Industrial Engineering

Holistic Approach Needed to Meet Digital Commerce Needs

Holistic approach needed to meet digital commerce needs

ISE Magazine May 2020 Volume: 52 Number: 5

By M. Scott Moon

https://www.iise.org/iemagazine/2020-05/html/moon/moon.html

Industrial engineering forefathers Frederick W. Taylor and Frank and Lillian Gilbreth pioneered the study of mass production methods. They took their engineering roots and formed a new discipline to deal with the rising consumer demands for goods and services at economical prices. They lived in the transitional time when “hand-made” goods could no longer keep pace with the growing consumer appetites for goods and services.

It was their out-of-the-box thinking that help create a structured discipline to deal with the undisciplined issues they needed to solve. Through the years, tools and techniques would evolve that would help analyze the activities of people and processes and realign resources to complete business processes more efficiently. These approaches served as the beacon of change as business evolved during the industrial revolution.

Now that we have achieved this success, what is next? Will the industrial engineering discipline lead the way into the computer revolution or will it sit by and watch another discipline lead the way? ISEs are equipped to be that beacon of change, but to complete this the role will require they evolve their perspective and take leadership positions.

A market shift is underway

 The shift in the way goods are sold puts a strain on the traditional views of how to transact business. As the digital commerce stream continues to explode, traditional brick-and-mortar retail is struggling to find its way in the new world (see Figure 1). Recognizing this burgeoning trend does not require one to throw out all of our traditional thinking; it merely requires that the application of these approaches evolve to meet the new conditions.

Gartner, a leading technology research firm, defines digital commerce as “the buying and selling of goods and services using the internet, mobile networks and commerce infrastructure. … Digital commerce goes beyond simple online transactions.” In digesting the magnitude of the processes encompassed by this process, we begin to appreciate that solving the new issues is not isolated on a single discipline but requires a cross-discipline understanding and ability to solve complex issues.

Unlike the physical needs to streamline people-based processes, the new commerce requires the need to solve less tangible business processes. Fundamental skills must be applied to cross-functional inefficiencies that require structured, business process solutions. Of all of the engineering disciplines, industrial engineers are the best suited to solve their issues.

An engineering discipline shift

 Over the last decade, industrial engineering has shifted its focus to system engineers. They have created an interdisciplinary field of engineering and engineering management that focuses on how to design and manage complex systems over their life cycles. As such, they have set up the study of work processes, optimization methods and risk management tools. Systems engineering deals with work-processes, optimization methods and risk management tools in complex projects.

What this fails to do is put the solutions being developed in the context of business processes, financial conditions and overall business strategy. Traditional solutions that focus on silo-based optimization must be changed to include holistic business problem-solving to ensure the right issues are being optimized. By not understanding the operation of the entire business, problem-solvers are left to their understanding of the is-sue they will address and fail to understand the greater business context.

Today’s systems engineering fails to provide an overall understanding of business, how it works and the impact of the process to the bottom line. A failure to give graduates this holistic understanding leaves them unable to address the underlying business issues. Educating graduates by relying on engineering techniques and approaches leaves problem-solvers without the tools they need to add optimal value.

Solving the problems of tomorrow will require optimization analytics, financial acumen and an overall understanding of the business operation that emulates a combination of engineering and business. These two disciplines must work together to deliver a consolidated degree of business architects. In this union, associates would be able knowledgeable architects able to construct customized solutions to complex business problems.

New grads need the following critical skills:

  • Business process. The typical issues that businesses must manage to compete in a digital commerce world. They need root cause analysis to find the real issue versus the symptom being proposed.
  • Overall business understanding. An overview of the different functions within the business, how they operate, the major issues they address and how the optimal business should work to streamline the business. Without knowing how the business works, it is hard to determine the driver of the symptom raising concern.
  • Statistical modelling. The value of statistical analytics in finding underlying trends of the business and the different processes that can benefit from these approaches. The evolving artificial intelligence will rely on developing an understanding of critical underlying cause/affect relation-ships that can only come with sound analytics.
  • Supply chain skills. A detailed understanding of the total supply chain and the issues that one must address to move goods efficiently and cost-effectively. Concepts like distributive logistics, customs, cross-border issues and service level modelling are critical to competing in the high-stakes marketplace.
  • Organizational dynamics. Aligning roles, functions and tasks organizationally is critical to ensure the right skills are cultivated and refined.

Unless we equip tomorrow’s leaders with the right toolbox, they will be unable to evolve business to meet the changing customer requirements.

Customers are demanding products when they want them, as they want them, for a low price. The requirements of this endless aisle constant access will continue to challenge previous approaches to business. By arming our next round of business leaders with the right foundational skills, we can drive through this change and lead business to new heights.

If we fail to evolve the industrial engineering discipline to these new needs, another discipline will need to evolve to fill our gap. Like the early days when Taylor evolved from his mechanical engineering roots to become the father of industrial engineering, the time is now to refocus the current curriculum to generate the next generation business architects. The sustainability of many long-standing businesses will rest on our ability to create business architects to help them navigate the turbulent waters.

Source: IISE Magazine May 2020: https://www.iise.org/iemagazine/2020-05/html/moon/moon.html