US manufacturers must identify and invest meaningfully in digital innovations such as data analytics if they want to maintain competitive advantage in an increasingly interconnected world.
The Fourth Industrial Revolution, or industry 4.0, is upon us, and while no one knows for sure exactly what that will look like, one thing is certain: that everything we once took for granted about the way business is conducted is going to change, and that includes in the US, the world’s largest economy.
This will require a fundamental shift in mindset by US manufacturers, from a narrow focus on single issues to the realization that in the brave new world of 21st century business, all of these ‘priorities’ are interconnected, and must therefore be viewed and addressed holistically rather than in isolation.
Take workplace safety as an example. Using digital technologies to remove people from hazardous environments is a key driver for manufacturers, but to do this effectively requires investment in remote capabilities, IT infrastructure and applications, internet connectivity, and in cybersecurity.
Understandably, many companies still find it easier to invest in one area at a time in order to drive efficiencies and continue on their digital journey, with the choice between technology, data, process and organizational change often being made based on whichever stakeholder shouts the loudest.
Instead, a suite of strategies and technologies across process automation, data analytics and remote technologies is needed across the operation in order to drive real change.
Manufacturers that fail to adapt to this ‘new normal’ will quickly find that they won’t be able to recruit people, they won’t be able to adapt their products to the needs of the shifting market – and they won’t stay in business.
COVID-19 ACCELERATED THE DIGITAL TRANSITION
The global pandemic has disrupted manufacturing operations worldwide, but it is easy to forget that competition in the manufacturing industry was putting huge pressure on companies to reduce costs, improve customer experience and increase profitability before anyone had even heard of COVID-19.
How can US manufacturers respond? The easy answer is that manufacturing CIOs must leverage new digital technologies to take advantage of the opportunities presented by industry 4.0. Fine, but the idea that simply gathering data in a pool and then applying AI and machine learning will magically give you the right answer is flawed. What is often missing is a conceptual understanding of how the data got in that pool – and, crucially, how it can best be leveraged to drive genuine business value.
I recently spoke to a large oil and gas operator that had invested in infrastructure designed to bring data from thousands of pumps into a central database. When I asked for the data inputs required, not only did they not have them, they didn’t even know how data from key equipment got there!
They spent a boatload of money and in return got a big treadmill that they use as a coat rack. Why? Because they partnered with a company that promised the world with no contextual knowledge.
So, getting the right person, and not just the right solution, at the right time is a combination that industry is looking for right now because the technology stack is so large. I see this as an incredible opportunity for those companies and people that understand how to navigate the digital storm.
EQUIPPING THE NEXT GENERATION FOR SUCCESS
One thing is for sure: standing still is not an option. A recent report by Gartner found that 36 percent of manufacturing enterprises realize above-average business value from IT spending in digitalization at a reasonable cost compared with peers, while 36 percent of manufacturing CIOs whose enterprise had recently experienced some type of disruption said operating cost competitiveness had fallen behind.
As Gartner says, this disruption represents a challenge for manufacturing organizations, but is also a chance to adopt digital themselves. To do this, we must equip the next generation with the correct tools they need to affect change. After all, where is the value in employing digitally literate people if you then place them in an environment where they are using a pencil and paper to record stuff?
Industry 4.0 requires a plethora of different skillsets. Someone may have knowledge of IT, but they can’t become a point specialist because they don’t know OT. Or they may be fluent in data looping, but don’t know the application. I believe there is a growing realization among manufacturers that a perfect storm is forming: it’s not that this generation isn’t smart enough, we haven’t evolved our tools to enable them to work efficiently. The company that figures that one out will attract the best talent.
FUTURE PROOFING US MANUFACTURING
One thing hasn’t changed, and that is manufacturing still boils to down production quality and cost to produce – and yet the tribal knowledge that has built up in individual workers over many years is either retiring or about to. ABB Process Automation president Peter Terwiesch recently, and astutely, described the situation as the ‘Wild West’, in that there is a veritable gold rush of technology providers out there offering digital solutions, to the extent that ‘digital’ has become a tremendously overused word.
This must not be allowed to overshadow the massive potential that industry 4.0 represents for US manufacturing. For example, during the recent Covid lockdown, ABB was unable to get an expert out to a paper company struggling with quality control issues. Instead, ABB experts used wearable AR headsets and smartphones to talk someone who had never performed loop tuning before through the procedure remotely, fixing a problem that would have normally taken a week in just four hours.
Too many manufacturers still rely on the ‘First-Time Fix’, whereby they wait for an asset to fail and then assess the number of service requests that are resolved during an engineer’s first visit. Instead, innovations such as machine learning offer a unique opportunity to translate data into forecastable information that can be used to predict when that asset will fail and avoid downtime altogether.
That is one of the goals of the Fourth Industrial Revolution, and it requires a new mindset on the part of US manufacturers and a willingness to embrace and fully invest in new digital technologies. In doing so, the manufacturing sector can improve production, profitability and sustainability, and continue to compete from a position of strength in an increasingly competitive, globalized world.