Globalisation 4.0: Data flows and the future of manufacturing
Author : Rob Sinfield, VP Business Cloud Enterprise Management, Sage
24 February 2020
For years, we’ve been hearing about how the ‘factory of the future’ is going to change the manufacturing industry. IoT technologies, automation, robotics and advanced analysis have long been seen as the coming thing – but the truth is that they’re now the present thing.
For example, the Business Secretary recently opened an R&D test bed facility in Sheffield designed to help grow the UK’s digital manufacturing capabilities. The UK Government is also offering £30 million in funding to support manufacturing projects using digital technology to improve productivity and agility. And in Worcestershire, the country’s first ever 5G-enabled factory was switched on in 2019.
The UK is seeing a boom in smart factory initiatives that are driving the sector forward. Far from the outmoded stereotype of L.S. Lowry-esque industrial units, clearly a growing majority of factories are using connected technology and seeing the benefits. So what’s next for the ‘smart factory’?
At Davos in 2019, the world’s economic leaders discussed the concept of ‘Globalisation 4.0’: the idea that in the coming decade, global data flows will overtake the trade in goods in economic value. As information sharing continues to accelerate and expand, the very framework of manufacturing will change. Country-by-country intellectual property will cease to be a key driver of competition. Instead, companies will share everything from business plans to 3D printing blueprints via the internet, turning manufacturing into a truly global concern – perversely, through onshoring.
The nation-based model of manufacturing dominance which has been in place since the Industrial Revolution – with first Britain, then America and now China controlling the bulk of global manufacturing – will come to a gradual close. In its place, we’ll see the rise of nearshoring and the return to local, on-shore production: micro-factories set up in-country, close to demand, fed by the same data streams worldwide and enabled by vastly advanced automated technology. High-end retailers are already manufacturing clothing in-store as a gimmick – but it’s a gimmick that echoes the future of the manufacturing industry.
A hybrid future
In a nutshell, the next phase of manufacturing will be a hybrid of local production and global data-flows. The on-shore and the off-shore will work together in harmony to produce internationally-designed goods in-situ. Global knowledge feeding local production. Branded locally: powered globally.
This on-shoring/near-shoring movement is also fed by a growing trend among consumers for purchasing locally-sourced produce on the perception that it is of greater quality, comes with lower shipping costs and has a smaller carbon footprint.
Superdry’s success is a good example of this – despite the company’s Japanese branding, the strength of its ‘made and designed in Britain’ credentials and genesis in Cheltenham fueled its rise to the top of the UK market. Conversely, little fanfare is made about the fact that the gearboxes used in F1 cars are sourced, designed and manufactured in the UK – but the expertise is there, nevertheless and the UK continues to stand-out as a hub for innovative engineering.
Change on the ground
The question then follows: are manufacturers ready for this data-driven change? Do they see an increasingly globalised industry as a threat, a challenge or an opportunity? In a sense, the answer is ‘all of the above’. Change is definitely being driven from within the industry, and we’re seeing players across the globe developing these new data-centric business models from the ground up.
However, as with any major change and particularly given the unusual speed of the digital revolution, there are companies for whom staying ahead of the curve is a struggle. It’s not just a matter of having the right technology – it’s a question of employing and training the right staff, future-proofing the supply chain and handling the regulatory requirements of a globally-integrated business.
Our research found that manufacturers are optimistic about the future of their industry – now they need to channel that optimism into growing and adapting their processes to ensure they’re able to compete in a data-led marketplace.
So, for example, it might be that they need to broaden their hiring practices to bring on professionals with data science skills; or it might be that they need to consider developing more regionalised product sets in tandem with local partners to provide a more tailored offering. They need to begin thinking outside the box and considering how to move away from a ‘one factory, many countries’ model to a ‘local-first’ model.
Those manufacturers that can react and transition to take advantage of this will be able to take advantage of the perceived threats and challenges to leapfrog competitors.
Effective technology
Technology does sit at the heart of this cultural change, and as a result, technology will play a key role in helping manufacturers build a business that can ride the data wave. For example, powerful enterprise resource planning (ERP) systems can help companies transform their day-to-day operations into digital-first workflows.
Manufacturers need to implement systems that not only allow them to direct operations on the factory floor or pay their taxes on time, but also to merge data from multiple business systems and use it to generate actionable and predictive insights. In other words, by pooling information from finance, marketing, sales and the shop floor in a single dashboard – and from all over the globe if your business operates in multiple markets – manufacturers can start to detect patterns that remain hidden in a more siloed model. This may be a manual process of analysing the consolidated data to realized immediate benefits. Going forward with the introduction of artificial intelligence (AI) and machine learning, manufacturers will realize even greater benefits with faster decisions, more automation, error and anomaly detection.
That can work on several layers. For example, if the finance team have sight of supply chain data, they might be able to flag up a known delay and plan for the resultant cashflow hit. Or if production line staff can access granular data from shop floor machinery, they can get advance warning of inefficiencies or faults before they turn into full-blown outages. This in turn allows the factory to implement predictive maintenance regimes, reducing the amount of downtime and keeping the line moving.
On a larger scale, group strategy could be informed by insights into the performance of certain units or systems – what’s seen to be working well in the UK can be rolled out to Germany, for example. And yes, blueprints from one region could be shared with others for quick set-up of new product runs.
The bottom line is that by running your business on a digital foundation, you can begin to move to the next level of integrated, data-driven manufacturing. It starts at the level of the factory, but the results of getting the right technology in place can be truly global.
A positive outlook
This view of a ‘global and local’, data-centric industry isn’t just change for change’s sake. Far from it. The benefits for both the national economy and the individual business in terms of efficiency, innovation and collaboration will be significant.
The next five years are going to be a learning process for the whole industry, but it will be worth the effort. Manufacturers need to take the call to go digital seriously – start on the factory floor, integrate with the back office and the partner chain and the global picture will reveal itself.
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