Navigating Operational and Workforce Challenges in Digital Transformation

Transcript

Stan Miller: Hello everyone and welcome to ROK Studios. I’m Stan Miller, I’m the PR & Analyst Relations Manager for Rockwell Automation in the EMEA Region, and I’m joined by Nina Tebbe. She is our head of Information Solutions Business, Central Europe for Rockwell. Nina, welcome to the studio. 

Nina Tebbe: Thank you for having me.

Stan Miller: And I’m also joined by Mohammad Elnakib. He is head of Information Solutions Sales for Rockwell Automation in Middle East, Turkey, and Africa.  

Mohammed Elnakib: Thank you, Stan.

Stan Miller: I got all that right on the first try.

Mohammed Elnakib: Yeah.

Nina Tebbe: Yes. You did.

Mohammed Elnakib: All good, yeah.

Stan Miller: So, guys, we’re here today to talk about navigating operational and workforce challenges with digital transformation. This is a remarkable topic. I can’t wait to get started. Nina, if it’s okay, if I start with you.

Nina Tebbe: Yeah. That’s fine.

Stan Miller: How do the ongoing skill shortage challenges that we’re seeing in the marketplace, mention for example, in the state of smart manufacturing report, the 2023 study that’s been released, how is that affecting manufacturers and what steps can they take to mitigate some of these challenges?

Nina Tebbe: This is a good and interesting question because most manufacturers, what they see and feel already is that we’re coming to a decade now where many of the baby boomers will retire. And where we see a lot of uncertainty about who will replace those baby boomers when they’re retired, who has the skills and the expertise to become the replacement. 

And first of all, of course, everybody’s hiring talent and is looking for talent, but if you have a talent on board, how quickly can you make this talent being in the same position as the lost worker that you had. And fortunately, there are now techniques and possibilities, what you can do to help these workers become skilled and expert very quickly, and why you don’t have to wait for them to make 10,000 hours, I heard once was the thing before you are a perfectionist on something, before they have put in 10,000 to do the same job, but they can reduce the time to get upskilled very quickly. And I think this is key when it comes to shortage of workers. Do you have anything from your perspective?

Mohammed Elnakib: No, I think you’re spot on, Nina. The workforce shortage that we’re seeing in the market as talents join early in the organization and they start adopting technologies that they can actually help them do their job quicker, more efficient, more reliable, and then they are more productive in a very short period of time. 

And the TCO, when you talk about an investment in such technologies, the business cases are really done from day one, because you are shortening the period from time to productivity, as you mentioned, from day one, they join, until the time they are productive and they are actually producing in the plant or in operation, very effective.

Nina Tebbe: It also has another effect. If you’re using like these technologies to bring workers faster to speed because you can use the same techniques also to shorten certain inspection time, for instance.

Mohammed Elnakib: That’s true.

Nina Tebbe: And becoming more effective and – 

Mohammed Elnakib: And maintenance – 

Nina Tebbe: - and doing this. So, there are different aspects that you can use when you are looking for new technologies that help you to overcome, this is one of the major themes that we are currently facing.

Mohammed Elnakib: And when we look at enabling technology such as [sounds like] demand to digitality as we speak, five years back we didn’t look at it as ridiculous such. We’re seeing demand to digitality more and more becoming a business enabler to a lot of our customers, especially when we look in the post-covid affect – 

Nina Tebbe: Yes.

Mohammed Elnakib: - when we are moving back to normal, moving back to their operations, we are actually using more of these technologies to perform the jobs better and quicker and more efficiently, that’s – 

Nina Tebbe: Yeah. And it also reduced the hurdle in the minds of a lot of the – you sometimes look at the industry and you say oh, they are “old-fashioned”. Not everybody consider themselves as old-fashioned, obviously, but there are some more reluctant to change to digital, what gadgets are the new workers bringing in here now. But now they see what they can do also, due to covid, and what effect it has and that it can have a positive effect on their outcomes, et cetera. 

Stan Miller: Really good points. Really good points. Just to keep us moving along. Let me ask – and maybe Mohammed, if I could ask you this first.

Mohammed Elnakib: Sure.

