Trends 2016: Manufacturing

Stephen DeAngelis

January 12, 2016

A couple of years ago, Jeff Dobbs, KPMG’s Global Sector Chair for Industrial Manufacturing, wrote, “The challenges of the past five years (largely characterized by global uncertainty, economic volatility, geo-political instability, shifting markets and natural disasters) have resulted in massive changes to the manufacturing landscape and there is every indication that these macroeconomic winds of change will continue to blow.”[1] Dobbs’ prediction has proven accurate. The staff at Global Manufacturing reports that the manufacturing sector “is showing signs of reinvention in areas including automation, 3d printing and data analysis, and the next five years looks to be pivotal in realising this change.”[2] Tipping points are always interesting phenomenon to explore; and, if 2016 is going to be a tipping point for manufacturing, knowing what is pushing the sector toward that tipping point is important. A number of organizations and experts have offered their opinions on this subject. Below are some the trends they cite.

Big Data Analytics

Almost every discussion about how manufacturing is transforming, at some point, touches on the important role that big data analytics is playing. “From helping leaders rethink how products are developed to enabling on-demand, customized manufacturing to streamlining operations,” writes Sedar M.T. LaBarre, a Vice President at Booz Allen Hamilton, “advanced analytics is reshaping manufacturing.”[3] Adam Robinson, who oversees marketing strategy for Cerasis, predicts, “Advanced analytics will be further involved in everyday manufacturing operations.”[4] He continues:

“The workplace will become more efficient and safer due to the digitalization of assets, known as digital manufacturing, which allows for digital design and even distributed manufacturing. Manufacturers will be able to improve their inventory due to the information presented by both supply chain and operations data. Logistics and Transportation Managers at manufacturers will have reports at their fingertips on how to continue to reduce transportation costs, a heavy portion of the expense budget, by leaning on data to continually improve. Manufacturers are turning to advanced analytics to predict when a machine on the production floor is going to fail so they can perform preventative maintenance before a failure causes expensive unscheduled downtime. These few areas of the application of advanced analytics are some of the applications by manufacturers.”

Advanced analytics are being enhanced by the maturation of artificial intelligence systems (particularly, cognitive computing systems). Cognitive computing systems are capable of making routine decisions and alerting decision makers when anomalous situations require their attention. They can also provide insights that older systems were incapable of providing as well as predictive analytics that can help with both marketing and operations.

Internet of Things

Much (if not most) of the data that is going to be generated in the manufacturing sector is going to come from the Internet of Things (IoT). LaBarre insists, “Connectivity is shifting the focus in manufacturing from churning out products to delivering services that improve the lives of customers. That means success in high-tech manufacturing — from vehicles to turbines to smartphones — is about drawing from connectivity to create a meaningful and sustained customer relationship, with highly customized products and offerings. As the traditional manufacturing boundaries break down, those companies that best define and prove their value to customers will be best positioned to thrive in disruption.” Robinson adds, “IoT can help companies provide improved predictability of customer demand with real-time visibility of product and service demand signals.” He continues:

“In a supply chain, strategic deployment of IoT technologies can improve asset utilization, customer service, working capital deployment, waste reduction and sustainability. Real time communication between machines, factories, logistic providers and suppliers provides improved visibility on the end-to-end supply chain. IoT can address compliance, regulatory and quality reporting requirements such as parts traceability and product genealogy, emissions and country of origin. With IoT, organizations are better suited to track shipped products for warranties, returns and predictive support for maintenance. The real promise of IoT-enabled supply chains is to delegate decision making on some of the operational aspects to smart objects and systems, based on real time analytics and machine learning algorithms.”

Robinson also sounds a cautionary note, “One of my concerns,” he writes, “is IoT security — especially on how to protect deeply embedded end-point legacy devices that have limited resources and interfacing mechanisms available.”[5] He is not alone in his concern about IoT security. LaBarre observes, “The threat is well-known: anything that is connected to the Internet can be hacked. With recent headlines of vehicle, medical device, and thermostat hacking, customers now demand that their connected products are protected. Companies that earn customer trust — by demonstrating a commitment to privacy, security, and cyber incident response — will win out long term.”

