The Future of Manufacturing Part 1: The Six Key Trends of Manufacturing 4.0

The IT industry often deliberately spreads fear, uncertainty, and doubt in the marketplace. They create confusion about the future, and then, of course, sell you the perfect solution. So is the so-called “Fourth Industrial Revolution” and “Manufacturing 4.0” part of the usual befuddlement bandwagon?

What is really happening? What are the technologies that will form this change? And what difference do they really make? Read the six key trends, but for a top-line perspective watch the short video below.

Shop Floor Technology Is Increasingly Information Technology

First, a little context. Historically, there was a clear distinction: your operations teams owned shop-floor technology, and the IT team owned IT. But this gap is rapidly closing. For many companies, the challenge now is to have the right leadership to effectively lead these cross-border initiatives and to deliver value.

The winners will be those companies who are smart enough to use technology and data to meet customer needs more effectively and to innovate ahead of the competition. This is as much about leadership as it is about technology.

We believe there are six key trends to this generation of technology:

  1. IoT/5G
  2. Improved collaboration
  3. Big data, AI and machine learning
  4. Robots/cobots
  5. Servitization
  6. 3D printing

Here’s what they each mean.

1. How Will IoT/5G Make a Difference to Manufacturing?

Just to be clear, “IoT” means the “Internet of Things,” or using connectivity to control machinery and harvest data. “5G” is the fifth generation of technology for cellular networks.

When it comes to manufacturing, IoT and 5G are about incorporating sensors and controllers on the shop floor to make the production activity more visible and controllable in real-time. This requires new systems as well.

Most importantly, it requires skilled personnel to deliver the benefits, which include minimizing costs and maximizing output with more accurate ordering, production, and stock management.

One of the best aspects of IoT and 5G for manufacturers is how it improves reporting. Rather than basing decisions on reports that were manually created a week or a month ago, information flows into your ERP or MRP systems to provide accurate, up-to-the-minute information, with minimal manual intervention.

Ultimately, IoT lowers costs, increases profits, and delivers better quality and service to customers.

Continue reading the key trends below the video.


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2. How Will Manufacturing 4.0 Improve Internal and External Collaboration?

When you hear “Manufacturing 4.0” or “Industry 4.0” it generally means increasingly autonomous systems and information in real-time.

More specifically, Manufacturing Execution Systems (MES) allow the capture of more data about detailed process activities and individual operations on individual items. MES can make use of barcode or QR-code scanning, or automated collection of RFID information, or similar smart-monitoring.

As more real-time information is available, and office IT like Microsoft Teams becomes mainstream, your management, supervisors, and even skilled operators no longer need to be on the shop floor to manage production. Managers and supervisors can see precisely what is happening, managing production in real-time, or detecting issues as they happen. They can also look backwards to understand costs, cycle-times and quality. Managers can assess effectiveness of processes, teams, production batches, and even individual machines or staff.

E-commerce has reset customer expectations across all industries. Your customers will increasingly expect to be able to see and assess the progress of their own orders through your factory

This technology has external implications as well. Fortunately, with Manufacturing 4.0, integration of your production activities with your customers, suppliers and partners becomes possible at a far more detailed level.

3. The Impact of Big Data, Artificial Intelligence and Machine Learning in Manufacturing

Of course, large volumes of data create new challenges as well as opportunities. Manufacturers need new tools to understand data patterns. technologies such as Tableau and Snowflake make vast number-crunching and visualization easy, and once the data is digestible, it’s a small step to introduce automation for some aspects of decision-making.

It doesn’t have to be rocket science. It can be a structure of simple rules, such as alerting the customer to reorder ahead of time. Or it can be sophisticated Machine Learning and Artificial Intelligence.

The combination of data, AI, and machine learning is already proving to be extremely powerful. But it doesn’t mean that people no longer matter. The issue is often one of skilled leadership. Manufacturers need technology-savvy leaders to set the vision and to create a culture of data-driven, analytical decision-making. With the right technology leadership it becomes much easier—and more profitable—to exploit all this new technology.

4. The New Generation of Robots and Cobots

In the past, due to their high cost and the production volumes necessary to justify the expense, industrial robots were often only used by large manufacturers.

But now we have a new generation of collaborative robots, or cobots, which automate tactical elements of production activity. Their simplicity and flexibility mean that they are easier to deploy and can quickly deliver value, which makes them far more appropriate to the mid-market.

Again, implementing this fantastic technology creates a leadership challenge. Cobots are often configured and programmed by skilled production operators working in tandem with IT staff. Again, you’ll need a skilled IT leader who can facilitate this collaboration.

5. Servitization Creates Greater Value

“Servitization” simply means the shift from selling products to selling services. We live in an era where companies want to buy everything “as a service”: manufacturers can increasingly look to a future where they charge customers for using their products rather than buying them. Whether it’s car tires, aircraft engines, or workwear, manufacturers are charging recurring revenues or licenses to their customers for the use of the products, often with support and replacement bundled in.

Servitization will increasingly work in tandem with other aspects of Manufacturing 4.0. Perhaps the greatest opportunities are in monitoring and communicating with your products while in use. This enables new models for preventative maintenance, guaranteed service and support.

We will also see entirely new opportunities for value-added services, along with greater opportunities for upselling and better customer lock-in. The bottom line is that reliable, recurring revenues are more valuable than one-off sales. Manufacturers who make this change will become increasingly dominant.

6. The 3D Printing Revolution Continues

3D printing will have a revolutionary effect on many aspects of manufacturing. Rapid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customization where customer expectations will undergo a major change. Customers will expect endless product versions and variations.

For manufacturers, the benefits are also enormous: 3D printing now allows for a wider range of materials, and data can be included directly onto the product. For example, QR codes or human-readable product IDs can be printed as part of the production process, with obvious benefits for process monitoring and stock management.

And 3D printing will massively reduce the need for stock holding, especially for spares, which will free up cash. This may have a transformative effect on smaller companies and their ability to invest in these new trends.

What This Means for Everybody (and the Mid-Market)

Along with the increased flexibility for customers and manufacturers, the above trends will have enormous, worldwide effects.

These changes will reduce labor costs, which in turn will reduce the attractiveness of low-cost economies as well as economies of scale. Together with an increased post-COVID focus on security of supply, this will enable a return to more local manufacturing.

Finally, it’s worth noting that more local manufacture would be a reversal of decades (or centuries) of growth in global trade of manufactured goods. Despite forecast increases in consumption, a recent ING report estimates a reduction in world trade by as much as 40% by 2040!

The reduction will affect a wide range of industries, from shipping to insurance, and may have very broad-ranging geopolitical ramifications as well. It won’t be the first time that manufacturing has changed the world!

It seems then quite reasonable to speak of another industrial revolution. But while many in the IT industry will want to sell solutions, we see it more as a leadership challenge. We believe that ambitious mid-sized businesses will find huge opportunities, so long as they have the right leadership in terms of their IT and technology.

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The Future of Manufacturing Series:

Part 1: The Six Key Trends of Manufacturing 4.0
Part 2: Board checklist for successful MRP/ERP projects
Part 3: Getting data right

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