Digital transformation has long been touted as the magic formula for manufacturers that want to optimize operations, increase cost-effectiveness, boost efficiency and productivity, accelerate speed to market and build a sustainable, risk-resilient business. However, while most manufacturers have experimented with new technologies over the past decade, few have implemented the core data management platforms, smart equipment, internet of things architecture and connected systems at the scale required to achieve measurable success.
The high cost of delay became instantly clear when the global COVID-19 pandemic emerged in early 2020, disrupting supply chains, stopping shipments in their tracks, locking workforces in their homes and forcing manufacturers to adjust their existing processes to meet fluctuating product demand and profound shifts in consumer behavior.
With that experience, and facing the prospect of long- and short-term financial, environmental and other factors threatening to further disrupt how they do business in the future, long-delayed transformation pilots are beginning to take hold at an enterprise level – and their focus does not stop at digital, but extends all the way to virtual experience.
In a recent BCG survey, 75% of executives agreed that they regard digital transformation as becoming more urgent in light of the COVID-19 crisis, and 65% said that they anticipate increasing their investments in digital transformation, BCG said in its July 2020 “The Digital Path to Business Resilience” report. “As almost every organization’s dependence on digital technologies grows, it is hardly an exaggeration to say that adopting and managing digital technologies will be critical to business resilience. Done right, a digital transformation will not only build long-term resilience, increasing speed to market, workforce productivity, and stability. It will also deliver short-term financial gains.”
Significantly, automation, machine learning, artificial intelligence, the internet of things and data analytics are now high on manufacturers’ must-have wish lists. What’s more, these technologies are no longer targeted just at automating existing processes. Instead, manufacturers are going beyond digital, adopting virtualized platforms that connect people, processes, assets and operational systems to enable intuitive visibility into, and control over, their entire extended ecosystem.
“Extending connected digital enterprises to a larger ecosystem of partners and suppliers drives organizations to be resilient, adaptive and intelligent," said Vishwesh Shete, global head for plant solutions, TATA Consultancy Services, where he is responsible for manufacturing execution systems and manufacturing IT solutions. "Meanwhile, automating operations using a machine-first delivery model enables them to make faster decisions and become agile. In addition, all these features enable organizations to drive high personalization. We call this neural manufacturing.”
A key aspect of neural manufacturing is the ability to operate a business as a platform via virtual twin experiences, which allow manufacturers to not only monitor current operations, but also to drive optimizations. This enables manufacturers to craft the best possible plan for optimizing the entire business lifecycle – from raw material to the final product in the end users’ hands – including simulations of the user experience and virtual-twin validation of over-the-air updates that enhance the experience long after the sale.
“This gives manufacturers an enterprise-level and multi-operational view of all their products and processes throughout the supply chain, meaning they have all the insights they need to identify issues, improve product quality, make quick design iterations, reduce time to market, optimize costs and expedite decision-making so they can swiftly meet customer demand,” Shete said. “One of the biggest benefits of neural manufacturing is that it enables organizations to be purpose-driven rather than product-driven.”
"Extending connected digital enterprises to a larger ecosystem of partners and suppliers drives organizations to be resilient, adaptive and intelligent; meanwhile, automating operations using a machine-first delivery model enables them to make faster decisions and become agile."Vishwesh Shete, Global Head for Plant Solutions, TATA Consultancy Services
Virtualization is the key, combining 3D modeling and simulation to create virtual twins that not only replicate a machine, process or product in virtual space, as digital twins do, but also the environment in which those machines, processes or products must operate. This added value provides the visibility, insight and capability to run “what if” scenarios that enable agile, 21st century manufacturing.
“Virtualization allows manufacturers to run factories remotely, facilitate real-time collaboration between employees in different locations, create a virtual twin of their manufacturing plant and assembly lines to optimize production, design and simulate the behavior of products entirely in 3D, and also create closed-loop actions from the insights drawn from enterprise connectivity, thus making organizations resilient and responsive to business model innovations,” said Prabhu Patruni, global head, PLM Solutions at TATA Consultancy Services. “It provides a platform for a distributed manufacturing model where a company’s products can be designed and built anywhere.”
