Executive Summary
Digital technologies enable CCCP to automate manual tasks, expedite manufacturing processes, improve scheduling and logistics, and gather real-time data for decision-making. It allows CCCP to keep up with shifting client expectations for quicker delivery and specialized goods. Digitalization also enables CCCP to respond to shifting market norms brought on by Industry 4.0 and the Internet of Things (IoT). However, responding to these forces of change presents difficulties, including dealing with shifting client wants, adjusting to industry standards, navigating the changing industrial environment, and dealing with external regulatory obligations. By promoting an innovative culture, upskilling the staff, and assuring flexible organizational structures and procedures, CCCP must also pay attention to its internal environment. The primary factors driving change in the sector include technological breakthroughs, shifting consumer needs, industry standards and regulations, and competitive pressures. CCCP should concentrate on boosting product quality and compliance within the Production Department for operational improvement. Behavior problems, people- and process-related challenges, and behavioral disorders are all potential contributors to operational gaps. Digitization may close these gaps by facilitating process automation, data-driven decision-making, greater resource allocation, and improved communication and cooperation. Digitalization is not without danger, including issues with data security and privacy, technical uncertainty, and organizational opposition. Lack of digital skills and expertise, outdated infrastructure and systems, and financial constraints are all obstacles to digitalization. Removing these obstacles and adopting digitalization may result in greater productivity, real-time insights, scalability, cost savings, improved customer experiences, innovation, and transformation of workplaces and services.
Introduction
This report aims to look at the changing landscape of precast concrete manufacturing and how the introduction of digitalization can help reduce lead times, improve quality, and maximize efficiency. Civil Crete Concrete Products (CCCP), a well-established precast concrete company in operation since 1948, recognizes the need to introduce changes to its manufacturing prosses to meet customers’ needs for shorter lead times and improved product quality conformance as demand and competition rise. Lead time—the period between order placing and product delivery—is crucial in manufacturing. When assessing the benefits of introducing digitalization through automating its manufacturing process, CCCP needed to evaluate the forces of change within the precast industry, what areas of their operation would most benefit, and what the benefits could be. The risks need to be considered by going down this path. This paper will use several models to assess how digitalization would help CCCP. The potential effects of digitalization on lead times, product quality, and operational effectiveness will be better understood using these models.
Forces of Change
There has been a growing resurgence in the precast concrete paving products marketplace. These precast concrete products have been under market pressure for several years due to designers, architects, and homeowners choosing the cheaper alternative of imported natural stone. With the increased cost of shipping (Carrière-Swallow et al., 2023) and the inconsistency of the quality of the natural stone, there has been a move in the industry back to the more traditional concrete pavers.
Architects, designers, and homeowners love their choices with concrete pavers, color selection, different size options, supporting engineering on breaking loads, and the quality and consistency of the pavers as they are cast out of molds. Civil Crete, Concrete Products CCCP, has grown significantly over the past three years. While some manufacturing businesses may have struggled during the COVID period, the CCCP paving division grew stronger as the alternative cheaper imported stone became more expensive and harder to source (McKinsey and Company, 2020).
In addition, the industry is also experiencing significant forces of change driven by digitalization and evolving customer needs. The digital revolution and changing market requirements have shifted how organizations like Civil Crete Concrete Products (CCCP) operate. At the same time, once-precast concrete companies were manufacturing companies that sold products. They have moved more to sales businesses that manufacture products. The introduction of digital marketing has changed the customer base of the CCCP paver division. At the same time, their previous business model had mainly sold to smaller landscaping companies and homeowners in Melbourne, Victoria. Their online digital marketing presence has opened them up to larger, higher volume commercial contractors all over Australia.
Customers love the versatility of concrete pavers, such as the range of colors, various sizing options, and the reliability of engineering specifications. CCCP has recognized this changing customer demand and has positioned itself to provide a diverse range of concrete pavers that meet these evolving requirements (Perkin and Abraham, 2017).
Moreover, industry standards are changing, driven by advancements such as Industry 4.0 and the Internet of Things (IoT). These technological advancements have added pressure to the industry to improve manufacturing processes, enhance product quality, and streamline operations.
CCCP must embrace these changes in the precast concrete industry by incorporating digital technologies into its manufacturing processes, leveraging automation, data analytics, and real-time monitoring to improve quality control, productivity, and cost efficiency (Perkin and Abraham, 2017).
