The Digitalization Challenge for Manufacturing SMEs

Digital transformation is a must for small and medium manufacturers, but far from easy. Foshan, China-based steel manufacturer CX Precision Fabrication Co., Ltd knows the challenges firsthand. CX launched started digitalizing in 2015 and quickly had an epiphany. “Systems alone could not address all the problems, as they only enabled the data flow. Only connectivity could truly make transformation happen,” recalls CX General Manager Gao Chuhui. For help, CX engaged China Telecom Foshan, which collaborated with Huawei to implement a reliable, easy-to-maintain network designed to evolve with the company. The CX transformation project won first prize in September at the first Guanghua Cup Gigabit Optical Network Application Competition. Since completion, CX profits and production have risen by more than 50%, Gao says. Digital transformation is essential, she says. “We must transform if we want to survive.” Overcoming Obstacles CX is one of about 100,000 manufacturers in the industrial hub of Foshan in Guangdong province. Often, companies don’t know which tools to adopt, how to design the transformation process, and how to address their biggest pain points, says Gao Hongchao, General Manager of with China Telecom Foshan. “Manufacturers have urgent demands for digital transformation, but they all have much confusion,” he says. SMEs need to digitalize because they still rely “on labor and obsolete methods,” says Han Dong, Deputy General Manager of the Nanhai District Branch of China Telecom Foshan. “Much of their business is customized orders from large enterprises.” Connectivity is an issue. While 90% of Chinese homes have internet access, “less than 23% devices of manufacturing SMEs are connected, says Zhang Yufen, Vice President of Huawei CNBG Marketing and Solution Sales Department. Understanding Customer Needs As was the case with CX, SMEs need service providers that understand their needs, says Gao Hongchao. “Traditional system integrators think completing projects is everything. They probably will walk away when the project is deployed.” China Telecom stays with clients for the duration, he says. “Only by going into an enterprise, can we identify its needs.” China Telecom has service channels across Foshan, with resources targeted to specific industries. The company coordinates clouds, networks, terminals and users with its DICT capability, which integrates DT, IT and CT, Gao Hongchao says. In comparison, traditional system integrators only focus on terminals and users, he adds. To simplify and accelerate digitalization cost-effectively, China Telecom uses a monthly subscription model. "We do the SMEs digital program, the original intention is promotion scaling. In that case, the enterprise can move into the digital field without any worries," says Han Dong. “Apart from the monthly subscription model, the scheme and business model have two characteristics: One is the process via standardizing products, package tariffs and O&M platforms, enterprises can achieve digitalization in a simple, fast, and low-cost way. Another is the service teams who stay close to customers of China Telecom, can grow with the digitalization of enterprises continually”. Its SEM services are delivered in three layers. One involves traditional services such as internet access and 5G SIM cards. The second layer involves two types of IT services – cloud services for desktop, monitoring, server, and security, as well as wired and wireless networks. The third layer addresses specific use cases in production, office solutions, transportation, and logistics. The company also collaborates “with strong players along the entire industry chain, such as Huawei, to better serve customers,” Han says. With the practice and collaboration introduced previously, Jing Yuzhi, president of Huawei's Optical Product Line, introduced 3 innovations. One is that 5G+F5G uses two advanced technologies to achieve fixed-shift integration to meet the needs of enterprises. The use of optical fiber instead of traditional switch network cables has good scalability, realizes the flexible collection of massive information, and solves the problem of resource networking for SMEs. Another one for practice, via opening the order, procurement, warehousing, processing, and delivery processes, data flowing achieves accurate and rapid delivery based on the order, which reduces the capital occupation of inventory and releases hidden productivity. In addition, realize a single network layout over ten years without moving, bandwidth can evolve infinitely. Huawei, says Zhang, recognizes a single technology cannot address all of an organization’s requirements. Nor does it make sense to optimize only part of a company’s processes, which leads to silos, network overlay and fragmented IT systems. “To avoid that, we must have the full picture in mind.” It’s important to understand specific use cases to choose the optimal solution, she says. “As digitalization deepens, enterprises have to deal with increasingly complex and diverse digital requirements. It is particularly important that Huawei fully understands the requirements of typical use cases, and accurately translates them into the demands for ICT technologies and services,” she said. For its part, China Telecom plans to continue working with the industry to encourage innovation, says Gao Hongchao. The CX project, he says, is an example of innovation. “We have done many things that had not been done before.” The main force is collaboration. Facing the future, the whole industry will create more standardized and scenario-based solutions continuously, so that more SMEs can have achievable success in the era of digital transformation.