Ep: 5 The 4-Step Maturity Transformation Model for Operations

00:14 Therese Snow

Hi, I'm Therese Snow, welcoming you to our DELMIA podcast, global operations on the go. Today we continue our series on the transformation journey with our guest, Eric Green vice president at DELMIA and Fred Thomas, strategic business development and marketing director at DELMIA. Let's listen in.

00:31 Fred Thomas

Hi, Eric. How are you?

00:33 Eric Green

I'm well, Fred, how are you doing today?

00:35 Fred Thomas

Good. Thanks for joining me today for this discussion. So let's get right into our second research note, talking about the maturity transformation model. What is the maturity Transformation Model?

Discovering Notes 2 and the Maturity Transformation Model

00:48 Eric Green

That's a good question. And what we found when we started the research note series, and there are different elements of manufacturing transformation or digital transformation or industrial transformation depending on whatever term you want to use. Our research indicated there are different elements associated with it. So in research note one, we spoke about the seven components of transformation. Another category that fits within the transformation series that needs to be addressed is maturity models. So in research note two, we took on the topic of the maturity models, and tried to categorize the maturity models that reflected most organizations’ state with regard to their business, the business processes under structure. And that's what we're really trying to accomplish and describe and discuss in research note two is the effect and relationship between maturity models and transformation.

01:45 Fred Thomas

Okay, good. You know, in the reviewing of the research note, I noticed that there is a passage in there that says it's a self-assessment model. Is this really something that a company can do for itself, or do they really need an army of consultants to move this ball forward?

02:03 Eric Green

You know, in self-assessing your maturity, we believe that it can be done fairly straightforward by looking at your IT processes, your OT processes or operational technology processes. And also looking at the state of the organization. Obviously, there are firms that do this type of work. And that obviously enhances the level of analysis and the depth, but it's not required. At the end of the day, it's really focusing on getting a gauge where the organization is at, given their maturity. So they can then begin to recognize how to leverage those seven components that are referenced in research note one, with the maturity to pinpoint where and how to start or evolve their transformation. But it's always good to have more help. But the end of the day, companies may not have the capital or the financial wherewithal or ability to spend a significant amount of money on a consulting exercise or project to get that level of analysis. The other thing that those analysis typically provide is a significant amount of detail, which can be good, but at the end of the day, it's not necessarily required.

03:16 Fred Thomas

Okay. We're not going to go through every one of them, but I thought it was important, let's just review the four stages of maturity that are outlined in the document. Like I said, we're only going to really focus on the first one today, but I thought the audience would be interested in knowing what all four are.

The Four Categories and Systems

03:44 Eric Green

Sure, we put them in four categories. We think they're logical groupings, by all means, you can make the debate and argument that one category can be expanded or reduced in size, or you could move the different elements around but we categorize them into four. First one is institutionalized processes. And today we'll go into some detail about what we mean by institutionalized processes. The second one or the second stage of maturity is automated processes with the core systems coordinated. So while we won't go into it, just to give you a quick example, in summary, where we see this today with most organizations, is they've done some of this standardization and institutionalization of the processes. And they've been able to automate these processes with core systems, and historically has been done with things like ERP. In the manufacturing world. It's the investments in manufacturing operations management systems, or in supply chain systems that allow for processes to be automated and coordinated, on top of those institutionalized business processes.

The third stage that we see is what we call the compressed processes with systems tightly linked to each other. So this is really where you're getting to what we call a process compression, which is essentially the acceleration of the data and the business decisions that take place with these processes and tools, and that requires a level of interaction that takes time and focus to make happen. And then last, the fourth stage that we see is optimized processes. And that one’s fairly self-explanatory. But it's more than just the optimized processes. It's actually the closed loop ability of that optimized process with the feedback. And we talk and go into detail too, in research note two, for each one of these four stages. But as you highlighted, we want to focus on research note two and stage one initially, to give the audience a feel for what we're talking about with institutionalized processes, and how that looks and where that starts.

05:56 Fred Thomas

Yeah, so let's move into it right now. When we talk about institutionalized processes, what are we really talking about? Are we talking about process memorization? Or is it something beyond that?

06:10 Eric Green

I think it's beyond memorization. It's actually the formal adoption of a standard practice. And that's a baseline. What we find in what's also reflected in different analyst research that we've included in the research notes, between different analyst firms like LNS Research or Gartner is that they've done studies on process and process maturity. You know, through that work, plus the work that we've done with our own customers, we recognize that when you do have standardized processes and practices, and you've institutionalized them, you get a business benefit from that, whether that business benefit is done at a very tactical level, like measuring overall equipment effectiveness, or what's called OEE, over something a little bit larger than a more cross functional business process, like new product introduction, seeing acceleration and improvement in product introduction as another business process. So it's really the standardization of a process and the data associated with that process in a manner that is institutionalized. And we're talking about institutionalization within the organization. So it's not just within a factory, but it's across all the plants or all the different entities that might consume that business process.

07:38 Fred Thomas

Based on what you just said, and you and I have worked with a lot of old line companies, both in North America and around the world through the years. But based on what you just said, tribal knowledge, then couldn't really be considered process institutionalization, could it?