Externally, CCCP faces challenges from fluctuating economic conditions, global supply chain disruptions, and changing regulations. The COVID-19 pandemic highlighted the vulnerability of global supply chains and reinforced the importance of resilience and adaptability. CCCP has navigated these external forces by proactively managing its supply chain, establishing solid supplier relationships, and implementing contingency plans to mitigate potential disruptions (McKinsey and Company, 2020).
Area of Operations
There are several contributing operational production gaps that can be identified in CCCP’s paving division is affecting them to consistently meet the changing requirements of Industry 4.0 and support their sales and marketing team’s push for growth.
CCCP’s current production of the pavers is a fully manual process; they are handmade, highly labor-intensive, and rely on human intervention at every stage, leading to low production volumes and a higher probability of quality and inconsistencies. The dependency on manual labor also increases the risk of workplace injuries and staff absenteeism, further impacting operational efficiency and increasing lead times.
The lack of automation in the paving production process also affects the overall throughput. The concrete pavers’ manual handling and processing limits the production rate of approximately 107m2 per day with five workers. This inefficiency leads to longer lead times, delays in meeting customer demands, and potential loss of business opportunities (Hill and Hill, 2017).
The reliance on manual labor also results in higher labor costs. With five workers required for the current production output, the wages for these employees amount to $2250 per day. It contributes to increased production costs and reduces the paving division’s profitability (Hill and Hill, 2017).
Moreover, the higher labor costs incurred in the manual process affect the organization’s financial performance. The paving division’s profitability is adversely affected, which can have broader implications for the organization’s financial stability and growth prospects. Externally, the operational gaps in paving production impact customer satisfaction and market competitiveness. Longer lead times and potential delays in order fulfillment can lead to dissatisfied customers who may seek alternative suppliers. It, in turn, can result in lost sales opportunities and a decline in market share (Hill and Hill, 2017).
Furthermore, the lack of productivity and inefficiency in the paving production process may hinder the organization’s ability to respond to changing customer demands and market trends. Customers expect shorter lead times, faster delivery, and high-quality products in today’s competitive business landscape. Failing to meet these expectations can place CCCP at a disadvantage compared to competitors who have embraced automation and achieved higher productivity levels (Hill and Hill, 2017).
By introducing automation into the paving production process, CCCP can address these operational performance problems and unlock several benefits. Implementing an automated paving machine, concrete batch plant, and additional molding equipment represents a significant investment of $950,000. However, the potential productivity improvements, reduced lead times, lower labor costs, and enhanced customer satisfaction justify the investment (Hill and Hill, 2017).
Automation would eliminate the reliance on manual labor, reducing the risk of errors and improving the quality of the paving products. The new automated production rate, estimated at 300m2 per day, would surpass the current output, resulting in shorter lead times and increased customer satisfaction. Additionally, the reduced labor costs associated with automation would positively impact the division’s financial performance (Hill and Hill, 2017).
Digitalization Rationale and Benefits for Operational Improvement
Digitalization refers to integrating digital technologies into various business operations, transforming traditional workplaces and services. By leveraging emerging technologies like big data analytics or cloud computing services, companies are realizing significant benefits from their investments in digitization. They include streamlining various workflows while boosting operational efficiency across all levels of their organization, rather than relying on outdated systems that require manual input or sorting through piles of paperwork day after day (Slack and Brandon-Jones, 2019). The new tools offer automation capabilities that save time and resources, thus eventually leading to happier customers who experience faster services and more intuitive interfaces between themselves and businesses.
Digitalization offers several relative merits compared to traditionally manual processes. Firstly, it enables incredible speed and accuracy in executing tasks. Eliminating manual labor for efficient processing is achievable through automated workflows alongside digital tools, which diminishes any possibilities for human errors, reducing downtime or process failures during operations. Furthermore, digitizing information enables entities to effectively manage their information systems leading to optimal usage and compelling analysis of large volumes of it, thus providing significant insights into various processes within an organization culminating in good decision-making processes based on factual evidence rather than deductions derived from assumptions or estimations (Slack and Brandon-Jones, 2019). Organizations are better equipped to identify potential bottlenecks via advanced analytics, improving resource deployment planning, thus leading to optimal utilization and enhanced performance.
