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Value Chain-Oriented Open Factory

ADMA’s 7th transformation explained

This is the third in a series of seven ADMA articles presenting the seven transformations that factories can advance on in order to improve their manufacturing performances. The seven dimensions are:

In a world of exponentially increasing technological developments and fast changing customer demands, manufacturers should develop their products, manufacturing processes and services with the complete value chain in mind. As a result, most companies can no longer depend exclusively on their organisation’s own skills, research and  learning power.

To address the indicated gap (yellow zone above), individual manufacturing companies increasingly need to engage into co-creation in order to expand their innovation capabilities. Innovations of the highest quality and using the most complex technologies are increasingly being carried out by co-creating new solutions, products and/or technologies. The key success factor is the combination and recombination of learned skills based on a flexible and de-centralised management of the co-creation network. Doing so, manufacturing SME’s are evolving from solo-players to networked organisations that share both risk, knowledge, optimal use of skills and technologies available in the network.

The ADMA Value Chain oriented Open Factory transformation is described along five performance areas in the left column of the table below.   

The average maturity scores for the more than 75 European manufacturing SME representatives that participated in this scan exercise are listed in the middle column. Maturity scores can range from 1 (lowest) to 5, being the level which the best performing European manufacturing SME’s would be reaching within the next 2 or 3 years. (The ADMA initiative has stated that maturity level 4 corresponds to the so-called Factory of the Future performance level.)

The next level performances are described in the right column.  

Smart manufacturing progression theme Average maturity score Description of next Maturity level
Internal Innovation Network: The organisation itself works as an innovation network to allow for an innovative environment. 2,72 An innovation plan is defined and new ideas are welcomed through open communication structures (level 3 of 5).
Partnership-driven innovation: Networks of innovation are actively used by the factory as a way to combine and recombine internal as well as external knowledge to reach the position of an innovation leader. 2,82 The organisation has some R&D partnerships with whom they share or whom they use to obtain access to key resources or knowledge. (level 3 of 5).
Supply chain governance: Agile supply chain structures enable high flexibility to cope with rapid changes in demand. 3,49 A small fixed supply chain is supplemented by new partners within a project-based approach. (level 4 of 5).
Beyond customer & supplier needs: The company has a broad stakeholder perspective beyond customer and supplier needs. 2,94 Individual stakeholders are identified and actively involved in specific activities. (level 3 of 5).
External knowledge management: Companies screen, capture and integrate external knowledge on new technologies, ICT- tools, finances, markets, etc. to be able to adapt to changes in its environment. 2,64 First elements of an external knowledge management system have been introduced. (level 3 of 5).

The purpose of ADMA obviously is to help SMEs in the manufacturing sectors improve their business performance.

So what would your enterprise, if at this average maturity level, need to do to advance to the next level in each of the performance areas and what would your enterprise potentially gain from that?    

In a move to creating internal innovation networks, this would entail the owner/CEO of the company to draft a multi-year innovation plan, and ‘walk the talk’ by welcoming ideas through open communication structures throughout the organization – in other words, breaking down the silos between departments.

In a move towards reaching the position of an innovation leader, moving from level 2 to level 3 would involve setting up some first (R&D) partnerships within which the company would share and/or obtain access to key resources or/and knowledge.

Van Hoecke, a Belgian SME manufacturing “lot size 1” kitchen drawers is constantly looking very actively for technologies in other sectors in order to simplify the selection and manufacturing processes as much as possible.
For the production of the bottom panels and the tool-free assembly of the drawer systems, for example, support was sought and found at the Swedish knowledge centre Välinge, the world market leader in mechanical (wood) joints, which is closely linked to the innovative laminate production in Sweden.

To fully capture partnership driven innovation value it is important to:

  1. Find & select the right partners – common vision
  2. Manage the partnership by clear & strict rules
  3. Communicate openly
  4. Balance management of internal & external interests
  5. Control costs of joint innovation projects
  6. Manage tensions & problems pro-actively
  7. Install proper IP management (if relevant)

Want to know more about this? We highly recommend the following SME-focused book on Partnership Driven Innovation :

In order to move towards more agile supply chain structures, enabling higher flexibility to cope with ever increasing and changing customer demands, moving from level 3 to level 4 would require the company to supplement their (usually small and fixed) supply chain by new partners within a project-based approach.

Bio-bakery De Trog, an industrial craftmanships-bakery delivering more than 300 different customer product types, every day uses more than 100 types of basic, locally sourced flower ingredients from a range of suppliers managed on a project basis.

Factories of the Future look beyond direct customer & supplier needs. They have a broad stakeholder perspective, also involving the customer’s customer, the (local) technology community, new solution providers, schools, the local community, etc. Moving from maturity level 2 to level 3, would involve a strategic mapping of highly relevant individual stakeholders, actively involving them in specific activities.

Rf-Technologies Case Study

Finally, moving towards maturity level 3 in terms of establishing an External knowledge management capability, first elements of a knowledge management system have to be introduced in order to actively screen, capture and integrate (external) stakeholder knowledge. You could think of installing a first kind of IT system that stores and retrieves knowledge to improve understanding, collaboration, and process alignment. Popular systems that get applied often include Evernote, Canva, Instacart or Hubspot.

Got inspired ? Further expert views on Open Innovation by Prof. Frank Piller can be found here. Curious how your company is positioned on the 7 ADMA transformation areas? Please take 5 minutes to do the scan @ www.adma.ec

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