Trends & Predictions 2018: Manufacturing

Stephen DeAngelis

January 18, 2018

Thanks to the rise of information technologies, most pundits agree we are in a post-industrial era. Even so, manufacturing remains an important sector of any national economy. Several years ago, Brookings Institution analysts, Susan Helper, Timothy Krueger, and Howard Wial, explained, “Manufacturing matters to the United States because it provides high-wage jobs, commercial innovation (the nation’s largest source), a key to trade deficit reduction, and a disproportionately large contribution to environmental sustainability.”[1] Like other economic sectors, the manufacturing sector is undergoing rapid change thanks to emerging technologies and processes. Kimberly Knickle, Research Vice President for IT Priorities and Strategies at IDC Manufacturing Insights, asserts, “Manufacturers of every size and shape are changing rapidly because of new digital technologies, new competitors, new ecosystems, and new ways of doing business. Manufacturers that can speed their adoption of digital capabilities in order to create business value will be the leaders of their industry.”[2] Below are some of the trends affecting the sector and some predictions prognosticators have made concerning it.

 

Manufacturing Trends

 

Operation and Information Technologies are converging. The staff at i-scoop writes, “The digital transformation of manufacturing, ongoing convergence of IT and OT and the usage of IoT, in combination with other technologies, are changing the face of the manufacturing technology landscape and the face of manufacturing itself (processes, people, work, business models and so forth). Although manufacturing technology traditionally refers to the various devices, systems and platforms used in manufacturing, we can’t but add a range of IT technologies to it in this ongoing convergence of IT and OT in a world where IP, data analytics and IoT in manufacturing drive the accelerating adoption of more recent technologies such as digital twin technology.”[3]

 

Digital Platforms are becoming a central focus and a key enabler of new customer experiences and value chain efficiencies. Sean Riley (@1seanriley), Global Industry Director for Manufacturing & Transportation at Software AG, writes, “Integrating Digital Platforms into the underlying systems of record will continue to be a focus next year, as will security, but now they will be used in earnest to unlock new value. These digital platforms will be leveraged for both the enterprise value chain and the extended supply chain and will be critical hubs for the incorporation of key emerging technologies, such as 3D Printing, Blockchain and IoT-enabled products.”[4]

 

Manufacturers are learning which legacy systems retain value. Riley writes, “Not all legacies are bad. Valuable processes, business logic, data stores, and digital histories exist within your legacy systems. Manufacturers will realize this in spades in 2018 as they look to replace aging applications with agile or nimble apps. Methodologies like microservices and devops will combine with bi-modal IT efforts in order to expedite the modernization of the monolith. To enable digitalization — without four to six years of replacing legacy systems of record — these applications will be accounted for and be part of a digital transformation.” Cognitive computing platforms are especially valuable for ensuring maximum value is extracted from legacy systems. Because cognitive systems wrap around rather than replace legacy systems they take advantage of what companies already have in place.

 

Manufacturing Predictions

 

IDC has come up with ten predictions for the manufacturing sector in 2018. The company bases it predictions on some significant changes in the industry. They include: Redefining how businesses design (or define), deliver and monetize products and services; developing new contextualized and customized experiences for customers, employees and partners; increasing coordination and collaboration between IT and line-of-business organizations, as well as among ecosystem participants; and, changing the nature of work and how it’s accomplished with people, process, and technology coming together. IDC’s predictions, summarized by the IndustryWeek staff, are:

 

Prediction 1: By 2020, 60% of the top manufacturers will rely on digital platforms that enhance their investments in ecosystems and experiences and support as much as 30% of their overall revenue. “Manufacturers are looking to digital platforms as the underpinnings for collaboration and coordination processes, bringing together the essential technology components for the benefit of cloud-based ecosystems — including employees, customers, suppliers, and partners.”

 

Prediction 2: By 2021, 20% of the top manufacturers will depend on a secure backbone of embedded intelligence, using IoT, blockchain, and cognitive, to automate large-scale processes and speed execution times by up to 25%. “Most manufacturers will look for their major enterprise applications to be the means through which they automate and speed execution, using embedded intelligence. For many, this will happen through intelligent ERP systems, which integrate IoT for critical data input, cognitive to enhance the analytics, and blockchain to maintain the integrity of the data and decision making.”

