co-authored with Prasad Satyavolu
Designing products in manufacturing has never been so exciting--and challenging--thanks to new, IoT-based technologies. Changes in manufacturing processes, supply chain, robotic plants, embedded sensors in products and manufacturing machinery are all driving real-time operational efficiencies, reducing risks, and at the same time creating grounds for innovation and business impact.
The boundaries of competition are changing the marketplace with new business models. Uberization is now a verb.
Just look at the leaders: GE, Siemens, Caterpillar, Harley Davidson, Ford, and recently Foxconn are all emphasizing digitizing their plants to improve efficiencies, cut costs and allow decisions to be made at unit level. GE is even shifting its brand to one as a software company.
Breaking down “digitization”
Digitization impacts all four elements of the organization: informed products, processes, people and infrastructure – the integration of which is essential to an automated, smart and streamlined manufacturing.
Products: Products are becoming ‘Smart’ meaning, they’re getting embedded (usually via sensors) with intelligence connected directly to the customer to monitor usage, productivity and help guarantee reliability. Advanced sensors and software applications like analytics and cloud-based programs have made this possible.
A ‘smart’ or informed product also take autonomous action, improving productivity and efficiencies through real-time supply chain improvements.
But it goes beyond better efficiencies: when products are smart, new business models are possible. New business models will be built around analyzing and monetizing sensor-generated data. And customers can be directly involved in ideation and design of products. Just take a look at Procter & Gamble’s ‘Connect plus Develop’ program wherein customers and partners share ideas and insights in new product development.
People: People are critical, but skillsets will shift. On the shop floor, it’s not going to be about machining skills, it will be about making meaning from loads of generated data for informed decision making and quick action. It will be about marrying the physical shop floor with the ability to redesign and reinvent old processes and systems.
According to research conducted by Cognizant’s Center for the future of work, the top two capabilities sought by companies are product designers and data scientists. With an estimated skills shortage of over 3 million in manufacturing in the next decade, and supply chain alone creating up to 1.4 million job vacancies by 2018 according to MHI research people are, to put it simply, not going anywhere soon.
Processes: A real-time information highway between supplier and customer re-configures the supply chain by making it more flexible and adaptable. Rote processes are automated, and data generated by automation helps with granular visibility and meaningful insights across the global value chain.
That said, while modern processes imply breaking information silos within the company and encouraging collaboration among different functional groups as part of the strategy, one of the most neglected pieces of the puzzle has been the cultural aspect of driving change within the organization. Moving away from “This is how we’ve always been doing “to creating new sets of operating principles will require strong change management initiatives.
Infrastructure: And last but not least, the role of an informed infrastructure – a combination of hardware and software applications to create an ecosystem for enhancing performance and efficiencies. An example is Cisco’s Virtual Manufacturing Execution System (VMES) platform for managing real time production operations.
Though smart infrastructure has been around in manufacturing plants for some time, robotics, cloud, mobile and analytics have taken it to whole new levels of intelligence and productivity. However, the big concern would be to not only manage the infrastructure complexities but also keeping it secure from digital threats.
In a nutshell
Short of unpredictable geopolitical events that upend trade and manufacturing, it’s the shifts in consumer demand cycles, ownership models and product transformation to “Smart” that is creating a new cost and revenue dynamics for the traditional manufacturer. For next generation manufacturing to succeed, organizations must embrace digital technologies across the four pillars of the organization to elevate performance, improve productivity, and create profitable business outcomes.