Part 3: The Art of Problem Definition in Industry 4.0
Guidance on starting Industry 4.0 projects with a problem-first approach, including methods to gather and analyze customer data for focused problem identification.
Photo by ChatGPT 4.0
👋 Hey, it’s Sara. Welcome to my weekly newsletter where I share insights to become more efficient. Each week, there will be a featured article, a glimpse into technology, a throwback to the past, and community conversation.
Read time: Warning! This is a long one.
“Put a good person in a bad system, and the bad system wins, no contest.” — W. Edward Deming
What is a problem-first approach?
I’ve heard it too many times… ”We are going to consolidate ERP systems, or we are going to implement Model-Based Enterprise, or we are going to implement Artificial Intelligence. Now, go figure out the benefits” Too often companies jump on the bandwagon of what is hot, or frequently talked about. A problem-first approach is a strategy where businesses identify and understand specific challenges or inefficiencies before considering the adoption of new technologies. A problem is identified, then a goal becomes easy to define and the benefits are understood on the front end. For example, the problem statement could be that customers complain that lead times are too long. The goal becomes cycle time reduction and the benefits = increased orders.
Why does it matter?
Companies that leap towards adopting new technologies without a clear understanding of the specific problems, often invest in solutions that do not align with the company’s needs. Money is spent on solutions that may not be necessary or solve a real problem. Such misaligned investments waste financial resources, time, energy, and reputation. Reputation is important because there will be a much lower tolerance when future projects are proposed, even when the return on investment (ROI) is favorable.
Beyond the financial implications, adopting a problem-first approach is essential for gaining key stakeholders' buy-in, especially those directly involved in the day-to-day operations affected by new technology. Stakeholder support is necessary. If the individuals who are expected to work with these new technologies do not see their value or understand the benefits, they can resist and hinder adoption. This lack of buy-in not only results in reluctance to adopt new practices but also in a broader resistance to change, which can dramatically extend the timeline for project implementation and further drain resources.
For instance, introducing a new data analysis tool intended to streamline operations can face pushback if the operational staff does not understand how this tool addresses their daily challenges. By clearly articulating the specific problems the tool will solve and involving these stakeholders in the solution development process (which I will talk about further in an upcoming article), companies can ensure smoother adoption, reduce implementation times, and use resources efficiently.
The problem-first approach matters because it ensures that technological investments are not just expenditures but strategic moves that address real challenges. It emphasizes the importance of aligning technological adoption with tangible benefits, ensuring that every dollar spent contributes to the company's overall efficiency and growth. Moreover, by ensuring stakeholder buy-in through clear articulation of benefits, companies can accelerate the adoption of necessary changes, optimizing both time and resources for a truly transformative impact on their operations.
Where to look for problems
To harness the full potential of Industry 4.0, identifying the right problems to solve is a critical first step that requires an assessment of different areas of the business. Uncovering these problems starts with the most vital stakeholder: the customer. Understanding what customers say and what they do provides information about their experiences, expectations, and the gaps in between. Problems can exist internally too. By examining the cost of poor quality and assessing capacity, we can identify waste that, if removed, can lead to enhanced operational efficiency and scalability. Problems can be identified, analyzed, and prioritized for projects through each perspective.
What Customers Say (A Qualitative Approach)
Leveraging customer feedback is invaluable in problem identification. The feedback can come through various channels, each providing unique insights into the customer experience and their challenges.
Surveys: Create concise, targeted surveys to gather specific insights. Use a mix of open-ended questions and quantifiable rating scales to capture a broad spectrum of feedback. Make sure each question aims to uncover a particular aspect of the customer experience, enabling you to collect actionable data.
Interviews: Conduct interviews with a clear goal in mind. Encourage participants to share their experiences and thoughts in detail. Focus on asking direct questions that prompt customers to elaborate on their feedback, allowing you to dive deeper into their perspectives and uncover nuanced insights.
