Imagine for a moment that you’re planning a camping trip with your friends. There are several of you, and the trip will last a few days, meaning that you’re going to have to take two cars and considerable volume of supplies. How do you decide how each car will be filled? Let’s say your friend already has tent poles and fire starting material, so it might fall to you to procure and transport sleeping bags and food supplies. If one car is more fuel efficient than the other, does that change your plans? How will you go about choosing the right route to your destination in order to find the right balance between toll roads and potentially less direct pathways?
Industry 4.0 is already radically changing the global manufacturing landscape; so much so that Deloitte estimated that as many as half of the S&P 500 firms would be replaced by 2027 due to digital disruptions. Prognostications like this lend a sense of urgency to discussions of the adoption of Industry 4.0 principals like interoperability and cyber-physical integration. What many forget, however, is that it’s not technology alone that determines a company’s long-term staying power. Rather, it’s the customers who ultimately determine the success or failure of a given business.
Additive manufacturing (AM), otherwise referred to as 3D printing, has long been one of those technologies that seems to be just beyond our grasp. By many accounts, this will soon cease to be the case. Gartner estimates that by 2021, 20% of the world’s top consumer goods manufacturers will use 3D printing to produce custom products. Some businesses are already establishing internal start-ups with the intention of refining 3D printing techniques and best practices, and as the process gains speed and production quality it will soon become a viable method for mass production and a disruptive force across the manufacturing sector.
What happens when you’ve been doing the same job for many years? Even if you began your work with little or no expertise in your field—let’s say supply chain management—no doubt by the time you’ve spent a few years performing the same or a similar set of tasks you gain new skills and improve the ones that you already have. Because you understand the supply chain better than you did when you were more junior, you’re better able to predict how it will react to different disruptions, and you can more quickly and more easily make snap decisions to preserve your supply chain’s agility and maintain optimal performance and on-time deliveries. In short, you learn, and by learning you make relevant production and shipping processes run that much more smoothly, more efficiently, and more profitably.
At a recent event, renowned consulting firm Deloitte revealed the results of a survey showing that only 14% of C-level executives were highly confident in their readiness to utilize Industry 4.0 principles to their maximum advantage. While other surveys have shown similar anxieties to exist throughout many different spheres of global manufacturing, we at the flexis blog believe that the new changes surrounding so-called smart factories, though significant, become less daunting as one learns more about them. After all, this new technology is explicitly meant to make life easier for businesses. In the spirit of demystifying the new global technological landscape, here are a few things you might not know about Industry 4.0:
In the autumn of 1999, Hershey’s was preparing for what they hoped would be a typical Halloween season. By the arrival of the holiday, it would prove to be anything but typical. In fact, the American candy giant would see an almost 10% drop in its stock price over the course of just one day. The reason? A failure to deliver more than $100 million dollars worth of Hershey’s Kisses and Jolly Ranchers candies to stores in time for Halloween. It turns out that Hershey’s had adopted a new order fulfillment system just weeks before their annual Halloween rush, and their IT hadn’t yet been successfully integrated into their value stream. The company would ultimately recover, but the incident still stands as one of history’s biggest supply chain snafus, proving that all supply chains are susceptible to risk and disruptions. Here is a ranking of some of the biggest supply chain disruptions:
Seasonality, which refers to regular, predictable fluctuations that recur year over year, has traditionally been a major factor in automotive manufacturing. Since car sales often spike in spring and autumn (when new models are traditionally released) and drop off in winter and summer, manufacturers can and do factor seasonal slow-downs and increases in demand (potentially including demand for new parts) into their production processes. With the rise of Industry 4.0 and the emergence of an increasingly global supply chain, however, the nature of seasonality is rapidly changing. Let’s take a look at how seasonalities operates in modern manufacturing.
Murphy’s Law states that whatever can go wrong, will go wrong—and nowhere is that more true than in the world of global supply chain management. Risk is simply a fact of life in almost all business spheres, but automotive industry manufacturers in particular frequently deal with incredibly complex supply streams that face a near-certainty of disruption. Managing complex relationships between suppliers, shippers, and production processes can lead planners to the brink of numerous potential pitfalls, but, luckily, in the era of Industry 4.0 there are more tools than ever designed to alleviate the pain points of the past.
Imagine for a moment that you’re an employee at an automotive manufacturing company. Every year of two, the owners create and share a strategic vision for the long-term future with management. Managers, in turn, create shorter-term plans of several months to put the longer-term vision into practice with Sales and Operations Planning (S&OP). As an employee, you manage your day-to-day tasks in accordance with those plans, responding the small crises of the workday with whatever resources and insights are available to you. Perhaps in responding to these situations, you find yourself wishing that there was something to bridge the gap between S&OP and those day-to-day processes. Sales and Operations Execution (S&OE) is that bridge, and it represents the path to the most responsive possible supply chain.
It’s been said that we should think of scientific revolutions not as revolutions per se, but as paradigm shifts—meaning that, rather than thinking of the great breakthroughs in 20th century physics or medicine as groundbreaking seismic shifts, we should consider them in terms of reorientations of method and changing understandings of old knowledge. The same might well be said of new developments in industry. The rise of automation, for instance, didn’t do away with the use of manpower overnight. Instead, it led us to reconsider the way we utilize people as resources and the way that we structure processes around manual intervention.
What does this way of thinking mean for how we discuss “the fourth industrial revolution,” i.e. Industry 4.0? Simply put, the tremendous potential benefits of Industry 4.0 won’t happen on their own. Yes, manufacturing as a field will change drastically and factories will become smarter and more reliant on sensors and internet of things (IoT) devices, but companies need to make an active engagement with these changes by learning to rethink their processes and their use of resources across the supply chain. This raises an important question: how can companies make the most of this new paradigm shift?