Service improvement guide Is paper part of industry 4.0?h20195. · What drives manufacturers to consider Digital Transformation? According to a 2017 Microsoft® study (Digital Transformation:

Service improvement guide

Is paper part of industry 4.0? HP MPS for the Manufacturing and Distribution Industry

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

2

Table of contents Introduction ............................................................................................................................. 3

Purpose ................................................................................................................................ 3 Overview ............................................................................................................................... 3

The current manufacturing landscape ................................................................................. 3 What are the options? ............................................................................................................ 4

Options available to the organisation .............................................................................. 4 The broader perspective .................................................................................................... 4 When Digital Transformation or process digitisation is the ultimate goal .................. 4

What drives manufacturers to consider Digital Transformation? .................................... 5 Industry 4.0 and the importance of data, information, and knowledge .......................... 5 The Digital Transformation journey ...................................................................................... 6 How are manufacturers evaluating the role of printed documentation within their organisations? ......................................................................................................................... 6 Service improvement within a managed print context ...................................................... 7

Cutting costs ........................................................................................................................ 7 Reducing paper dependency ............................................................................................. 8 A Digitally Transformed future and the role of paper in the present ........................... 8

Conclusion ................................................................................................................................ 9 About the authors ............................................................................................................... 9

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

3

Is digital transformation the only answer for the manufacturing sector?

Introduction HP is recognised as a leading manufacturer, shipping a printer every second and a PC every two seconds. As an innovator in its field, HP has evolved its printing solutions over time to meet the changing needs of clients in the Manufacturing and Distribution (MDI) sector, including the recent reinvention of prototyping by introducing the world’s first production-ready 3D printing system for manufacturing, the HP Jet Fusion 3D Printing Solution.

Purpose This white paper is intended to stimulate conversation within our global manufacturing clients concerning the ongoing role and relevance of paper and printing within their evolving business operations.

Overview When we looked holistically at our Manufacturing and Distribution (MDI) sector client base, it became apparent that our customers are increasingly looking for innovation from service providers like HP as they consider renewing existing contracts. As heavy-duty users of technology operating in a highly regulated and highly dynamic environment, manufacturing organisations are seeking partners to help them transform and innovate their internal and external capabilities to maintain competitiveness, reduce the regulatory burden, cut cost, and demonstrably increase productivity.

Unlike other industry sectors, such as financial services, manufacturing typically does not employ a highly mobile workforce. In addition, the collaborative nature of work conducted during the production cycle is very different from that of ‘information workers’ who typically collaborate via a computer terminal. Even in situations where detachable devices are part of the production support process, providing access to manuals, information, or documentation in manufacturing disciplines—such as Maintenance, Repair and Overhaul (MRO)—the nature of the work does not always allow for an electronic device to contribute a significant benefit or productivity improvement. Therefore, the use of paper-based documentation represents both a cost-effective and efficient means of sharing information and knowledge.

The current manufacturing landscape 3D printing has the potential to usher in a new era by revolutionising virtually every aspect of manufacturing—from initial design and shop-floor setup, manufacturing and assembly, to supply chain, logistics, and distribution. By 2022, it is estimated that 3D printing will evolve from prototyping and short-run manufacturing to a full-scale, production-ready technology. Manufacturers that adopt 3D prototyping today will, therefore, possess a competitive edge in terms of speed, capacity and cost inherent in the production environments of tomorrow. HP believes that its 3D printing platform has the potential to, not just revitalise the manufacturing industry, but reinvent how we design and make things, how we do business, and even where we produce things.

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

4

Our experience has shown us that IT plays an increasingly significant role in supporting business process automation and facilitating data exchange to drive a higher level of efficiency and productivity in manufacturing operations. However, some large manufacturing organisations are looking at reducing their dependency upon paper if productivity and process improvements can be realised as a quantifiable outcome. Paper is still central to shop floor operation for many clients. For example, large amounts of paper-based information are required for compliance with regulations and policies, such as Good Manufacturing Practices (GMP). Often, daily production batch orders are generated by Enterprise Resource Planning (ERP) systems routed directly to a printer on the shop floor.

A key question for many manufacturers is whether paper is a bottleneck for supply chain efficiency and, therefore, an inhibitor or constraint on the manufacturing process. For many HP manufacturing clients, that question inevitably centres around—to what extent do they need to adopt Digital Transformation in order to replace paper-based processes with digital alternatives and what benefits will this deliver?

