Digital

Manufacturing –
escaping pilot
purgatory
Digital
Manufacturing –
escaping pilot
purgatory
Contents

Executive summary 6

Part I: Key findings from the Digital Manufacturing Global Expert Survey 2018 8

Most manufacturing companies consider Digital Manufacturing a top priority and

themselves ahead of the game 8

A clear majority of manufacturing companies have already successfully piloted digital solutions 9

For most manufacturing companies, advancing beyond the pilot phase is still a big challenge 10

Part II: Our perspective on the three principles of escaping pilot purgatory 12

Strategize the process 12

Innovate the infrastructure 15

Mobilize the organization 17

Outlook 19

McKinsey’s global Digital Capability Center network 20

Global McKinsey contacts for Digital Manufacturing 21

Contributors 22

Digital Manufacturing – escaping pilot purgatory 5

 Executive summary

The global race for innovation leadership in Digital Manufacturing 1 is picking up pace: two
thirds of industrial companies worldwide say that digitizing the production value chain is
one of their highest priorities. To achieve this goal, companies are actively pursuing a broad
range of Digital Manufacturing use cases in three areas:

ƒƒ Connectivity. Enabling the flow of relevant information to the right decision makers in
real time. Examples include digital performance management and the use of augmented
reality to communicate interactive work instructions and SOPs.

ƒƒ Intelligence. Applying advanced analytics and artificial intelligence to an array of data

to generate new insights and enable better decision making. Examples include predictive
maintenance, digital quality management, and AI-driven demand forecasting.

ƒƒ Flexible automation. Leveraging new robotic technologies to improve the productivity,

quality, and safety of operational processes. Examples include autonomous guided
vehicles and using cobots for assembly processes.

Despite this focus and enthusiasm, McKinsey’s collaboration with the World Economic
Forum on the “future of production” has shown that many companies are experiencing
“pilot purgatory” in which they have significant activity underway, but are not yet seeing
meaningful bottom-line benefits from this.

To more fully understand how manufacturers across the globe are approaching their Digital
Manufacturing transformation and the challenges they are facing, McKinsey has conducted
its fourth Digital Manufacturing Global Expert Survey (Box 1). The results of this survey
provide interesting insights into how manufacturers’ approaches differ across the world, as
well as concerning behaviors that are contributing to “pilot purgatory.”

In Part I of this report, we share the results our 2018 survey. These show largely continued
levels of enthusiasm and prioritization related to capturing benefits from Digital Manufac-
turing with notable acceleration in China and India and regression in Japan. However, while
there is significant importance placed on the topic and many pilots have been launched across
a range of use cases, less than a third of respondents cite having moved critical use cases –
such as digital performance management – into large-scale rollout. At the same time, more
than 90% of surveyed companies believe that they are either at the forefront of Digital
Manufacturing in their industry or, at least, on par with the competition.

In Part II, we offer perspectives on six success factors that manufacturers who are
demonstrating at-scale impact from Digital Manufacturing are following. These factors
span the transformation categories of process, infrastructure, and organization:

Process

ƒƒ “Approach the opportunity ‘bottom-line value backwards’ – rather than technology forward”

ƒƒ “Establish a clear vision and change story for how Digital Manufacturing will create
competitive advantage and develop a phased road map and business case”

1 In this report, we use this term, broadly defined, to encompass similar terms such as Industry 4.0
and Smart Manufacturing.

6 Digital Manufacturing – escaping pilot purgatory

 Infrastructure

ƒƒ “Form an early view on the comprehensive target-state technology stack that is scalable
and analytics-enabled and supports the Digital Manufacturing road map”

ƒƒ “Build and lead a focused ecosystem of technology partners to rigorously manage the
building of the stack”

Organization

ƒƒ “Drive the transformation from the top (and via P&L owners) and coordinate
implementation widely – do not treat it as an isolated IT implementation effort”

ƒƒ “Get ahead of the capability gap – build the skills to achieve impact and the culture to
sustain it.”

