Last week I had the pleasure of being interviewed on the topic of Smart Manufacturing and digitalization by Dr. Rebecca Silveston-Keith for a study being performed by the University of Industry Demonstration Partnership (UIDP). I am sharing in this post some highlights from that discussion.
Rebecca: What are the main drivers for implementing digitalization in manufacturing?
Conrad: Before I answer your question, I would like to clarify that I fold “digitalization” under a bigger Smart Manufacturing umbrella to explain the relationship between the multiple manufacturing technology advances that are converging to fuel the next big industrial revolution, the Fourth Industrial Revolution.
Back to your question… One of the global main drivers behind investment in manufacturing technology and infrastructure is a recognition by governments of the role of manufacturing in economic recovery and growth.
In addition, many US manufacturing corporations have recognized the need to advance their entire supply chain in order to achieve new levels of productivity and quality, and have been sponsoring initiatives and groups like the Industrial Internet Consortium (IIC) and the Smart Manufacturing Leadership Coalition (SMLC) where industry and academia work together to advance and leverage the new digital technologies ad platforms.
Rebecca: What are the major challenges or bottlenecks ahead?
Conrad: In order to encourage manufacturing growth within the country, it is clear that there needs to be investment in the digital infrastructure. Industry, government and academia have recognized that there are gaps in the virtual infrastructure with respect to how systems interconnect so that the digital message fidelity/accuracy is maintained from product design down through the supply chain fabrication and assembly processes. These gaps prevent smaller manufacturers from reaching the benefits of highly automated manufacturing and prevents the creation of a highly integrated manufacturing supply chains.
Connectivity and standards are a challenge in manufacturing. Without standardization, the solutions are customized for each manufacturing operation which is slow and costly. Standardization would lower the cost of entry for small and medium manufacturers to implement more digitalization in their operations. Right now there are way too many different proprietary and custom integration methods. This is partly because big vendors would like to have monopolies and develop customers that become dependent on their proprietary solutions. No single vendor has been able to dominate and establish defacto standards either. Manufacturers are using different vendors for different aspects of digital manufacturing (the vendor that supplies the CAD tools is not the same as the one that makes the NC or CMM machines). Some vendor companies are starting to understand the potential of reaching a larger midmarket and are joining the alliance initiatives led by industry or government to provide these types of solutions to manufacturers. The Digital Manufacturing and Design Innovation Institute (DMDII) is an example of a government led initiative in the US.
Cyber security is a challenge. As more of the cloud technology and internet connectivity is leveraged and IoT (the Internet of Things) moves from consumer markets into manufacturing, (Industrial IoT or IIoT) it becomes imperative to assure the identity of the “things”, like machines, in order to have secure exchanges of information. The IT-OT (Information Technology to Operations Technology) integration issue is solvable but needs secured standards of communication to leverage the internet as the main gateway.
The right skills mix for the worker is a challenge. In order to put all this together, manufacturers need a different mix of skills. It is not just a matter of hiring people into manufacturing and IT jobs and performing on-the-job training, since they will need to understand mechanical, electrical, industrial systems, material science aspects as well as computer science in order to implement the new manufacturing infrastructure successfully. Blue collar repetitive jobs will be replaced by automation. However, the need for more sophisticated jobs will emerge as even the maintenance worker needs to teach robots what to do as well as configure, analyze, diagnose and trouble shoot issues. Clerical white collar jobs will also be automated but the engineering needs will probably go up and demand greater multi-discipline collaboration.
New employment models will, and have emerged as the new norm where manufacturers will rely on contract workers with specialized skills for everything from design to maintenance instead of hiring permanent employees. There is a need for very specialized skills like configuration, integration and maintenance of very sophisticated equipment and many organizations will not be able to retain these skills full time.
Adding to the skill requirement challenge is the perception that manufacturing jobs are dirty and declining. A new message needs to be reinforced for the next generation of manufacturing workers that there will be jobs and they will be more sophisticated and interesting.
Intellectual property (IP) protection is a challenge in an increasingly distributed global manufacturing ecosystem. Engineers and manufacturer operators are no longer under one roof but in different physical locations or countries. How is the security and IP guaranteed? The process of black boxing the IP will be the norm in the manufacturing ecosystem, so that no one entity has total exposure to the full process (think Boeing who integrates parts from multiple suppliers around the world for its Dreamliner). IP for design is also an issue with the emergence of 3D print shops. New rules and technology for protecting the IP of the design need to be developed. For example, we might need a way to distribute a 3D definition that is not only encrypted and protected by a password but also restricted to single print by a 3D printer or expiration date. Similar to schemes we use to protect the distribution of movies.
