SPIX industry publishes the first reasoned study for the formulation of the Return on Investment of exogenous innovations in the industry.
Between Open Innovation initiatives and the forced introduction of digital innovations, the industry is expressing difficulties in formalizing and quantifying the expected Return On Investment (ROI). SPIX industry offers the first reasoned study on the calculation of the ROI expected by the introduction of breakthrough innovations in industrial processes.
Introduction on Return on Investment of innovations
The community of interest around voice technologies for industry is taking a step forward! SPIX industry is developing its network of influence around the use of voice and voice assistance in the industrial environment. Today 2,500 industrial interlocutors follow the company and participate in the animation of the current reflections on the deployment of the voice experience in the industry.
To celebrate this step, and to thank its customers and partners, SPIX industry offers the first reasoned study on the calculation of the ROI expected by the introduction of breakthrough innovations in industrial processes.
“In this article, we will see how to formulate the ROI of an exogenous innovation, from the KPIs associated with the Lean approach of the industry. It is a question here of putting into perspective the normal uncertainties linked to the introduction of any innovative technology in an industrial environment, with comprehensible, easily calculable, exhaustive and coherent improvement objectives for the industrialist”, confirms André JOLY, Managing Director.
Presentation of the article, summary
SPIX industry offers an analysis of the expected ROI following the introduction of disruptive innovations and more specifically voice technologies in industry professions. The reasons that explain the difficulties encountered by manufacturers to formalize this ROI are explained, in particular for exogenous innovations that are not in their core business. A distinction is proposed between innovations that modify industrial processes in depth, and those that optimize the place of men and women in existing processes.
The way to conduct an ROI analysis for the specific case of the introduction of voice technologies in an industrial environment is proposed. Finally, through some business examples from production and maintenance processes, the formulation of concrete operational ROIs is presented.
The article’s plan is the following :
– Introduction: innovations, industrial processes and voice technologies
– How to formalize a ROI for the industry?
– Exogenous innovation, Lean, MUDA and ROI (see extract below)
– What are voice technologies for industry?
– Formalization of the ROI of the use of voice technologies
– How to evaluate the observables (KPIs) defined?
– Illustration of three industrial use cases
Exogenous innovation, Lean, MUDA and ROI
The approach to improving the productivity and efficiency of industrial organizations is formalized by a Lean approach, characterized by the fight against losses or wastes.
Originally, 7 MUDAs were defined by the Japanese Toyota to support the continuous improvement of production and industrial performance, otherwise known as Lean. An eighth MUDA was introduced later: the consideration of employees’ skills, especially blue collars, and field workers. Obviously, considering a voice innovation, this8th MUDA takes on considerable importance.
The 8 MUDAs from the Lean can be used to formalize observables adapted to the evaluation of the introduction of innovations servicing the improvement of the industrial performance.
Definition of Lean’s MUDAs
To be effective and sustainable, the processes of digitalization and innovation in industry must be part of a Lean approach. It is therefore logical, depending on the exogenous innovation considered, to formalize the expected ROI according to the MUDAs pursued. To do this, the understanding of the MUDAs and the axes of improvement of the industry, must allow us to define observables associated in the following paragraphs.
Overproduction corresponds to a quantity of production higher than the demand. A task performed in addition to what is requested, or a production prior to the sales order, are also considered overproduction and therefore, waste.
- Unnecessary stock and over-storage
Over-storage poses several problems within a company. It can be due to overproduction, untreated non-conformities, unused tools and means of production… Over-storage can lead to problems in inventory management and in the flow of the production process. Unplanned and poorly organized storage can lead to dangerous situations.
- Unnecessary transport and travel
Whether it is information or material, all unnecessary travel is a waste and does not bring any added value. In addition, unnecessary information movements can create additional mental load and fatigue for employees. Similarly, a trip empty or a trip to find tools are losses.
- Over-processing, complexity and unnecessary processing
A production process that is too complex in relation to customer demand, over-evaluated product quality, too much information is called over-processing. Unnecessary treatments do not bring any added value. Over-processing includes, for example, indicators that are too numerous or too complex, ranges that are complex to understand, meetings that are too long. Complexity can be a source of non-quality.
- Unnecessary gestures and movements
On the shop floor, any unnecessary travel is a waste of energy, time, and fatigue. This phenomenon is often caused by poor ergonomics or poorly calculated organization. An operator who goes back and forth on his workstation to find the appropriate tools is an example of unnecessary movements: the equipment should be close to the work area. Nevertheless, digitalization leads to new uses at the workplace, not always compatible with operational constraints.
- Defects, errors and scrap
When a non-conformity is produced, it necessarily constitutes a financial loss for the manufacturer. If it requires retouching or disposal, or if it represents customer dissatisfaction, then it generates a loss for the company.
- Waiting time and delays
Waiting times and delays can come from poorly synchronized process steps, changes in series that are too long, heating time of a machine or breakdowns on the production tool. A lack of training or unclear instructions in the shop floor can lead to wait times. In addition, the need to validate a decision, which results in sending and waiting to receive a message, falls into this category.
- Underutilized skills
Each employee has know-how, feedback, skills, creativity and team spirit that need to be put to good use during the implementation of the process and continuous improvement. Not using these abilities is a definite waste, as well as a lack of recognition and motivation among employees. This can come from too rigid management, or from a lack of training and explanations.
As part of a Lean continuous improvement process, it is therefore possible to project the effect of the planned innovations on the targeted MUDAs. This projection makes it possible to constitute a set of reliable observables, and not attackable. Indeed, being in a unitary way very linked to the targeted processes, they can hardly be questioned.
The ROI expected by the introduction of an exogenous innovation applied to an industrial process, is therefore made up of the observable KPIs associated with the targeted MUDAs.
Industrial innovations and the hunt for MUDAs
Not all innovations target MUDAs. The interest of this projection is to find the complementarities between innovations and MUDAs in a process of continuous improvement.
The table below shows the exogenous innovations mentioned in the introduction in order to project their potential effects on the MUDAs considered.
|MES / FSM & CMMS
|IoT data machinery
|Unnecessary stock and over-storage
|Transportation and travel
|Over-processing, complexity and unnecessary processing
|Unnecessary gestures and movements
|Defects, errors and scrap
|Waiting time and delays
We quickly see that software innovations such as MES/FSM/CMMS and Voice Technologies are very complementary in terms of improving targeted industrial processes. Between them, they cover all 8 MUDAs considered.
Apart from Voice Assistance, very few industrial innovations target the theme “skills and know-how of operators“: the famous 8th MUDA!
What’s coming next…
In the rest of the document, we will focus on the introduction of Voice Technologies in production and industrial maintenance processes. Then we will see how to formalize the observable KPIs with the method mentioned above. These observables will then be grouped together to support the expected ROIs.
The use of Voice Technology as an example is interesting because it reflects for most manufacturers the ability or inability to evaluate an innovative investment that is not in the heart of their business.
André JOLY – Managing Director
Phone. : +33 (0)6 25 17 27 94
Website : spix-industry.com
Linkedin : linkedin.com/company/spix-industry
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