DIGITISATION-The Dream Catchers are Here

Technology may not be the pixie-dust some believe it to be. But it is not a rock either. Applied well and at the right time, digitization can bring staggering leaps in a company’s profits.

There are certain Native American tribes that strongly believe in dreams as the source of something even greater than prophecy. People on the other side of the world also opine that the Great Spirit created the world on a Great Turtle’s back before drifting to sleep. Just the way, back here, Hindus believe that god Vishnu dreamt of the universe while he was enjoying his cosmic sleep.
These tribes, hence, also believe in the idea of dream-catchers. Things, spells, ways that build solid and cozy webs so that bad dreams are trapped. These webs also have a hole in the centre that is designed to make room for the good dreams to make their way in. In fact, in regions like Guatemala, they have worry-dolls too. The children can tell their worries to their dolls before going to sleep.
These beliefs and legends may sound silly or outdated but they are working for someone somewhere fight bad dreams and catch good ones.
Incidentally, the sleep industry also has a new dream-catcher around its spirit, if only; it paid attention to it and hung it on the right spot. Digitisation!
Yes, in the last five to seven years, a slew of technologies have evolved and many more have emerged, changing the landscape of factories, supply chains, business processes, retail points and customer engagement to another level altogether. These technologies are trapping some bad dreams that technology, or the ill-informed and illinvested use of it, caused-mattress makers and sleep-industry players to suffer.

The Signs of a Good Dream

What ails any traditional manufacturing set-up? Wastage, inefficiencies and flab that keep adding to the pile of unnecessary costs and thus, eating away precious margins. They also make an enterprise too slow and rigid to get to the customer in a fast and precise way. Hence, revenues take a hit. The maths is not hard to guess. When costs inflate and sales deflate, it is hard to ensure good margins. And no matter how old or huge one’s foothold is, sooner or later, things are bound to topple over.

There are many latent and ignored islands of fragmented and manual processes across the entire chain of a mattress or sleep-product’s journey.
From the very first nugget of an idea to the last stop at a customer’s place, there is so much that can be done in a better, more efficient, smart, automated, streamlined, insightful and visible manner.

Many latest and advanced technologies such as Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Order management, Inventory management, Warehouse Management System (WMS), Delivery and Point of Sale (POS) systems can help in a tremendous way to increase the efficiency of some underlying processes and save costs. Plus, the world is already setting its eyes on next-gen technologies like Radio Frequency Identification (RFID), Internet of Things (IoT), Artificial Intelligence (AI) and Robotic Process Automation (RPA) which are going to truly flip the way factories ran and the way retail or marketing worked.

This gamut of digital forces is not only relevant for factory operations or inventories but also for other stages of brands, for distributors and retailers and for any stakeholder who wants to maximize profits and deepen customer experiences.
Dr. Rajkumar Palanna, CEO, eMpulse and a digital transformation expert, dissects that whether it is a small manufacturer of pillows or a transportation company or a mid-level enterprise, everyone can reap a lot of potential in emerging technologies. “We are looking at democratisation of technology in the new-age approach. With cloud-based and accessible-to-everyone data, the outcomes change. These areas significantly improve the operations of a company. If done right, it can mean a five to ten percent profit impact.”

So mattress industry players are also at the right value-addition stage with new innovations and the explosion of data available for analysis. This leap can go beyond profits.

Yet, many tech firms in the Asia Pacific region are still at early stages of adoption. They view technology as an investment to expand when growth is good but they cut on it when growth slows down. According to Forrester Asia Pacific Tech Market Outlook (2019 to 2020), the region’s CIOs can expect tech market growth of four percent or more in 2019 and 2020.

What is interesting is that firms in Japan, China, Australia and Singapore consider technology to be core to the business and will keep investing even in a downturn.

That should be the direction and strategy with technology. More so for an industry that has been, for long, trapped in legacy IT, misfit systems, out-dated tools and unwieldy processes.

Sheep-counting to Industry 4.0

This is the era of Smart Manufacturing, as Stephen Ezell, Information Technology & Innovation Foundation (ITIF) captured in his report in 2018.

We are entering an age where digitalisation of manufacturing is upending how products are designed, fabricated, used, operated, and serviced post-sale. It is also showing its quas-imagical impact in transforming the operations, processes, and energy footprint of factories and the management of manufacturing supply chains.

‘Smart manufacturing is being driven by the advent and maturation of many technologies, including: High-Performance Computing (HPC)powered Computer Aided Design (CAD) and Engineering (CAE) software; cloud computing; the IoT; advanced sensor technologies; 3D printing; industrial robotics; data analytics; machine learning; and wireless connectivity that
better enables Machine-to-Machine (M2M) communications.’ The report spells out, underlining the advent of Industry 4.0 in today’s factories.