Lead times have become better with digitalization. Organizations may dramatically cut lead times using digital technologies like automated processes, real-time data exchange, and predictive analytics. Automation reduces lead times by removing manual chores and streamlining processes. With the advent of industrialization, historically labor-intensive and error-prone tasks may now be completed more quickly and precisely. This automation speeds up filling consumer orders in areas including order processing, inventory management, and production scheduling. Digitalization also makes it easier for supply chain stakeholders to collaborate and coordinate better (Cao and Iansiti, 2022). Organizations may improve visibility and information sharing using digital platforms and communication technologies while minimizing delays and bottlenecks. This better collaboration results from shorter lead times and quicker responses to market needs.
Organizations may improve quality control procedures and guarantee more fabulous product or service standards. Businesses may gather real-time data and track several metrics throughout manufacturing and delivery using digital technologies like IoT (Internet of Things) devices, sensors, and data analytics. With real-time data monitoring, businesses may quickly identify abnormalities or departures from anticipated quality standards. Organizations may develop proactive quality control procedures by collecting and analyzing data to find trends and connections. Quick interventions are made possible, lowering consumers’ possibility of getting faulty items and obviating the need for rework or recall.
Additionally, digitization makes it easier to create standard operating procedures and quality management systems (Cao and Iansiti, 2022). Centralized digital platforms enable businesses to set up standardized quality control procedures for all locations and divisions. It guarantees that quality standards are followed and maintained consistently, leading to more significant overall product or service quality.
By removing inefficiencies and maximizing resource allocation, digitalization presents numerous cost-reduction possibilities. Organizations may save labor expenses and decrease human error by digitizing and automating manual procedures. This automation boosts productivity by enabling workers to concentrate on higher-value activities that require human skill. Digital technologies also allow businesses to collect and analyze enormous volumes of data, producing insights that might motivate cost-cutting actions. Predictive analytics may improve inventory management by ensuring that stock levels align with demand, saving carrying costs and lowering the risk of excess inventory. Real-time data monitoring may help spot energy inefficiencies, enabling focused energy-saving actions and lowering utility bills. Digitalization also allows businesses to set up remote monitoring and maintenance systems, eliminating the need for onsite visits and related travel costs (Cao and Iansiti, 2022). Organizations may address problems proactively, avoiding expensive equipment breakdowns and downtime, using remote diagnostics and predictive maintenance.
Risks, Barriers, Enablers, and Digitalization
Risks of Digitalization
Lack of flexibility
One risk of digitization is the inability to quickly adjust to changing business conditions and technology improvements. Implementing digital technology often takes extensive infrastructure, software, and training expenditures. Once in place, these systems may become stiff and difficult to change or replace. Existing digital systems may need to be updated or more efficient due to technological improvements and changes in consumer preferences. This lack of adaptability might make it difficult for a business to act swiftly and meet new problems or possibilities.
Cost of investment
A significant upfront investment in technological infrastructure, software licensing, and personnel training is often necessary for digitalization. Digital solutions may be expensive to deploy initially, particularly for small and medium-sized businesses (SMEs) with limited funding. Costs for continuous maintenance and upgrades also add up over time. Organizations may face financial difficulties due to the expense of digitization, primarily if the promised return on investment is not achieved or if the advantages take longer to manifest. Before committing to such projects, firms must thoroughly evaluate digitization’s possible costs and benefits.
Barriers to Digitalization
Resistance to change
Employee resistance to change is one of the major obstacles to digitalization. This reluctance may result from a lack of digital skills, uncertainty about new technology, or concern about job losses.
Legacy systems
Heavy users of old systems may have trouble incorporating new digital technology into their organisations (Sebastian et al., 2017). Modern digital platforms might be incompatible with legacy systems, necessitating expensive upgrades or replacements.
Cost and budget constraints
Initiatives to increase digitalization often require significant infrastructure, software, and training expenditures. Budget restrictions and a lack of funding might prevent organizations from adopting digitalization completely.
Data privacy and security issues
Organizations now rely more on digital platforms, which presents issues for data security and privacy. Threats to cybersecurity and possible hacks may prevent businesses from adopting digital transformation.
Lack of digital talent and skills
A competent workforce capable of efficiently managing and using digital tools is necessary for the adoption of digital technology. A big hurdle may be the market’s dearth of digital expertise and capabilities.
