BusinessDigital CapGemini

Why manufacturers must understand the new digital success models

June 7, 2016

The manufacturing sector is changing almost beyond recognition. Many firms do not know how to capitalise on the fundamental technology shifts taking place.

The arrival of industrial 3D printing is transforming production. WinSun, in China, has created a 2,466 cubic metre goliath of a machine, capable of constructing everything from furniture up to entire sections of buildings.

Meanwhile, a major study claims that connecting factory devices on the Internet of Things poses a huge total potential efficiency gain of $1.95 trillion.

For manufacturers to really succeed in this area involves carefully chosen modernisation and automation to create an ‘Industry 4.0’ factory. It also requires a willingness to embrace constant change and to analyse new opportunities.

The speed with which enterprises adapt their business models and maximise the benefits from new technologies and digital innovations, while protecting against associated security threats, will determine their competitiveness in the coming decade. 

Totally new thinking is required around systems, supported by these key business success factors:

Understanding the key elements for change to manage new customer expectations

Globally, manufacturers are striving to address growing customer expectations for better, smarter and more reliable products, enhanced experience and mass customisation.

With improved manufacturing, quality can be increased at the same time as a wider variety of items are produced. More carefully effected production can also lead to less excess product and scrap.

As organisations prepare to embrace new business models including pay-per-use, make-to-order and extended customer experience; digital technologies provide the answer.

There are a number of technologies that manufacturers must evaluate in a digital age, including the Internet of Things (for smart, connected products and factories and beyond), and industrial 3D printing (for improving test production and bridge the gap between design and build). This is in addition to increasingly mature product and asset lifecycle management, onsite and remote operations management, system simulation, and industrial cybersecurity.

With regard to IoT alone, according to a Cisco study, smart factories have a $1.95 trillion ‘value at stake’ -the result of IoT driven increased revenue and efficiency, and lower costs. This includes the better use of assets, improved employee productivity, less waste in the supply chain, and faster innovation.

Smarter machines with better sensors and connectivity, and easier interfaces for staff, offer huge improvements, while connecting the devices sold enables an array of new services that can be sold to customers and maintenance partners. 

Adoption of IoT varies greatly. Countless manufacturers have begun to be active, including General Electric’s IoT-geared factories for real time manufacturing data, Bosch’s IoT Lab for exploring potential, and Airbus’ plants providing real time engineering data.

These companies are in an advanced stage. A recent Capgemini study found that industrial manufacturers and medical device companies are well ahead of other factories in the maturity of their IoT, but car manufacturers and pharmaceuticals lag behind.

Industrial 3D printing is equally important. It offers the ability for cost savings, faster production, and frequent test production, though there is much debate over how quickly the benefits will be realised.

Its potentially compact size also enables the relocation of production facilities much closer the point of demand and consumption. The market for 3D printing technology is expected to grow to several billion dollars by the end of the decade, with core manufacturers leading the way.

Not all 3D printers are small, however. One of the biggest 3D printers is in China, and is run by WinSun. It can build everything from furniture to houses, and companies such as Airbus and Ford are also advancing their use of 3D printing for increasingly large parts. 
Given the converging digital and physical systems, it is essential to tackle cyber-attacks and ensure highly secure operations. Manufacturers will need to keep close track of assets and engineering designs – the latter of which faces a further increased threat of counterfeiting.

Taking on the new environment: Industry 4.0

The array of technology, including the many different ways in which digital innovation can potentially be integrated into operations, is what is causing the headaches for manufacturers – but newer business models support the change. 

The increasingly adopted model of ‘Industry 4.0’ – in which factories are quickly being automated, capitalising on big data to adjust configuration and drive predictive maintenance – is the perfect environment for this digital adoption.

But its adoption is sector-specific. What represents a game-changer for an aerospace company, for example, can be a world apart from the technologies simultaneously having a profound impact in streamlining the operations of a steel producer, a pharmaceutical manufacturer or a consumer goods giant. 

Many organisations might value above all an increased ability to collaborate with suppliers and partners on parts design through cutting-edge 3D visualisation tools. Others might focus most on complex systems simulation, or on using big data analytics techniques to optimise factory production and supply chain management. 

Companies must understand as much as possible, early on, where there is greatest potential. For some this will mean supporting and optimising existing operational activity while for others it will involve making radical changes to processes and understanding supplier and end-user relationships in completely new ways. 

Crucially though, manufacturing enterprises and their leadership need first to completely take on board the idea that the digital revolution is already well underway and that if they don’t respond to the opportunities and the challenges that emerge as a result, they should be in little doubt competitors will.

Embracing and integrating the constant change

With an appreciation of the systems in place and the new environment, companies need to embrace constant technological change, and to effectively integrate what matters.

The industry remains a relentlessly competitive one and for manufactures there is always a very real need to avoid being left behind. This means embracing the potential of digital innovation and doing more with the vast swathes of data their operations and interactions produce. 

Any such progress requires constant sharp assessments, early investment and a willingness to innovate and take risks in pursuit of the kind of gains that deliver sustainable competitive advantage. 

There’s no doubt that there is enormous potential for manufacturers to do more with the latest data-driven solutions and digital technology. But there are no guarantees that these opportunities will be realised unless businesses have the foresight to truly embrace the future. 

More and more tech companies have started to team up to help businesses in different industries to make the most of the IoT and 3D printing. For example, last month, Capgemini announced an important partnership with Siemens. The companies have created a full platform of analytics for connected buildings and assets, enabling increased efficiency for a wide array of businesses. Such technology could be essential for manufacturers in maximising the opportunities available to them around the IoT.

It is essential that manufacturers grasp the best technology available to them, including 3D printing and the IoT, and then capitalise on it. They must adopt the right business models for change, rolling them out widely, sharpening them, and constantly adapting them. 

The potential for cost savings, higher productivity, better efficiency, and offering new services, is huge. Take action now to avoid being left behind.

By Leo King
Leo King is an experienced freelance journalist who writes for a number of newspapers and magazines about business and consumer topics. He has a strong background reporting on cutting edge digital change in large organizations.


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