What are the options? In HP’s experience, there are many options open to an enterprise with respect to the evaluation of the internal and external role of paper and printing. As part of HP’s Service Improvement programme, we tend to approach this challenge on three levels:

Options available to the organisation • Do nothing

• Move, remove, or reconfigure print devices

• Introduce digital access devices

• Digitise paper-intensive processes

• A combination of all the above

The broader perspective In addition to an emphasis on cost and security as key components of any strategic initiative:

• Consider the role of printing and paper, not just the consumption of paper and utilisation of devices (and their associated costs)

• Broadly evaluate the role of paper and print by involving as many stakeholders as possible from internal IT, end user, business process, and customer-facing functions

• Think medium- to long-term. For example, over the three- to five-year lifecycle of a Managed Print Services (MPS) contract

When Digital Transformation or process digitisation is the ultimate goal • Define the goals of an existing process

• Define the desired service improvement objectives

• Evaluate the flaws or inconsistencies in an existing process

• Quantify the extent to which paper contributes to those flaws or inconsistencies

• Define the extent to which the process can be simplified through the removal of paper and/or the introduction of new technology

• Define metrics and a return on investment (ROI) to avoid a victory of process over outcome

Level1

Level 2

Level 3

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

5

What drives manufacturers to consider Digital Transformation? According to a 2017 Microsoft® study (Digital Transformation: The Age of Innocence, Inertia or Innovation?), the main drivers behind Digital Transformation initiatives for manufacturers are operations optimisation (efficiency) and customer experience improvement, closely followed by the need to survive as an organisation. A focus on information management is not new for manufacturers while cost reduction remains a key driver of any improvement initiative, including Digital Transformation. In comparison to other industry segments, like banking or insurance, the manufacturing sector, in our opinion, has been relatively slow to embrace a Digital Transformation strategy.

Manufacturers are usually unconcerned about the volume of pages printed because it is a requirement within most production and supply chain processes as an integral source of input or output. In logistics, shipping, warehousing, product lifecycle management, or legal and sales functions, print volumes are often growing. However, cost, environmentally-friendly or green initiatives, and e-form technologies are starting to drive a decline in printed pages within roles, functions, and activities directly related to the production cycle.

Industry 4.0 and the importance of data, information, and knowledge According to worldwide management consulting firm, McKinsey & Company, Industry 4.0 is defined as the next phase in the digitisation of the manufacturing sector, driven by four disruptions: the astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; the emergence of analytics and business-intelligence capabilities; new forms of human-machine interaction such as touch interfaces and augmented-reality systems; and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing.1

In our experience, the evaluation of content digitisation and processing should be an important and integral part of any Industry 4.0 strategy. A Digital Transformation strategy helps a manufacturing organisation move beyond the printed ‘document’ to manage the seamless flow of information in support of manufacturing operations. For many organisations, the printed document remains an essential part of the way in which they operate, communicate, and manage data, information, and knowledge. An increasing number of manufacturing organisations, however, are starting to view ‘a document,’ whether printed or in a digital format, as an increasingly inefficient configuration or repository for content. Their focus is turning to access to content and the value of that content in delivering an operational, commercial, or financial outcome.

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

6

The Digital Transformation journey Manufacturing shop floors are unique in terms of their reliance on efficient and effective paper-based tools, such as job schedule cards on walls, time sheets, and spreadsheets. And some manual processes require paper in the form of picking slips and consignment notes, as well as for planning, reporting, and order tracking documentation. The aim with digitisation is not simply to remove or reduce a dependency upon paper in an organisation. In situations where paper is a mandatory component within a process, the ultimate objective is to increase the speed, volume, and capacity of the production cycle while delivering an acceptable Return On Investment (ROI) without adversely impacting product quality. Our manufacturing clients consistently tell us that they perceive the highest possible level of efficiency and process improvement to be an aspiration that could only be achieved if paper could be entirely removed from the production workflow continuum. The quandary for manufacturers then becomes the identification of the point on the curve where cost-justification and time align with productivity gains and cost to determine how far they go on the Digital Transformation journey.

