Next-Gen Manufacturing – Riding the Waves of Disruption

The manufacturing world is facing unprecedented disruptions, which offer both challenges and opportunities to the players. On one hand, manufacturers can be bogged down by the volatility, uncertainty, complexity and ambiguity (VUCA) of our times; on the other, they can look to ride the waves of disruption to enable next-gen manufacturing to deliver greater value and impact – both for themselves and their stakeholders.

1.???The impact of digital on the manufacturing sector

The current era is challenging the fundamental constructs of organizations across business models, talent and operating models, and their data and technology capabilities. Compared to other industries, heavy-asset industries like manufacturing have been slower in moving forward on their digital journeys. There is significant headroom for manufacturing organizations to digitally transformation themselves, across every part of their value chain, and potentially even disrupt many traditional practices. Leaders in the industry are digitally transforming across multiple dimensions, touching not just systems, processes, and people, but also how they create value for customers, go-to-market, serve the market needs, and create new ways to monetize their offerings.

Organizations are leveraging the power of Industry 4.0 (I4.0 in short) – the fourth industrial revolution – to become more adaptive, interactive (internally and externally), and resilient. The right applications of technology and ways of working can lead to more empowered decision making, new opportunities for upskilling, reskilling, and cross-functional collaboration, better talent attraction and retention, and improved workplace safety and employee satisfaction.

Digital manufacturing is enabling organizations to shift their focus from just an efficiency play to a transformative game-changer. Bold moves and digital adoption enable the organizations to shift their mindset from a cost-optimization approach to truly becoming a value-driver and creating a key competitive advantage in the market. More importantly, it helps them in being better prepared to tackle the disruptive challenges in the future, and capture a larger portion of the value-pool created.

2.???Being smarter about smart manufacturing

Through the multiple eras, manufacturing is increasingly becoming more advanced, connected, and smart. Smart manufacturing represents a significant leap forward from a simpler automation state to a fully connected, flexible and adaptive system configuration. The concept of smart manufacturing combines technology, data, processes, and human interactions to disrupt and transform production’s role as a learning and responsive entity in response to changing conditions throughout factory networks and value chains. It enables the integration of Information Technology (IT) with the Operations Technology (OT), and helps bridge the physical-digital divide. Organizations can aim to achieve operational excellence, minimize variability and risk and deliver reliable supply from efficient operations. The impact-radius is also large: not only does it help in improving processes, but in building smarter supply chains, and in a more evolved end-to-end connected ecosystem.

While these changes point to a continuous innovation curve, manufacturers need to be smart in deciding where to invest and how to take advantage of the opportunities. It is also a significant mindset shift for the leaders – to not adopt new technologies simply for the sake of getting the latest ones in, but to choose those that will truly make a difference for their organizations and create the most value for them and their customers.?

3.???Transformation of the future manufacturing workforce

The skills gap is a well-known problem in the manufacturing industry. An aging workforce, a shortage of interested younger workers, and a competitive job market for skilled talent have created challenges in the manufacturing labor market. Digital trends, increasing use of latest technologies, automation, and pandemic-related changes have put workers in a constant state of change and flux. In addition, the infusion of technology into the manufacturing environment is changing the dynamic between humans and machines, in the form of cobots (collaborative robots), AR (augmented reality), VR (virtual reality), digital twins, and cognitive manufacturing. Advanced technologies have altered traditional roles, and new skills and capabilities are required to meet employers’ shifting expectations for future factory workers. There is an increasing need for the workforce to keep up with the accelerating pace of change and demands, both of the external market place and their own organizations.

Potential solutions need to be addressed at two levels: the role that organizations play, and what workers can do to respond to the changing times. For organizations, the answer does not lie in replacing the existing workforce, but in up-skilling existing, internal resources who already have valuable experience in the manufacturing industry, and creating the right environment for continuous learning and development. Adaptive workers who are agile in developing new capabilities will find it easier to succeed in changing environments with newer demands.

4.???Sustainability in manufacturing operations

Sustainable manufacturing (or green manufacturing) represents a holistic approach to the process of creating goods with an aim to reduce or minimize the negative footprint on the environment, society or economy. The U.S. Department of Commerce defines sustainable manufacturing as “the creation of manufactured products that use processes that are non-polluting, conserve energy and natural resources, and are economically sound and safe for employees, communities, and consumers.” The benefits of sustainable manufacturing include improved operational efficiency by reducing costs and waste, long-term business viability, better compliance to regulatory requirements, and better brand creation and recognition as a sustainable-conscious organization.

Amid a slow political process on climate change, businesses globally must step up their efforts to reduce carbon emissions. Engineering and manufacturing can make an essential contribution to achieving net zero, as manufacturing plants, machinery, and sophisticated production processes are at the heart of global value creation everywhere. In order to be successful, it is essential that sustainability be a business-agenda and be part of the upfront design-for-manufacturing (DFM) process, rather than be an afterthought.

5.???New business and operating models enabled via advanced manufacturing

The pandemic highlighted the crucial role played by supply chain systems and manufacturing in the global economy. It also stressed the fact that the manufacturing companies need to be constantly innovative, agile, and responsive to emerging changes. Companies need to look beyond their operations, productivity, and efficiency goals, and enable new forms of business and operating models to create new sources of value for all the stakeholders.

In keeping up with the changing customer demands, organizations are assessing creating new value propositions in the form of new service models (Everything as a Service!), data and insights monetization, platform-play, coopetition (collaboration between business competitors, in the hope of mutually beneficial results) plays, and shared economies, to name a few.

6.???Re-shoring & near-shoring

Semiconductor chips effectively work as the brains of all electronic devices, ranging from computers and mobile devices, to automobiles and household appliances. There has been an over-reliance on the East-Asia based companies for the global supply of semiconductor chips. The pandemic exposed the over-dependency, when a global shortage led to supply chain issues for major manufacturers, price inflation, and geopolitical tension. In addition, regions and countries are seeking to have more control over critical technologies to achieve digital sovereignty. All these factors led to the need to invest in domestic economic revitalization.???????????

The CHIPS and Science Act is part of US President Biden’s economic plan to invest in America, stimulating private sector investment, creating good-paying jobs, making more in the United States, and revitalizing communities left behind. As part of their efforts, the Department of Commerce is overseeing $50 billion to revitalize the U.S. semiconductor industry, including $39 billion in semiconductor incentives.

In a similar move, the European Union has agreed on a landmark plan, dubbed the European Chips Act, for a $47 billion package of public and private investments to secure its supply chains, build large-scale capacity and innovation, avert shortages of semiconductors in the future, and promote investment into the industry to make EU self-sufficient.

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The opinions expressed here are my own.