Reviews: Actively monitor and analyze customer reviews on your products or services. Look for recurring themes or specific issues mentioned across multiple reviews. This direct feedback can highlight consistent areas of concern, guiding your efforts to address these problems effectively.
Social Media Listening: Monitor social media platforms for mentions of your brand, products, or industry-related topics. Use tools designed for social media analytics to track and analyze these conversations. This approach helps you quickly identify customer sentiments, emerging trends, and immediate feedback.
What Customers Do (A Quantitative Approach)
Internal data can be analyzed to identify customer behavior and potential issues.
Analyze Sales Data: Use sales data to spotlight trends in product offerings or project types. Analyze profit margin by project or product line. Insights from this analysis help identify areas for innovation or improvement, driving targeted Industry 4.0 initiatives to enhance product offerings and market fit.
Map the Customer Journey: Detail the customer’s journey to uncover specific stages where customers disengage or experience dissatisfaction. These insights inform Industry 4.0 solutions aimed at streamlining the buying process, enhancing customer interaction, and boosting retention rates.
Examine Customer Returns: Investigate return data to determine prevalent reasons behind product returns. This knowledge directs Industry 4.0 projects toward enhancing product quality, accuracy in product descriptions, and overall customer satisfaction through improved design and manufacturing processes.
Review Warranty Claims: Analyze warranty claims to detect recurring product issues or defects. Utilizing this information shapes Industry 4.0 efforts in refining product designs, improving quality control measures, and ensuring reliability, ultimately elevating the customer experience.
Cost of Poor Quality
Understanding and minimizing the Cost of Poor Quality (CoPQ), the costs associated with internal and external failures, is an effective strategy for Industry 4.0 projects. If your organization lacks a specific metric to quantify this, develop one. While the ideal scenario involves measuring the full Cost of Quality—including prevention and appraisal costs—the CoPQ provides a starting point. Companies can pinpoint and reduce wasted costs from inefficiencies and defects.
CoPQ encompasses expenses related to rework, returns, warranty claims, scrap, lost sales, concessions, etc. By tracking these costs, businesses can identify significant problem areas that, once addressed, will save money and enhance overall operational efficiency and customer satisfaction. The goal isn't to dwell on the metric itself but to use it to identify inefficiencies that are draining resources. This approach allows companies to direct their attention and resources toward solving the most impactful problems, paving the way for more strategic investments in quality improvements and innovative processes.
Profitable Growth by Creating Capacity
Let’s face it, finding good employees is challenging. When companies are targeting growth, the dreaded conversation of where to find employees to make the growth possible ensues. Fortunately, Industry 4.0 can help free up capacity by creating efficiency and reducing waste, thus mitigating the need to find people in a tough labor market.
Let's consider additional strategies for identifying high-level bottlenecks currently limiting your capacity, yet not exposed to customers, or showing up in the cost of poor quality.
Process Throughput Times: Evaluate your operations to identify processes with the longest throughput times. These can indicate bottlenecks where delays accumulate, affecting overall capacity and delivery times.
Utilization Rates: Look at the utilization rates of your critical resources, including machinery, technology, and personnel. Resources consistently operating at or near full capacity may indicate bottlenecks that, if alleviated, could significantly free up operational bandwidth.
Supply Chain Delays: Consider external factors such as supplier reliability and lead times. Delays or inconsistencies in receiving materials can create bottlenecks in production, affecting your ability to grow.
By focusing on these areas, you can narrow down your operation's specific processes or aspects that need attention.
In our next two articles, we will delve deeper into how to conduct value stream mapping and uncover hidden inefficiencies and waste.
Once a problem has been identified, the next crucial steps are to quantify the issue and establish clear, measurable goals for the project. Quantification involves assessing the problem's scale and impact on the organization—in terms of operational inefficiencies, financial losses, or customer satisfaction metrics….these are the project's key performance indicators (KPIs). This data-driven approach not only brings clarity and objectivity into the equation but also facilitates the setting of specific, achievable goals. Defining what success looks like is essential; it transforms a vague problem into a target with quantifiable parameters. By doing so, the benefits of addressing the problem through an Industry 4.0 solution become apparent and easier to communicate. Stakeholders can visualize the project's direct correlation and impact on the company's bottom line or market position, making the case for investment and adoption more compelling.
