In American manufacturing, the idea that a gap exists between the Information Technology (IT) and Operational Technology (OT) organizations is an almost universally held assumption. Most manufacturers you talk to will agree that this gap exists within their organization and that it’s a problem in need of fixing.

Why is this belief so widespread? Could it have something to do with the fact that manufacturers are constantly bombarded by marketing messages that tell them the IT/OT gap is everywhere?

And why does the prospect of closing the IT/OT gap seem so daunting? While the first two questions are somewhat rhetorical, this last one has a simple answer: closing the IT/OT gap is so hard because everyone is looking — and starting — in the wrong place.

Years ago, manufacturing software vendors and their associated system integrator channels created the concept of an IT/OT gap. They have profited handsomely from this idea ever since, while not making much headway in closing the gap they identified.

These vendors/integrators probably did not intend for this situation to arise. Rather, it stems from their not being fully aware that closing the IT/OT gap requires another, more important gap to be closed first — the one that exists between Sales and Operations: the S/Op gap.

The S/Op gap speaks to the fact that most factory supply chains are not functioning at anywhere near optimal performance. The impasse that exists between Sales and Operations causes the supply chain organization to operate in a perpetual state of chaos, undermining cross-functional coordination and efficiency, especially when it involves sharing data and analytics for business decision-making purposes.

This chaotic situation can be caused by everything from ineffective management to slow, manual business and continuous improvement processes that allow supply chains issues to linger undetected for extended periods of time.

S/Op Gap Symptoms

How do you know if your manufacturing supply chain is suffering from an undiagnosed S/Op gap? If most or even many of these scenarios describe the state of your operations, the chances are high:

• Unnecessarily high inventory levels of both raw materials and finished goods
• Large scrap volumes of expired raw materials and finished goods
• Frequently missed delivery dates or partial on-time orders
• Constant production schedule changes to accommodate escalations
• Large rework volumes due to poor first-pass quality
• Consistently poor customer service due to limited service rep access to production or delivery schedules
• Constant finger-pointing between Sales and Operations management

How the Gaps Relate

Let’s assume that IT/OT and S/Op gaps both exist within a company. What happens if all the effort gets focused on fixing the IT/OT gap without attending to the turmoil created by the other one first? You end up with a chain reaction of events that will ultimately result in a zero-sum game. Here’s how things usually play out:

1. Operations, the team that should own OT, finds itself fighting a battle on two fronts: one with IT, one with sales. Because of the resulting supply chain problems and disconnect with the sales organization, Ops is unable to sufficiently explain why it is functioning so inefficiently. Ops may have lots of data, but none that is sufficiently robust to silence the “Your data is not right, mine is” debate.

2. Senior management can see the value in having teams aligned on a single set of numbers, and since IT is the group that fixes problems with information, it follows that IT should be sent off to solve the problem.

3. IT is granted a juicy budget and head count to resolve the ops shortcomings, which includes taking over control of all hardware and software in the OT domain. IT now finds itself in a principal position of power within the organization.

4. The IT/OT rift deepens as the IT organization begins to take actions that further compromise operational efficiency. The project mandate is to solve information problems, causing the Operations problems to get lost in translation.

6. Despite having a very limited understanding of the supply chain or manufacturing operations, IT now unilaterally controls the ERP system, the MES system and the plant floor.
7. Closing the IT/OT gap is no longer an option. Meanwhile, the S/Op gap remains wide open.

So… How could this have been different?

Let’s roll back and start again. Operations and Sales are in the same familiar battle for plant efficiency versus sales volumes. But this time, let’s have things play out differently.

Realizing that data is king, Operations managers set about getting their data in order. They focus on the key metrics that help their position: customer service levels, efficiency, reliability, lead times and inventory levels. They make sure that trustworthy data is available in real time.

The Operations managers are able to support their assertions that longer production runs are viable without impacting customer service, and can even point to forecast accuracy as being the key metric that the sales team should improve.

With improved credibility based on freely available, trustworthy data, Ops has the power to close the IT/OT gap.

Now, back to reality: the scenario where Operations may not have completed these measures. The only way to solve the dual-gaps problem in this situation is for everyone to take a step back, shelve any IT/OT alignment efforts and focus exclusively on closing the S/Op gap first.

Doing so will empower both Sales and Operations — two revenue-producing functions — to team up toward the single, mutually beneficial goal of creating an efficient manufacturing organization. Meanwhile, Ops and OT will be back on level footing with IT where they belong, to the long-term benefit of the company as a whole.

To recap: the IT/OT gap in North American manufacturing cannot be closed by traditional systems integrators, because these integrators are systematically going after the wrong problem first. And furthermore, they don’t possess the skill sets needed to address the underlying S/OP gap beforehand.

What is required is a resource with vast experience working across senior management, IT, Sales and Operations to clearly identify the problem, outline a plan, and help implement a modern data infrastructure to close all the gaps in the proper sequence.

That resource is us – Spruik Technologies – and we can’t wait to start working with the forward-thinking manufacturers out there. Let’s talk!