When tools of better speed, insight and automation are leveraged; a company sees a two-pronged impact. There is a new top-line revenue growth possibility thanks to better, more intelligent and differentiated products. There is also the parallel advantage of bottom-line cost savings due to more efficient and more effective innovative processes using the digital capabilities of the equipment being now used. With lean and smart manufacturing, organisations become insight-driven and that helps making the customer experience also turn more consistent and digital. Not only that, new business models can emerge out of this symphony of data, processes and speed. When production and logistics can get intelligently connected to the rest of the business, one can handle demand-supply fluctuations for sure. But there is something else too – now one can understand a customer needs proactively and have all the capabilities in place of delivering what they want.

Industry 4.0 is here. In fact, one of the most significant changes in recent years is the emergence of digital as a core component in the manufacturing process, as Mr. Raghuram Joshi, General Manager, Enterprise Solutions, Robert Bosch Engineering & Business Solutions Private Limited (RBEI) tells us when he outlines the scope of digital transformation in the Indian Manufacturing space.

“Some people call it ‘Industry 4.0’, some ‘Smart Manufacturing’ and others ‘Future Factories’. This means using IoT, AI, blockchain and other modern technologies to make the manufacturing process more efficient, predictable and equipped to produce higher quality products.”

Mr. Raghuram Joshi points out another significant aspect too. There is an increasing complexity with regards to organisational processes. “Manufacturers need to deliver a higher variety, they need to deliver the right product and they need to deliver it at the right time.”

Sharing his experience on digitisation at Kurlon, Mr. Narendra Kudva, Chief Operating Officer of the company says, “We at Kurlon have been at fore-front of technology, and innovation is part of our DNA. We were among the earliest to adopt SAP as our ERP system 16 years ago. Today, our whole organization including the factories are running on the latest SAP 4 Hanna. It helps us streamline our entire process of procuring materials, manufacturing, logistics and customer delivery & experience.”

While keeping up with the latest technologies, we have kept an eye out on the new technologies such as AI, IoT, RFID, RPA, and Block-chain. Some of these can have an immediate positive effect on this industry.

“RFID has been around for a while, and the greatest benefit it offers is the end to end tracking of the products, right from the production line, all the way to homes of the customers. On the manufacturing side, it offers valuable insights into the production process, tracking defects, making improvements in production. It can provide total visibility throughout the entire supply chain model”, he adds.

Speaking on the IoT, Mr. Narendra Kudva says IoT offers a way to capture lots of data. “We can then use analytics to classify this data and apply it for different applications such as improving manufacturing, quality and customer experience. When you have large amounts of data available on hand, the next step is using ML (Machine learning) to predict outcomes. Lastly, AI offers the ultimate solution, where all of the improvements and experiences are offered through superior human like thinking. The challenge with AI is that the models that are used to train the AI need to be made by humans, and there is a deficiency of trained personnel who can do that. However, with technology and computing power growing exponentially and new workforce being trained in this field, we should start seeing the benefits of these technologies as early as 2020”, he adds.

Meanwhile, Mr. Narendra Kudva says that Kurlon was one of the first few companies in India which implemented SAP. “We have integrated our SAP with warehouse software. This integration provides us immediate information and alerts on the stock at each warehouse location directly connected to our manufacturing units.”

Kurlon also digitised its sales force. “We have developed an app for our sales force. This app sits on their smartphone. Through this app, the sales team can take orders from the retailer and updates it on the app. This app is integrated with our SAP at the back-end and our inventory team can get first-hand information on the product requirements. Through this app, the salesperson can order the required size or a model of mattress. This app also tracks the route of sales team”, he says.

The Next Wave of Early Birds

When we look at new-gen technologies
like Robotics, Industrial IoT (IIoT), IoT, AI, Block-chain, RFID, Smart contracts etc. in factories and supply chains in India, the contours are fresh and exciting. Mr. Raghuram Joshi believes that new digitalisation possibilities create the opportunity to connect not just the manufacturing setup of the OEM (Original Equipment Manufacturer), but also the ability to integrate beyond their organization.

“This could include suppliers, vendors, partners and more. Closer collaboration can help all parties to work more efficiently and optimise the entire supply chain.”

But this necessitates a different shift in the mindset as well. “While on the digitalization journey, it is important that manufacturers maintain a holistic view throughout the full product development process until the point of consumption. For this to be possible, they would need to enable the entire supply chain and manufacturing site etc., which allows them to progress and provide their product as a service. In other words, you need to enable the entire stack. As a manufacturer in the digital world, the ability to operate with a digital twin of a product will also be essential. Without this digital infrastructure, organizations risk missing out on the benefits of monetizing software and services.” Raghuram Joshi explains.

