The state of Global Manufacturing
The Industrial Revolution of the 1700s was perhaps the most important change that the world had seen on a massive scale under a very little time frame. It was the transition to a new era of mechanized manufacturing processes with a huge upside potential of catering to the rising demands of the growing population. The late 1800s introduced the world to the electrification of factories after the advent of A.C. and D.C. motors. Establishment of electric facilities, lowering of electricity prices, increased flexibility in manufacturing and fewer maintenance processes allowed many factories to witness a 30% increase in their average output.
Manufacturing in the 21st century is much more complex and global. The uncertainties in the supply chain due to geopolitical tensions have created major roadblocks for every major industry. There is more and more push for local manufacturing in the developed economies such as US, UK and EU. However, each country is going through a myriad of challenges at the local level. Here are some factors that are affecting the factory output.
- Workforce shortage - According to a joint study by Deloitte and The Manufacturing Institute, it is estimated that about 2.1 Million manufacturing jobs will go vacant by 2030 due to the gap in skills. This gap in skills is partly due to the fast pace of technological change across various industries and partly due to the high difficulty of recruitment of workers with specific skills. Stagnation in labor supply is a huge worry because that may restrict the growth potential in the long term.
- Safety concerns - Occupational health and safety issues in the manufacturing industry have been recognized by the National Institute for Occupational Safety and Health (NIOSH) as top priority. Failing to adhere to the standard safety procedures risks both the health of its workers and the reputation of the industry. Millions of workplace fatal injuries occur every year globally. Manufacturing accounts for almost 20% of the workplace fatal injuries globally.
- Supply Chain instability - Manufacturers almost always face global disruptions that add to production cost, reduce profits, delay product launch and test the abilities of anufacturing companies to adapt. Case in point is the chip shortage that is currently affecting every major industry globally. Rising costs of raw materials, slow deliveries, demand verpowering supply and transportation challenges are the root factors behind the supply chain instability.
- Product launch rate - The competition is always faster. Production not keeping up with sales, unexpected breakdown of machinery, shortage of raw materials and repetitive manufacturing errors lead to a delay in the supply of products which then gives the competition the advantage to make the playing field their own.
Industry 4.0 - Digitalization of Manufacturing
Digitalization or a digital transformation of the manufacturing industry is one of the key enablers that has the potential to eliminate or minimize the effect of the challenges described above. Digitalization can help improve both the responsiveness & agility of manufacturers that are affected because of the ever-changing market conditions and supply-demand imbalance.
According to Gartner’s glossary, Digitalization is the use of digital technologies to change a business model and provide new revenue and value-producing opportunities. It is the process of moving to a digital business.
According to Mckinsey, Digitalization of the manufacturing sector is happening in 4 ways
- Data, computational power and connectivity – Includes big data, internet of things and cloud technology
- Analytics and Intelligence – Includes use of statistical techniques for digitization and automation of knowledge work
- Human-machine interaction – Includes the use of virtual and augmented reality for improving human and machine interaction and at times easing the complex tasks done by humans.
- Digital to Physical conversion – Includes use of additive manufacturing, advanced robotics for low cost prototyping and in some cases precision manufacturing.
Figure 1 : 4 Ways of Digitalization in Manufacturing Sector
Impact of Digitalization of Manufacturing
Figure 2 : Productivity Impact of Digitalization on various sectors
Some of the main benefits of Industry 4.0 include:
- Paperless process flow - Digitization allowed for a 3D approach in design and manufacturing which ensured reduction of the overall production time, capturing growth and protecting long-term profitability.
- Connected Process - machine-to-machine (M2M) communication, Computer Aided Design (CAD), High Performance Computing (HPC), Cloud Computing, Industrial Internet of Things (IIoT) are some of the most important technologies applied today in tandem to advanced sensor technologies and wireless connectivity to keep every process under the manufacturing tree connected.
- Real-time data - with the Industrial Internet of Things (IIoT), a real time flow of information about various operational status is readily available for analysis. Data sets include input, consumption, wear & tear, load capacity, position, temperature, humidity etc, which are then processed by the Embedded Computing systems to increase productivity by atleast 25%.
- Big data analysis - Sensors attached to industrial machinery provide continuous feedback throughout the manufacturing process from acquisition of raw materials to final delivery. This data library is then processed by analysts and Business Intelligence (BI) tools to further refine the manufacturing process. Some of the biggest benefits of data analysis include environment friendly designs, better safety, elimination of repetitive errors, better product quality and efficient inventory management.
This Fourth Industrial Revolution that we are witnessing today means a smart, connected, closed-loop system. With further innovations in this phase, remote operations monitoring, M2M communication & data driven automation could push the manufacturing industry beyond its current capabilities and ensure huge advances in quality, reliability & agility. Digitalization of manufacturing companies around the globe is creating solutions for many challenges faced by them. Manufacturing operations have become much more organized and streamlined than before by capturing data at every step.
Sources
- Lombard R., van Waveren C.C., Chan K.-Y.(Department of Engineering and Technology Management, Graduate School of Technology Management, University of Pretoria, Pretoria, Republic of South Africa)(corro@up.ac.za)
- Ezell Stephen, 2018, “Why manufacturing digitalization matters and how countries are supporting it”, https://www2.itif.org/2018-manufacturing-digitalization.pdf
