European manufactures are generally considered as some of the most advanced in the world. Despite that, when Fujitsu recently conducted a survey of manufacturers, we discovered that although 90 percent were clear that digital transformation was not just necessary but would have a big impact on their business model, only one third actually had put detailed strategies in place to make the most of the opportunity. I suspect this gap is even wider in other markets.
This underlines that when it comes to smart manufacturing, there’s clearly a tension between what manufacturers know and what they are doing. Let’s start with the issues that are clear and accepted by all manufacturers who have their eyes open.
The impact of changing consumer expectations
The first is that consumers are changing manufacturing forever. Manufacturers recognize this and talk less and less about ‘making products’ and more about providing the same products and support ‘as-a-service’ to the customer.
How did this happen? Somewhere along the line in the last decade, consumers grasped the concept that there are better options than outright ownership. Not only does it require a hefty upfront outlay, possibly financed on credit, it also leaves you liable for all the depreciation and maintenance costs of an asset that might only be used for a small fraction of the time.
This is already playing out in the archetypal manufacturing marketplace – cars. Here we see young, urban consumers switching away from ownership of an asset that is only used for a few hours a day – at the most – in favor of a per-journey, as-a-service-based consumption model. Alongside this shift, consumers want to buy products using their mobile phones – choosing anytime and from anyplace.
For manufacturers to respond to these demands, they must link back into the manufacturing operation in the widest possible sense. This means collecting data from the services arrayed around the product and create insights to help deliver better services.
This is what smart manufacturing delivers. It connects the end-to-end process, from sourcing, to procurement, to processing, to manufacturing, to warehousing, to distribution, to retailing – all automated within a process geared to give the end customer what they want, in the way they want it.
Smart technologies enable greener manufacturing
One of the factors driving new consumption methods, like as-a-service, is consumers’ desire to reduce the environmental impact of owning assets. Consumption of a car as-a-service implies shared ownership, fewer cars and a lower impact on resources. These demands, however, create new demands and pressures on manufacturers as well as highlighting many new opportunities.
Manufacturers including Fujitsu are increasingly alert to this, especially when it comes to recognizing the potentially negative aspects of some current manufacturing processes and the need to transition to more sustainable models. In 2016, Fujitsu became one of the first private sector organizations to incorporate the United Nations’ Sustainable Development Goals (SDGs) within its global strategy, recognizing a close alignment between these goals and Fujitsu’s vision of a Human Centric Intelligent Society.
Environmental protection is of course just one dimension of the SDGs, but most alert manufacturing organizations are now responsive to the fact that operations must be optimized to minimize environmental impact, and smart manufacturing provides the capabilities to achieve this.
The revenue-generating supply chain
For example, smart sensors and smart technologies provide many ways to mitigate the environmental impact of manufacturing. By eliminating inefficiencies in manufacturing and the supply chain, it delivers a win-win for the environment as well as for greater profitability.
The opportunity within the supply chain goes even further than these environmental and efficiency gains. A smart operational value chain that embraces procurement, refining, processing, production, storage, distribution, retailing consumption and maintenance requires a whole cycle which needs to work absolutely perfectly to monetize the opportunities. Manufacturers are starting to get it – those that don’t are going to end up losing wallet- and market-share.
Smart technologies drive true co-creation
Most manufacturers have already had a taste of digital disruption in their core market. In the long term this is a blessing, since now they understand the necessity of co-creation to discover and embrace how digital technologies can increase their share of market.
This might seem an odd statement, but such a degree of cooperation within an ecosystem of partners is so far outside the normal way of working in business that it typically takes an almighty shock to set it off.
Companies like Fujitsu have developed sustainable, proven co-creation frameworks, teaming up with customers and third parties to deploy design thinking, Industry 4.0 frameworks and IoT, enabling customers to channel their inner disruptor and come up with new products and solutions for customers.
At Fujitsu, we have taken that a step further and invested in a global network of Digital Transformation Centers where we bring in customers to identify and understand the pain points and co-create solutions. Where it’s appropriate, this might also involve new partners from left-field, including academia and the public sector. It’s a very engaging, very intense, very interactive approach that produces exciting, workable outlines for Proofs of Concept, where we can work with customers to potentially jump to a new operational dimension.
On your marks: the three priorities for smart manufacturing
I started by noting a gap between the realization that smart manufacturing is the way forward and a surprising absence of strategies to address this need.
Where should you start? There are three focus areas where I recommend manufacturers concentrate their thinking. The most fundamental need is to embrace the concepts of the digital factory and smart manufacturing. The world has changed and we cannot carry on working the same way anymore. Secondly, data is king, and you need to understand how to drag information and insights out of the supply chain and drive this into your smart manufacturing strategy, finding new ways to engage with the supply chain on the one side and the consumer on the other. Thirdly, if your point of departure is how to improve the life of the consumer, you will be on the right track – that should be the primary objective of smart manufacturing.
Get these three factors right and you are in good shape to move to smart manufacturing.