In the landscape of emerging technologies, sensors and IoT are already standing out. The application of IoT is projected to generate $1.2 to $3.7 trillion of value globally by 2025 (McKinsey). This unmistakable effect would be seen in four areas specifically: operational efficiency; predictive and preventative maintenance; supply chain management; and inventories and logistics.

Imagine factories where operational efficiency gets maximized when IoT facilitates predictive and preventative maintenance. Factories can now use sensors to monitor machinery in realtime and the whole air shifts from that of a repair-and-replace to the new environment of predict-and-prevent.

The advantages of emerging technologies are numerous when applied inside and beyond the legacy IT fabric of manufacturing companies. Take the case of Internet of Things (IoT), for instance. If manufacturing companies install IoT sensors within equipments, they can collect significant operational data on the machines. “This helps them to have an in-depth look at how the business is performing and enable them to find out which equipments need repairing before more problems arise. This prevents them from making more significant expenses by skipping the downtime or replacement of the equipment. Hence, investment in IoT and big data helps businesses in saving money,” explains Mr. Karan Kumar, Cofounder & CTO, Hogar Controls.

This can be further extended to a factory scale and infrastructure. Investments in IIoT help a manufacturing enterprise to unleash pockets of productivity, efficiency, pre-emptive maintenance, agility and speed that were never even possible or plausible before. “IIoT is related with various connected devices which help following tasks to control the behavior of the industrial devices – It is about monitoring, collecting, exchanging, analysing, instantly acting on information and much more. Hence, the convergence of IoT and big data in IIoT is an important component.” Mr. Karan Kumar is confident that edgeComputing will be in high demand as we go ahead.

A Lullaby With Magical Effects

The Digital renaissance is clearly underway and would only be ignored at the cost of falling behind.

This reminds us of some observations at the McKinsey Global Institute (MGI) – the majority of value (80 to 90 percent by some estimates) created in prior industrial revolutions can be attributed to replacement of old machines with new ones.

Look at other markets. Mr. Brian Boyette, CEO, Avior Group, Phoenix, Arizona, USA observes, “Lean and digitization has been one of the largest
levers with fast ROI, to improve business profitability during the last decade in USA.”

As per July 2018 (ForresterSAP), about 88 percent of innovative manufacturers have started or completed their digital transformation. This stands in contrast 54 percent of other companies. Note that those manufacturers, who considered themselves to be innovative, also rated themselves highly across the board for innovation in strategy, technology, people, process, and culture. Cannot be a sheer coincidence, can it?
Looks like as tech markets in China and India mature, their tech purchases will start to shift more towards the software and services categories that dominate tech spending in Japan, Australia, Western Europe and the US. As software and services purchases rise from five percent to seven percent, it is seen that many firms in India, China and ASEAN are acquiring their first Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) solutions.

As Mr. Thomas Varghese, General Manager, MM Rubber Company Limited shares, technological advancements in mattress manufacturing especially R&D, Supply Chain and Customer Relationship are always desirable and welcomed. “The mattress industry in India is still in a developing stage and there are many miles to go. Wherever new technologies can be adapted for improvisation, including AI, the mattress Industry should opt for it.”

Mr. Deepak Mehta, Director, Tirupati Foam also weighs in the role of AI and other emerging technologies and avers that technology plays a very important role in this digital era, where every information is on the tip of the hands of humans. “AI is still an emerging technology; what we saw in sci-fi movies earlier is now becoming a reality and hence this will also help the industry to achieve new heights. Looking into CRM, SCM , PoS deployments; this has helped a lot to track you down in your system at a macro level which helps you to understand not only your product and demand but also how efficiently and effectively; so that while reducing your Cost of Production you can work and serve your customer.”

Good Morning Robotisation and Servitization!

Many old-school manufacturing companies in India are reaping the impact of automation in transforming customer engagement as well. RPA or Robotic Process Automation is helping to expedite order delivery. One customer of Pega Systems, for instance, witnessed that processing these requests used to require agents to walk through 122 steps; and 20 of which included painstakingly cutting and pasting sales order numbers into a messy maze of systems. But after automation, customers could change and update shipment dates on-the-fly, without any human intervention. RPA can start helping companies to detect order entry errors and to whittle down the time it takes to process them.

