Industry 40 demands new solutions for manufacturing
Life is changing fast for manufacturing companies. Not only is the business of designing, making, shipping, distributing and selling finished goods becoming ever more global and competitive, but technology is ensuring that it is evolving at a pace that’s tough to keep up with.
Manufacturing companies need to be more agile, thoughtful and innovative than ever in how they do business. Manufacturing is a connected, but often global, distributed operation. Many of today’s complex products use raw materials and components from all over the world in their manufacture. While there may be a single location at which all of those come together, it’s rare to see products that are produced end-to-end in one place anymore.
A 2012 World Economic Forum report (produced in collaboration with Deloitte Touche Tohmatsu Limited) offers the manufacturing process of aircraft manufacturer Boeing’s 787 Dreamliner as an illustration of the concept it calls “disaggregation” – and provides a stark illustration of both the complexity and international nature of modern manufacturer. The report says that Boeing’s Dreamliner is manufactured with components from 287 suppliers across no less than 22 countries.
In fact, it’s such a great model of modern, complex international and interdependent manufacturing that it was also offered in 2016 as an example of global supply chain complexity by the U.S. Chamber of Commerce (see illustration below).
The major takeaway from this example is that modern manufacturing is a highly interdependent, complex (and often international) undertaking. Manufacturers are vulnerable to any single point of failure along the global supply chain.
All of the pieces shown above have to come together in order to build a new Dreamliner. You can’t deliver a plane that is missing the landing gear doors or the aft fuselage. Any delays due to issues with any of the components shown above have significant implications for both manufacturers and their customers.
Consulting firm McKinsey & Company undertook a major survey of 300 leading manufacturers in 2015 to determine how many of them were ready for “Industry 4.0” – the catch-all term (often used interchangeably with “Factory 4.0”) for the next wave of manufacturing modernization. It offered the “digital compass” below to illustrate the many levers and value drivers of Industry 4.0.
The term “Industry 4.0” (or Industrie 4.0) is generally credited to an initiative by the federal government of Germany to modernize manufacturing – and has become a popular term covering a broad range of innovations.
In a report introducing the concept, Germany Trade and Invest explained that Industrie 4.0 is all about connecting the digital and physical worlds that are core to manufacturing today.
It involves leveraging “Internet of Things” (IoT) technologies, artificial intelligence, ubiquitous networking and connectivity, big data and better human machine interfaces (such as those offered by augmented reality solutions) to create a smarter way to manufacture.
The vast amount of data generated by these systems underpins the rise of the “smart factory” – one in which that data is then analyzed by artificial intelligence systems, which produce recommendations on what, if any, actions need to be taken to improve the operation of the factory.
