all, to fully automize the system needs a lot of research. You cannot change all the systems at once, you have to create a pilot project which will follow the rest.Future lies with data and that should be the key approach in making a system automated. We need to collect all the possible data scenarios first.
The major challenges will be related to the adaptation of the new systems by the existing employees.Overcoming that issue will lead to the knowledge base of the mass of the people. To make the system successful we need to create a detail documentation of all the steps and arrange repetitive training sessions for our employees.
Indeed automating the system will save a lot of money and increase the productivity of the company but that will lead to laying off certain number of employees. But it will increase the incentive prospective of other employees who will quickly adapt the system and helped in decreasing the operational cost of the company.
Below are three major issues we faced with the Operations and other external partners across the Cisco and similar problems other companies face too.
Change Management of new systems & processes:
We were given intense training and made aware of the benefits of the new systems. The people who have been in the company for many years and were not open to change the way they have been working and providing the results.
Socialization and Communication:
We have to communicate with the multiple partners(Oracle, SAP) and contract manufacturers making sure that they are ready for change and their IT and leadership understand the transformation and our requirements.
Adoption:
When you develop the system, the team should utilise the new system to provide faster output. We moved to Oracle R12, and it took 2 years for the team to adapt to new technology and sunset the old technology.
IT and operations management goes hand in hand. In the current world, IT is the biggest savior of time and money and data is the new bacon. Integrating the operation system with IT approach needs comprehensive efforts in upgrading the existing system, motivating the employees and trained them appropriately.
Size and diversities of a business always played a major role in giving rise to a complex system. Harley being a major player in the automobile industry and their businesses are widely spread across the world, which makes the IT integration more time consuming and complicated. It cannot be done in a single step, rather it should follow a staggered approach in implementing the up-gradation. Moreover, all the relevant employees have to be well educated with the new system to get benefitted from the new system.
Definitely, the new IT integration will improve the performance and save operation cost to a substantial amount but every change has certain side effects. The major side effects will be a layoff of some employees, although it will increase the incentive portions of the newly grown employees in this area.
Below are three major issues we faced with the Operations and other external partners across the Cisco and similar problems other companies face too.
Change Management of new systems & processes:
We were given intense training and made aware of the benefits of the new systems. The people who have been in the company for many years and were not open to change the way they have been working and providing the results.
Socialization and Communication:
We have to communicate with the multiple partners(Oracle, SAP) and contract manufacturers making sure that they are ready for change and their IT and leadership understand the transformation and our requirements.
Adoption:
When you develop the system, the team should utilise the new system to provide faster output. We moved to Oracle R12, and it took 2 years for the team to adapt to new technology and sunset the old technology.
I think that Jason Meridew has a point in saying that a coordination with the vendors should be made when receiving orders beyond HD capacity using IoT. Although you can always make sure that you have multiple vendor for example, allowing to have a back up plan or a greater material procurement base for such occasions. Also, the mode of delivery can be set up that the cost of going faster would be compensated and reflected by your own cost of ordering faster to the supplier. To create a successful ecosystem across companies, you need to make sure that everyone moves or works at the same pace, or with other words that no delay should be caused by one company cancelling the advance of another one. No Herbies, to utilize the vocabulary of the goal. Incentives should be used in terms of global success, that means not just a department goal should be achieved but a company goal, when possible. Although one might argue that you cannot be responsible for events you are not in control of. This is the notion of statistical fluctuation in combination to dependable events that has to be dealt with.