Box 1 Overview of McKinsey’s Digital Manufacturing Global Expert Survey

SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

ƒƒ Over 700 qualified respondents from companies with more than 50 employees and over
USD 10 million in revenues, spanning a range of industry sectors from automotive to
chemicals to transport and logistics

ƒƒ Impact, strategy, key solutions, and implementation approach assessed for seven key
markets (Brazil, China, France, Germany, India, Japan, and the USA)

Digital Manufacturing – escaping pilot purgatory 7

 Part I: Key findings from the Digital
Manufacturing Global Expert Survey 2018
McKinsey’s 2018 survey of global manufacturing companies reveals an interesting
mix of organizational commitment and clear progress on one hand and stagnation in
Digital Manufacturing on the other hand. Three key findings characterize the industry’s
development over the past 12 months.

Most manufacturing companies consider Digital Manufacturing a top priority

and themselves ahead of the game

Leaders in manufacturing organizations have identified the importance of digital manu-

facturing, and for the most part they see themselves as doing rather well vis-à-vis their com-
petition (Exhibit 1). On average, 92% of respondents report that they are either on the same level
as or ahead of their peers when it comes to Digital Manufacturing. In other words, very few see
themselves as “behind the curve” or, thus, needing to “catch up” to the competition.

Exhibit 1 Most organizations feel themselves ahead or at the same level as competitors

How do you feel you are placed relative to most of the competitors in your industry
with respect to implementing and capturing value from Digital Manufacturing?
Percent
We are ahead We are on We are behind
of our competitors the same level our competitors

Brazil 32 58 10

China 52 41 7

France 28 58 14

Germany 28 64 8

India 47 48 5

Japan 12 61 27

USA 38 57 5

Average on same level or ahead: 92

SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

At the same time, the idea of Digital Manufacturing has held its importance among companies
in the industry (Exhibit 2). More than two thirds of respondents report that Digital Manufac-
turing is at the top of their operations-strategy agenda. There is a fair amount of variation by
region, but for most, Digital Manufacturing is a global priority. Respondents from Japanese
manufacturers are the outliers here. Not only are they the least likely to identify Digital Manu-
facturing as a top organizational priority, they also are accordingly the least likely to see their
organizations as winning the Digital Manufacturing race.

The picture of where manufacturing companies stand today regarding Digital Manufacturing
is a useful snapshot, but an understanding of changes in attitude over time is at least equally
illuminating. In this context, it is noteworthy that – after an all-time high in 2017 – optimism
about Digital Manufacturing’s potential has plateaued for the first time in China, the USA,
and Germany. In Japan, enthusiasm has dropped off significantly from what already had been
clearly the lowest level of all four countries in which this attitude was measured.

8 Digital Manufacturing – escaping pilot purgatory

Exhibit 2 Digital Manufacturing is a top priority for manufacturers
Top priority Average or low priority

How much of a priority is Digital Variation exists across countries

Manufacturing on your company’s Percent
direction agenda?
Percent Brazil 73 27

China 87 13
Low priority

10 France 55 45
Average
Germany 69 31
22
68 India 94 6

Japan 31 69

Top priority USA 63 37

Average top priority: 68

SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

A clear majority of manufacturing companies have already successfully piloted

digital solutions

In each area of Digital Manufacturing – connectivity, intelligence, and flexible automation –

most of the respondents report (at least) piloting solutions within their organizations
(Exhibit 3). There is, however, a sizable gap between the share of respondents who see the
relevance in certain Digital Manufacturing categories and those who report that their
organizations have piloted solutions in those areas (an average spread of 15 percentage points).

Exhibit 3 High levels of relevance and conducted pilots across all Digital Manufacturing levers –
degree of adoption seems to be consistent across levers
Relevance
Pilot phase (or advanced)
Across industry sectors and categories, Digital Manufacturing
solutions are adopted consistently
Percent
Connectivity Connectivity groups Digital Manufacturing
85 solutions that improve and facilitate
operational performance, manage-
ment, and everyday collaboration of
64 employees (such as augmented reality
and digital performance management)

Intelligence Intelligence refers to applications

87 around analytics and prediction
models as well as digital twins of
products and processes (such as
70 predictive maintenance or demand
forecasting)

Flexible Flexible automation is associated with

automation 77 automation solutions that use new
digital equipment to increase effi-
ciency through its flexible deploy-
61 ment in the production system (such
as autonomous guided vehicles or exo-
skeletons)
SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

Digital Manufacturing – escaping pilot purgatory 9

 Analytics for quality management and inventory optimization are the solutions most likely
to have gone beyond the concept stage, while autonomous vehicles and 3D printing are the
least piloted Digital Manufacturing solutions.