Tribal Knowledge vs. Institutionalized Processes

07:58 Eric Green

Well, tribal knowledge is interesting. Every company has it. And in many companies, it is the DNA; it’s the workers’, you know, knowledge, know-how, and that helps drive the organization or those individuals in those departments’ and groups’ continued success. But the problem with tribal knowledge is that it's just that; it's very difficult to pass on, or disseminate and maintain. And so ideally, an institutionalized process includes that tribal knowledge and reflects that tribal knowledge that has been gleaned from people who have been in roles that support those business processes or in those departments, you know, for the last 5, 10, 20 years, however long it's been. You and I both know that in some industries, there are people that with their tribal knowledge, and they have 20 to 30 years of expertise in a given topic in a factory or in a department, whether it be quality or material management or production line activities. The key is how do you encapsulate their knowledge in the context of that business process that you're institutionalizing? So it's that the process can only be standard flat factory, but can be shared across those factories, or departments or even the supply chain, depending on what the business process is, in a manner that benefits the entire enterprise.

09:27 Fred Thomas

Yeah, it's kind of funny, I think you'll remember this, we worked with one company that had, I don't know, a 38-year employee and he kept wanting to retire but the company couldn't let him because he's literally the only guy that knew how to keep everything in the plant running. That's not a situation you want to be in. So that really stresses that standardization always involves digitalization.

09:51 Eric Green

It does. You have to document the process. And that can be documented through Lean exercises, where you do your value stream mapping. But at the same time, you also want to document it digitally. Because there's, as we all know, the process consumes data, you know, whether it's a production line that's consuming material and tracking the pace of production and with a Takt time over something at a broader level where you're doing material replenishment and a pull-based inventory replenishment system. There's data that's associated with that. So you do want to digitalize it and capture that information in a way that can not only be standardized, but shared across the different entities, you know, whether it's a factory or like I said earlier, different supply chain stakeholders.

10:51 Fred Thomas

Have you seen, do we have, say supporting data or analysis that indicates there's a real benefit to process standardization?

11:01 Eric Green

We have. If you look at many of the implementations we've done for customers combined with industry research, there are documented statistics that reflect benefits of institutional honors processes. I can think of one example right off the top of my head where, working with one customer that, the ability to standardize and institutionalize a process they had across a network of factories, and being able to share that with the other factories led to a significant improvement in productivity, and the quality that was being captured at one plant, but now, because they’ve institutionalized it, they're able to reap the same benefits across their network of factories. And when you're a company that has 20, 40, or even upwards—some of our customers have over 100 factories—that benefit can be significant.

11:56 Fred Thomas

Yeah, that number really grows quickly. In a situation like that.

12:01 Eric Green

It does.

12:02 Fred Thomas

So we talked about self-assessment; what questions should a company be asking themselves to really understand their level of maturity at say, stage one?

Are most of your key processes documented?

12:14 Eric Green

In the research note, we did provide some introductory questions. Simple one, and the first one is, are most of your key processes documented? It's amazing to me even in talking to customers that we work with today, that the answer to that simple question is not always a yes. Even with the advancements of all the technology, the advancements with automation, and the advancements with the new manufacturing techniques, that many customers don't have good, documented processes, within their supply chain, or within their factory. So that's the first question. A couple of the other questions that we have that are in research note, we do provide these questions within the research notes, across all the different stages, and we also have tools and teams that can help our customers address these questions.

But the second question we have in the research note on this particular topic is, are those processes followed across the organization? So meaning, maybe you do have your processes documented, but are those processes truly repeated and consistent across the organization, whether that's across the continent, you know, factories between, let's say, North America, and Europe and Asia, or between departments: quality, manufacturing, engineering group, or the production group? And these are the type of questions you have to look at, to really understand, you know, what level of maturity you're at? And then the third question we have in the research note that I'll share with everyone is, are most of your manufacturing quality processes executed uniformly across the sites. So for example, if you have a quality inspection process or quality testing process in a factory, in Warren, Michigan, for example, is that same quality process conducted at the same level of uniformity and consistency, in Shanghai, China? So these are all things that allow you to look and assess, not only are your processes documented, or are they institutionalized across the organization, and are they followed consistently.

14:18 Fred Thomas

That makes a lot of sense. Eric, I want to thank you for joining me today for this discussion.

14:25 Eric Green

Glad to be here. This is a topic we firmly believe that as we look at working with and continue to work with our customers that with the transformation series is something that we'll all benefit from. And we continue to focus on investment. And some of our research, we document and put together more research notes and there'll be more coming. We already have research note three done and we're starting the process on research note four so we believe this provides a lot of value to our customers and we want to continue to share this insight that will ultimately help them transform their businesses and support them in their business journey.

15:02 Fred Thomas

Thank you, Eric.

15:03 Eric Green

Thank you, Fred.

15:05 Therese Snow

Thank you, Eric and Fred for continuing the conversation on the transformation journey. See the link displayed on the screen or checkout our DELMIA blog or YouTube channel to download your copy today. This is Therese Snow and thank you for listening to global operations on the go.