Ep: 14 The Business Benefits of Transformation/Notes 4

00:13 Therese Snow

Welcome to our DELMIA podcast, Global Operations On The Go. Today, we continue our series on the transformation journey. Our guest, Eric Green, Vice President of DELMIA, will be interviewed by Adrian Wood, Director of Strategic Business Development at DELMIA, and we'll pick up with Note 4: the business benefits of transformation. Let's listen in.

00:38 Adrian Wood

So Eric, Dassault Systèmes has developed what's called a transformation journey value framework. Can you describe this a little bit and how it helps to understand where and how value is derived?

Key Topics and insight Identified

00:51 Eric Green

I can. The whole transformation journey in the research notes series where put it in context, we’ve put in place working with many of our customers, because they were looking for insight on different topics to help them transform their business. And as we focused on the key topics, we identified the different enrollment topics that our customers were interested in learning more about, and how to address. And so in research note four, we talked about the business benefits and the value framework that you alluded to. But those are preceded by three other research notes that set the stage. One is—the first research note is—the seven components of transforming operations.

The second one is the four steps maturity and transformation for operations. And then the third one is one that is—what I would say is a collection of key considerations for any transformation effort. Research note four focuses on that value framework, and we've identified a value framework and put this together as part of the transformation journey and the research Note series—to help our customers understand, depending upon the combination of those factors of maturity, the components of transformation that they're focusing on, where and how they can derive different business benefits as it relates to their specific initiative.

02:20 Adrian Wood

Okay, and you mentioned, there are four levels of maturity in this framework. And perhaps you could describe some example of the value companies have actually benefited from in some of these areas?

Achieving Value with Processes and Optimization

02:32 Eric Green

Sure. The levels of maturity that we've identified for achieving value within research note number four is—in no particular order—is the institutionalized business processes; the second one would be automated processes; third is compressing the size and processes; and fourth is optimization. Now within each one of those maturity levels, there are different types of benefits that are typically achieved. And the research note elaborates in significant detail about this: like, for example, when you're institutionalizing processes, some of the first and most immediate benefits are on quality or manufacturing improvements in efficiency due to repeatability.

And these are things that that we've seen in the research note—we’ve highlighted examples of this—where benefits range from 6 to 10, 12 percent of improvements in those areas. And then on the areas of quality, you're seeing that you improve quality subject consistently provide products that meet the requirements. And this is incredibly important in regulated industries, whether it's aerospace and defense, or industries like life sciences or food and beverage that are regulated by the FDA. And some of the more mature levels—like, we're talking about compressing silos and processes as I jump ahead a little bit—there are significant benefits because the advancement of technologies like we have, called the Virtual Twin Experience, allow for some benefits to be compounded and grown, because of the solutions that we provide. And that allows for the full connectivity from the ideation phase of the product through the entire manufacturability analysis of the product, through the execution, and ultimately through the order fulfillment of providing that product and associated services to the customer, whether it's a B2B environment or a business-to-consumer environment, where we're actually getting something delivered to our homes.

And the Virtual Twin Experiences that we have allow for that to be managed end-to-end, and more importantly, allows for a closed-loop process where we can actually do things in a way that improve the entire operational spectrum, but do so from a virtual model, and therefore, eliminate and reduce cost, time and effort that otherwise would not be achievable without having a virtual model in place to address the business issue. So those are two examples. And in research note four, we elaborate on the other processes and go into much more depth on those business processes and those activities across those levels of maturity; things like new product introduction, operational improvement across factories and topics like that, as it spans each one of those maturity levels.

05:42 Adrian Wood

You mentioned Virtual Twin Experience, and of course, digital twin technology is a hot topic for many companies these days. I want to just double click on that, if we could. How critical is that technology and how’s it play a role in delivering value across these different maturity levels?

Digital Twin Technology and Real-World Situations

05:58 Eric Green

Oh, it's definitely a hot topic. Digital twin technology and digital twins, if you read the analyst reports and research and consulting papers, which we leverage some interesting data points in the research note series, you know, highlight and define what it is. And most people would view that as the twin of a product that is being manufactured and designed. When we're talking about it, it’s from the context of manufacturing. When we talk about the Virtual Twin Experience, we're talking about it in a much broader context. So one element is having all the data in the model-based approach that not only reflects the product, but also the factory, the operations and the different production lines, as well as the supporting business processes, which would be areas that affect the supply chain—like raw material flows and distribution of final goods.

So having—as I defined that—having that holistic model-based approach and view where you not only have the data to make informed decisions, but you have the ability to simulate and optimize the entire operational framework in a virtual environment, then you have the ability to essentially do game scenarios, to understand the impact of different strategies, or as we've seen over the last 18 months, see the impact of real-world situations that have affected the business, whether it's—as we see today—with the chip shortage in different industries, with microprocessor shortages affecting everything from high-tech to the automobile industry to consumer goods, and other similar supply chain problems. Having the ability to model, simulate and optimize based upon these real-world issues in a virtual environment gives you the opportunity to pursue strategies and understand what the possible implications are for actually executing them—and realizing that trying to solve the problem one way is going to create or manifest other issues that are going to cost you—the organization and the manufacturer—money, or cause significant delays that make the actual recommended solutions not even feasible.

