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It’s the future of manufacturing as we know it. Here’s what operations executives need to know to ride the wave of innovation to survive and thrive. By Terri Hiskey

There is a lot of buzz around the various technology enablers of Industry 4.0. But, viewing Industry 4.0 as a technology initiative is a mistake. Why? Because Industry 4.0 is more than this—it’s the future of manufacturing as we know it.

Industry 4.0 facilitates fundamental improvements to the industrial processes involved in manufacturing, engineering, material usage, asset performance and management, and supply chain and lifecycle management. It is not just about improved performance and efficiency; it’s also about enhancing agility, flexibility and speed-to-market when designing and launching new products and services.

It also gives organizations something even more powerful—the means to navigate change. This is crucial at a time when manufacturers are reinventing their business models to focus on value-added services, and/or entering new geographic and adjacent market segments.

From a business perspective, Industry 4.0 supports four major tenets of operational execution:

  • Interoperability
  • Information Transparency
  • Actionable Insights
  • Automation

These tenets in turn, support several business imperatives. These include:

Scaling globally, scaling to purpose — Today’s Industry 4.0-outfitted factories are empowered to drive productivity and keep costs down while ensuring quality and consistency across manufacturing processes globally. Automation gives manufacturers the ability to refocus personnel on more value-added activities. As they expand globally, extending and expanding product and service offerings, automation maintains process consistency, and enables manufacturers to focus on what they do best. They are then in a more advantageous position to take on work that is most aligned with their key competencies as well as activities that are most profitable.

Cloud technology is central to Industry 4.0. It allows manufacturers to scale operations by focusing more on operations versus information technology. The cloud is the great equalizer—giving small and midmarket enterprises access to leading software capabilities—and capacity as needed—without having to monitor and manage infrastructure.

Gaining operational control and visibility—In an increasingly complex and global manufacturing enterprise, digitization on the factory floor creates a single “digital thread” across operations to support responsiveness, improved collaboration and reduced risk. Visibility from order entry to inventory to finished goods is required to inform customers, partners and other stakeholders on status at any time, and to streamline compliance requirements.

Ironically, the smart factory is producing more real-time data than ever that can be harnessed to optimize operations. However, according to the McKinsey Global Institute, despite the immense potential factories have for value creation in the IoT era, an estimated 70 percent of data captured in manufacturing goes unused.

As more intelligence products are brought to market, manufacturers need to boost capabilities for traceability around products and components including sensors and embedded software. This is necessary to eliminate blind spots in internal quality processes and reduce waste.

IoT data can help manufacturers ensure product quality and even predict and prevent failures at the component level, the assembly level, and with shipped product to understand risk for product warranties.

Mapping to the new modes of manufacturing—Mass market manufacturing has given way to personalization and customization. This entails shorter production runs, which require switching out lines more often. Manufacturers must configure and reconfigure the shop floor quickly and easily to avoid expensive machine and line downtime.

Technologies such as augmented reality can help reduce lag time between design and production. 3D printing is pivotal in this area. To date, the use case for rapid prototyping has been proven to be a game changer, and other broader use cases are now coming into focus. These include 3D printing for spares or replacement parts—which dramatically reduce the time and cost of part acquisition, especially for old or obsolete parts, enabling manufacturers to significantly reduce downtime while extending equipment shelf life and return on investment.

Cultivating and exceptional customer experience—Manufacturers know customer experience is fundamental. This entails providing the means to deliver what customers want, when they want it (i.e. omni-channel order and fulfillment options) to keep pace with changing market demographics and customer expectations.

Industry experts at Deloitte say Industry 4.0 enables a more responsive customer-centric organization where digital technologies offer opportunities for innovation and growth, and novel ways to improve and customize the customer experience. With the ability to understand a product performance and customers’ interactions with those products in the field, manufacturers gain knowledge as to how to best grow and enhance customer relationships.

Organizations Must Deal with the Technology Debt

The most digitally mature companies are eight times more likely to gain market share than the least digitally mature, according to Bain & Company, which benchmarks companies ranging from digital skeptics on the low end of proficiency to digital differentiators at the highest level.

While most organizations recognize the “digital dividends,” many face an uphill battle with legacy systems. In fact, a large percentage are spending excessive IT cycles on integration, which takes away from their ability to focus on innovation and competitive advantage. In a recent study by Accenture, it was found that the typical IT budget may allocate up to 90 percent to maintaining the current state and just 10 percent on innovating—a “technology debt” that is bankrupting competitive advantage. Per Accenture, technology debt encompasses the inefficiencies, duplicate processes and extra work created by an outdated or out-of-control technology architecture.

Operations executives are taking stock of whether the business systems they have in place are ready to support the Industry 4.0 journey. Product Lifecycle Management (PLM), Enterprise Resource Planning (ERP), Manufacturing Execution Systems (MES), and Computer Aided Drafting/Computer Aided Manufacturing (CAD/CAM) all must be integrated to support the move toward increased digitization and customization. The boundaries between production and management must disappear, and ERP, MES and other critical systems must form an integrated unit for businesses to realize growth opportunities in this new age of intelligent manufacturing.

What’s more, as digitization in the factory continues, security implications grow and a sophisticated and layered approach to security is critical. This is challenging for manufacturers who may not have the security resources in house to adequately address this growing challenge. Leveraging a cloud hosted software model can give manufacturers the ability to confidently move forward with Industry 4.0 initiatives.

Evaluating the existing IT environment is the first step to understanding Industry 4.0 readiness. Digital capabilities are vital, and ensuring the right foundation is in place to capture, analyze and act is critical, as time and Industry 4.0 tide wait for no man … or manufacturer.

An accomplished marketing professional with broad experience in the manufacturing and supply chain sectors, Terri Hiskey is vice president of Product Marketing for Manufacturing at Epicor Software, a provider of ERP solutions for 20,000 customers worldwide. Visit www.epicor.com for more information.

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