When it comes to RPA, most enterprises seem to be crossing the ‘tinkering’ stage. There is a shift in the focus of RPA from job elimination to augmenting talent, digitizing processes and extending the life of legacy IT systems. As RPA moves ahead from the boundaries of traditional automation software, it arms enterprises in recognizing and adapting to deviations in data or exceptions when confronted by large volumes of data. An HfS (Horses for Sources) research also explains that any company which has labor-intensive processes, where people are performing high-volume, highly transactional process functions, will boost their capabilities and save money and time with RPA. Its estimates show that the total enterprise robotics software and services market will surpass $4.3 billion by 2022 as a compound growth rate of
40 percent.

Then, there is the possibility of servitisation that is a new wave coming on the heels of Industry 4.0. Think of a mattress-maker who jumps a big shift. It stops products and starts providing complete solutions. It can now understand customers better and monetize asset data. This not only brings more revenue from services with higher profit margins but a new level of increased customer intimacy as well.

Everybody wants to get into Servitisation, but the change is not happening at the pace people would expect, Mr. Raghuram Joshi reminds. “In the past, revenue generation or turnover in the manufacturing industry was linear in nature—i.e. the more I produce, the more I am able to sell. However, the emergence of digital has enabled new non-linear business and revenue models, which is why manufacturers are reevaluating the way in which they serve their customers. Examples like subscriptionbased models, ‘pay as you go’ or ‘pay as you use’ are becoming increasingly practical and relevant. End users are demanding products as a service rather than buying them as Capital Expenditure He offers an example. “A manufacturer who sells dishwashers and washing machines can also offer services for these products like preventive maintenance. However, this service can be further enhanced by utilizing a smart home platform to provide services focused on end-user convenience. This empowers customers to decide how they would like their home equipment and machinery to run, whether this is from a power usage or comfort perspective.”

Technology Trickles Into The Retail Hole

Retail space is also a new playground for many technologies as they combine data, analytics, sensors, augmentation, embedded reality and personalization into strong equations. Ask Mr. Milind Shah, Partner – MarTech, RPA & Data, DAN Consult, and one can understand the clear differentiation for technology for mattresses industry which can attract shoppers to buy through digital channels. It is being seen along 3 broad principles:

  1. Product Visualisation: Superior product visualisation is continuing to be a driving factor for ecommerce success in 2019.
  2. Having a Mobile-First Strategy: Lot of decisions are being made on the go and a key mobile first strategy and with a good mobile app, digital-first firms in mattresses industries are offering a more immersive mobile experience to the users with features like push notifications, alerts, personalisation, custom recommendations.
  3. Brand Positioning: The Omni-channel brand positioning around mattresses, has changed from a home essential to a health product and mainly through technology and digital interventions of educating the end client and making him aware of importance of sleep.

Mr. Milind Shah also reasons that in the USA as per date below from “OneClick retail” Mattresses furniture sales showed the highest increase on Amazon with reference to last year up to 82 percent. The trend is expected to catch up in India Market as well.”

This is also a space where gaps and opportunities exist in a hard-to-miss way. Mr. Hormazd F Sholapurwala, Managing Partner, Pillow Tech industries argues that there is a lot that can be done to improve logistics and distribution parts that affect the last mile of a mattress cycle.

“There are so many apps today that are helping us get cabs and food. What if there is something that can jump in when a customer needs a specific mattress that is not immediately available with a distributor but should somehow be delivered to his/ her doorstep by collaborating with other partners or entities.” This remains a ripe area for technology to revive and refresh. Sleep-walking anyone? All said and hoped, there is a reason somewhere that is still stopping many organizations from pushing the pedal on the new world of better profits, efficiencies and happier customers.

Manufacturers still struggle from a lack of awareness, internal expertise, and requisite internal workforce skills to support the digital technologies,
as indicated in the ITIF report. Most manufacturers (especially Small and
Medium Enterprises or SMEs) simply don’t know where to start or how to
deploy digital technologies to solve specific business problems in a way
that generates a positive return on investment.

Technologies like RPA are still nascent and vague; and those like IoT still face interoperability and standardisation challenges. Dr. Raj Palanna pins it down to the need for getting foundation technologies in order first. “We need to have safety systems, ERP, information systems, inventory systems and work-flow systems taken care of first before emerging technologies like AI, RPA or Block-chain can be considered by the industry.” He also confronts the issues that digitisation may present and suggests that the mattress-industry has to start defining standards, interfaces etc. and remove the fragmented nature of technology. “The whole industry gains when everyone becomes profitable and efficient. Collaboration and competition can be nurtured in a healthy way by ISPF. Multiple companies within the overall value stream, and on the entire value chain, can bring new synergies.”