Creating a Project Charter
Please note - you don’t need to address all areas defined above. Select an area to get started. When a problem is identified, document the problem statement into a project charter. Here is a list of items to include in the project charter.
Problem Statement: Provide a succinct, clear description of the issue the project aims to address.
Objectives: Detail the specific, measurable, achievable, relevant, and time-bound (SMART) goals the project aims to achieve …the KPIs described earlier.
Benefits: Outline the expected advantages of addressing the problem, such as improved efficiency, cost savings, increased customer satisfaction, or enhanced competitive advantage. Highlight how these benefits align with broader organizational goals.
Scope: Define what is included and excluded in the project to manage expectations and prevent scope creep.
Stakeholders: Identify key individuals and groups involved in or affected by the project, including project sponsors, team members, and other interested parties.
Resources: List the preliminary budget, tools, personnel, and other resources required to execute the project successfully.
Timeline: Establish key milestones and the overall project timeline, including start and end dates and deadlines for critical milestones. Start with what is known and refine as the project becomes more defined.
The project charter is essential for keeping stakeholders aligned and ensuring everyone remains focused on the original problem, especially as the project progresses. It acts as a reference point that teams can return to, ensuring that the project stays on track and continues to align with its initial objectives and benefits. By starting with a well-defined charter, businesses can set their Industry 4.0 projects up for success, ensuring strategic alignment and a clear framework for action and accountability. This document should be viewed as a living document, adapted to new insights and shifts in direction.
Case Studies
My original intention was to include case studies to showcase the value of doing the topic described in the newsletter. However, the case studies need to include enough detail to be used as learning tools….and the newsletter is quite lengthy already. I will dedicate future articles to the case studies. I appreciate your understanding.
Tech Spotlight: Transcription & ChatGPT
When my husband was in college a few years ago, he discovered the power of using the voice-to-text feature in MS Word to create a first draft of a paper. He saved hours simply walking around the house and spilling his thoughts into his phone. Google Docs and the iPhone Notes application have the same capability. I use the Notes application quite a bit when I need to jot down thoughts that include ideas for this newsletter.
Recently, I discovered that MS Word has an option for transcribing audio. A few weeks ago, I was a guest on a podcast talking about continuous improvement. In that episode, my passion for continuous improvement was clear and I wanted to dissect the episode further. I asked for the Audio file. Worst case, I would listen to the episode and take notes, but I was curious if I could transcribe the file.
In MS Word there is a feature where you can upload an audio file and produce a transcription. The easiest way to find it is to search for “Transcribe.” When clicked, a pane appears on the right of the screen, providing instructions on transcribing the audio file. There are options to include time stamps and speakers.
Once the audio file is complete, upload it to ChatGPT with a prompt specific to the information you wish to extract. You could ask several things: summarize the script with the main points, a specific question about the conversation, create 5 LinkedIn posts, etc.
I decided to test the sentiment analysis within Large Language Models and use it for personal reasons. Typically after a podcast recording, or live event, I analyze what I could have done better. This podcast episode was different …I felt joy and a sense of self. Wanting to dig into this further, I used ChatGPT to help me extract the moments in the podcast where I was passionate, convert that into a summary of my key values (at least those evident in the podcast), and then into a mission statement. Perhaps this approach doesn’t scale, but I was impressed with the result.
PS - I’ll be using the file to make content 😄
Community Conversation
Do you have other questions do you have that I can answer here? Answer in the comments or hit me up on LinkedIn.
Thank you for being a part of our journey. If you’ve found value in our conversation, please consider sharing this newsletter with others who might benefit and contribute.
Until next time, thank you for your support and curiosity.
— Sara 🙋♀️
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Erie, PA 16415, USA
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