How are manufacturers evaluating the role of printed documentation within their organisations? When evaluating existing Managed Print Services (MPS), manufacturers typically involve multiple internal functions to obtain a balanced view. As an example, Procurement and Contracts groups will assess existing contractual arrangements and scope of service specifically for value for money and quality of service. Centralised IT functions will also play a role in evaluating an ongoing relationship with a technology-based service provider, usually with a focus on service reliability and availability relating to a Service Level Agreement (SLA). The Manufacturing sector also tends to place a stronger emphasis on the role of technology in driving down costs than other sectors, while constantly evaluating opportunities to improve the way its employees collaborate to increase efficiency and workplace culture.

The result of a collaborative approach when it comes to information-sharing and a collaborative workplace culture, involving multiple business functions with a medium- to long-term objective, is often a reassessment of the role of printing and paper within the organisation. At HP, we have been a part of many robust customer discussions ranging from the ‘paper is evil, let’s get rid of it’ perspective to a more granular appraisal of why certain processes, transactions, roles, and functions remain paper-dependent and the effort required to reduce that dependency.

HP has developed a methodology based on the Continual Service Improvement phase of the Information Technology Infrastructure Library (ITIL) lifecycle to help manufacturers analyse their current relationship with printer and copier technology. In this way, we can help determine what, if any, changes they may wish to implement as a service improvement project within the context of their existing Managed Print Service (MPS). In HP’s experience, manufacturers will typically implement one of three transformational projects:

• Focus on cost containment and reduction through the reconfiguration of the existing print environment and the role of printed documents and content.

• Introduce a Device as a Service (DaaS) component using tablets, as an example, as the principle access device for content and transactional activity.

• Implement a Digital Transformation project designed to manage content electronically and remove or significantly reduce dependency upon paper.

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

7

Service improvement within a managed print context Unlike other industries, manufacturers, tend to consider the role of printing as an integral part of the way they function. When considering shop floor and production operational requirements, printing could be classified as a business-critical activity. Conversely, when considering back office functions, printing could be classified as a non-mission critical function. It is for this reason that many manufacturers outsource the delivery of a Managed Print Service—because it is typically regarded as a non-core business activity which can be better managed by a service provider, thereby reducing the burden on limited resources within an internal IT or administrative support staff.

To further support this approach, HP developed its Service Improvement methodology to help organisations operating in the MDI sector examine their current patterns of business activity and costs, as well as the role paper and printing plays within various business roles and functions; not necessarily limited to administrative and back office functions. The underlying principle is that HP can facilitate and manage the evaluation process as an input to establishing strategic operational objectives in the context of overall service improvement for end users, while minimising the impost upon internal stakeholders.

HP’s strategic decision to move in this direction has been in direct response to customers, such as the organisation who told us that they now believe paper is evil, seeking a strategic review of the way in which information and knowledge is documented, stored and distributed in an increasingly digital world. With respect to the role of paper, imaging, and printing, HP is well placed to apply its expertise and help manufacturers consider how best to transform the way they manage content.

HP’s approach considers associated costs, operational performance relative to industry peers, optimising innovative technology, and the extent to which Digital Transformation makes commercial and operational sense within a broader business process engineering framework. HP also examines options relating to the development of secure and cost-effective service improvement initiatives that will deliver tangible process and transactional efficiency gains.

Cutting costs While a Managed Print Service helps significantly reduce the number of pages printed and optimises the infrastructure and, consequently, the overall cost of printing, there are greater potential cost savings to be achieved by analysing current patterns of business activity and the role paper and printing play at the function and process levels. Printing can be regarded as a burden for manufacturers as it inhibits their efficiency, with documentation moving in physical form from production and distribution facilities to central locations, internally and to customers and peer organisations, externally. In a transactional sense, the time it takes to complete an operational task, transaction, or production cycle is protracted by the physical movement of a paper document which, in turn, generates inefficiency, risk, complexity, and cost.

Working with many large manufacturers, HP has observed that the cost savings achieved from less printed pages and less print devices (as a consequence of deploying a Managed Print Service) can also be re-purposed into the funding of a Digital Transformation project that will help drive additional savings and productivity improvements.

HP’s approach in these situations is to reduce printing costs by starting with the consolidation of the devices and offering more capabilities to digitise documents directly at the point of customer interaction. The principle objective is to avoid physical paper distribution and form-filling by introducing online interactivity to facilitate the transition from paper to digital using alternative devices. The savings is then measured across multiple dimensions such as transaction time, volume and capacity, and human interaction across an end-to-end process.

Service improvement guide | HP Managed Print Services for the Manufacturing and Distribution Industry

8

Reducing paper dependency The ‘paperless office’ concept has been around since the mid-1970s. For manufacturers, making it a reality has been hindered by three key factors:

1. They operate in a highly regulated environment relating to access, maintenance, and archiving associated with document and records management.

