Mevotech LP

What is the future of Manufacturing?

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People have argued that the future of manufacturing in North America is bleak and the trend in recent years has definitely seen a move to lower-cost regions. As an alternative, others have argued that we need to change our approach and it’s not just about low-cost labor, it’s also about productivity. Covid-19 supply chain disruption and shutdowns have further increased this focus on built local.

So, how does the future of Manufacturing relate to Digital Transformation, technology and automation, and Industry 4.0? Let’s start by exploring some key concepts.

What is Digital Transformation?

Digital Transformation starts and ends with the customer and how you add value for them, how that then impacts your internal processes, your culture, and your employees. It is the harmonious connection of all of your internal business processes to deliver on the customer promise.

It is also about taking a different view of your business models to understand how you can utilize technology to add value in new and innovative ways.

The two distinct dimensions of a customer-driven digital transformation are

1. Integration of Digital Technology. Fundamental Customer focused changes in business models are driven by technology. This might also include customer-driven modernization of existing business models, and associated changes to internal processes to ensure they are connected and business flows.

2. A Cultural Shift. Are all of your employees customer-focused? What do you need to do to help them become more customer aware? How do you go beyond that and push the boundaries, experimenting, and potentially failing? This may involve abandoning well-established processes for new ones — ones that are maybe not yet fully defined – trying new things, with no guarantee of success.

In some situations Digital Transformation has helped businesses transform from a one-off sale of a product to an ongoing service contract, thereby adding more value for the customer, and ultimately generating increased revenue for the seller over the longer term. For example, GE no longer directly sells aircraft engines. These days they sell engine flight hours, and associated services such as real-time monitoring, diagnostics, and dynamic maintenance.

What is Industry 4.0?

Industry 4.0 originated in Germany around 2012 and was designed as a drive for manufacturing improvements to grow the German economy. Unlike some other economic development initiatives, Industry 4.0 was ground-breaking and pulled together a robust set of industry approaches that had widespread applicability and huge potential. While its origins were in Germany, its value and potential have become recognized worldwide.

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Described as the 4th Industrial Revolution, the official definition is “the merging of cyber and physical systems”. People often assume it is about technology, robots, and automation. While those are all potential aspects, so are sensors, connectivity, the Internet of Things (IoT), and safety.

Fundamentally, it is about turning real-time data from your operations into information to make better decisions and drive improved processes, be those decisions manual or automated.

Competitive Advantage

Industry 4.0 is a philosophy or a corporate strategy and is about how you use data to drive a smart or digital factory, how you empower your workers with data and use techniques such as process improvement and 6-sigma to improve performance. This is supported by various enabling technologies, connected devices, and analytical tools.

The result? Improved performance, higher Overall Equipment Effectiveness (OEE), and reduced downtime, which by the way, then delivers increased revenue and profitability. By 2030, the estimated GDP value of Industry 4.0 in North America is a massive $7.1 Trillion.

How does Digital Transformation relate to Industry 4.0?

While on the surface Digital Transformation and Industry 4.0 appear to be fundamentally different and disconnected, Manufacturing can bring the two together to its advantage. Digital Transformation’s focus on the Customer drives internal business change and improvements in internal business flow. This need for interconnection and smooth flow of information within your company will translate into goals to drive your Digital Transformation.

TheseCustomer views and business goals provide essential input forManufacturing to understand what is needed and to formulate a plan on how to drive change. Industry 4.0 approaches can then be utilized to provide data-driven approaches, automation, and advanced tools to deliver on those customer needs.

For example, maybe the customer has specific requirements related to on-time delivery, these can be built into the business processes, from production scheduling, raw material purchasing, and delivery, through to manufacturing operations, supply chain, and shipping. The interconnection of these critical internal processes works in harmony to accelerate the business and deliver on the customer’s needs.

Key Takeaways

1. Firstly, focus on the Customer

a. How can you add value for them?

b. How can you make their life easier?

c. How can you pivot your business model to deliver on the above?

2. Secondly look at how Data can drive your business

a. Critically review the data to understand what is going on

b. Become Data-driven in all of your decision-making

c. Use data to identify and drive, improvements and automation

If you satisfy the customer needs, they will keep coming back!