The evolution of the factory - from the blacksmith to modern smart factories

By Yannick Schilly – President & CEO Altix Consulting Inc.

Part 1 – a look back in history and evolution (3min read)

A couple of months ago, I was in South Carolina with my family and we spent a day at one of the beautiful plantations near Charleston, the Middletown plantation. I wanted to explain to my kids how, early on, the Ashley river was used to transport the rice, sugar can or cotton production to the port and the city and how it would be distributed from there to the markets. It was very well done, the plantation had rebuilt the ecosystem of crafts and techniques they had to use back in the day to efficiently run the plantation, from farming and livestock, to carpentry and pottery, as well as the seamstress textile production to the blacksmith metal and tool production repairing fences, tools or transportation carriages. My kids were absolutely fascinated by the horses, goats and pigs (or even wild alligators), but also by the story this place could tell and especially by the blacksmith shop. It was dark, it was dusty, it was hot, the fire was burning with the forging bellow, the traditional air pump being manually operated to blow into the embers, heating the steel so it could be formed under the pressure and force of the blacksmith’s hammer. Beyond the novelty that this scene represented to my kids, it was also an intriguing journey back to the roots of what would become the world of industrial production, to which I decided to dedicate my studies and professional life over the past 25 years.

It is often extremely helpful to understand the history and the development of an art or a science to better capture the moment we are in and the trends of development we are heading to and specially to anticipate those trends in order to remain competitive. Context is often everything and in this article we will attempt to provide a historical yet actionable perspective on the moment we currently find ourselves in.

Looking at the evolution of society over thousands of years (stone, bronze and iron age) we see the first shelters, primitive tools, clothes, fire and cooking bring humans unprecedent security, comfort and power. Over the last couple of hundred years, the first industrial revolution was ushered in with the invention of the steam engine and resulted in the emergence of the factory in England with the early textile industrial production. This progress quickly led to trains and railroads, steel production and coal mining, international and global trade as well as two more industrial revolutions accompanying the emergence of the Henry Ford’s automobile production line and eventually airplanes and the modern electronics, home appliances or industrial food and beverage, made possible through the electrification and the computerization of the factories. At this exact moment in history, we are in the middle of the fourth industrial revolution which is all about the smart factory, with device to device communication, artificial intelligence and machine learning – so called cyber-physical systems, which will auto-regulate themselves to maximize efficiency.

The evolution of manufacturing and global supply chains was always a powerful economic engine, forcing the development of ecosystems around from the theory of politics and economics (Karl Marx, Adam Smith,…), the theory of management (Taylor, Ford, Drucker, Porter,…), the development of science and technology (Edison, Benz, Tesla,…), the development of modern cities and industrial or logistics clusters (Venice, Amsterdam, New York, Hong Kong or Singapore) as well as of schools and universities, which had to provide the talent to nurture the flourishing economies. We have seen some shifts over the centuries from the primary sector (agriculture and mining) to the secondary sector (manufacturing) and finally the third and fourth sectors (services and research). These economic shifts were also accompanied by demographic and geographic shifts across countries and continents, with producers looking for market entry and expansion, as well as supply chain efficiencies (close to raw materials, close to affordable labor, pro-business policies, close to markets, …) leading to the world of global competition that characterizes our current reality.

Part 2 – an acceleration in innovation and technology (3min read)

In the first part, I tried to span the big picture of the evolution in the world of manufacturing and supply chain. In this next part, we will try to come down to a smaller and more recent timespan, looking at decades, rather than centuries, to identify the history of various core elements of the modern factory.

The term mass production really started to be used after the Encyclopedia Britannica and the New York Times used the term around 1926 in relation with the Ford production methods and associated research. Early in the century, we saw the birth of what we know today as the management consulting industryor outsourced professional services with the arrival of pioneers like Arthur D. Little and McKinsey. Over a century, an explosion in the number of factories occurred supporting and enabling a strong world GDP growth. Simultaneously, another explosion of tools and techniques occurred across scientific management and industrial engineering, such as the birth of quality management, management systems and production systems, lean management, six sigma and business excellence, the Theory of Constraints, and many more. All of these are still very important tools and methods, and the modern CEO/CxO just can′t afford to ignore them, as they are the keys of the piano that need to be mastered and played in order to orchestrate modern business and management.