2. They must deal with other organisations and institutions that often use different or incompatible technology platforms.

3. For many customers, paper-based documentation is still regarded as the most valid proof that a transaction has been completed or evidence of a current account status.

In addition, multiple surveys reporting on the state of Digital Transformation in the corporate sector increasingly show that many organisations, across a wide range of industries, now believe that innovative and affordable technologies, robust business processes, a pragmatic regulatory environment and, most importantly, consumer and employee confidence are all converging to make the transition to an exclusively digital world a realistic proposition.

HP recognises a fundamental shift in the way some of our customers are starting to view their commercial and operational outlook and the changing role printers, scanners, and copiers will play in that future. While we do not believe that paper and printing will ever completely disappear or even that the decline is as dramatic as some industry analysts predict, we do see the manufacturing sector as being at a crossroads in terms of how data, information, and knowledge is shared by a workforce that, typically, has a lower ratio of PC or tablet deployment than other sectors. It is for this reason that we have made the strategic decision to be a part of this transformation and assist our hundreds of manufacturing customers throughout the world with the way in which they evaluate their ongoing dependency upon paper and printing.

A Digitally Transformed future and the role of paper in the present HP’s approach to the digital transformation of a process begins with the role paper plays in that process. We commence client engagements with a Service Improvement workshop, using the ITIL IT Service Management lifecycle, to evaluate existing levels of consumption and utilisation at a macro level. In this way, HP complements the role of Systems Integrators and information management software vendors, with whom HP partners when required.

When partnering with manufacturing organisations to evaluate the digitisation of paper-based processes and content, HP uses a proven discovery methodology. HP works with teams responsible for digitisation—business process owners, department and functional leaders, and end users—to evaluate opportunities for further digitisation. A close collaboration with core and supporting departments and front-line staff is a crucial aspect to supporting the effective Management of Change that digitisation brings at an operational level to ensure there is minimal impact on the production and customer experience.

For some manufacturers, full digitisation is regarded as the ultimate objective but for many, there is a realisation that the complete removal of paper is not a realistic option. This is largely due to the cost of the technology required to displace paper or the complexities associated with the multiple internal and external applications required to complete an end-to-end transaction and the negligible potential for gains in productivity. To quote the ITIL best practice model for IT Service Management, “a process should be simplified before it is automated.” In HP’s experience, there are still processes that cannot be simplified to the point that they can be completely digitised. In such situations, documents or content can be digitised and uploaded directly into an electronic digital repository with the option to use automated processes to expedite approval, workflow, and decision-making procedures from that point in the administrative or operational management cycle. In such scenarios, partial Digital Transformation can represent the most cost-effective and efficient solution.

Service improvement guide | HP Managed Print Services for the Financial Services Industry

Sign up for updates hp.com/go/getupdated

Share with colleagues

© Copyright 2017 HP Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

Microsoft is a U.S. registered trademark of the Microsoft group of companies.

4AA7-1246EEW, September 2017

Conclusion Manufacturers continue to seek opportunities to take cost out of their existing operations. These opportunities will come through re-engineering existing production lines and rethinking processes and the way they deal with their suppliers and manufacturing sites. A key design principle within Industry 4.0 is the concept of information transparency, which focuses on the replication of the physical world in a virtual form and central to realising that aspiration is a Digital Transformation strategy.

HP’s Print Service Improvement methodology provides a framework for working with manufacturing organisations to facilitate this evolution from the printed document to managed digital content. At HP, we believe our approach is unique because it does not start with complete Digital Transformation as the desired end state. Instead, we work with our manufacturing clients to consider current patterns of operation performance, the potential for productivity gains, and remedial options relative to cost, which includes Digital Transformation relative to the ongoing relevance of paper as a source of information.

About the authors Neil Adamson is a Professional Services Segment Lead, based in Sydney, Australia, within the HP Managed Print Services WW Professional Services team. [email protected]

Marie-Amélie Masnou is an Industry Services Segment Lead, based in Böblingen, Germany, within the HP Managed Print Services WW Professional Services team. [email protected]

Learn more hp.com/go/mdiworkflow

1 Manufacturing’s next act, McKinsey & Company, June 2015 (http://www.mckinsey.com/business-functions/operations/our-insights/manufacturings-next-act).