Rebecca: You answered a few more of the questions on readiness and skills needed with that answer so I will skip ahead a bit… Are companies implementing digitalization? Are small companies adopting digitalization?
Conrad: Most manufacturing organizations are aware of the potential of digitalization. The large, or more solvent, manufacturers are leading the early adoption and putting the infrastructure in place. They would like to see more of their supply chain adopting the new infrastructure, platforms, and communications standards and that is why they are sponsoring groups like IIC and SMLC. If through those types of efforts, we manage to put more plug-and-play standards in place, smaller businesses will be able to join the new manufacturing ecosystems that will evolve.
Rebecca: How is digitalization influencing value creation within business? E.g. are there new business models emerging, innovative products, services and processes, value chains, R&D processes
Conrad: New business models enabled by digitalization include: mass customization, product-as-a- service and manufacturing-as-a-service. These new models change the way manufacturers view and interact with the suppliers and customers. New business models make sense for some types of manufactures that are producing high value customized products (think Invisalign braces) as opposed to those producing widgets or products destined for the grocery store shelf.
These new business models are not for every type of product or process, but the possibility of a business model where manufacturing is the core competency is a bigger business model opportunity.
However some solution providers might be under-representing the opportunity ahead and the resulting confusion from the wave of new IT terminology and recommendations can cause manufacturers to miss the bigger picture among the hype. For example, there is a misunderstanding about the role of big data and predictive analytics in Smart Manufacturing and IIoT. Big Data and predictive analytics should not be viewed as the end goal of Smart Manufacturing or IIoT initiatives. They should be viewed as tools that might be useful for some manufacturers within their Smart Manufacturing strategy. Better business intelligence and analytics are a nice side effect of structured data communications throughout the organization. However, more important to most manufacturers will be the new levels of automation, process controls and process integration across the enterprise and product value chain. For example, being able to tell whether your product meets the design specifications after assembling the many parts received from a multi-tier supply chain might be more important to an organization than having an accurate view of machine down time.
Rebecca: Beyond company boundaries, how is industrial renewal and digitalization influencing different parts of the value chain / value network?
Conrad: Manufacturers need their suppliers to be up to speed as well because, for many, 50-70% of their product are made outside of their factory. The goal is to empower the small companies in order to drive costs down and improve quality through improved fidelity to specifications traveling in structured communications. Smaller companies in the supply chain will not be able to implement digitalization without standards in place that make it as easy as plugging a machine into the electrical outlet.
Rebecca: What else can labor unions, state agencies, vendors, customers, academic institutions, local, state, and federal agencies, suppliers/vendors do to stimulate industrial renewal?
Conrad: The types of initiatives I mentioned earlier are all good. In addition, perhaps more educational programs that focus on developing multifaceted engineers that understand mechanical, industrial, electrical, materials as well as systems and computer science are needed.
Rebecca: What does the US do or can do better than other countries?
Conrad: The US venture capitalistic driven economy stimulates entrepreneurship and tolerates mistakes along the way to success. The US is good at agile iteration, is more experimental and tends to try things faster. Time will tell whether this approach will result in faster implementation than the more methodical approach of some other countries.
The cowboy mentality in the US also means that industry does not necessarily embrace government participation even for things that they should like issues that span entire industries. The partisan US government system might be a little slower in its ability to help implement and promote a new communication infrastructure and new standards than some other countries. We’ll have to see what happens.
I hope you enjoyed some of these highlights as much as I enjoyed the interview with Rebecca. I am looking forward to the results of this UIDP study.
Professor Jari Kuusisto of the University of Vaasa from Finland is carrying out joint research with international partners from Austria, Germany and the United States on industrial renewal and digitization. The aim is to produce insights and country comparisons that can be invaluable for businesses and policy makers in addressing industrial renewal related challenges. The key focus areas of the research surveys include understanding the drivers for industrial renewal phenomena, business, research and policy perspectives, and the skills, technologies and other related capabilities needed to be successful in participant countries. In the United States the University of Vaasa partnered with the University of Industry Demonstration Partnership, an organization focuses on developing strategies to overcome barriers slowing industry and academia research partnerships for the betterment of the US economy. Dr. Rebecca Silveston-Keith, representing the UIDP, is leading a series of 55 interviews capturing insights along the value chain from suppliers to fortune 500 companies, and the local state and federal agencies involved in manufacturing renewal.