#35-Industrial Automation and Digital Manufacturing
We live in a world where the low CAPEX disruption stories get a lot of attention especially the ones related to B2C service platforms and ecosystems. However, digital is going to impact not just the B2C service industries but heavy B2B industrial sectors as well.
Let’s start with manufacturing
Manufacturing, in the long run, will not be dependent on humans, location, raw material, supplier, logistics, and trade relations.
Manufacturing will be governed only by real-time consumer demand.
Amazon employs over 200,000 robots in its US Warehouses and fulfillment centers.
It acquired KIVA robots in 2012 for about ~775 million and post the acquisition, Amazon-owned Kiva Systems’ machines were taken off the market and used only by Amazon warehouses. It has also now established a business unit called Amazon Robotics.
According to Associated Press, Amazon now has more than 200,000 robotic vehicles it calls “drives” that are moving goods through its delivery-fulfillment centers around the U.S. That’s double the number it had last year and up from 15,000 units in 2014.
According to Wiki, Kiva sold systems based on two different robot models. The smaller model was approximately 2 feet by 2.5 feet, and 18 inches high, and capable of lifting 1,000 pounds. The larger model was capable of carrying pallets with loads as heavy as 3,000 pounds. Both were a distinctive orange color. The maximum velocity of the robots was 1.3 meters per second. The mobile bots were battery-powered and need to be recharged every hour for five minutes.
The manufacturing sector is undergoing a massive shift in the age of industry 4.0 technologies and a post-COVID-2019 world.
Major disruptions are coming in Supply Chain through Automation, Robotics, and Digital Transformation efforts. Industry 4.0 technologies like industrial internet, real-time demand and inventory management, computer-aided design, digital twin, 3D printing will enable manufacturers to produce products in optimal quantities and to forecast the right demand.
The global manufacturing model is undergoing a massive shift to adapt to a highly competitive digital age. Information age impacted the services business a lot and created billions of dollars in value. The digital age will cause the shift of trillions of dollars in both manufacturing and services business.
- World’s manufacturing hubs may lose the attractiveness due to the rise in labor wages: China’s average manufacturing wage level has tripled between 2006 and 2017 and now stands higher than India, Brazil, Argentina, Sri Lanka, and Mexico. Adidas opened up a factory in Germany after a long time. Vietnam is also emerging as a popular manufacturing destination in the ASEAN region.
- Advances made in smart manufacturing (industry 4.0) are real: The reason why manufacturing shifted to low-cost countries was that there were not many alternatives available. However, with the rise of robotics, automation, and the industrial internet, the manufacturing sector is going to be flooded with smart factories. The average cost of sensors reduced by over 66% from 2005 till 2017. By 2020, there are over 25 billion connected devices or more in the world (50 billion by 2025 according to some estimates).
- Flexible manufacturing plants near-final markets on the rise: Smart plans near the consumer markets help to understand complicated local market conditions, to reduce high logistic costs, and to cater to diverse local consumer demands. The manufacturing lots may get smaller, yet more personalized and customized as per the consumer demands.
- Nationalist sentiments and trade wars are not helping: Elections these days are won based on national sentiments present in the manifesto. Trade deadlocks are more rampant than ever. These trade guidelines put more pressure on the big corporations to manufacture in their headquarter country. The country’s political heads and policies require them to create employment opportunities in the manufacturing sector too.
- Industry 4.0 technologies are progressing and reaching an optimal level for consumer adoption: 3D printers are immensely useful in producing spare parts and medical devices. Robots and co-bots are rapidly being adopted across sectors to replace human labor, and to automate plants and warehouses. AR/VR has significant implications for the apparel manufacturers and fashion industry. Predictive maintenance is possible through the help of data generated by the smart factories, and that can result in massive savings and plant optimization. Industrial blockchain has seen heavy deployment in the oil & gas and energy sector.
As a manufacturer, the need of the hour is to be agile and respond to the above trends. Think about how the future is going to be like and how well you are prepared for it. As per a 2018 World economic forum (WEF) report, The Fourth Industrial Revolution will transform the world – but only 14% of business executives feel ready for it.
ROBOTS ARE NEARLY READY TO TAKE OVER COMPLEX MANUFACTURING
Future Transformation Roadmap: Top Imperatives for the CXO’s
- Is the business using industry 4.0 technologies for manufacturing?
- What proportion of business’s designing, manufacturing, and
warehousing is automated, and how much depends on human
workers? - Are the manufacturing plants strategically located to wither any trade sanctions and pandemic risks?
- Does the manufacturing plant allow flexible manufacturing? If the demand for the traditional product falls or fails, then how quickly can the machines shift to a new production line?
Sidhartha Sharma (personal views)
Digital Strategy and transformation expert
