Using Digitalization to Make Manufacturing a Competitive Weapon
It was my honor to recently speak at the MAPI ManufacturED Summit in Chicago and have the opportunity to network with like-minded industry influencers about current and future challenges and sharing best practices to overcome these obstacles to success.
For 85 years, MAPI has embraced the mission of understanding what keeps manufacturers up at night. Digitalization is precisely one of those topics, with 38% of CEOs citing the pace of technological change as a cause for concern, according to a recent PWC global survey. For too many years, we have treated manufacturing as a black box – as a process or activity that has to get done. Without exaggerating too much, it seems the sentiment has been that it doesn’t really matter where production happens, or how it happens, as long as the costs go down and productivity goes up.
I would even say that some folks are celebrating their automation systems’ 40th anniversary in their plants. This isn’t a good thing, as you certainly don’t want to celebrate a 40-year-old automation system when you are updating your iPhone every few months. This is not a long-term manufacturing strategy, and will only constrain future growth. And, in the age of hyper-connected and vocal consumers who are active on LinkedIn, Facebook, and Twitter, you don’t want to be the company that outsourced production to the lowest bidder. People want the latest product, produced at the highest quality, in some cases customized just for them, at a reasonable price. And, by the way, they want it now.
Digitalization is the new competitive weapon. It makes you the best of the best, and the companies that have embraced it feel that they have a competitive advantage. It is the key differentiator in manufacturing today.
It is no exaggeration to say that digitalization changes everything. Think about a few statistics:
- By 2020, 25% of the world’s economy will be digital, up from 15% in 2005.
- By 2030, the number of connected devices will grow from 8 billion to 1 trillion.
- And by 2050, there will be 10 billion people inhabiting our planet interacting either directly or indirectly with all of these devices and the data they generate.
These are massive changes affecting all of us. Change can be stressful, but we’ve been there before. In the 1990’s, we were automating our plants. As computers and networking advanced in the 2000s, we started taking the first steps in terms of integrating the automation and engineering process. This made the value chain a little more flexible, but only slightly. Today, in the age of digitalization, it is now possible to create the digital twin of the entire value chain based on one data store. That means having a digital copy of the product, the production process, and the performance so that product and production can be optimized together.
For most, the key to winning will depend on beating the competition in KPIs such as productivity, efficiency, uptime, flexibility, etc. Digitalization is driving improvements in all of these areas. And if they‘re not driving improvements for you, they might be for the company that wants to take some of your market-share. The fact is, the question is not if digitalization will impact you, but when. The benefits are clear.
First, time to market. Product complexity has more than doubled in the last 15 years. Product lifecycles have shortened by about 25%. And no one is immune. All manufacturers need to get new products out faster. What is the difference between a successful startup and one that you’ve never heard about? It’s scalability. Great ideas are a dime a dozen. The key is to scale them and get them to market quickly.
Manufacturers also need to enhance flexibility. Consumers want infinite variations on the things that they buy. Think about your last vehicle purchase. Automotive manufacturers must be able to respond to changes immediately and offer variety and functionality tailored not only to the regional market but also increasingly individualized to customer requirements.
Quality is critical. It is becoming more and more important that each product has a genealogy – it carries with it information about exactly what happened during production as well as detailed information about ingredients and components contained in the product itself.
Efficiency. Energy prices and other commodity prices are rising. Sustainable production is becoming more and more mainstream. Efficiency is critical.
Security is essential. The digital transformation means the physical and virtual worlds are integrated through new technologies like the digital twin, data analytics, 3D printing, and artificial intelligence. Today, that data is more relevant than ever, and we need to secure this data and the infrastructure that creates it.
And finally, the digital transformation is helping companies discover and monetize new business models. That might mean delivering new value added services for the fleet of products forming your installed base. Or it might mean creating entirely new revenue streams for your company. Regardless of the extent of the change, there is no doubt that transforming your manufacturing operations with advanced automation and digitalization will yield rapid benefits for your company. And those benefits will only increase over time.
Siemens had great foresight decades ago. Folks knew of us as a leader in automation, so many questioned our software acquisitions in the 2000’s. A decade later, you now see design and manufacturing as seamless and integrated functions. People couldn’t see the value contribution that software would make to the development of products, and to the development of manufacturing processes.
The terms “design for production” and “design for manufacturing” have been around for a long time. In the past, the technology was never sophisticated enough to advance the concepts. There was no way to bridge the gap of the design environments and the manufacturing environments. If you didn’t control the product design adequately, then you couldn’t control the manufacturing processes adequately.
These are the mega-trends that are rapidly approaching the industry. This change can be very stressful. But, because there is scalability in digital, you only need to start with a long-term vision.
To see an example of a company that had a vision of using digitalization, read more about the Tenaris Bay City project. Tenaris, a leading global supplier of steel piping and related services for oil and gas exploration and production operations, used digital technologies at its new $1.8 B plant in Bay City, Texas to stay competitive, profitable, and productive at one of the most highly automated seamless pipe-making plants in the world.
Raj Batra is the President of Digital Factory for Siemens USA. He oversees the development, marketing, sales, R&D, vertical industry and manufacturing aspects for Siemens’ digital factory business in the U.S.