In many cases, companies are piloting multiple digital solutions simultaneously (Exhibit 4).
The global average is eight solutions, but the number varies widely by country. While Indian
manufacturers report, on average, piloting more than ten Digital Manufacturing technolo-
gies at any given time, companies in Japan are, on average, piloting only about four.

Exhibit 4 On average, companies are piloting 8 different Digital Manufacturing solutions

How many different Digital Manufacturing solutions are you already piloting
in your organization?
Number of different solutions

Brazil 8.9

China 10.2

France 6.7

Germany 6.9

India 10.6

Japan 4.1

USA 8.5

Average 8.0
SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

What’s more, an analysis of implementation success over time reveals that significantly
more companies are reporting successful piloting. Yet while success rates in implementing
Digital Manufacturing solutions increased rather strongly in China, the USA, and even
Japan, piloting success among German companies has stagnated.

For most manufacturing companies, advancing beyond the pilot phase is still
a big challenge

Even when companies report significant numbers of pilots, most cite significantly less
progress in terms of broader rollout (Exhibit 5). In fact, the gap between piloting and rollout
is significantly larger than the gap between perceived relevance and piloting, suggesting that
scaling is a bigger hurdle than getting the ball rolling.

10 Digital Manufacturing – escaping pilot purgatory

Exhibit 5 While pilots are common, companywide rollout is still rare
Pilot phase (or advanced) Rollout phase

At what stage are you with adopting specific Digital Manufacturing solutions
at your company?
Percent of relevant solutions
Connectivity
64

23
-41

Intelligence Lacking impact

70
at scale –
only ~ 30% of
29 organizations did
-41 rollout-relevant
solutions company-
Flexible wide
automation 61

24
-37
SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

An analysis by sector shows that the newer, more technologically advanced areas of the
manufacturing sector (for example, industrial automation) are further ahead in the
implementation of Digital Manufacturing than older, more established areas such as paper
and packaging (Exhibit 6).

Exhibit 6 Technologically advanced industries are leading the digital transformation

Industries Pilot phase (or advanced) Rollout phase

Industrial automation 78% 34%

Software 77% 34%

Semiconductors 73% 20%

Consumer goods 70% 26%

Automobile manufacturing (OEM) 66% 23%

Mechanical engineering 65% 24%

Plant engineering 64% 23%

Supplier of automotive 64% 20%

components (OES)

Transportation and logistics 61% 26%

Healthcare 60% 22%

Chemicals 59% 25%

Paper and packaging 56% 20%

Average 66% 25%

SOURCE: McKinsey Digital Manufacturing Global Expert Survey 2018

Digital Manufacturing – escaping pilot purgatory 11

 Part II: Our perspective on the three
principles of escaping pilot purgatory
The results of our Digital Manufacturing Global Expert Survey 2018 clearly indicate that
most companies are still struggling to move successfully from the piloting of point solutions
to delivering sustainable impact at scale. Success stories for capturing sustainable impact at
scale are still few and far between.

What we have learned from our research – which is also supported by our client experiences
and industry observations – is that companies often make the same missteps when it comes
to Digital Manufacturing strategy and implementation. In order to escape pilot purgatory
and to capture and sustain the value from digital technologies, we recommend that orga-
nizations focus on six success factors across three categories (Exhibit 7).

Exhibit 7 To escape pilot purgatory, organizations should keep 6 key success factors in mind

Approach the opportunity Form the comprehensive Drive the transformation

“bottom-line value back- target-state technology from the top and com-
wards” – rather than stack that is scalable municate results and
technology forward success stories

Approach digital holistically Build and lead a focused Get ahead of the capa-
with a clear vision and ecosystem of technology bility gap and build the
develop a phased road map partners culture to sustain it

SOURCE: McKinsey

Strategize the process

Without a focus on solutions that have a high impact on the bottom line, organizations end
up pursuing an Digital Manufacturing journey that is financially not feasible. The following
success factors are directly tied to the ability of manufacturers to establish a solid business
case for the implementation of their Digital Manufacturing solutions.

