Several businesses see digital transformation and the promises of Industry 4.0 as ways to improve their level of operational excellence. Did you know that operational excellence is also one of the key steps towards a successful digital transformation?
Seize the opportunities
For several years now, news has spread about the opportunities offered by digitization to improve an organization’s efficiency and effectiveness.
First, while computerization served to automate low value-added activities in an operational, administrative or manufacturing process, digitization pushes this concept even farther.
For example, with the digitization of processes and the inclusion of computer systems, today’s businesses generate colossal quantities of data. The data collected are often used for monitoring purposes, i.e. in scorecards or operational and financial reports.
Improve the overall effectiveness and efficiency
In the manufacturing field for example, innovative solutions born from artificial intelligence and advanced analytics can now help unlock the predictive potential of these data, accelerate decision-making when non-compliance or failures are detected, and as such, improve the overall effectiveness and efficiency of the production chain.
Even client experience improvement initiatives via digitization opportunities can result in unexpected efficiency gains. For example, processing client data using advanced analytics provides an unequalled level of understanding of clients.
In addition to improving the experience of these clients through greater tailoring of services, a better understanding of your clients provides sharper focus on investments and employee and manager work on current projects and activities that have true value for the client, and improves your efficiency at the same time.
Lastly, discovering trends in demand fluctuations allows businesses improve operational planning and reconcile sales with operations (break down the silos!) to enable the business to produce a good or deliver a service just in time and with the required quality.
The fact that all of this happens, more often than not, on the factory floor or at any other point where the company’s activities are carried out, is directly in line with the philosophy behind operational excellence, which sees “operators” as the main levers for the continuous improvement of a business.
The challenges of 4.0 and operational excellence solutions
Beyond the opportunities, the promises of Industry 4.0 also involve real challenges for businesses.
Management methods
The notion behind Industry 4.0 will force business culture to go from a hierarchical structure to one of accountability and move towards a learning culture. Furthermore, the increased sharing of data among a business’s divisions will result in changes in behaviour and paradigms. Silos will be removed, managers from different business units will no longer keep information from each other.
Labour
Corporate digitization will require implementing training programs to update the staff’s skills based on the company’s, clients’ or business partners’ new needs.
Investing in labour training is key since employees will have to deal with the digitization, connected devices and algorithms. With the support of these components, businesses will take operational decisions at an unparallelled level and pace.
Business models
Industry 4.0 offers the possibility of transforming all products into a single service platform.
Aligning the business strategy and vision
To ensure the longevity of the short-term gains of Industry 4.0 (e.g. automating a process or procedure), the company will have to ensure that its actions align with its business strategy and global vision.
Operational excellence, with its close management bases, already commits the business, its employees and first-line managers to a culture of accountability and sharing and ultimately, the decentralization and acceleration of decision-making (with a minimum of guides or parameters).
It makes it possible to settle inefficiencies before scaling them by automating part of your activities.
The world is changing; your challenges will too. Make sure you maintain your operational excellence. Get ready to act. Our experts can help.
07 May 2018 | Written by :
Pierre Fortin is a partner at Raymond Chabot Grant Thornton. He is your expert in Management...
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Now more than ever, technology can help you put your clients at the heart of your actions. So, offer them the unique experience they’re looking for.
In this digital age, some of yesterday’s practices have not been valid for some time. Nevertheless, one thing remains: there are still clients to listen to, understand, serve and that a business would like to foster unforgettable and positive interactions with that go beyond the everyday transaction.
The client experience: win-win for all
Today, business models are being transformed or created, product or service offerings are more modern and the delivery of the client experience is going digital. In this digital whirlwind, the client experience can still be defined as the result of all the interactions a client can have with a brand or business, what they perceived and especially, how they felt!
Basically, how your business can generate more perceived value for its clients who, in turn, through their loyalty or references, will generate more revenue, will help increase your profitability and enhance your brand image.
Digital opportunities
Process digitization and the use of powerful computer systems open the door to perfect opportunities for enhancing the client experience. Here are three examples.
1. Increasing knowledge of clients for a more in-depth experience
Let’s be honest here. How well do you truly know your clients? What are they looking for? Which positive emotions contribute the most to their experience? What creates value for your business?