Automation

“The role of robotics in the list of manufacturing trends in 2016 cannot be understated or ignored,” Robinson writes. Citrix analysts add, “The rise of robots in the manufacturing sector has sparked a debate about employment, however Citrix believes that further investment in robotics won’t mean massive workforce reductions. Instead it is thought that new roles will be created by the automation trend, catalyzing a new era of innovation and product development.” Guy Bieber (@gbieber2), director of strategy and architecture at Citrix, predicts, “By 2016, manufacturing jobs will start to shift around more intricate work, including the training and maintaining of robots, as well as working on optimizing manufacturing processes.” As proof of how quickly automation is going to transform the manufacturing sector, Robinson points to an article, in the MIT Technology Review, that describes how China is looking to retool its manufacturing industry by heavily investing in robotics. The article reports:

“China is laying the groundwork for a robot revolution by planning to automate the work currently done by millions of low-paid workers. The government’s plan will be crucial to a broader effort to reform China’s economy while also meeting the ambitious production goals laid out in its latest economic blueprint, which aims to double per capita income by 2020 from 2016 levels with at least 6.5 percent annual growth. The success of this effort could, in turn, affect the vitality of the global economy.”

LaBarre points out that, in the future, robots aren’t going to be tied to the assembly line. “With drones increasingly at their side,” he writes, “the next generation of robots is ready to take over even more of the product distribution process.”

Customization and Personalization

The emergence of additive manufacturing has made customization and personalization more affordable. Robinson notes, “3D Printing will take away the old perception that manufacturing is a dirty place to work where only boring, route, tedious jobs are available.” LaBarre adds, “Crowdsourcing, rapid prototyping, 3D printing, and Over-the-Air (OTA) updates: this is the new reality of high-tech manufacturing. Manufacturers will simulate factory floor layouts and configurations to optimize space and the time it takes to go from parts to product.” The staff at Global Manufacturing believes that new technologies are driving marketing and manufacturing much closer together. “Until very recently manufacturing and marketing have been two very separate industries,” the staff writes. “The manufacturing team would develop the product and the marketing team would pick it up on completion. However, there are some critical examples to show that manufacturers need to pay more attention to the marketing of their product from a manufacturing perspective from day one.” Alan Sage, co-founder and CEO of Digabit, Inc., agrees with that assessment and, as a result, predicts that manufacturers will get much more involved in e-commerce. “Based on extensive market research and discussions with manufacturing executives,” he writes, “we’re predicting the following developments in e-commerce for manufacturing over the next year.”[6]

  • Manufacturers will seek to increase their share of aftermarket parts sales.
  • Manufacturers will seek custom (specifically tailored) e-commerce solutions.
  • Manufacturers will integrate e-commerce systems with IoT initiatives.
  • Equipment manufacturers will require dealers to adopt modern parts management systems, and to integrate those systems with their own.
  • Manufacturers will sell more parts directly to consumers, even if it’s still through their dealer channel.

Conclusions

Whether 2016 turns out to be a tipping point for the manufacturing sector remains to be seen. Nevertheless, Dobbs’ prediction that massive changes to the manufacturing landscape will continue to take place and that the macroeconomic winds of change will continue to blow will certainly be proven correct. As President and CEO of a cognitive computing firm, I believe the maturation of cognitive computing, advanced analytics, and the Internet of Things will create a tipping point in the near future that will change the manufacturing sector forever.

Footnotes
[1] Jeff Dobbs, “Global Manufacturing Outlook: Performance in the Crosshairs,” KPMG, 2014.
[2] “REPORT: 2016 to be a ‘tipping point’ for manufacturing technology,” Global Manufacturing, 28 October 2015.
[3] Sedar M.T. LaBarre, “High-Tech Manufacturing Trends for 2016,” Booz Allen Hamilton, 2015.
[4] Adam Robinson, “6 Manufacturing Trends to Watch Out for in 2016,” Cerasis, 7 December 2015.
[5] Adam Robinson, “4 Key Trends to Watch in Smart Manufacturing and Supply Chain,” Cerasis, 9 October 2015.
[6] Alan Sage, “E-commerce For Manufacturing: Emerging Trends,” Manufacturing.net, 20 October 2015.