 

Prediction 3: By 2020, 75% of all manufacturers will participate in industry clouds, although only one-third of those manufacturers will be monetizing their data contributions. “The proliferation of IoT-enabled connected products, assets, and processes is creating a wealth of performance- and location-based operational data, more quickly and easily, at lower technology costs. Industry clouds are an appealing option for sharing and analyzing this information. Furthermore, manufacturers are looking to industry clouds for sourcing and supplier management as well as working with customers.”

 

Prediction 4: By 2019, the need to integrate operational technology and information technology as a result of IoT will have led to more than 30% of all IT and OT technical staff having direct project experience in both fields. “Operational equipment has become widely instrumented, and increasingly interconnected, with IoT being a major contributor to connectivity. To leverage that connectivity, manufacturers are finding that the approach requires collaboration between information technology and operational technology and their respective organizations.”

 

Prediction 5: By 2019, 50% of manufacturers will be collaborating directly with customers and consumers regarding new and improved product designs through cloud-based crowdsourcing, virtual reality, and product virtualization, realizing up to a 25% improvement in product success rates. “With the growth and maturation of cloud-based platforms, the integration of social media–like capabilities within collaborative innovation systems, and the broader use of simulation and virtualization of product models or digital twins, the tools are available now for manufacturers in all industries to progress and modernize their approach to ideation, innovation, and new product development.”

 

Prediction 6: In 2020, augmented reality and mobile devices will drive the transition to the gig economy in the service industry, with “experts for hire” replacing 20% of dedicated customer and field service workers, starting with consumer durables and electronics. “The gig economy has been defined to include part-time, temporary, and freelance jobs. … In 2017, it has now become a significant portion of the workforce in the United States and globally in countries that have the digital infrastructure to support it. This digital infrastructure is a core reason the gig economy is so popular, even in a non-recessionary market — it enables talent accessibility.”

 

Prediction 7: By the end of 2020, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10% and service performance by 5%. “IDC defines the concept of digitally enhanced supply chain as something that would leverage internet of things and sensor data to provide real-time data insights that can essentially serve as inputs for building a cognitive model. … The concept of a cognitive supply chain also allows organizations to proactively manage inventory by moving it closer to customer demand, which ultimately can reduce the overall cost of supply chain operations and increase the service levels.”

 

Prediction 8: By 2020, 80% of supply chain interactions will happen across cloud-based commerce networks, dramatically improving participants’ resiliency and reducing the impact of supply disruptions by up to one-third. “Today, business networks are the essential enablers of digital transformation. … Companies are restructuring their supply chains to allow them to be quickly reconfigured depending on the order volumes and geographic source of demand. … Therefore, open and flexible cloud architectures will be an essential tool as they enable data generation from any source (both internal and external to the manufacturer), comprehensive and fast analysis, and then ubiquitous consumption (initially with on-premise access as significant but declining over time).”

 

Prediction 9: By 2020, 25% of manufacturers in select subsectors will have balanced production with demand cadence and achieved greater customization through intelligent and flexible assets. “One of the holy grails in manufacturing is how to achieve perfectly fine-tuned demand-driven (or shelf-driven, in CPG) value chains. This means aligning to the speed and changing needs of a demanding market without sacrificing the essential cost optimization results achieved in the past. A lot is being done by infusing real-time “intelligence” into networked, information-centric processes — essentially by providing decision makers with up-to-date information regarding the execution status of the processes they are leading and about the expected business outcome of their decisions.”

 

Prediction 10: By 2019, 15% of manufacturers that manage data-intensive production and supply chain processes will be leveraging cloud-based execution models that depend on edge analytics to enable real-time visibility and augment operational flexibility. “The widespread availability of a reliable cloud infrastructure is making cloud a tool in the hand of process leaders. The opportunity of converting raw data from the machine level into enterprise-grade information can transform and elevate the role of shop floors in manufacturing organizations and make them central in the fulfillment process.

 

Footnotes
[1] Susan Helper, Timothy Krueger, and Howard Wial, “Why Does Manufacturing Matter?” Brookings, 22 February 2012.
[2] Staff, “Top 10 Predictions for Global Manufacturing in 2018: IDC,” IndustryWeek, 19 December 2017.
[3] Staff, “Manufacturing and manufacturing technologies – evolutions in convergence,” i-scoop, 2017.
[4] Sean Riley, “Five Manufacturing Trends in 2018 And Beyond,” Beyond B2B, 29 November 2018.