1 “Approach the opportunity ‘bottom-line value backwards’”

With the plethora of Digital Manufacturing solutions on the market, it is easy for companies
to be led by what is exciting. Beginning with a clear view on how Digital Manufacturing
solutions can address operational pain points, creating competitive advantage and driving
bottom line impact is key to ensuring tangible returns:

Determine the value-creation potential. Implementation costs are only

justifiable if the payoff is significant. 61% of respondents see lack of ROI 61% of manufacturers see
as a major obstacle when implementing Digital Manufacturing solutions insufficient ROI as a barrier
at scale. Understanding the company-specific situation will be key in to implementing Digital
determining the potential value at stake of an Digital Manufacturing Manufacturing at scale
transformation.

12 Digital Manufacturing – escaping pilot purgatory

2 “Establish a clear vision for Digital Manufacturing and a phased road map
to get there”

The concern that a lack of vision is a significant obstacle to digital transformation has grown
over the last year. In 2017, only 15% of survey respondents saw a lack of vision as a significant
obstacle. Today, that share has climbed to 59%. Three principles can help manufacturing
companies create a real vision for Digital Manufacturing:

Think holistically. Look down the road – i.e., past an immediate fix – and beyond your
company – i.e., into the context of the entire ecosystem – and make technology decisions
based on what will build a long-term competitive advantage.

Showcase the benefit. No matter how comprehensive or holistic, a vision

without organizational buy-in will likely fail. Making the benefit of a Lack of vision is a barrier
particular technology clear to all is critical, yet only 25% of respondents to Digital Manufacturing
have set up Digital Manufacturing integrated pilots as showcases to success for 59% of manu-
train and inspire the organization. By creating one or more “lighthouse” facturers, but only 25% have
facilities that showcase the integrated picture of how individual use cases set up lighthouses to make
combine to create truly transformative outcomes can help companies build the benefits clear
a clear and unified vision for Digital Manufacturing. Selecting subsequent
use cases that generate the desired value can solidify a company’s buy-in
around the aspirational vision for Digital Manufacturing.

Create an ROI road map. To achieve the highest ROIs that come from scaling, the complexities
of the technology and use cases, the level of process and cultural change needed, and the
sizable investment required must be carefully managed. To this end, transformation requires
a road map. The road map should be based on both a clear definition of the size and nature of
the business opportunity and a precise understanding of the IT and operational technology
(OT) architecture and resourcing requirements. The good news is that today, more than 58%
of respondents report that they have a robust road map for implementation – compared to only
33% in 2017.

Digital Manufacturing – escaping pilot purgatory 13

 Industry case: Developing the digital vision and approach for a holistic digital
transformation of an automotive tier-1 supplier

Situation Approach
A tier-1 automotive supplier requested The approach to supplier’s Digital Manufac-
McKinsey’s support in its digital trans- turing goals was based on the four pillars of a
formation, specifically to enable it to address digital transformation: strategy, organization,
and adopt the megatrends in the industry product development, and change management
related to products, services, and processes

Vision Impact
A comprehensive outlook for the supplier included The transformation equipped the supplier with
a perspective on how eight aspects would contribute the tools and structures it needed to reap the
to its Digital Manufacturing vision: value of Digital Manufacturing:
ƒƒ Digital products that boost revenue ƒƒ A digital road map charted the course to
10% in additional revenue and a 15% cost
ƒƒ IT and platforms that support rapid scale-up
reduction
ƒƒ Digital supply chain for end-to-end
ƒƒ A digital factory facilitated the scale-up of
efficiency
Internet of Things (IoT)/digital use cases
ƒƒ Capabilities to drive digital initiatives
ƒƒ A digital ecosystem of partners supports
ƒƒ Organizational culture that embraces digital ongoing innovation
transformation
ƒƒ Investments focused on growth-based
digital models
ƒƒ Business processes seamlessly integrated
with digital solutions
ƒƒ Global partnerships that complement
in-house capabilities

14 Digital Manufacturing – escaping pilot purgatory

 Innovate the infrastructure

With the strategy and business factors sufficiently addressed, companies can focus on both the
critical influences of the technology stack and the importance of an effective technology ecosystem.

3 “Form the comprehensive target-state technology stack”

Digital Manufacturing is, by definition, “technology driven,” but more than 44% of respondents
point to IT deficiencies as a main challenge in successfully implementing those initiatives. In
defining the optimal technology stack, manufacturing companies should keep five principles
in mind:

Comprehensive. Definition should include a look at all five layers: collection, connectivity,
data, analytics, and applications. It should also be specific to your operational model.

