Digital Transformation Insights – Is Manufacturing Ready For A Digital-first Economy?

Digital Transformation Insights – Is Manufacturing Ready for a Digital-first Economy?

Industry 4.0 is a broad term used to describe ‘the information-intensive transformation of manufacturing and other industries in a connected environment of data, people, processes, services, systems, and IoT-enabled industrial assets to generate and utilize actionable information insights and realize smart industry and ecosystem industrial objectives.’

This statement is a broad vision of the direction the manufacturing industry is headed. Indeed, not since the introduction of the mass production assembly line has the industry been on the verge of such radical transformation.

However, due to massive investments in legacy systems (broadly termed Operational Technology or OT), most manufacturers are hesitant to merge their OT with IT. To effectively implement a transitional digital transformation plan, manufacturing executives should explore the various areas in manufacturing that are starting to experience the effects of digital transformation, some of which are covered below.

1. Industrial Internet and the Industrial IoT

The industrial internet is defined as ‘the convergence of the global industrial system with the power of advanced computing, analytics, low-cost sensing and new levels of connectivity permitted by the internet.’ Current manufacturing legacy OT systems operate within closed loops and are often deeply entrenched and customized either within manufacturing niches or within companies.

To open up these closed loops, the industrial internet seeks to do for the manufacturing industry what the consumer internet did for the information industry, which is to create a seamless and integrated network of systems, people and things. Within this network, industrial IoT, networks of nodes, sensors and machines will be the primary ‘netizens’ with humans only participating at a high level.

For example, General Electric, through its IIoT arm GE Automation, offers a cloud IIoT solution that predictively optimizes finishing, assembly and fabrication, information management and material management functions for automotive manufacturers.

2. Big Data, Artificial Intelligence, and Advanced Analytics

IDC predicts that by 2020, digital content will have increased 50-fold. Of this deluge of data, a major portion will be unstructured data originating from sensors and other such devices. According to the World Economic Forum, currently, companies across multiple industries, including manufacturing, only utilize about 1% of all the data they collect. However, AI and advanced analytics are helping companies realize efficiency and cost-cutting gains by analyzing this data and producing actionable insights.

For instance, by utilizing a greater proportion of the data it collects and analyzing this for variability, McKinsey reports that a top five biopharmaceutical company was able to identify nine parameters that affected one of its product lines. By optimizing for these parameters, the company was able to realize 50% savings, worth between $5 million and $10 million, annually.   

Manufacturing companies seeking similar gains must consider the utilization of AI and advanced analytics either through in-house experiments or partnering with Silicon Valley tech startups like Anodot, Arundo, and Citrine Informatics that are innovating in the manufacturing space.

3. Open Applications, Platforms, and Process Automation

Not to be confused with open manufacturing, which focuses more on peer-to-peer manufacturing, open applications, platforms, and process automation focus on the highly technical OT manufacturers use. Advancements in open systems are currently focused on creating open standards that apply across the manufacturing industry and not just specific niches.

For instance, Open Process Automation systems create a universal integrated standard that manufacturers can deploy across all their assets. Such a platform creates numerous advantages including interoperability, integration of best-in-class modules, preservation of proprietary software, adaptive security features, among others.

For instance, by offering interoperability, manufacturers can use different systems and platforms, yet be able to connect them for data sharing (e.g. specifications) purposes. Also, through proprietary software preservation, OPA will enable manufacturers to retain bespoke software while still achieving interoperability capabilities.

4. Asset Performance Management (APM)

Traditional APM encompasses the capabilities of data capture, integration, visualization and analytics tied together for the explicit purpose of improving the reliability and availability of physical assets. As digital technologies take root, modern APM has evolved to include advanced capabilities that integrate machine learning, advanced predictive analytics, and novel concepts like digital twins to provide a unified view of assets.

Such capabilities are essential as an ARC study found that poor APM costs manufacturers up to 1.5% in revenues. Although most manufacturing companies are still stuck using reactive break-fix approaches to maintenance, advanced APM underpinned by digital technologies can help such companies improve efficiency, and recapture lost revenue.

5. 3D Printing (Additive Manufacturing)

Although the hype around 3D printing has died down, real-world applications of the technology are only now beginning to emerge. Merging computer-aided design (CAD) and additive manufacturing machines, today, manufacturers can create complex shapes quickly and cheaply. The technology utilizes thermoplastics, metals, ceramics, biochemicals and, hopefully, one day, human cells.

Current applications of the technology are in the aerospace, automotive, healthcare, and product industries. Although currently, only 29% of manufacturers use 3D printing for prototyping and in some cases, end-product creation, Siemens predicts that by 2020, 3D printing will be 50% cheaper and 400 times faster, leading to a 300% growth in the utilization of the technology, especially in end-product creation.

6. Smart Products

In manufacturing, when the term product is used, it is often assumed to be a consumer product like a fridge or smartphone. However, within the manufacturing sector, a product is anything manufactured at any point in the value chain. For instance, a chip used in a smartphone is a product.

By adding smart features to such products across the entire supply chain, manufacturers can anticipate and proactively counter changes in the market environment. Areas in which this digital advancement holds promise for manufacturers include smart products that have situational awareness, personalization, adaptability, proactivity, business awareness, location awareness, and network capabilities.

7. Advanced Robotics

Robots have been on the manufacturing floor for decades. They have, however, thus been limited to non-cognitive tasks. Current advances in robotics for manufacturing, led by startups like Veo Robotics in Waltham, Massachusetts, United States, combine AI, advanced imaging and sensory inputs and ambidextrous capabilities to create cobots or collaborative robots.

Consider vehicle manufacturing, where robots dominate the body shop while humans dominate the assembly line. As advanced robotics matures, this distinction is anticipated to go away as more robots join the assembly line. For manufacturing, advanced robotics holds the promise of not displacing humans, but enabling them to be more productive and creative.

The Future of Manufacturing

As the global economy becomes increasingly digitalized, manufacturing will evolve from an industry that makes physical products to one that adjudicates this process. Shifting priorities in consumer preferences and supply chain economics will continue to push manufacturers to increasingly use data collection and analytics to achieve manufacturing methods and processes that improve overall efficiency as well as drive down costs.

Established companies will also face diminishing competitive advantages as barriers to entry lower, commercialization and commoditization escalates, and digital transformation skills become scarce. To lead in the new economy, manufacturers will need to use the approaches outlined in this article to transform into the manufacturing companies of the future.

Top Startups in Robotics for Manufacturing

From Markforged making 3D printed end-use parts that are as hard as metal to Brain Corp building a universal robotics operating system, robotics is transforming the manufacturing industry in fundamental ways. Out of this transformation will rise the next manufacturing leaders of the Fourth Industrial Age. To offer insights into what the next iteration of manufacturing will look like, we’ve curated a list of the top ten startups in robotics for manufacturing. Click the button below to discover the top startups in robotics for manufacturing. 

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