Smart manufacturing will push the industry forward
The future of the manufacturing industry across the developed world is uncertain and policy-makers everywhere are looking for a magic bullet. Last month Nissan committed to building new cars in Britain only after 'assurances' were provided by the British government over the impact of Brexit on the car industry. In the US, meanwhile, the new President-elect Donald Trump has promised to revitalise the industry in and bring manufacturing jobs back to America by renegotiating international trade deals such as NAFTA and TTIP.
However, while the industry landscape looks uncertain and these developments move along slowly, manufacturing has been transforming. Technology is transforming the industry, so much so that we find ourselves in the fourth Industrial Revolution. History tells us that this will impact manufacturing significantly and in many different ways including supply chains, consumer demand and labour. We have come a long way from steam power and mass production which drove the first and second Industrial Revolutions. The fourth Industrial Revolution is defined by data; big data and the Internet of Things (IoT) are at the heart of the movement: however, the key is how this data is interpreted and applied to optimise manufacturing overall.
Smart manufacturing is transforming the manufacturing industry globally and companies which do not move with the times could suffer. A report from the Conference Board of Canada from earlier this year found that some manufacturers are working with 20-year-old software. One Associate Director at the Board commented: “In lieu of data and facts, many operational leaders are still relying on experience, gut, and manually produced spreadsheets to make decisions.”
There is a real opportunity for middle market manufacturers to take advantage of these new technologies which are becoming more affordable, while middle market companies are nimble enough to experiment with new processes and ways of thinking which could put them ahead of their larger corporate competitors.
But innovating doesn’t require a complete rebuild of your supply chain and there are many small changes middle market companies can implement to make their processes smarter. Smart tags can help optimise supply chain processes by tracking inventory in real-time, from raw materials to the final product. Modern manufacturers are also employing cloud technology to manage these smart devices to help information flow from the factory floor to the very ends of the supply chain.
Mobile technologies are playing a more significant role in manufacturing businesses as they are becoming more affordable and middle market companies are catching on. In RSM US LLP’s 2016 Manufacturing Monitor, which surveyed 1,174 middle market manufacturers from around the world, 64 percent of respondents indicated that they had plans to implement mobile technologies into their business. Various mobile platforms, including phones, tablets and smart watches can be used specifically for the manufacturing environment. These devices are great platforms on which to share real-time performance data and allow quality and technical managers to have all of the information they need in their day-to-day jobs on them at all times.
Some businesses are also looking at IoT technologies to improve operations and product quality, and reduce costs. In fact, 40 percent of companies surveyed already have an IoT strategy in place. IoT also has obvious benefits that can be realised in production processes, including process optimisation and preventative maintenance - but it also has other benefits, such as guarding against cyber-attacks.
It is disconcerting that not all businesses are embracing smart manufacturing. We know that nearly one-third of declining manufacturers expect to decrease their IT expenditures in the next year. But, investing in technology does not have to mean pouring money into the latest and greatest technology. Even smaller, less expensive technologies can help you improve your processes in more ways than you think.
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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.