A million years ago manufacturing was a very personal business. Individuals constructed their own tools and weapons. Those items, however, represented the latest technologies available to mankind. People who possessed them had a better chance of survival than those who didn’t. Around twelve thousand years ago, more advanced technologies, like boats and plows were developed, which led to permanent settlements and employment specialization. Individuals became farmers, fishermen, merchants, or craftsmen. Over the next few millennia, bricks, iron tools, and wheels were added to humankind’s kit. Between 1500 BCE and the beginning of the Christian Era, some of the first “machines” were created and the iron age blossomed. One of the greatest achievements during this period was the mass production of products made out of interchangeable parts during the reign of Qin Shi Huang, China’s first emperor. Over the next 2000 years, various regions of the world advanced (and sometimes lost) new technologies including precision geared instruments, water wheels, windmills, optics, navigation instruments, and the like.

All of this historical achievement came together when steam power was harnessed and the First Industrial Revolution ignited in the late 18th century. The industrial revolution changed much of the developed world from being rural and agrarian to urban and industrial — and manufacturing’s symbiotic relationship with technology was forever secured. Most pundits believe there have been two subsequent waves of industrial revolution following the first and that we are now entering a fourth wave of revolution. Andrew Waycott, Chief Operating Officer and Chief Technology Officer at Factora, describes these waves.[1]

1. The first Industrial Revolution started in England in the 18th century. Think: mechanical looms.

2. The second centered on electrically-powered mass production, near the start of the 20th century. Think: Henry Ford and assembly lines.

3. The third is electronics and robotics and IT. Think: computers enter the office and manufacturing space.

4. The fourth is about harnessing, finally, the power of data. It’s about big data and predictive analytics and artificial intelligence, and it includes Smart Manufacturing. Early computers did what humans could do, but faster and better. Smart Manufacturing puts machines in the business of real decision-making — through calculations outside the range of human capabilities. Think: the data tells us what to do.

The Fourth Industrial Revolution has also been labeled Industry 4.0 — which will embrace the Internet of Things (IoT), big data, artificial intelligence (specifically cognitive computing), advanced analytics, and smart automation. A few years ago, an article in The Economist called this new revolution “manufacturing … going digital.”[2] Members of the editorial staff at Supply Chain 24/7 agrees with The Economist that digitization is having the greatest impact on manufacturing. “Manufacturing is undergoing a digital transformation driven by smart technology and connected devices,” they write. “Ecosystem connectivity of data systems and improved analytics in the supply chain are being leveraged to drive innovation and optimization throughout the manufacturing landscape.”[3] An accompanying infographic — depicting results from a Jabil sponsored survey conducted by Dimensional Research — notes the following:

• Two-thirds of the companies surveyed believe digital transformation is key to future competitiveness and growth. Most of the others agreed it will deliver better business results.
• 93% expect the rate of digital transformation to accelerate in the next 3-5 years.
• 90% are in the middle of the transformation phase.
• 100% plan to invest in transformative technology (mainly analytics).
• 93% want their manufacturing partners to actively support digital transformation.

According to the survey, the three top challenges to digital transformation are employee push back (44%), organizational structure affecting decision-making (40%) and lack of expertise (40%). This shouldn’t come as a huge surprise. In his famous book The Prince, Niccolo Machiavelli discussed how difficult it is to change an existing organization and why one must expect to put his career on the line to effect change. He wrote:

“There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.”

Change, however, is inevitable. Doug Kimball, Product Marketing Director for JDA Software’s Manufacturing Planning and Flowcasting solutions, notes, “Technology is disrupting the manufacturing industry, and with any type of change, comes opportunity.”[4] What kinds of opportunities? Dan Zhang notes, “As equipment, factories, and businesses become more intelligent and connected, visibility (and therefore optimizations) can extend from intra-plant to inter-plant.”[5] He continues:

“Data will be able to be shared throughout the enterprise from the plant floor to the supply chain with the potential to streamline processes, optimize supply and demand, speed time to market of new products, reduce inventories, and more. … The factory of tomorrow will be a proactive, self-healing environment, and will be responsive at both the micro and macro levels. The equipment, components, and production units of the connected, smart factory will provide information to identify problems right when they happen, or even before, using predictive analytics. Problem resolution will happen in real time, either performed by human operators or by the equipment itself.”

Waycott adds, “While the smartest person in the room is still human (depending on how we define ‘smart’), machines can tell us things we don’t know and could not figure out on our own.” There is a lot to think about as manufacturers transform into digital enterprises and some considerations involve factors outside of a company’s control (like consumer behavior). Kimball suggests “a few takeaways to consider as you navigate this new digital environment”:

• It’s all about me. At least that’s what your customers believe and are consistently expecting. The digital world has brought about a new era of ‘always on’ connectedness. Your customers can now bypass traditional purchasing channels and interact with you directly via social media or through other fulfillment/maintenance services they receive. This ubiquitous digital connectivity also breeds a growing expectation for instant, and individualized, responses. Customers want real-time information about product availability, customization options and they want products fulfilled their way. Your company will need to be able to adapt its manufacturing and fulfillment processes to meet their growing needs.
• You’re on call, 24/7. The always-on mentality of the digital world is pervasive, and manufacturers’ response capabilities will need to be supported by automated processes. Agility will be a key factor, as manufacturers will need to be able to quickly shift their manufacturing strategy and supply chain processes to address market changes. Relying on inventory as a buffer will no longer be effective from a cost or customer service perspective. As omni-channel continues to grow, the challenges of where, when and how much inventory is staged will require increased visibility and collaboration. Additionally, as customers look for personalized experiences, supply chain segmentation capabilities will become more critical to manufacturers’ success.
• Product, meet the backseat. Sure, product features are still important. But convenience and digital connectedness are increasingly playing a greater role in the purchasing process. Easy research and comparison options abound, driving more competition for that customer’s spend. Consequently, manufacturers will need to rethink the entire product development process — considering the digital component of physical products, as well as service and fulfillment options — to create a complete customer experience. New products, embedded with technology that enables automatic refills or upgrades, are ushering in opportunities for new digital platforms and revenue models. When a customer purchases a product in the future, they will be considering the entire experience, or outcome, as part of their decision-making process. A product that is fulfilled but with a poor experience, may not be ordered in the future — or a different source may be considered. This will require manufacturers to adopt new ways of thinking around products, and the corresponding production processes.

Technology is taking manufacturing in a whole new direction — but technology has always done that. The symbiotic relationship that has developed over the past 300 years is only growing more secure.

Footnotes
[1] Andrew Waycott, “What is Smart Manufacturing?” IndustryWeek, 28 January 2016.
[2] “The third industrial revolution,” The Economist, 21 April 2012.
[3] Staff, “How Digitization is Transforming Manufacturing,” Supply Chain 24/7, 6 March 2016.
[4] Doug Kimball, “The Manufacturing Industry is Changing Fast — How Prepared are You?” Supply Chain Nation, 26 February 2016.
[5] Doug Zhang, “Smart Factories and the Industrial Internet of Things,” Dataversity, 21 January 2016.