Making the connection – why we are living in a joined-up manufacturing world
Industry 4.0, or the fourth industrial revolution, is already bringing radical change to the entire manufacturing value chain. One of the key enablers is connected manufacturing which is today helping to link together all the components - from the supplier to the production line, reseller or distributor, and finally end customer.
Across the world, manufacturers are already gleaning information about the supply chain and their products through the Internet of Things. The new paradigm is enabling them to extend this connection to the end customer and start to feedback the information they assemble there to production to adapt the value chain.
Reaping the rewards
This new connectivity enables manufacturers to find out more about how their customers are using their products. And these developments are likely to have a profound influence on the way that goods and solutions are made in the future. Thanks to the change unleashed by Industry 4.0, manufacturers are already designing and developing products based not just on their own vision and expertise but also on customer feedback and an analysis of how customers are using the product itself.
Moving a further step forward, manufacturers can use that information not just to improve the product but also embed it with services that align with customer needs and deliver incremental revenue streams. It is an evolution of the whole concept of design. Manufacturers no longer simply have to consider the shape, form and build of the product but they now have to think about how best to embed services into the product too.
Customer usage can increasingly be tracked and this knowledge shapes the ongoing development of the product. If a particular function is not being used at all, it can be removed in the next version. If a function is being used intensively on the other hand, its capabilities can be developed further in the next release. In a sense, the customer is in charge, leading and driving the evolution of the product based on the way they are using it. It’s also critical though to have a feedback loop in place so that customer complaints can be fed back into the design and development process. If customers are complaining to customer service that a valve has broken, for example, then the design team also needs to be aware of it so that they can adjust the product accordingly.
Dawn of a new era
The arrival of the new age of connected manufacturing represents not just a big change but also a major challenge to most manufacturers. Their focus is no longer simply on creating a product and then trying to sell it, instead they need to gather together and then utilise information about how the product can be used and how it can be serviced. Doing this successfully necessitates cross-department collaboration. Working in silos is no longer a viable option.
Moving to a connected manufacturing model is not easy, of course. Organisations need to put an overarching business strategy in place before they take the plunge. They need to know what their ultimate goal is - what they are looking to achieve - before they switch to the new model. They need to understand, for example, what markets they want to target, what demand is likely to be and what KPIs are they going to put in place to measure achievement. And they need to have a talented team of people in post who can read and analyse information coming from the customer and then kick-start the development of new products and services that address this new insight into behaviours and preferences.
And remember - all of this has to be part of an evolutionary process. A big bang approach simply will not work because the risk involved will be too high. If an organisation moves too early, they are likely to find that in fact they can’t change sufficiently quickly because they haven’t tested their plans properly and they don’t have a fully thought-through strategy in place.
The capabilities enabled by this new connected manufacturing paradigm are today enabling manufacturers to transform not just the way they engage with customers but also their entire business model and approach. The days of the traditional ‘sell it and forget about it’ manufacturing approach look to be numbered.
Manufacturers today can’t afford to adopt a purely sales-focused approach. Instead, they need to go beyond that to draw on the data resources they have across the organisation and beyond in order to understand clearly how the customer is using the product and what they are looking to get out of that usage, so they can deliver value added services that enable them to build a long-term relationship post-sale, improve the user experience and tap into incremental revenue streams. It’s a revolution in the whole way that manufacturing is carried out – and ultimately that is likely to be one of the greatest legacies of the new connected world that Industry 4.0 has ushered in.
Fabrizio Battaglia is Head of Manufacturing at HSO
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IMF: Variants Can Still Hurt Manufacturing Recovery
After a year of on-and-off manufacturing in the US, UK, and the eurozone, demand for goods surged early last week. Factories set growth records in April and May, suppliers started to recover, and US crude hit its highest price point since pre-COVID. As vaccination efforts immunise much of the US and UK populations, manufacturers are now able to fully ramp up their supply chains. In fact, GDP growth could approach double-digits by 2022.
Now, the ISM productivity measure has surpassed the 50-point mark that separates industry expansion from contraction. Since U.S. president Biden passed his US$1.9tn stimulus package and the UK purchasing managers index (PMI) increased to 65.6, both sides of the Atlantic are facing a much-welcomed manufacturing recovery.
Lingering Concerns Over COVID
Even as Spain, France, Italy, and Germany race to catch up, and mining companies pushed the FTSE 100 index of list shares to a monthly high of 7,129, some say that UK and US markets still suffer from a lack of confidence in raw material supplies. Yes, the Dow Jones has made up its 19,173-point crash of March 2020, and MSCI’s global stock index is at an all-time high.
Yet manufacturers around the world realise that these wins will be short-lived until pandemic supply chain bottlenecks are solved. If we keep the status quo, consumers will pay the price. In April, inflation in Germany reached 2.4%, and across the EU’s 19 member countries, overall prices have increased at an unusual pace. Some ask: Is this true recovery?
IMF: Current Boom Could Falter
Even as Elon Musk tweeted about chip shortages forcing Tesla to raise its prices, UK mining demand skyrocketed; housing markets lifted; and the pound sterling gained value. The International Monetary Fund (IMF), however, cautioned that manufacturing recovery won’t last long if COVID mutates into forms our vaccinations can’t touch. Kristalina Georgieva, Washington’s IMF director, noted that fewer than 1% of African citizens have been vaccinated: “Worldwide access to vaccines offers the best hope for stopping the coronavirus pandemic, saving lives, and securing a broad-based economic recovery”.
Across the globe, manufacturing companies are keeping a watchful eye on new developments in the spread of COVID. Though US FDA officials don’t think we’ll have to “start at square one” with new vaccines, the March 2021 World Economic Outlook states that “high uncertainty” surrounds the projected 6% global growth. Continued manufacturing success will in large part depend on “the path of the pandemic, the effectiveness of policy support, and the evolution of financial conditions”.
Mathias Cormann, secretary-general of the Organisation for Economic Co-Operation and Development (OECD) concurred—without global immunisation, the estimated economic boom expected by 2025 could go kaput. “We need to...pursue an all-out effort to reach the entire world population”, Australia’s finance minister added. US$50bn to end COVID across the world, they imply, is a small investment to restart our economies.