And so having that in place, and that environment in place, so that you can actually do these gaming type scenarios—to understand what strategies you can pursue, to understand how the implications of a supply chain issue or manufacturing issue affects your business, or how to potentially go after and capture new markets—opens up the realm of possibilities for you to be much more creative in how you go after addressing business. And the more mature you are as an organization in having not only the data and the model-based approach that we're talking about, and the Virtual Twin Experience, but also the maturity of your understanding of the businesses and the drivers of each, unleash the creativity that you can explore for found new ways to serve customers, that have really set some companies apart. And we've seen that with some of our customers and how they've truly differentiated themselves in a market that's extremely challenging.

09:12 Adrian Wood

Okay, that makes sense. And when we think about levels of maturity—sometimes you think of sort of a linear progression through those different levels—but can organizations actually, you know, start initiatives and get value at different stages concurrently? Or do they need to go through this maturity level one step at a time? What should they do, or what could they do?

Utilizing Available Date to Drive Business Value

09:35 Eric Green

Well, I'm going to say yes, that can be done concurrently. Now, there are some caveats to that; the first is that the data’s available. In many cases that we find in organizations where we assume the data is available, working with our customers, when we come to the realization that the data does not exist, because either the processes are manual or the systems are closed, and therefore you don't have access to the information. So I think one of the key things is making sure that you do have the data available, but presuming that the data is available to at least establish the baseline and foundation, yes, we have the ability to drive business value across a multitude of different areas, given what the overall corporate strategy is. So for example, we have customers today that are pursuing transformation initiatives and they're focusing on parallel strategies.

One being focusing on engineering and design of product, another being focusing on manufacturing and supply chain, those are happening in parallel and in tandem. And of course, because of our approach, and with our solution, with the 3DEXPERIENCE platform, they have the ability to do so, pursuing both parallel strategies while still being connected as they move forward, and doing so in a way that allows for them to get benefits in different parts of the business, but yet, understand the constraints or the dependencies upon the other departments or functions. So that's an example of the largest or the widest level of scope. But this also can be achieved even at a macro—sorry, a micro level, which would be, you know, within a factory. You can start specifically on focusing with the Virtual Twin Experience to address adding a new production line—like we're seeing so much of today with reshoring and nearshoring activities—to reconfigure a factory to support additional product SKUs.

But at the same time, while that's being done, we allow for customers to address other business process areas to drive value, especially in the things like material synchronization, that ensure you manage your inventory at the appropriate levels, even while you're changing your product SKU mix. And, again, there's the relationships there, but they can be done independently, at the same time, so that you can at least get the benefits in a near-term basis versus a longer-term basis, depending upon your production cycles.

12:02 Adrian Wood

So it sounds like a lot of flexibility for different companies in different industries that might have different needs and challenges based on where they are in maturity; lots of solutions. And my last question is really this: how do you think Dassault Systèmes solutions uniquely provide value for companies to enable sustainable business operations through this framework?

The Focus on Sustainability

12:23 Eric Green

I'm going to start with a couple of comments. First, Dassault Systèmes, as an organization, we are keenly focused on sustainability and sustainable innovation. That is our vision and mission. So we're oriented towards providing solutions that drive sustainable operations from the get-go. In addition to that, as you highlighted, our solutions with the 3DEXPERIENCE platform, allow for companies to start very large, and support the challenges and transformations of the largest companies in the world to very small—to the companies that are in true startup mode and carving out and growing a business that is going to be disruptive to the marketplace.

And so what makes us unique is not only our vision and focus, but also our scalability; scalability to be able to handle the most complex problems down to some of the smallest challenges based on company size as they're trying to grow and transform. Within that spectrum, our approach with a holistic model-based Virtual Twin Experience that ties in the real-world activities to provide a closed-loop and optimized process is unique. And this goes well beyond the market definition of a digital twin, because what we're talking about here is something that actually extends in perpetuity because it evolves. And there's almost a living type of solution that evolves and changes over time as your business changes. It's not tied to just a digital twin of a product. It is actually the Virtual Twin Experience of how that product goes to market and all the business processes and facets that affect it. And therefore, each product and each geographic market will and does have some specific challenges, and we can address those challenges uniquely for that given area.

But more importantly, as companies are transforming their business, we have the ability to help them depending on what are the key needs for their transformation. And so, to answer your question, it basically comes down into four key elements. One is this is our focus and mission. Second is our scalability with our solution, the 3DEXPERIENCE platform. The third is the fact that we can start across many different functional domain areas to help drive that transformation. And the fourth is we can grow and even partner with you over time because of the customer solution and capabilities and the wonderful people we have within the company.

15:03 Adrian Wood

That's a great summary. Eric, thank you very much for your thoughts and insights. That's all my questions for today.

15:09 Eric Green

Thank you, Adrian. Everybody, have a good day.

15:10 Therese Snow

Thank you, Eric and Adrian, for continuing the conversation on the transformation journey. Our listeners can learn more by accessing the link in the podcast description. I'm Therese Snow, and thank you for listening to Global Operations On The Go.