Enablers of Digitalization
Leadership support and vision
Providing adequate leadership support and a well-defined vision for digitalization are essential facilitators. Effective leadership in digital transformation entails advocating for such initiatives, establishing strategic goals, and furnishing the requisite resources and assistance to ensure their successful execution.
Collaboration and partnerships
Digitalization efforts can be facilitated through collaboration with technology partners, vendors, and industry peers. Collaborative alliances can reduce entry to specialized skills, assets, and collective intelligence, expediting the assimilation and execution of digital initiatives.
An agile and adaptive culture
Organizations adopting an agile and adaptable culture are more likely to succeed in digitalization. A societal environment that fosters a disposition towards experimentation, innovation, and ongoing education facilitates the execution of digital initiatives and enables prompt adjustment to evolving technological advancements and market requirements.
Models/frameworks
Quality control model
It is essential to guarantee the quality of digital initiatives. To monitor and enhance the quality of digital processes, organizations should apply quality control models like Total Quality Management (Romero et al., 2019). These models call for ongoing process evaluation, analysis, and improvement in order to raise overall operational quality.
Cost-Benefit Analysis Model
Organizations may evaluate the financial sustainability and prospective returns on investment (ROI) of digital initiatives by doing a cost-benefit analysis. In this approach, the expenses of integrating digital technology are assessed and compared to the anticipated savings and benefits (Teng, Wu, and Yang, 2022). It assists businesses in allocating resources wisely and giving priority to initiatives with the greatest chance of success.
Risk Assessment Model
Digital initiatives are inherently risky due to cybersecurity hazards, data breaches, and service interruptions. To recognize, evaluate, and reduce risks related to digitalization, organizations should use risk assessment frameworks like the ISO 31000 framework or the NIST Cybersecurity Framework (Albarraq, Alkayyal, and Bawareth, 2023). Reduce risks and guarantee company continuity; this entails putting in place strong security measures, disaster recovery plans, and contingency procedures.
Key Recommendations
People
- Establish a comprehensive training program to improve employees’ skills and knowledge concerning quality control and conformance standards.
- Encouraging employee engagement, ownership, and accountability in maintaining and enhancing quality standards is essential.
- Establishing cross-functional teams or quality circles is one approach to foster collaboration and promote ongoing improvement endeavors.
Processes
- Perform a comprehensive evaluation of current procedures to pinpoint opportunities for enhancement and optimize workflow.
- Establish a comprehensive quality management system encompassing uniform protocols, quality assurance checkpoints, and periodic evaluations.
- Incorporate lean methodologies, including utilizing value stream mapping, to discern and eradicate inefficiencies, diminish errors, and amplify procedural productivity.
Systems
- Invest in advanced technology and digital tools for quality control and conformance monitoring. Those mentioned above may encompass computerized inspection systems, instantaneous data analysis, and electronic record-keeping.
- Deploying an enterprise resource planning (ERP) system or quality management software is recommended. It will enable the integration and streamlining of various functions, including inventory management, supplier management, and customer feedback.
Change considerations
- Formulate a comprehensive change management strategy to facilitate the seamless execution of enhancements in operational processes. The proposed approach should encompass unambiguous communication, active involvement of stakeholders, and instructional initiatives to encourage the workforce throughout the changeover.
- Facilitate the cultivation of a growth-oriented mentality by instituting feedback loops and mechanisms that enable personnel to offer recommendations and proposals for improving quality.
- Cultivate a culture of learning that welcomes experimentation, risk-taking, and innovation to facilitate ongoing improvement endeavors.
Conclusion
Digitalization improves operational efficiency, productivity, and quality. Digitalization improves communication, cooperation, resource allocation, processes, and employee empowerment. Data security and privacy, technology hazards, organizational opposition, lack of digital skills and expertise, legacy systems and infrastructure, and cost are digitalization risks and obstacles. Leadership, vision, teamwork, partnerships, and an agile and adaptable culture enable digitalization. Organizations must consider goals, risk assessment, change management, metrics, and monitoring while adopting and executing digital initiatives. Digitalization is not one-size-fits-all. Each company must evaluate its digital transformation requirements, obstacles, and preparedness. To manage digitalization, engage people, foster innovation, and use partnerships.
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