Scalable. A critical element for scalability is the data ingestion pipeline complemented by
analytic capabilities.

Analytics enabled. Systems (software and infrastructure) provide the

Among the IT deficiencies,
material, but analytics provides the insights that, ultimately, generate
only 20% of manufacturers
the value. Only 20% of organizations have set up a data lake across their have built network-wide
network in more than 50% of their plants, and only 25% use an advanced data lakes in more than half
analytics platform at scale. of their plants
Integrated. Digital Manufacturing implementation requires that the relevant information from
operational (OT) and information technology (IT) be integrated. Successful IT/OT convergence
creates the delivery engine that will develop use cases that meet a manufacturer’s business needs.

Secure. Cybersecurity must be actively addressed by, for example, analyzing the connections
and adaptability between legacy and future systems.

4 “Build and lead a focused ecosystem of technology partners”

The entire technology stack process – from development to rollout – must be tightly managed
to ensure cohesion and seamlessness. Manufacturing companies should keep sight of three
aspects of the process as they move forward:

Architecture complexity. Manufacturers face challenges navigating the complex landscape

of solution providers. When building in the necessary components to the technology stack,
machinery players will want to leverage industry standards as much as possible to ensure
cross-organization interoperability.

Partnerships. Select a few partners that go deep in both functional and Partnerships can help man-
integrative expertise; co-developing when possible. More than 40% of age complexity, but more
respondents prefer to build their IT/OT systems in-house or tailor them than 40% of manufacturers
based on external sources. This contributes to the need to bridge a wide
prefer to build their stacks
range of systems that includes ones developed in-house, purchased from
in-house
vendors, or co-developed.

Agile execution. Manufacturing companies should drive execution of their Digital

Manufacturing initiatives with an agile mindset across software and analytics. Beyond
building the right external partnerships, they need to build the capability for internal
collaboration across functions and break down organizational silos.

Digital Manufacturing – escaping pilot purgatory 15

 Industry case: Optimizing the technology setup of a leading electronics manufacturer

Situation Approach
A leading electronics manufacturer asked After analyzing the technology setup reference,
McKinsey to support in conducting Digital current and target architectures were designed
Manufacturing pilots and make the organization and a pilot road map made of two phases was
fit for the digital production system developed. The first phase addressed blocking
issues on critical design and infrastructure,
the second phase addressed the comprehensive
stack for a scalable foundational IT/OT platform

Findings Impact
Blocking issues were identified in two of the five To address these data-related barriers to Digital
areas of critical design and infrastructure Manufacturing implementation, the company
pursued two main initiatives
ƒƒ Data collection
ƒƒ Data/design centralization
—— No flexibility: each device has different
collection mechanisms, meaning data —— Consolidate infrastructure
cannot be properly ingested and stored —— Ensure reusability of solution across
for analyses all sites
—— No scalability: some of the point solutions, —— Begin perpetual storage of operational
specifically in scanner data, will prevent data for big data analytics
scaling to significantly larger data volumes ƒƒ Service-oriented architecture
—— Data delay: data delayed up to 30 to
45 minutes across the plant —— Create set of five to six services to be
used globally
ƒƒ Data structure —— Create dynamic visualizations based on
—— Data inaccuracy: some miscalculations Web-based (microservice) application
in jobs get repeated and exaggerated, that will decouple page creation for
affecting the accuracy of reports data storage
—— Lack of data history: neither consistent These initiatives resulted in
data archiving strategies nor mechanism
to store historic data for future modeling ƒƒ Reduced setup and maintenance cost by 90%
ƒƒ  Reduced application development cost by 50%
of current model

16 Digital Manufacturing – escaping pilot purgatory

 Mobilize the organization

Digitizing the production system represents tremendous change. While technology is the
obvious tool of a digital transformation, two success factors speak directly to the importance
of people in the success of the change initiative.

5 “Drive the transformation from the top”

Capturing the full value potential from Digital Manufacturing requires a consistent
approach. Two principles help ensure this outcome:

Executive-level leadership and P&L commitment. Top teams should

appoint a clear, executive-level transformation leader and consider taking the
C-level leadership is respon-
whole top team to digital immersion sessions and “go-and-see visits” in order sible for Digital Manufac-
to acquire the necessary capabilities and adopt new ways of working. In this turing efforts at only 36%
regard, manufacturing companies have a way to go, given that only about of manufacturers
one third of respondents report that their organizations have appointed
a C-level individual responsible for driving their Digital Manufacturing
efforts. Ensuring a sufficient pace and widespread adoption of Digital
Manufacturing also requires the commitment of P&L owners.