Stan Miller: As manufacturers are increasingly adoption software as a service, right – 

Mohammed Elnakib: Yeah.

Stan Miller: - to cope with operational challenges, what are some of the key considerations they should keep in mind to ensure these solutions are effectively managed?

Mohammed Elnakib: That’s a great question. And I wish there is a blueprint for that, but at the same time, I think there are best practices that we learned throughout the journey of adopting cloud. Cloud has been there for quite some time, but there’s some things that when we put into SAS, especially for manufacturers, that when they follow such steps, they are able to make the journey more reliable and more efficient and quicker, right. So, first step is they need to identify their needs, right. 

Why am I adopting SAS, what are the mission critical priorities that I need to solve with SAS? So, once you have identified your need and you know exactly your business pain points, now you look for the software, and you need to look for the software first by evaluating the vendor. So, when you evaluate the vendors, we’re not looking to evaluate a cloud service provider, but rather a manufacturing experienced cloud service provider, which means that you not only have a cloud experience, but you have a cloud that is dedicated for manufacturing, and this is why evaluating a vendor, when it comes to the manufacturing SAS environment, you need to look into the cloud SAS environment. 

Now, you evaluated the vendor, you need to look into the third pillar, which is actually data security. From a data security, we know that’s a very critical point as always in cloud. You need to make sure, while ensuring data security, that this vendor has the right security protocols so that both data at rest, data in transit are both encrypted. 

Once you ensure that this vendor has a good security protocol and mechanism, you now need to move to the next step, which is basically train your people, make them ready to adopt the software. And this is a very, very important point because a lot of these projects fail due to culture difference and culture gaps of adopting such technology. If they aren’t ready, and you didn’t prepare them, you might fail in the journey, right. 

So, I believe if you have the right footprint and you ensure also that the software that you’re going to use have the right integration capabilities, cause there are dozens of SAS softwares in the market, right, but not every technology has the right integration mechanism that can make your life easier concluding on the overall solution. So, the integration capability is also one of the main things that you need to look at, once you’re looking into the SAS.

Nina Tebbe: And let me add to the journey. I think it’s important to understand and we embrace this very heavily.

Mohammed Elnakib: Yeah.

Nina Tebbe: Every client is on a different path –

Mohammed Elnakib: True.

Nina Tebbe: - on their journey to digitization. And you also have to acknowledge not every client or every customer is a green field, yeah. So, right now, we are in the lucky situation that with evolving, emerging technologies, companies start building green fields, but most of our clients have already existing plans that they want to use a couple decades more to – and bring them to life. 

So, the situation I think is important as well as how do we embrace it, how do we embrace over the existing things that are there and integrate it into something that can be used for the future, not write everything off. And I think to give the people, the clients, return on investment that they did many decades ago, and still being able to infuse just little things to make more use out of it, that’s great. 

And I think we are embracing this and we are trying to be very open for whatever they have, to be agnostic on one hand, but also to help them grow and develop.

Stan Miller: Guys, let me keep us moving with the next question. Mohammed, you touched on this, but Nina, if I could ask you first.

Nina Tebbe: Yeah.

Stan Miller: You know, there’s growing importance of data security, right? So, with the increasing integration of – you know, the IT and OT departments, this is certainly a major issue. How can manufacturers ensure a seamless and secure collaboration between these traditionally siloed departments. Nina, what’s your take?

Nina Tebbe: So, I think from a security standpoint, it is something that relates to the infrastructure that you’re using. So, I think the infrastructure at every company is the foundation of everything, everything is built on. You have to have something built on concrete, not on quicksand. 

And I think here it is important that you use something that is reliable, that you trust – trust is very important in infrastructure environments because you need to trust that this infrastructure cannot be hacked, that you can secure all your data there, and that’s why Rockwell Automation decided to partner up with a proven infrastructure provider in this, and this is Microsoft, and they are providing infrastructure for the cloud infrastructure and our SAS components run on Microsoft Azure, and we’re very happy that we have this solid infrastructure, so we don’t have to worry about this. 

We can work with the people then on the value adds that they can bring to their businesses and the solution we can develop together, not on the infrastructure.

