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Keeping connected: Progressing through digitalisation, with a focus on connecting the ecosystem - Interview with Haydn Powell

Keeping connected: Progressing through digitalisation, with a focus on connecting the ecosystem

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Haydn Powell, Digital Manufacturing and Supply Management Strategy, Advanced Components and Systems Division, Caterpillar Inc, is a keynote speaker at the 2019 CIM Symposium.

We asked Haydn to share some insights into Caterpillar’s digital strategy.

1.       What is Caterpillar’s long-term strategy for digital transformation?

My division at Caterpillar, Advanced Component and Systems, manufactures large complex components like cylinders, valves, axles and gear boxes. How efficiently we operate is a key driver for our business, and our digitalisation strategy is enabling us to become more efficient.

Ultimately our strategic vision is based on driving improved competitiveness in the business. Directly that means attacking our cost structure, and improving our ability to respond to changing market needs, and reduce lead time. So we’re deploying digital applications to help us achieve these things, and trying to be agile in how we do that, and move quickly.

We are working within a strategic framework to achieve these objectives, approaching digitalisation in a holistic way which looks at our whole ecosystem. So while we will no doubt make some gains through implementation of discrete technologies, we recognise that we need to remain focused on our overall strategy.

2.       How have you approached digital implementation in practice, and what is your current focus?

We have been working as part of the IfM’s Digital Supply Chains Consortium, and have used Jag Srai’s ‘Ten Digital Scenarios’ framework to identify where our strategic priorities for digitalisation lie. This has helped us to break down the enormous task of digitalisation into steps.

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Figure 1: Ten Digital Scenarios

We began with steps focused on cross-supply chain improvements, and this was my theme last time I talked at the Symposium, covering supply network design with optimisation of factories and manufacturing location.

We are now moving on to identify the biggest opportunities for digital manufacturing within the factory, and how things like the Industrial Internet of Things are driving opportunities for improvements. This also encompasses process automation – programming a lot of the transactional activities in the back office planning area that we previously did manually, now moving to digital capability. We’re also seeing increased availability of machine learning systems and vision systems – these are very real and affordable now, and robust enough to use. So it’s a different environment than even two or three years ago.

Of course, our factories are inextricably connected with the rest of our supply chain, and we are fully aware of the need to stay connected to the bigger picture, but we see the potential for real innovation in the factory as our next priority.

3.       What do you think are the main drivers for change?

A key driver is lead time, because in order to compete in global marketplace you need to have the ability to manufacture almost anywhere and to deliver almost anywhere in the world. This presents different challenges from local, regional or in-country manufacturing. The further the distance, the more critical the lead time becomes, due to the need to keep inventory available to offset long lead times.

So we can use digital technologies in various ways for shrinking lead time. First is predictive analytics: having more reliable data to more accurately predict what inventory you actually need—as opposed to a more traditional guesstimate or forecasting approach—can shrink lead times and cost, and starts to become a competitive advantage. Secondly, making use of connectivity in order to fulfil market demand more promptly, and respond faster, by being able to manufacture anywhere, also helps.

The other key driver is the competitiveness of the business itself. Technology is starting to make a real impact on cost structure and, critically, back office structure. This is through efficiency of process, by being able to make more accurate and intelligent decisions more quickly; and also because we can automate a lot of these processes now, and have them operate 24/7.

4.       What do you think the implications of this are for the workforce and for the skills you need?

There are likely to be shifts in terms of the skills we need and where we need them. I think this will become evident over the next few years. But the skills we need in the back office are often high value, and the market demand for people with those skills is significant, so we need to be able to recruit and retain those employees and offer them more challenging and intellectually stimulating roles.

I think in fact the shift in the workforce is not about putting people out of jobs, but more about enriching the workforce with more interesting and challenging roles, as we automate some of the more manual functions. The skill requirements themselves will change – there will be more problem-solving, more thinking, analytical roles – but we still need the people.

5.       What do you see as the key barriers to digital transformation?

One barrier that comes to mind is the practical challenge of having a digital infrastructure in place. The technology is moving so quickly, but often the legacy infrastructures have inadequate bandwidth and connectivity to handle greater volumes of data.

6.       How do you ensure digital transformation remains focused on customers rather than becoming about the technology itself?

