The future of manufacturing — what it is and how to get there

Photo by Lenny Kuhne on Unsplash

The Status Quo in manufacturing

Today, manufacturing is in very different stages depending on the industry and company size. Famously, the automotive manufacturing processes are the most advanced because unit economics and production volumes made automation and digitalization profitable in almost all cases. In contrast to that, other industries like metal parts production, furniture production or medical equipment production often times employ at least partially manual processes still.

All this applies mostly to processes outside the actual physical production steps, which are automated in almost all cases. So, which are these processes that make up the “rest” of the manufacturing of a product?

Here is an exemplary list of things outside the core production steps, where automation can also be applied:

• Transfer of newly delivered materials to storage
• Supplying machines with materials
• Cleaning and maintenance of production machinery
• Retooling of production machines
• Inspection of products for defects (during and after production)
• Moving of products between production steps
• Assembly of products
• Packaging of products

To a large degree, these processes are performed by employees because of various reasons. Some of them are cost-effectiveness of the necessary technology to automate these processes, inability of technical solutions to actually perform the task, lack of knowledge of potential solutions or lack of external pressure to optimize further.

But in the last few years, many things became possible, small, cheap or all of that at once: Robots or Cobots, computing power and as a result AI, Sensors / IoT-devices, 3D-printing and more. And so, the opportunity and pressure to use that new tech to optimize increased. Now, what exactly could the future of manufacturing look like?

Exec summary:

• Core production steps are automated, most others are not
• New tech enables that now!

The future in manufacturing

While the first vision of industry 4.0 was to arrive at a lights-out factory which could operate in the dark without any human intervention, the current belief is that humans will still be central to the factory, but as more high-skilled technicians with oversight responsibilities.

Most of the processes will require little to no manual input, instead relying on vast amounts of data generated in real time and interpreted intelligently.

That’s where the current hype topics of IoT and AI come into play. These enable both the generation and useful interpretation of the massive amounts of data points that are needed in a cost-efficient manner.

Today, very few factories actually make extensive use of the current possibilities. The peak of these possibilities would be a complete digital twin of the whole factory, but only “a small number of factories worldwide have successfully combined automation, artificial intelligence, and the Internet of Things to achieve game-changing productivity gains” — as per McKinsey.

That is also a chance, because that also means there is still time to get into it. And decision-makers have understood that: While in 2017, 29% of respondents of a PWC study answered, that their companies has implemented networking technologies that connect components, machines, production management, transportation vehicles, workers, and even products, more than twice as many (60%) expect to do so by 2022.

The benefit of this “ideal” status seems clear to most: respondents of the previously mentioned PWC study expect 12% higher revenues and 12% higher efficiency on average.

So how does one get there?

Exec summary:

• Production employees will still play a key role in the future — but high skilled
• IoT and AI are the enablers
• The time to go fully digital is now!
• Benefits are higher efficiency and revenues

Steps to take and what is still missing

Accenture, in a study from 2019, detected four main reasons why digitalization and automation was moving slower than possible:

1. Few successful pilots create fake feeling of progress
2. Digital decision makers lack of knowledge and courage for
3. Silos / separated departments slow down efforts
4. Lots of small projects without connection — never arrive in production

These are reasons that can’t be mitigated easily and McKinsey agrees that it is not only a technological shift but also and first and foremost a culture shift.

Let’s assume that the culture that enables decision makers and breaks down department walls has already been established — the next step could be to understand what the actual goal is.

For example:

1. Do you want to purely increase efficiency and unit economics?
2. Do you have to move into high variance, low lot size production?
3. Do you want to sell more directly to your end customers by individualizing your products (see shoe manufacturers)?

When a clear goal has been established, meaningful technology pilots and projects can be selected and executed and a clear connection between them can be defined. While incumbents offer very stable and proven systems, sometimes looking to start-ups can be the right choice as they are sometimes simply the fastest. There are a lot of start-ups out there that make new technologies usable for manufacturers — they might be worth thinking about as a decision maker or C-Level executive.
Just some examples:

1. ProGlove — Wearable scanner
2. Celonis — Process mining
3. Geek+ — Warehouse logistics automation
4. Relayr — Industrial IoT for multiple use cases
5. Aucta.io — VR based training for production employees
6. Wandelbots — No-code robot arm training
7. Synsor.ai — Visual inspection & predictive optimization (shameless plug: that’s my start-up)
8. Sounce.io — Sound based quality control

Admittedly, there is a lot of work to do on the technical side still. It is currently very hard to connect all the moving pieces and most offerings function well by themselves but are not necessarily able to contribute to a bigger whole that is the fully digital factory, the “digital twin”. The management systems that centralize all the data, the MES (manufacturing execution systems) and ERP (enterprise resource planning) systems also need to adopt all those new pieces.

Exec summary:

• Don’t fall for known hurdles like pilot purgatory
• Culture and clear goals first
• Connect pilots and projects to a bigger picture
• Also look for start-ups for solutions

Final notes

The central European manufacturing industry has both the relevance and the substance to be a leading player for years to come. But there is not much time left for many to start moving — increased demand for quality, flexibility and lower costs will catch up with the laggards. This will not happen at the same speed in different industries (Deloitte report p. 38) but nobody really questions whether it does happen, only when.

As a start-up founder in this space, I hope that the industry as a whole takes this opportunity and makes the next step towards true industry 4.0!