Currently, advanced analytical methods and tools can be used to conduct more critical analyses of the structured and unstructured client data available (satisfaction surveys, record of complaints, feedback or comments on a blog, history of transactions with the business, etc.).
These analyses make it possible to see clients from a different angle and obtain an unparalleled level of understanding of their needs and expectations and the emotions they need to feel to create long-lasting relationships, knowing that the emotional impact is the most important vector of the decision to purchase.
Furthermore, sharing these new client data analyses throughout the company is a great motivator for breaking the internal organizational silos that often hamper a totally integrated, smooth client experience.
2. Personalizing the product and services offering, and complementary services
Traditionally, better knowledge and segmentation of clients resulted in a business adapting its product and services offering, thereby attaining a certain level of personalization. This rings true even more so today with in-depth knowledge of your clients, thanks to the advanced analysis of your client data.
However, more precise personalization was often hindered by the related costs. Today, with the opportunities offered through digitization, several steps of the offering development process can be automated, thereby significantly reducing costs and opening the door for investments to further personalize.
3. Reducing clients’ efforts…and increasing speed of experience delivery
Do you feel it’s easy to do business with your company? What would your clients say?
Smart digitization of the client journey can result in major opportunities for decreasing the work required of clients and increasing the speed of the experience delivery, such as:
- A true omnichannel client experience offering a choice of channels for the clients’ interactions with the business;
- Clients who are automatically recognized, regardless of the different channels used;
- Personalized recommendations based on their purchase or behaviour history, which makes buying decisions easier;
- The possibility of completing part of their client journey at their own convenience, wherever they want, how they want;
- The possibility of completing transactions 24/7.
You win too: the same digitization methods and tools can also help you become more agile and efficient when delivering this new age experience.
Avoid creeping featurism in your client experience!
Digitization offers many excellent opportunities to those who know when to seize them, but it also sets traps for businesses that, swept away by market trends, imitate their competitors without thinking about their own business challenges and strategic objectives.
Begin your thought process… with the client! You must first know your clients well and have a clear idea of the client experience you wish to offer.
Then, redesign your clients’ journey by imagining the ideal experience from start to finish, then pull out all the stops, especially, the digitization lever, that will enable you to deliver an unforgettable and positive experience.
This will make it possible to fully benefit from business opportunities resulting from digitization that will not only project an innovative image for your clients, but also, which is even more important, generate perceived value to each of your interactions with your clients, thereby yielding actual benefits for your business.
07 May 2018 | Written by :
Pierre Fortin is a partner at Raymond Chabot Grant Thornton. He is your expert in Management...
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Updated on June 27, 2022
For many companies, financing is perceived as an obstacle to digital transformation, which is essential to their survival.
Technological innovation covers many aspects of a company’s operations. Now more than ever, it must be included in an organization’s strategy to ensure its sustainability and competitiveness. You can invest in your transformation in a gradual and targeted manner based on your specific needs.
In order to determine which financing sources apply to your business, you must first define its needs, as well as your financial structure.
Subsidized an audit 4.0 program
You must prioritize your needs and consider a reasonable schedule to carry out the different implementation phases for these technological innovations.
First of all, you should know that the ESSOR program of the Ministère de l’Économie et de l’Innovation (MEI) offers financial assistance to organizations in all sectors of activity to establish a diagnosis and digital plan with the help of an accredited auditor.
This step will be crucial in determining your specific needs based on your current level of technological advancement.
Several financial assistance programs available
Depending on the investment needs identified (equipment, technology, salaries, process optimization) and your situation, you may be eligible for financial assistance offered by governments or institutions.
Here are a few resources:
- Investissement Québec (venture capital and investment funds, refundable tax credit financing, term loans, Compétivert program);
- Financial assistance for the purchase or modernization of equipment;
- Financial assistance for research and innovation;
- Canada Economic Development Program;
- Banks and Desjardins caisses (term loan on acquired equipment);
- Business Development Bank of Canada and Roynat (term loan on acquired equipment).
