For its 2021 report “The Resilience of Manufacturing: Strengthening people operations and bridging the talent gap amid crisis,” The Workforce Institute at UKG, a provider of research and education on critical workplace issues, garnered responses from more than 300 hiring decision-makers at both domestic and multinational manufacturers with a strong U.S. presence. When asked what the remainder of 2021 held for their sector, three responses stood out in terms of the digitization of the manufacturing workplace:
- “Fifty-four percent predict increased investment in technologies and practices that will help augment the workforce (e.g., automation, analytics, reskilling, upskilling),” the report stated.
- Forty percent predict greater use of AI and machine learning to better predict and mitigate risks within manufacturing and supply chains.
- Thirty-five percent predict business intelligence tools will increasingly simplify decision-making for all employees, at every level of an organization.
“Organizations that achieved year-over-year growth are more optimistic,” said the report, with 42% predicting that digital transformation of the factory floor will accelerate in 2021.
One place exuding that optimism is Novelis, the Atlanta-based, $12.3 billion global aluminum company with 33 plants across nine countries, 14,650 employees and annual earnings of $1.7 billion. There you’ll find Executive Vice President and CFO Devinder (Dev) Ahuja leading the way on what he calls the company’s “digital journey.” It’s a process as tied to the company’s sustainability commitment as it is to P&L and earnings goals. And it’s generating results from Asia to Brazil.
“There have been 35 use cases successfully executed,” he told the worldwide virtual audience at the 27th Georgia Tech Global Business Forum convened in November 2021 by the Georgia Tech Center for International Business Education and Research (GT CIBER) and partners. Improvements ranged from adjusting furnace temperatures to customizing by ingot the “scalping” process for removing surface irregularities.
“Globally, things have exceeded our expectations,” Ahuja said. “Returns delivered a 3% to 4% increase in EBITDA. The ROI represents a $60 million to $75 million contribution to the bottom line.”
Democratizing the Data
That’s huge when you’re a company intent on sustainably executed growth. Novelis recently announced plans to invest approximately $500 million in growth capital projects, including a $375 million investment in China and a $130 million investment at its plant in Oswego, New York. “China is one of the fastest-growing vehicle markets in the world and its automakers are gaining market share across Asia,” said Sachin Satpute, executive vice president and president of Novelis Asia.
Pleasing the specifications of those customers is about a lot more than just turning big hunks of metal into thinner versions of that same material, Ahuja told his Atlanta audience. It involves a high degree of fundamental science, detailed process engineering and complex molecular chemistry, with each roll and plate product they sell containing a different combination of metallurgical properties designed to fit critical standards. Which is why the company started looking into digital automation four years ago.
“If Novelis is to keep and ideally expand our competitive advantage, our manufacturing operations were the obvious place to start,” said Ahuja, a board member at the National Association of Manufacturers (NAM). “What may seem like a relatively small percentage of improvements in key areas of the manufacturing process can significantly increase EBITDA, our primary metric for performance.”
Leveraging such improvements across the whole company is the ultimate goal, even as individual operations each have their unique characteristics.
In order to devise a system to access all those data points, Novelis worked with McKinsey & Co. on a strategy that started with building a central team of data scientists and data engineers to lead the advanced analytics effort. The company found that talent at Georgia Tech and Georgia Southern University, among others. They targeted specific plants and use cases aimed at such things as eliminating plant downtime or quality defects, then moved the data to the cloud.
Next came advanced analytics training and Python programming instruction, both in the classroom and on the job, for selected plant engineering personnel with, as Ahuja’s colleague Uma Haynes, vice president of Analytics, put it, “the attitude and the aptitude.” The most success in upskilling came from “folks who just had the desire to lean in, because it is quite technical in terms of programming and algorithms,” she said.
Indeed, addressing the usual attitudes encountered when the word “automation” is uttered was central to the cause too.
“There is so much to be done with advanced analytics. The potential is almost unlimited.”
—Devinder Ahuja, Executive Vice President and CFO of Novelis
“Many employees hear ‘job loss,’ even though no job cuts were planned,” Ahuja said. “Fear of the unknown is a common response when new ways of working are introduced. Getting buy-in was critical to our digital automation journey, and it’s critical anyway to any big change an organization makes.”
Workshops were held with team leaders to identify issues that could be addressed with advanced analytics. Fast forward to today, and “our employees are starting to do in-depth analysis as part of their daily work,” he said.
‘Untapped Opportunity’
Dan Abramson, senior executive director of U.S. Manufacturing, Transportation, Entertainment & Services for SAS Institute, calls the Novelis case “a master class in implementing an analytics program.” Management buy-in and consistent KPIs are key, he said, “and all of it needs to be tied to corporate strategy and P&L impact. How Novelis has talked about the project and almost an innovation pipeline of use cases is a really good approach.”
He said he’d observed a similar process unfold at a sheetrock manufacturer, as operators and engineers at the plant level were intrigued by what advance modeling could mean for quality metrics.
“As subject matter expertise was combined with our data science expertise, there was this human magic that was unleashed, and the excitement grew,” he said, with the ultimate result that operations veterans with decades of experience producing drywall bought into analytics, “and they started to advocate to scale that use case to other plants around the world.”
Next for Novelis comes the possibility of digitizing more corporate functions in order to reduce the costs of back-office processes. “We are beginning to see measurable results there,” Ahuja said, giving personnel more time for value-added activity. Blending key customers’ data with Novelis data is also yielding new insights that would not have been possible had the data stayed siloed. “And we’re beginning to apply advanced analytics to our supply chain to improve material flows and partner engagement,” he said, noting his conversations with executives at top companies in NAM.
“There is so much to be done with advanced analytics. The potential is almost unlimited. There is a huge amount of untapped opportunity in manufacturing, which continues to be very traditional even today. We need acceleration in digitizing manufacturing. There is so much untapped efficiency that can come out of doubling down the focus on digitizing manufacturing and IoT, reskilling and retraining, and making people comfortable with digital operations.
“Even some of the top FORTUNE 50 companies in the manufacturing space whose leaders I talk with,” he said, “have a lot ahead of them.”
