Six trends standing between manufacturers and the factory of the future
The factory of the future – often called the smart factory – could potentially add $1.5 trn to the global economy by 2022. Implementing digital technologies to transform factory operations has now become imperative for every company, from the automotive to high tech manufacturing industries. Yet it can be difficult to do this successfully.
Automation is not new to the manufacturing sector. However, while it has historically focused on discreet operational improvements, the factory of the future will move beyond traditional automation to be built around a fully intelligent and connected system. Driven by a constant stream of data from business, operational and production applications, this system will quickly learn and adapt to new and changing demands to create a truly smart factory.
Moving to the smart factory model brings many benefits. Deloitte has pinpointed the power of the factory of the future as “its ability to evolve and grow along with the changing needs of the organisation – whether they be shifting customer demand, expansion into new markets, development of new products or services, more predictive and responsive approaches to operations and maintenance, incorporation of new processes or technologies, or near-real-time changes to production”.
Capgemini has endeavoured to put figures against these benefits – and these should be catching industry attention. “Manufacturers expect on-time-delivery of the finished products to accelerate by 13 times, while quality indicators to improve at more than 12 times the rate of improvement since 1990. At the same time, overall productivity and labour cost improvements are reported to accelerate at 7 times and 9 times the rate of growth since 1990, respectively.”
However, despite all these benefits, the consulting firm identified one small but important problem: manufacturers are not yet seeing success from this drive to create the factory of the future. In fact, although 76% confirmed they had already launched – or were in the process of launching – a smart factory initiative, only 16% were happy with their efforts.
So which key trends are holding the industry back from achieving the factory of the future?
Supply chain digitisation
To date, many manufacturers – particularly in the automotive sector – have started to implement smart factory components in areas like planning and maintenance. Yet the factory of the future needs to go beyond the factory floor, reaching beyond the four walls to integrate with suppliers and customers. Digitisation is changing the entire supply chain from a linear, sequential operation to an interconnected, open and multi-layered ecosystem of trading partners. Manufacturers need to consider how to integrate their smart factories into these new digital supply chains to see real success.
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Data is essential to the factory of the future. Using advanced analytics and applied AI, data will drive every process, detect any operational errors, provide user feedback and improve both the quality and volume of production output. Consider the future of an automotive manufacturer. Factories will see far more customisation facilitated by data that identifies demand, minimises the downtime needed for retooling and resetting, and enables the ‘run of one’. As a result, manufacturers will be able to look at how they can exploit their data to create new data-driven products and services, such as predictive maintenance capabilities within connected vehicles.
To some, ‘digital transformation’ means shifting from paper-based to digital processes. The factory of the future takes this one step further. This transformation – driven in part by the rapid growth of the Internet of Things – relies on the convergence of operations technology and information technology. This integration ensures every aspect of factory operations can be connected and monitored. In this scenario, IoT data can be used in many different ways, whether simply feeding into operational systems to improve performance or blending with data from other enterprise systems to start changing how the entire factory and supply chain operates.
Advanced analytics, AI, drones, blockchain, robotics, 3D printing and wearables... In truth, IoT is just one of the many disruptive digital technologies confronting manufacturers today. Yet given the different production process requirements within every organisation, there can be no ‘one size fits all’ approach to the factory of the future. Instead, each individual company needs to work out the best combination of disruptive technologies to meet their specific business goals.
Widening skills gap
The key to a successful digital transformation project is people – not just technology. This is particularly true when considering smart factories of the future. While increased digitisation is unlikely to reduce headcount, the roles and responsibilities of employees will change as operations technology and information technology become more closely integrated. Some more repetitive tasks may switch to become automated processes best completed by robots but other high value and knowledge-based roles will emerge to exploit the data within the system. Agile and adaptive change management will ensure staff can effectively move between roles and gain access to the new skills they require.
Governance, risk and compliance
Deloitte has highlighted that traditional governance, risk and compliance models will fundamentally change due to one of the smart factory’s most valuable features: its ability to self-optimise, self-adapt, and autonomously run production processes.
By reducing the need for human intervention, automated systems bring fewer errors and less risk. Yet governance and compliance policies require organisations to monitor and audit the machines that now fulfil this aspect of their business. Additionally, the connectivity of the smart factory extends into the wider trading partner ecosystem so any governance, risk and compliance policies, procedures and technologies need to take full account of this new, interconnected and more collaborative way of working.
No one doubts whether the factory of the future will be intelligent and connected but there is industry uncertainty around how long it will take to get there. Yet the word ‘future’ is misleading. The benefits are too substantial to prevent this industry change from coming quickly. Intelligent and connected factories are likely to appear in the next few years.
Capgemini suggests that implementing a smart factory approach can lead to operating margin gains of over 100%. With so much to play for, manufacturers will find ways to achieve the factory of the future sooner rather than later.
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.