Manufacturers face immense pressure to operate more efficiently and sustainably. For many, the way forward will require a renewed focus on their Industry 4.0 vision, including smart factories running with intelligent processes. Plenty of challenges lie ahead— creating a risk-averse supply chain, significant labor shortages, continued globalization, significantly higher data using IoT technology and the ability to translate that data into actionable information, and a shift in the Future of Work to more remote operations. Given all of this, companies need to build a kinetic environment that can evolve and innovate as needed. Two Deloitte manufacturing and transformation specialists discuss a blueprint for creating the built-to-evolve smart factory, and unlocking value for the business, faster.
A 2021 global study on resilience by Deloitte revealed that 66% of leaders in manufacturing believe the massive change will be an occasional, if not regular, occurrence. Whether in the form of climate change, political shifts, trade wars, upheaval is here to stay. Organizations need to be agile and resilient to weather the storm and adapt.
For Brenna Sniderman, executive director, Center for Integrated Research, Deloitte Services LP, a smart factory, one that is connected to the business, is the best route to both. “It delivers information about what's being made, helps optimize how facilities are being used. And it also helps leaders understand their supply network, where supplies are, and be more informed about what's going on around them so they can better react to changes.”
This is especially true, notes Vadhi Narasimhamurti, principal, Deloitte Consulting LLP, given how the rate of change is going to accelerate. Company leadership must also revisit how they think about building agility and resilience into their business. “They need to evolve, not just build solutions or capabilities to last—build solutions and capabilities to evolve. A smart factory is a perfect example of the kinds of capabilities that companies need to continue to build in order to keep that evolution going.”
While the specific use case within an industry may be slightly different, there is a common set of problems all companies are tackling when it comes to a smart factory: Dynamic scheduling, augmented workforce, quality assurance, quality management, asset utilization sustainability and energy management, smart conveyance and warehousing – all elements that drive value into the business. Says Narasimhamurti: “Companies are starting to hone in on what is the exact problem this technology will solve and as a result create the kind of investments they need to drive the value.”
This commonality across industries gives way to what Sniderman calls “a portability of knowledge” that will allow solutions for a particular vertical to be applied elsewhere. She goes on to point out that essential to a smart factory is how it fits into the rest of the value chain or supply network, and having data from all different areas to better understand the downstream effects of changes, and help management make smarter decisions. “Rather than needing to look at your supply chain as a linear process where you can't react upstream until you've seen fully what's going on downstream you can really react to how things are shifting in a much more real-time interconnected way.”
Scaling any new capability can be difficult to achieve but taking an ecosystem approach can make it easier. To Sniderman, working with ecosystem partners can help organizations find and extract greater value, leverage different types of data that they might not have had access to, or work across their value chain to drive much more intelligent decisions. Working with an ecosystem enables organizations to drive rapid growth, lower the entry barriers into new geographies, and get new products to market much more quickly. “The ecosystem helps leaders bring in capabilities that they might not ordinarily have.”
While they are leveraging the ecosystem, leaders would do well to broaden their thinking of the players within it. Narasimhamurti points out there are two ecosystems: Experienced supply chain partners with whom strong relationships should be built, and startups making their way in the space who are using technology in extremely creative ways. Companies should create a combination of the two.
Assets for the manufacturing floor that cost millions, if not billions, of dollars, are not replaced overnight to make way for new ones. In fact, notes Narasimhamurti, smart factories need to be created with existing assets, with existing infrastructure, with existing investments that companies have made. “That is common around the world, and it is something that we have seen across many industries.”
The first thing companies need to think about? Connectivity, the heart and soul of a smart factory. “The diversity [in age] and purpose of the assets—companies have to consider how they are going to pull data from them,” says Sniderman. Before long, access methods will be a concern, then security will be top of mind. But in the end, with thoughtful design, structure, and decisions, “it can all be brought together, analyzed and used.”
It wasn’t so long ago that, before making a significant investment in a smart factory, companies would do a proof of concept to be sure it would add value to the business. Now, companies are creating solutions at scale, moving away from proof of concepts. “Because they believe in the concept,” says Narasimhamurti. “Companies have quickly realized that proof of concepts or pilots may show some value, but the real challenges and the value creation opportunities lie when you get to solutions at scale.”
As Sniderman sees it, there is such a thing as starting too small—a POC that was so specific, so tailored, designed so discreetly that it can’t be scaled. “Starting with scaling actually helps you address a lot of those challenges and make sure that the solution that you are producing or creating is actually going to be more broadly useful and applicable.”
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A smart factory is a perfect example of the kinds of capabilities that companies need to continue to build in order to keep that evolution going