It is easy to get lost in the technology. It’s also easy to say we’re just going to prove the technology works then scale it up, but never get out of this technology-focused mode of testing and proving. So you’ve got to have a strategy that is connected to fulfilling customer demand, and is tied to accelerating drivers of profit. We’re focused on customers rather than manufacturing processes, and everything we do has to build from that.

Digital technologies have the promise of helping us to understand the customer experience better, and are already helping us to improve it. It’s early days, so learning how to connect that back to what we produce—and adapting what we produce in an intelligent way—is still on the horizon. But that’s certainly where we want to go.

7.       How do you think companies across sectors can use digital transformation to achieve long-term, sustained competitive differentiation?

There are definitely ways to gain shorter-term competitive advantages, with more and more connectable IoT devices and robust, commercial tools and systems that are very affordable and can help improve efficiency in the factory and in the supply chain. There are connectable tools to help you visualise where your product is, or what your suppliers are doing, and tie that into where the product is going at the customer end of the supply chain.

To gain real sustained competitive advantage, we need to look at the ecosystem holistically and think about how everything connects together. Connectable technologies are helping us to do this, by orchestrating the different elements of the ecosystem so they are working together towards the desired outcome.

In the IfM’s Digital Supply Chains Consortium, we look at all the different dimensions of the ten digital scenarios across the end-to-end supply chain, keeping the big picture view without becoming too focused on a particular area. It’s crucial to think constantly about how everything connects and works together.

It’s interesting to see among Consortium members that the ten scenarios can come together in different ways for different businesses. We can look at it collectively and then take it away for our own business and create our own landscape. And this is how we can each build our own firm’s strategy for sustained competitive advantage.

8.       What are your key takeaway messages for other firms tackling digitalisation?

My presentation at the CIM Symposium will be about our practical experience in implementing our steps towards digitalisation within the Manufacturing Factory at Caterpillar.

We started with a focus on the customer end of the supply chain, including omnichannel distribution models, customer connectivity, market offerings. We’ve then looked at visibility across the end-to-end supply chain – the scenarios along the bottom of the diagram (see Figure 1). We’re now focused on applications that support the scenarios along the top – in terms of digital factory design, process design and control, scheduling digital production – and we’re making improvements in those areas.

In each step of implementing our digital strategy, we have learned a lot and made considerable progress. We are learning how to harness the technologies as enablers to apply lean thinking in a digital way.


Haydn Powell

Haydn Powell, Director, Digital Manufacturing and Supply Management Strategy, Advanced Components and Systems Division, Caterpillar Inc, has over 30 years of experience in manufacturing engineering, operations and supply chain management. He has published over 25 technical papers and is a member of several national and international committees and technical organizations.  He is the inventor of a number of patents in inventory management and currently leads the digital manufacturing and supply management strategy for Caterpillar’s Advanced Components Manufacturing Division.  Prior to joining Caterpillar Haydn was involved in research and the application of welding and joining process technologies at The Welding Institute (UK) and has over 15 years of experience working in the European automotive industry with Automobiles Citroen, Peugeot, Jaguar Cars and Ford Motor Company.  Haydn graduated from the University of Coventry, UK with a bachelor’s Degree in Materials Science and held an appointment as Industrial Research Fellow in Materials Management and Logistics Strategy at Cambridge University UK during his tenure at Jaguar Cars.

Haydn Powell, Director, Digital Manufacturing and Supply Management Strategy, Advanced Components and Systems Division, Caterpillar Inc, has over 30 years of experience in manufacturing engineering, operations and supply chain management. He has published over 25 technical papers and is a member of several national and international committees and technical organizations.  He is the inventor of a number of patents in inventory management and currently leads the digital manufacturing and supply management strategy for Caterpillar’s Advanced Components Manufacturing Division.  Prior to joining Caterpillar Haydn was involved in research and the application of welding and joining process technologies at The Welding Institute (UK) and has over 15 years of experience working in the European automotive industry with Automobiles Citroen, Peugeot, Jaguar Cars and Ford Motor Company.  Haydn graduated from the University of Coventry, UK with a bachelor’s Degree in Materials Science and held an appointment as Industrial Research Fellow in Materials Management and Logistics Strategy at Cambridge University UK during his tenure at Jaguar Cars.

Haydn Powell