Life is changing fast for manufacturing companies. Not only is the business of designing, making, shipping, distributing and selling finished goods becoming ever more global and competitive, but technology is ensuring that it is evolving at a pace that's tough to keep up with.
Manufacturing companies need to be more agile, thoughtful and innovative than ever in how they do business. Manufacturing is a connected, but often global, distributed operation. Many of today’s complex products use raw materials and components from all over the world in their manufacture. While there may be a single location at which all of those come together, it’s rare to see products that are produced end-to-end in one place anymore.
A 2012 World Economic Forum report (produced in collaboration with Deloitte Touche Tohmatsu Limited) offers the manufacturing process of aircraft manufacturer Boeing’s 787 Dreamliner as an illustration of the concept it calls "disaggregation" - and provides a stark illustration of both the complexity and international nature of modern manufacturer. The report says that Boeing’s Dreamliner is manufactured with components from 287 suppliers across no less than 22 countries.
In fact, it’s such a great model of modern, complex international and interdependent manufacturing that it was also offered in 2016 as an example of global supply chain complexity by the U.S. Chamber of Commerce (see illustration below).
The major takeaway from this example is that modern manufacturing is a highly interdependent, complex (and often international) undertaking. Manufacturers are vulnerable to any single point of failure along the global supply chain.
All of the pieces shown above have to come together in order to build a new Dreamliner. You can’t deliver a plane that is missing the landing gear doors or the aft fuselage. Any delays due to issues with any of the components shown above have significant implications for both manufacturers and their customers.
Industry 4.0 - A new way to work
Consulting firm McKinsey & Company undertook a major survey of 300 leading manufacturers in 2015 to determine how many of them were ready for “Industry 4.0” – the catch-all term (often used interchangeably with “Factory 4.0”) for the next wave of manufacturing modernization. It offered the “digital compass” below to illustrate the many levers and value drivers of Industry 4.0.
The term “Industry 4.0” (or Industrie 4.0) is generally credited to an initiative by the federal government of Germany to modernize manufacturing – and has become a popular term covering a broad range of innovations.
In a report introducing the concept, Germany Trade and Invest explained that Industrie 4.0 is all about connecting the digital and physical worlds that are core to manufacturing today.
It involves leveraging “Internet of Things” (IoT) technologies, artificial intelligence, ubiquitous networking and connectivity, big data and better human machine interfaces (such as those offered by augmented reality solutions) to create a smarter way to manufacture.
The smart factory leverages data
The vast amount of data generated by these systems underpins the rise of the “smart factory” – one in which that data is then analyzed by artificial intelligence systems, which produce recommendations on what, if any, actions need to be taken to improve the operation of the factory. According to the Germany Trade and Invest report, there are a number of benefits that this approach brings.
“High levels of automation come as standard in the smart factory: this being made possible by a flexible network of cyber-physical system-based productions systems which, to a large extent, automatically oversee production processes,” it concludes. “Flexible production systems which are able to respond in almost real-time conditions allow in-house production processes to be radically optimized. Production advantages are not limited solely to one-off production conditions, but can also be optimized according to a global network of adaptive and self-organizing production units belonging to more than one operator.”
So it’s easy to see why the smart factory has become a strategic goal for manufacturing companies around the world, yet it is not without its challenges.
Inter-dependence becomes a key issue
In the world of the smart factory, where everything is connected and data driven, it can be easy to optimize for obsolescence – meaning simply that if you don’t design things properly, you can have a factory that’s great at producing last year’s products, but has a tough time retooling for the new products you are going to create for the upcoming year.
The very philosophy behind the smart factory also means that everything is connected and inter-dependent, so that when there are problems in one area of the factory, there can be impacts on the rest.
That is why, as the report suggests, smart factories should be designed to be adaptive and “self-healing” so that they can absorb the impact of both malfunctions and changing business conditions.
Automation needs people
While much of what you read about industrial automation suggests that it’s all about replacing people with machines, that’s not really true. While it is certainly the case that some automation scenarios can involve workforce reductions or workforce redeployments, there are also plenty of cases where they actually mean that companies are better able to scale and respond to new opportunities – and that they need people with different skills.
This perception has created a challenge for the manufacturing sector in that, like many other parts of the economy, demographic changes have meant that it’s getting harder to find skilled, experienced employees to operate, service and maintain the increasingly complex automated systems used in many new factories.
Meanwhile, a recent joint study by Deloitte and the Manufacturing Institute found that perceptions about the manufacturing sector are making worse an already difficult shortage of skilled people. The chart below shows just how those perceptions might impact the ability of manufacturers to attract qualified employees.
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This article was written by Geof Wheelwright, a technology journalist for more than 25 years (including work for The Times of London, the Financial Times, Newsweek, Time Magazine, The Guardian and trade publications such as Computerworld and Geekwire) and is now the Director of Marketing Communications for Mountain View, California-based Atheer, Inc. He has written three eBooks for Atheer about the use of AR in industry, covering the aviation, automotive and manufacturing sectors