I recently listened to this podcast from McKinsey on the future of manufacturing, and I'll summarise some of the key topics and add some of my own thoughts on the points they made about the direction that the manufacturing industry is headed in.
'Lighthouse manufacturers'. An exclusive club?
The podcast kicks off by mentioning that there are a number of 'lighthouse manufacturers' globally who are blazing a trail for the rest of the industry in terms of best practices and digital transformation in what has been called the "fourth industrial revolution, or Industry 4.0"
While one may think that these would be brand new greenfield factories filled with automated robots, it's not the case at all.
The most advanced cases where “the fourth industrial revolution” is taking shape are 'brownfield' sites, not in new buildings that were set up to that effect. Transforming an existing facility and its existing equipment is possible, even in factories that have been around for a long time.
It's not done in factories that are literally 'lights-out' either. New digital technologies and training in new skills 'augment' operators' capabilities rather than replace them.
Digital technologies bringing factories into the 21st Century
The most digitally advanced factories often use a portfolio of digital technologies, each often aimed at improving just a single process or task. By implementing 20-30+ cases, a Bayer factory in Italy increased productivity by 40% without capital investments.
Some great examples given of digital industry 4.0 technologies used to digitally transform factories are predictive maintenance, digital performance management, 3D-printing, and IoT sensors (working with the cloud).
The data from IoT sensors on machines is used to automatically alert engineers before issues occur and even have the parts ordered and ready-and-waiting for them before they arrive to perform the maintenance.
Upon arrival, AR glasses show technicians how to perform the maintenance, so the need for an encyclopedic knowledge of procedures is no longer required in maintenance staff.
This takes the reactivity and, hopefully, downtime out of factory maintenance.
Digital performance management
An effective replacement for old-school often hand-filled 'dashboards' or visual management boards that we commonly see in factories showing KPIs and other data.
Now these dashboards are fed with real-time data from IoT sensors which allow a true view of performance immediately and also faster reaction to any issues by the management team and staff.
As SynControl is an IoT app that uses real-time data to improve the performance of quality inspection teams, I can completely understand the importance of digitising data collection and results in order to streamline factory performance and react in a more agile way.
An amazing example of cost-reduction is 3D-printing spare parts where needed, rather than keeping them in inventory in a central warehouse and shipping them around.
3D-printing is now more economical and it has started to break into mass-manufacturing. Rather than just being the preserve of prototyping, it's used today, for example, by certain smartphone component manufacturers who often print 100,000 pieces or more at a time.
IoT sensors and the cloud
IoT is a component of most of the digital technologies that we see driving productivity in Industry 4.0. In the podcast it's likened to the body's nervous system, where IoT sensors send stimuli to the cloud (the brain) which then reacts using automation.
Not only can IoT help factories improve performance on site, but it also has a part to play in business, as it can provide customer usage data which will influence design, production, marketing, and so much more that is beyond the factory floor.
Are jobs under threat?
Factories that are at the forefront of digitisation have the same numbers of staff and fixed assets, but that's because they're winning more of today's market share due to improved processes and capability over their competitors and as such they're rapidly growing productivity and capacity without needing to lose any staff. Instead of reducing staff and relying on automation, they're augmenting their staff to be more productive when using digital technologies and have a more interesting and satisfying role.
However, factories who are just now looking at digitising may find that the technology will allow them to do more with fewer staff, leading to an almost inevitable reduction in staff numbers as they reduce costs to compete with the factories who are already more productive.
Launching a digital transformation (or not)
In a given industry, those at the leading edge of technology adoption can rethink their process and reap most of the benefits.
Manufacturers that have already made efforts to stabilise their operations and train their workforce (e.g. those that applied Lean principles & tools) can digitise much faster. Otherwise, they will go through many hurdles.
The speakers suggest that from interviewing manufacturing leaders who have undertaken digitisation transformations, they said that:
"The biggest failure mode is when we try to digitally transform a site that has not mastered lean." "Because not only is the workforce not prepared for this kind of change—but also the processes are not characterized well enough. Things are not under enough control to take full advantage of digital."
At one point, your company will need to modernise its IT stack. It will also need to upscale some of its people so they can work with the new systems.
Successful implementations come when objectives for the whole company are defined: Faster, cheaper, more agile...? You need to work back from the business value you want to achieve, and then decide on what new software & hardware you need.
Make sure to then avoid “pilot purgatory”, a very common issue.
The speakers warn against:
- Slow decision making - Many times, savings realise only after scaling the new technology.
- Using lack of ROI as a justification for not spending on scaling up something that worked as a pilot - Setting up digitisation in a pilot area is only a first step, and is not sufficient to prove any ROI. This can stop some manufacturers taking the next step.
Where do you stand on Industry 4.0? Has your factory, or those of your suppliers, implemented digital technologies to improve performance, cost, etc? How has the experience been so far?
Tell me by leaving a comment below.