Products of Tomorrow
France-based tractor manufacturer CLAAS Tractor, for example, has shifted its business to a platform model. The approach connects the dots so that people, processes and information, previously locked in application silos, benefit from a single platform that spans every function, from the beginning to the end of the product lifecycle. This allows CLAAS Tractor’s people to work from a single trusted data source and manage all design and production processes in virtual environments, enabling fast and safe virtual experimentation to reveal the best possible solutions.
"The factory of the future must integrate the products of tomorrow that have not yet been imagined."Etienne Bourasseau, Industrial Director, CLAAS Tractor
When designing a new tractor in the past, for example, data silos forced the company to build a physical prototype tractor in a testing area and assemble it with instructions printed on paper documents, just to identify any design and system-integration issues. Now, the platform approach allows design engineers to not only create a 3D virtual twin of the tractor, but also use the models for virtual assembly tests. This confirms the feasibility of the manufacturing process and ensures every component and mechanical system will function correctly – without physically manufacturing or assembling a single part. As a result, CLAAS Tractor can quickly identify and rectify any design errors and optimize its tooling and assembly lines, all before manufacturing begins. The 3D models also serve as highly intuitive assembly guides on the factory floor.
“The factory of the future must integrate the products of tomorrow that have not yet been imagined,” said Etienne Bourasseau, industrial director at CLAAS Tractor. “Digital continuity is an asset for us; it links the product designer and the assembly operator who will use the operating instructions.”
CLAAS Tractor also can easily customize designs to suit customers’ individual requirements; the company produces around 8,000 tractors for customers in Asia, Europe and the United States every year.
“We hardly ever produce the same tractor twice in a year,” said Franck Bruneau, industrial process architect at CLAAS Tractor. “At any one time, we can have 20 different models on the same assembly line. In these models we have more than 300 options,which means we have unique assembly combinations every day. The 3D modeling and virtual simulation platform is the only way to anticipate the integration of specific options and to plan the process upfront.”
To quickly respond to new market trends and customer demands in time to win market share, manufacturing organizations also need an agile, flexible and resilient supply network, said Lisa Anderson, US-based manufacturing consultant and author of “Future-proofing manufacturing & the supply chain post COVID-19.”
“When the COVID-19 pandemic hit, the single biggest issue from a manufacturing point of view was the significant mismatch between demand and supply,” Anderson said. “Sudden changes in customer demand – such as the surge in people buying toilet paper – quickly resulted in increasingly larger changes further down the supply chain, leaving those at the end of the chain [manufacturers and raw material suppliers] struggling to get the right inventory, assets and resources in the right place at the right time. To remain resilient to such changes in the future, manufacturing companies must modify their existing supply chains and operational models so they can respond within hours or even minutes, rather than days or weeks.”
To do this, Anderson recommends that manufacturers focus on finding ways to better predict customer demand and market changes. That requires visibility into the forces driving both demand and supply. By combining capabilities that include enterprise resource planning, internet of things, artificial intelligence, predictive analytics, demand forecasting and machine learning on a< platform, manufacturers can not only see, but also analyze, anticipate and respond to fast-changing dynamics.
“These technologies enable manufacturing organizations to collect and analyze data from across their end-to-end supply chain, giving them near-real-time visibility into, and control over, their entire operations so they can easily anticipate and prepare for shifts in customer demand, changes in the availability of raw materials, potential distribution issues, and more,” Anderson said. “Once they have these technologies in place, manufacturing companies can easily align demand and supply and future-proof their business by moving to innovative new operating models, such as mass customization, modular production and distributed manufacturing.”
of manufacturers will have invested in the technology and business processes necessary to achieve true resiliency by the end of 2021.
Kevin Prouty, Group Vice President, Manufacturing and Energy Insights, IDC
Kevin Prouty, group vice president of manufacturing and energy insights at global market intelligence market firm IDC, believes that resiliency is now the most important characteristic of any future-proof manufacturing supply chain.
“Those who have both studied and operated supply chains for decades have always talked about the importance of visibility, agility and resiliency, but these terms are now on the tip of everybody’s tongue and are taking on a profoundly more important role in an increasingly disruptive world,” Prouty said. “Supply chain resiliency will allow companies to react more quickly to both internal and external events and speed ‘time to recovery’ for larger disruptions.
“Although resiliency is not something that can be achieved overnight, IDC forecasts that 90% of manufacturers will have invested in the technology and business processes necessary to achieve true resiliency by the end of 2021. This could also have the added benefit of boosting their productivity by 5%.”