“The ROI on digitisation is so high, thanks to efficiencies plus availability of inexpensive answers – that it is almost stupid not to digitise. But there is a roadmap to it. You would need analysts and experts to guide through gaps, processes, vendors and solutions. Process understanding, deciding and implementation of technologies and change management have to be undertaken well.”

As per the results of a survey by Pegasystems on RPA and Robotic Desktop Automation (RDA), these technologies are being highly effective in streamlining work – though achieving and maintaining those results isn’t as simple as it seems. Value from automation It was noted that most respondents gain significant value from automating their operations with bots. Here, 67 percent said that robotic automation is simple as it seems.

Value from automation

It was noted that most respondents gain significant value from automating their operations with bots. Here, 67 percent said that robotic automation is even more effective than they originally anticipated, while only eight percent felt it was less effective than expected. What is tough, however, is getting to that point and staying there. The survey unraveled many important issues.

Like: Organizations are spending more time and effort getting bots up and running than anticipated. Deployment popped as respondents’ top bot challenge. Almost 50 percent found bots harder to deploy than they first thought, while on average, only 39 percent of bots are deployed on schedule, and it typically took 18 months (on average) to successfully push bots live into production.

Then there was the difficulty of inevitable changes to the underlying enterprise architecture that is likely to lead to increased bot-breakage over time. As the survey unfolded, 87 percent of respondents experience some level of bot failures. Also, maintenance came up as the second biggest problem that bot users face. So with bot-breakage a near certainty, RPA and RDA can’t be viewed as a set-it-and-forget-it task. As was seen, 41 percent of respondents said that ongoing bot management is taking more time and resources than expected. They (38 percent) also found bots to be adding another layer of complexity to IT. Plus, 26 percent worried about more ‘shadow IT’ addition issues than expected.

We cannot deny that 61 percent think bots bring more value and ROI
than originally expected. But we can also not dismiss those 13 percent that have been let down by the amount of value and ROI they’ve seen.
RPA is a good indicator of what can work and what can go wrong while injecting any new technology paradigm in the traditional manufacturing space.

One more thing that can go wrong is security. As per a new global survey from Sophos ‘ The Impossible Puzzle of Cybersecurity’, IT managers are inundated with cyberattacks coming from all directions as cybercriminals exploit weak links in security that are leading to supply chain (third party vendor) compromises. As many as 27 percent of Indian IT managers consider IoT threats, 21 percent consider internal staff as the top security risks and 24 percent of Indian IT managers consider supply chain as a top security risk.

Stop tossing and turning

Challenges will persist and emerge. But the right approach lies in both the way one thinks about technology and the way one executes it, specially in an industry that has long been considered an old-economy one. Ask Mr. Raghuram Joshi and he recommends that digital transformation initiatives need to consider existing technology investments. “A clean slate approach would not be very practical and may lead to intensive discussion around not just ROI but also acceptability from current teams. Manufacturing setups have a legacy and uniqueness of their own. At the same time
these setups are so diverse, you rarely have one solution that suits everyone. It is therefore, necessary to run pilots in the field and then roll them out to the larger organization.”

For fully realizing the potential from Digital Initiatives, it is important to consider these programs at multiple levels, he advises. “Digital Core – comprising of ERP, MES and PLM systems, Enterprise Intelligence Systems – MIS, CRM, eCommerce, Business Intelligence and Collaboration Portals, and interfaces beyond the enterprise like payment gateways, data sharing with ecosystem players. Missing pieces often lead to either suboptimal results or ad-hoc systems and processes that tend to complicate the technology landscape of the enterprise further.”

Lot of opportunities in technology

That said, it is a very exciting and interesting time to be in manufacturing with lots of new opportunities arising— whether that is in relation to technology or the services we can now make available, he confidently maintains.

“In this non-linear environment generally no two solutions are the same, from both a technology and business model perspective. However, taking this into consideration, whoever manages to master the combination of these two aspects is at a huge competitive advantage. The pace of change is unlike anything seen before and while not all of the components of manufacturing’s digitalization are fully mature, not trying them could be a risky move. If organisations wish to remain relevant it is imperative that the adoption of new technology is high on their list of priorities.”

Whether one accepts it, denies it, scrambles to it or crawls towards it, digitization is going to be the new reality.

It is time to let go of bad dreams and welcome new ones. It is time to embrace a new force, with open arms and swift footsteps. As they say ‘Catch your dream before someone else does. Only an open heart will catch a dream.’

ISPF is an industry body which promotes importance of sleep and role of mattress for a Indian consumers. ISPF plays very important role in connecting Indian bedding industry ecosystem. ISPF also acts as bridge between India and international players.