Integrated decision making. A fragmented or disjointed application

of digital technologies will undermine the ultimate success of Digital Only one third of manu-
Manufacturing. Coordination across all plants, geographic locations, facturers have a globally
and functions along the value chain is essential. At this point, only one coordinated Digital
third of respondents report having a coordinated Digital Manufacturing Manufacturing strategy
effort globally.

6 “Get ahead of the capability gap”

Successful companies recognize the importance of new skill sets in their approach to digital
transformation as well as the importance of an organizational culture that facilitates
development:

Encourage innovation. A digital transformation has the best chance of succeeding in an

environment that encourages creativity and supports innovation. To this end, companies
can, for example, leverage the innovation challenge concept to foster and accelerate the
creation of new ideas. Comprising the four modules of “pitch night,” “innovation challenge,”
“partner challenge,” and “academy challenge,” this concept relies not only on leveraging a
company’s external ecosystem to generate ideas or on tapping into the ideas of its employees
but also on ideation and co-creation with suppliers and external experts as well as on
promoting innovation by organizing a challenge with academic partners.

Focus on talent. Building among staff the capabilities to address

the challenges of Digital Manufacturing is linked to both individual Talent issues are the main
Digital Manufacturing use cases as well as to the overall transformation. Digital Manufacturing
Ensuring the necessary skills and capabilities can come through a challenge for 69% of
combination of internal training, the acquisition of new talent, and manufacturers
collaborations with tech-solutions providers and research and academic
institutions. More than two thirds of respondents see attraction, management, and the
retention of top talent as the main challenge about Digital Manufacturing implementation.

Digital Manufacturing – escaping pilot purgatory 17

 Industry case: Building the foundation of the first digital-enabled steel plant in the world

Situation Approach
A state-of-the-art steel plant in the Netherlands After analyzing the status quo, we jointly
was looking for the next S-curve in continuous defined a vision for the digital-enabled steel
improvement and planned to fully digitize their plant. Then, a road map was developed to chart
operations. a robust implementation plan and direct the
transformation.
Apart from piloting new and promising
technologies in isolated projects, the client In a second step, use cases were prioritized, built,
wanted to follow a holistic approach to digitally tested, and scaled in multiple waves to ensure
transform the whole organization. quick impact and excite the organizations.

Two considerations, among others, have been In parallel, three imperatives helped lay the
capability building and the creation of a guiding foundation of the digital transformation:
vision to excite the organization from the develop capabilities, build the IT infrastructure,
beginning and create the advanced analytics ecosystem

Findings Impact
As capability building is central to digital Throughout the digital transformation, 200
transformations, the client’s digital capability practitioners were trained from all parts of
building is fundamental. We thus decided to the organization – from senior management
follow three main steps: at the executive level to individual work units,
including maintenance and local IT as well as
Create the analytics academy with a focus nontechnical functions
on intensifying the capability building of the
project team and continuous improvement. What’s more, a digital ecosystem was created
to ensure the transformation’s sustainable
Define and establish the three required roles for impact. Setting up this ecosystem comprised
the organization’s successful transformation: establishing and formalizing, amongst others,
advanced analytics translator, data scientist,
and data engineer. ƒƒ A
 n internal networking community on
digital topics
Develop for each role the required tailored
ƒƒ Collaborations with knowledge institutions
learning journey with its specific internal
and external modules, such as cleaning and ƒƒ A
 valuable proposition for digital talent and
structuring data. access to corresponding talent pools
ƒƒ Partnerships with start-ups and spin-offs

18 Digital Manufacturing – escaping pilot purgatory

Outlook

The move from the “current version” of factory production to Digital Manufacturing holds
the promise of significant value, and according to the results of McKinsey’s 2018 survey, this
shift is a top strategic priority for manufacturers across the globe. Despite the importance
placed on it, most manufacturers are struggling to take the Digital Manufacturing successes
they have experienced in limited pilots to a scale that would bring the full benefit of the
technology.