Also, find out about programs that target your industry, such as the Dairy Processing Investment Fund, as well as programs specific to your region.
Tax credits and tax measures
You should also know that several tax measures are available to help you finance your technological innovation projects. Make sure you take advantage of all of the measures to which you are entitled.
Loans
If the company anticipates strong growth thanks to this upgrade towards Industry 4.0, it may consider additional financing, i.e., a loan that would be repaid according to the self-generated funds, referred to by different terms.
Unsecured bond (debenture)
This fixed income investment is generally not secured by specific assets but rather by the issuer’s credit score.
Senior debt
This is a loan secured by assets that gives the lender a priority right to repayment over other creditors if, for example, the company defaults, or over the company’s profits.
Royalty loan
A loan with a periodic repayment.
Cash flow loan
A loan based on the expected cash flow of the project being financed.
Do you have questions about the best ways to finance your innovation project? Our experts can help you.
04 May 2018 | Written by :
Gilles Fortin is your expert in corporate finance for the Québec office. Contact him today!
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It is no secret that the crisis caused by COVID-19 has significant financial repercussions for companies and represents a real headache for managers.
Use Industry 4.0 technology to boost operational and financial data cross-referencing to determine production costs more quickly and be more competitive.
Production cost and measuring processes
Production costing could be described as cross-referencing operational and financial information that are often in separate systems together into a common structure.
The purpose of operational data is to measure a business’s various processes (speed, quality, satisfaction, etc.) while financial data indicate the cost of resources needed to operate these processes. The two data help determine the cost of the manufacturing process, distribution, sales, client experience, etc.
Individually, operating and financial data do not provide the same informational value or foster quick and efficient decision-making.
The operational data challenge for production costs
The level of corporate informational maturity varies greatly, and data collection methods range from notes on paper to integrated management systems (ERP), and the ubiquitous Excel spreadsheet. Until recently, we were rarely able to access structured, quality data. Instead, data compilation, validation and transformation exercises were required to obtain accurate data that could be used in costing. Today, organizations are facing two major revolutions:
- Easy access to digitization
There has been an abundant supply of products and services in this field in Quebec for several years now, making it possible to quickly obtain accurate, structured operational data; - The enhancement of existing data
Many companies have an unsuspected information asset in their hands. They accumulate data in ERPs, machine tools or other systems without exploiting them.
With artificial intelligence et advanced analytical techniques, it is now possible to enhance these data and gain an important competitive advantage.
With the data acquired by digitizing processes or using existing data, the company can determine the production cost more quickly and often more accurately. It is also possible to exploit the benefits of costing and to analyse profitability by product, customer, order, etc., based on available information and the company’s objectives.
A practical example
A summary analysis provided the following information: 47% of the costs incurred are operating costs, 53% are selling and administrative costs. An analysis of the 53% production costs revealed that they consist of the following services:
Findings:
To support its distributors, for several years the company has been hiring more resources to prepare bids and technical drawings with no corresponding rise in sales.
Exploiting data to understanding how costs behave
By analysing six variables over time and adding qualitative data, it was possible to define measurements that characterized each of the distributors:
- Measurement 1: Success rate (sales $/bid $);
- Measurement 2: Bid cost per distributor;
- Measurement 3: Technical drawing cost per distributor;
- Measurement 4: Sales per distributor.
The above graph indicates that distributors 1 and 2 account for less than 10% of the bids and technical drawing departments’ efforts and 50% of sales. On the other hand, distributor 6 accounts for 50% of the bid department’s efforts and 25% of the technical drawings department’s effort.
Return on investment
On the basis of this analysis, the company drew up a clear portrait of each distributor’s contribution. Using this information and an analysis of the six underlying variables, the company:
- Discussed potential improvements with distributors;
- Targeted training efforts;
- Identified the efficient distributors’ good practices and passed them on to the others;
- Introduced fees for certain services;
- Eventually, dropped the distributors that did not show any improvements, despite the measures taken.
Whether data come from an ERP, artificial intelligence or elsewhere, if they are not used, there is no return on investment.
Our consultants are available to help you initiate or continue your 4.0 transformation and support your projects, from the smallest to the most ambitious. Go for it!