2016: The Beginning of Quality Management’s Digital Transformation

This time last year, we identified what we felt were the three most important developing trends in Quality Management. We identified that these were Industrial Internet of Things (IIoT) pilots focused on quality improvements, increased adoption of risk management automation, and substantial growth in Cloud-based EQMS adoption.

Fortunately, 2016 was an exciting year to make predictions. On top of several new technologies that have been changing the face of quality management, there were important updates to core quality standards (ISO 9001:2015 and IATF 16949:2016), all of which stand to shake things up quite a bit over the coming years.

So, how did we do? Read the original predictions and rationale here.

Rapid Adoption of Quality-Centered IIoT Pilot Projects

Last year, LNS survey data had shown a clear shift in the market’s perspective on the IIoT. Over the 18 months leading into 2016, much of the market had moved from being unaware of the IIoT to investigating it and beginning investment. Most importantly for quality professionals, quality improvement was a leading use case. This indicated that we should expect a growing swell of IIoT pilot investments intended to improve quality as companies tested the waters with this new technology.

This prediction was born out over the year. We spoke with many companies that invested in IIoT pilots, including several notable successes that improved supplier, shop-floor and/or in-service quality through Predictive Analytics and Cloud-based collaboration.

In fact, this trend is continuing to accelerate, as can be seen in the chart below. LNS has now surveyed 2,801 respondents about their IIoT plans, and over the past three years the portion of the market that is investing has almost doubled, awareness has substantially increased, and those that don’t see the value in investing are diminishing.

Takeaways for Quality leaders #1:

Find the IIoT initiative at your organization or consider championing one. The IIoT is real and important to quality. Help improve the success of these initiatives by leveraging the latest LNS research, for instance, the LNS Supplier Quality Management (SQM) research which provides IIoT use cases and success stories.Quality 2016 Prediction Recap.png

Increased Adoption of Formal Risk Management

LNS statistics had also demonstrated a sharp increase in plans to automate Risk Management with software. The inflection point occurred in 2015, indicating that Risk Management automation would increase significantly in 2016. As a side note, the current statistics still suggest that the market would like to double Risk Management automation over the next twelve months.

Did we see a huge uptick in Risk Management automation in 2016? 20% more of the 2016 respondents reported automating Risk Management with software as compared to years past, which is a pretty big increase (although far short of doubling). This indicates that the market has identified a need for Risk Management automation, but 80% of the market were unsuccessful in positioning it successfully with management.

Takeaways for Quality Leaders #2:

Clearly, quality leaders had more modest success deploying risk management automation versus quality-centric IIoT projects. Why? In many cases, companies see IIoT as transformative and important to strategic objectives. Risk management isn’t often seen in the same light. Improve business case success by referring to LNS’s Executive Business Case research for strategies, approaches, and data. We were engaged in business case development discussions with many companies in 2016 and found success applying this research.

Increased EQMS Adoption, Primarily in the Cloud

This prediction was timely and right on the nose. The EQMS adoption rate did indeed increase in 2016, and EQMS in the Cloud far outstripped the growth of EQMS adoptions as a whole, dramatically increasing over 2015. Cloud proved to be the EQMS star of the year, easing the transition from paper to automated software for those deploying EQMS for the first time.

The vendor community reported substantial growth in Cloud EQMS adoption, with many vendors reporting that roughly half of new deployments selected Cloud versus on premise. This was a jump from 2015, in some cases quintupling Cloud adoption rates. Also, as predicted, this did not impact the defense industry, which has its own unique data security considerations.

LNS data shows that this trend will continue. Currently, 72% of 2016 respondents indicate that they have deployed EQMS on premise, while 59% planned to either initially deploy on the Cloud or move to the Cloud.

Takeaways for Quality Leaders #3:

The Cloud isn’t for everyone but does have benefits for many, which may include simpler validation, continuous software updates, improved global performance, or just plain reduced hassle. It’s a viable option that should be considered for first-timers as well as those with existing installs. Some vendors have very mature and scalable Cloud offerings while others have done little more than host on-premise solutions. Dig a little deeper to make sure you get what you want.

More to Come

Overall, we feel like 2016 predictions were accurate and timely. Coming soon – the top trends of 2017!

Supplier Quality Management Roundtable 2017

All entries in this Industrial Transformation blog represent the opinions of the authors based on their industry experience and their view of the information collected using the methods described in our Research Integrity. All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.

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