With the ever-growing complexity of industrial production, increasing product variety and customization, more advanced technologies, more advanced materials, more technical constraints and precision, several technological solutions have emerged. Automation and robotics entered the factories as early as the 1970s, along with increasingly precise production machines featuring interconnected layers of mechanical, electrical, electronic and mechatronic systems and controls, from field level actuators and sensors to controls such as CNC, PLC, HMI, all the way up the automation pyramid to enterprise IT and modern integrated ERP solutions.

Engineers started to use computer systems to better manage information with the computer aided design / computer aided manufacturing (CAD/CAM) and product lifecycle management systems (PLM) entering the world of product design and industrial engineering design. Factories became larger with impressive flows of materials and information requiring perfect organization, structures and discipline in order to ensure the economic and financial success of the enterprise. Larger factories and increased technology levels also require more people and higher skill levels, leading to the transformation of the modern human resources management that now needs to manage company culture, values, talents, leadership and in-house training and education programs. All of these ever-changing trends have now led to the life-long learning enterprise and leaders that need to continue evolving with the enterprises they lead.

The factory, especially in a mass production environment, is often not an isolated system, but an embedded system in a network of other complex higher and lower level systems, made of suppliers, partners, customers and international, multicultural, dynamic supply chain networks. To lead and manage in this multi-national/global environment, management theory had to likewise evolve and learn from nature, with bionics and other emerging theories such as the cybernetic management, or the science of managing complex systems.

Trying to wrap-up and summarize: Over decades, the factory became a complex socio-techno-economical integrated, dynamic and smart system, embedded in an environment with a corporate social responsibility and environmental footprint that could no longer be ignored.

The most recent developments have exhibited a trend of tremendous acceleration in innovation and technology, not only in terms of hardware and equipment for the factory, with machines becoming ultra-specialized and extremely precise, but also with software tools allowing a customized control of the equipment and real-time information and data exchange across international networks enabled by the internet. Considering where we came from and where we are, the question now becomes: Where are we heading too?

Part 3 – navigating the information overflow and the complexity of decision making (3min read)

For the modern executive in a manufacturing and supply chain environment, the flow of information can be overwhelming. How do you navigate the flow of information and decide which trends truly need to be followed, and which ones can be safely ignored? While most large corporations are well-equipped with internal and external resources and information/expert ecosystems, the challenge seems to be even bigger for small and medium size companies as they typically:

-      Serve the large corporations and are facing customer requirements and expectations, for example with respect to digitalization and continuous gains in efficiency;

-      Are often niche technology leaders in product and/or manufacturing technologies like advanced plastic injection, aluminum die-casting, electronics, …;

-      Their competition is truly global, with established and newly emerging players, but also potentially disruptive technologies from the start-up community;

-      Their resources are fundamentally limited, whether financially, in terms of human resources or management capacity.

It is becoming more and more clear that in Industry 4.0, everything is getting re-designed:

-      The smart, connected, inviting and energy-efficient factory building of the future;

-      Advanced and digitally-enabled manufacturing and logistic machines and equipment;

-      Advanced IT and software environments linking people, processes and technologies in order to produce smart Products 4.0;

-      The need for a highly-skilled workforce, with a life-long learning mindset, capable of mastering everything from STEM basics, to advanced concepts implemented by means of both digital and mechanical tools;

-      Highly qualified and specialized networks and ecosystems leading to Collaboration 4.0.

The world of advanced manufacturing and global supply chains offers a unique opportunity for careers and life-long learning opportunities in diverse cultural environments. Nevertheless, the industry encounters a unique and unprecedent labor shortage and skills gap.

The challenges are huge for the executive. To be successful in this digital age, one must navigate:

-      Technology trends and manage technology evolution to ensure sustained global competitiveness;

-      The business environment and evolution in terms of markets and competition, geopolitics and trade, regulatory and compliance, …;

-      A brand, culture and environment what will attract the best talent, but also customers and a variety of stakeholders;

-      The proper speed and sense of urgency to remain on the top of the game, without quickly burning out internal resources and energy;

-      An optimum balance between financial constraints and shareholder expectation.

In that context, we need to work on providing executives with the support systems and Partnerships 4.0, which will help them to succeed and master the challenges they are faced with. Taking the time to map out your company’s unique situation and status quo, as well as its strategic direction and re-evaluating business planning and resources will help to derive the strategy and the resource allocation as well as what the initiatives are the companies is following and what are the ones the company is not following. While strategic planning has always been important, nowadays it is absolutely critical for economic survival.