Although many manufacturing companies have been piloting Industry 4.0 initiatives to improve their operating models and supply chains, few have managed to execute them across the entire organization, a prerequisite for achieving measurable – and meaningful – financial and operational benefits, industry analyst firm McKinsey & Company reports in its 2020 Industry 4.0 survey. In fact, more than 70% of organizations fail to demonstrate compelling returns and instead are stuck in a “pilot trap.”
Beyond cash constraints caused by COVID-19, the main barriers to success continue to be a lack of the right technology and people trained in fully executing it.
“Impact at scale is only achieved by the right people with the right capabilities and incentives,” said Karel Eloot, senior partner at McKinsey & Company. “To derive meaningful value and bottom-line impact, it’s critical for companies to take a holistic approach that involves outlining the business problem they want to solve, creating a digital transformation roadmap and a detailed plan with bottom-up initiatives, and conducting a series of implementation sprints. True front runners have not only successfully transformed beyond the four walls of the factory site, but have also extended their Industry 4.0 innovation journeys through the end-to-end value chain to drive value for their enterprise.”
Transforming the Workforce of the Future
Projects capable of transforming manufacturing organization into a fully connected, platformed operation require more than the right technology and processes. As Eloot notes, a true transformation requires a radical upskilling of employees. In a world where a recent McKinsey Global Survey on future workforce needs reports that 87% of executives are already experiencing skill gaps, significant efforts to upskill and reskill employees are needed as well.
McKinsey & Company’s August 2020 report “Building the vital skills for the future of work in operations” finds that in Europe and the United States over the next decade, demand for physical and manual skills in repeatable and predictable tasks is expected to decline by almost 30%. Meanwhile, the demand for technological skills (both coding and interacting with technology), complex cognitive skills and high-level social and emotional skills will rise by more than 50%, 33% and 30%, respectively.
This is where organizations like Workshops for Warriors can help. Founded in 2008, the San Diego-based school provides advanced manufacturing training to US military veterans and transitioning service members. To date, graduates have earned more than 7,500 nationally recognized credentials and secured advanced manufacturing careers at major companies that include SpaceX and Boeing.
“To support advanced technologies, manufacturing companies need a dedicated pipeline of individuals with targeted advanced manufacturing training, nationally recognized certifications and the ability to adapt their skills as technologies evolve,” said Hernán Luis y Prado, the workshop’s founder. “For 16 weeks, we immerse our students in hands-on training with advanced equipment and software, providing accelerated programs to ensure they learn the entirety of the manufacturing process.
“To support advanced technologies, manufacturing companies need a dedicated pipeline of individuals with targeted advanced manufacturing training, nationally recognized certifications and the ability to adapt their skills as technologies evolve.”Hernán Luis Y Prado, Founder, Workshops for Warriors
"Our training program plays a pivotal role in driving the digital transformation of the manufacturing sector and facilitating future innovation. Our graduates combine their military-honed adaptability skills with world-class advanced manufacturing training to provide employers with the human capital they need to compete successfully in an ever-changing technical environment.”
Studies led by the World Economic Forum and McKinsey & Company show that lighthouse manufacturers often achieve significant and simultaneous improvements across multiple performance measures – including productivity, sustainability, agility, speed to market and customization – when they successfully integrate advanced technologies across the value chain.
“We’ve seen several companies that have boosted productivity by 90%, cut lead times by 80%, halved time to market and increased energy efficiency by up to 50%,” Eloot said. “These lighthouses are showing us for the first time how the Fourth Industrial Revolution will transform manufacturing and the entire organization.”
Clearly, the COVID-19 pandemic has given manufacturers an unforeseen incentive to adopt virtual and platformed technologies that help them respond to, and recover from, immediate crises. Now, it is crucial for these companies to use the technologies to reimagine the future manufacturing model and build the resilience they need to withstand as-yet-unknown future shocks.
The pandemic has made it clear that no one ever truly knows what will happen in the future, so manufacturers must ensure that their people, processes, systems and supply chains are flexible and agile enough to rapidly adapt to whatever circumstances arise,” Anderson said. “Customer demands will continue to evolve rapidly, so agility, flexibility and resilience will no longer just be an advantage; they will be the cornerstone to success for manufacturers who want toremain competitive and profitable.”
Click here to discover how virtualization is transforming manufacturing