Mohammed Elnakib: And I think Nina, you touched on a very good point because once you look into data security as well as manufacturing, adopting SAS, and you look into your security criteria’s, your security protocols, you need to balance in terms of what critical information that you are really pushing to the cloud and what information that you are keeping with you on prem. 

And when we talk about manufacturing data, some of the data is not really critical for you, and this is the data that we can leverage as a software company, to actually try to develop and make your business more effective and more operationally sustainable.

Stan Miller: That’s a great point. Guys, I’m going to keep this moving. Mohammed, if you don’t mind, I would love to ask you this question specifically.

Mohammed Elnakib: Yeah. Sure.

Stan Miller: Can you share any examples of how your customers have navigated the complexities they’ve faced in integrating digital technologies with their existing landscape? What advantages did they gain from cloud solutions versus on prem during their digital transformation journey?

Mohammed Elnakib: That’s a very good question. It’s very close to my heart as well because one of the things that keep me moving is that when you see the success that you do with your clients, and this is a journey that makes me in this job until now, right. So, one of the main things that I remember, one of our customers and CEO, a heavily Capex involved company where they used to have a very good plan, growth rates, they are selling really well, they are increasing in their revenue, they are, I think, growing double digit gross and sales every year; however, from an operational Capex standpoint of view, they are investing heavily in their equipment, right. 

So, when I had the discussion with the CEO first, he was telling me, we’re growing in revenue, but at the same time, I’m buying the new equipment to increase the production every year. I’m not profitable enough, there’s something that we need to do. So, we started digging deeper into what’s actually causing that. And we tried leveraging multiple tools until we came up to a conclusion, we’re leveraging less reality, for example, to be able to identify the existing digitalization of their assets, right. 

And we monitored at the beginning for a few months and we found that utilization was approximately around 16%. So, what this means is that for anytime he wants to increase his production capacity, what he used to do is actually buy new equipment when in fact he’s only using the equipment he has only 16% of its original manufacturing time. 

So, by installing such software, he was able to increase the efficiency from 16 – I think now we reached around 86, 87 in around six months, and he stopped buying new equipment. And I’ll tell you now that each – the cost of this machine was approximately around $1.2 million dollars per year. So, if he’s increasing the revenue, he needs to buy additional equipment to fund it too. So, if you look into the overall total cost of ownership, I think it justifies the case, yeah.

Stan Miller: Remarkable. That – 

Nina Tebbe: Yeah.

Stan Miller: - that’s remarkable. All right. One last question for you guys and Nina, if you wouldn’t mind, I would love for you to answer this. How can a modular approach to digital transformation help organizations transition from automation to data driven decision making?

Nina Tebbe: That comes now back to my journey that I already spoke about. I think when you go on a journey, you’re not having like – when you start sailing, for instance, you’re not going to start sailing with the goal in mind that you would sail the world. No, you want to sail first maybe just the lake in front of your doorstep and want to understand what can I achieve with this little boat, yeah, and maybe you start with a small boat first, and then you try to go on a bigger boat and a yacht maybe, then one of the real big boats.

So, every client is like this. They don’t want to start with a big bang, that’s an old methodology from the past. When you think now about agile development, then you start small and try to find out if this small solution is helping your process or not. If it’s not helping, then you move onto something else, but you don’t spend a lot of bucks on something. So, you really start small and then slowly evolve. 

And when you notice oh, it’s working fine and I can go now to other shores, they will scale up and go bigger. And I think this is something that clients are looking for. How can I start small? How can I leverage something that also gives me the level of security and standardization, that I don’t have to reinvent the wheel whenever I want to try something new, that I always have to rewrite the software and I have tons of people looking just to make it work again. 

So, start small, being able to scale, and then you are safe, and this is the modular approach that we are really, really promoting here.

Stan Miller: That makes complete sense, scale up, build on a solid foundation, and see those results. Guys, this has been a great discussion, I’m so grateful for you guys joining us in the studio today. Nina, Mohammed, thank you very much.

Mohammed Elnakib: Thank you, Stan.

Nina Tebbe: Thank you, Stan.

Stan Miller: And thank you for watching. If you’d like to learn more about Rockwell Automation information solutions, visit www.rockwellautomation.com.