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Manufacturing: the operational environment

Figures from numerous sources indicate that over 30% of British consumers are shopping more online now than during the recent lockdown. The message for retail couldn’t be clearer – digital retail is here to stay and being (or becoming) a truly data driven organisation is what will mark the difference during a significant period of upheaval. Retailers who are prepared will be in a position to capitalise on the opportunities. 

The role of digitisation, and the growth of the industry 4.0 model (after the first three industrial revolutions) is creating business models which are transforming the nature of manufacturing. The focus is heavily on value delivered efficiency gains to deliver value throughout the supply chain and these are changing the competitive environment in what is now a highly cost-competitive market. Large industrial manufacturers simply cannot risk falling behind in operational efficiency against their competitors. 

Industry 4.0 Driven by Data

Big players and SMEs

The Industrial Internet of Things (IIoT), 3D printers, artificial intelligence (AI), augmented reality and digital twinning (1) are enhancing business operations across manufacturers of all sizes from all sectors. The biggest operations can take full advantage of However, a large number of SMEs are still lagging far behind. Given the trend towards more customisation and the potential for smaller product runs, there are opportunities for smaller players to get in on the game. The main barrier for SMEs is lack of skills and knowledge, but financing is also a big obstacle at present. 

To provide support for manufacturing SMEs looking into the routes to digitisation, the British government created its Made Smarter scheme. The pilot, rolled out initially in the North West saw a 20% take-up of small businesses in adoption of Industry 4.0 solutions. (2) 

How digitisation is driving innovation and excellence

There are multiple ways in which the digital transformation is providing opportunities for manufacturers to enhance their performance;

So, on the one hand, we have a technology-enabled landscape built on the power of algorithms – the internet of things, 3-D printing, robotics, machine learning and more are shifting wholesale the paradigms of manufacturing processes. These enablers are built on cloud-based service platforms which perform a dual function – saving time and money with automated processes and AI-driven insights and analytics. Secondly, by using data to generate business intelligence, operational efficiency, end-to-end supply chain optimisation and longer-term scalability. Both of these drive business objectives and focus on solutions for the customer. 

Data, data, data

Back in 2016, it was predicted that “Nearly three-quarters of companies (72%) expect that the use of data analytics will substantially improve customer relationships and customer intelligence along the product life cycle.” (3)  Present industry commentaries suggest that the drive towards digitalisation is moving ahead apace; “The UK manufacturing industry has taken a significant step in adopting digital technologies, with 80% confident Industry 4.0 will be a reality in their businesses by 2025.” (4)

Indeed, large manufacturing enterprises now have various server or cloud-based services and platforms which provide them with a greater or lesser level of control over the data they generate (depending on the service model they choose). These services (SaaS or PaaS) include;

  • Enterprise Resource Planning (ERP)
  • Manufacturing Execution Systems (MES)
  • Product Lifecycle management systems (PLM)
  • Master Data Management (MDM)
  • Product Information Management (PIM)

Manufacturing is interconnected and driven by data

With so much data in play, the potential for misalignment in data policies, deployment and versioning is enormous. That is why the last two items in the list,  MDM & PIM, are so crucial for manufacturers. Moving forward, cost, efficiency and customer focus can only be fully achieved if manufacturers adopt a holistic approach to their data assets. Otherwise, they fall behind and are essentially competing at an inferior level in a two-tier competitive landscape.

In fact, manufacturers, distributors and retailers are finding opportunities to work hand-in-hand in finding ways to add end-to-end value in the product life cycle; “For some manufacturers, aftermarket [services] already account for the entire profit generated by the company. In many cases, new equipment is no longer sold to generate profit for the firm, but to fuel the future aftersales on the installed base business.” (5) The interconnectivity and connectedness of product data reverses its journey along the supply chain and leaves the distributor in a key data-enriching position. The aim of this business model is to drive value for the customer, as this is what the end user will increasingly be demanding in future.

Keep up or fall behind

One industry observer sums up the benefits of this new industrial landscape in four words; “…connect, integrate, interoperate and reconcile.” (6)  Industrial manufacturers who focus holistically on a strategy including immediate ramp-up requirements as well as longer-term technological changes will be better positioning themselves for what may well be a case of ‘separating the wheat from the chaff’ over the coming years, as those manufacturers who fail to adapt to this operating environment fall by the wayside as their digitally enabled competitors forge ahead.

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(1) Digital Twinning: The creation of a digital replica of potential and actual physical assets for maintenance, modelling and repair purposes.
(2) (2020)
(3) PWC: 2016 Global Industry 4.0 Survey
(4) (2020)
(5) Deloitte: Aftermarket services – transforming manufacturing in the wake of the COVID-19 pandemic (August 2020)