A holistic approach to Digital Manufacturing – one that considers the fundamentals of the
organization and the business as much as it focuses on the technology-related factors – can
help manufacturers get over the hurdles that stand between pilot success and company-
wide rollout.

The good news is that, as demonstrated by several real-world cases, a rollout is not a mystery,
and successes exist. These “lighthouses” have the power to help unify a manufacturer’s vision
of Digital Manufacturing. The knowledge from these case examples can also help build a solid
business case and chart the course for companywide implementation.

Digital Manufacturing – escaping pilot purgatory 19

 McKinsey’s global Digital Capability Center network

Our Digital Capability Centers (DCCs) provide a unique environment for companies
and their managers to see, touch, and better understand Digital Manufacturing in real
life. Learning to master core technologies such as IOT, advanced analytics, robotics, and
additive manufacturing, managers can eyewitness here the end-to-end transformation of
a simulated organization – from lean excellence into an industry leader with fully digitized
production processes. What’s more, the DCCs show live why and to what extent addressing
technical, management, and people systems in concert is crucial for the success of digital
transformations in general and for escaping pilot purgatory in particular.

Digital Capability Center Digital Capability Center

Chicago Aachen
Digital Capability Center
Beijing
Digital Capability Center
Venice

Digital Capability Center

Singapore

Contact e-mail addresses for the DCCs

General e-mail address Global_DCC@mckinsey.com

for all 5 DCCs

Digital Capability Center DCC_Aachen@McKinsey.com

Aachen

Digital Capability Center CCOE_inquiry@McKinsey.com

Beijing

Digital Capability Center DCC_Chicago@McKinsey.com

Chicago

Digital Capability Center DCC_Singapore@McKinsey.com

Singapore

Digital Capability Center DCC_Venice@McKinsey.com

Venice

20 Digital Manufacturing – escaping pilot purgatory

Global McKinsey contacts for Digital Manufacturing

Inspired by the critical role of its model factories in supporting lean transformations,
McKinsey has launched a global network of Digital Capability Centers with locations
in Aachen, Beijing, Chicago, Singapore, and Venice targeted at building Digital
Manufacturing skills across multiple levels of an organization, from executives to
the shop floor.

Interested in learning more? Please contact our regional Digital Manufacturing

knowledge leaders:

USA
Richard Kelly
Partner, Stamford
Richard_Kelly@mckinsey.com
+1 (203) 977 6939

Germany
Andreas Behrendt
Partner, Cologne
Andreas_Behrendt@mckinsey.com
+49 (221) 208 7262

China
Karel Eloot
Senior Partner, Shanghai
Karel_Eloot@mckinsey.com
+86 (21) 6132 3040

India
Kunwar Singh
Partner, Delhi
Kunwar_Singh@mckinsey.com
+91 (124) 661 1021

Brazil
Björn Hagemann
Partner, São Paulo
Bjoern_Hagemann@mckinsey.com
+55 (11) 5189 1613

Japan
Kenji Nabeshima
Partner, Tokyo
Kenji_Nabeshima@mckinsey.com
+81 (3) 5562 2690

France
Valerio Dilda
Partner, Paris
Valerio_Dilda@mckinsey.com
+33 (1) 4069 4275

Digital Manufacturing – escaping pilot purgatory 21

 Contributors

Content

Andres Aramayo-Prudencio
Associate Partner, Mexico City

Michael Coxon
Associate Partner, Cleveland

Enno de Boer
Partner, New Jersey

Dondi De Ocampo
Director of Engineering, Chicago

Andras Kadocsa
Partner, Budapest

Bernhard Mühlreiter
Associate Partner, Vienna

Joris van Niel

Senior Expert, Amsterdam

Editorial team

Andreas Behrendt
Partner, Cologne

Alexandra Duron
Engagement Manager, Montreal

Richard Kelly
Partner, Stamford

Simeon Mußler
Specialist, Hamburg

Raphael Rettig
Junior Specialist, Düsseldorf

Sebastian Stoffregen
Associate Partner, Munich

Production team

Frank Breuer
Media Designer, Berlin

Jörg Hanebrink
Senior Communications Specialist, Düsseldorf

Martin Hattrup-Silberberg
Senior Communications Specialist, Düsseldorf

Christian Johnson
Senior Editor, Hong Kong

22 Digital Manufacturing – escaping pilot purgatory

Digital McKinsey
July 2018
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