Are You Ready for the Smart Manufacturing Revolution?

With digital technology reaching an inflection point, manufacturers have a critical choice to make. They can continue to digitize individual factory functions, making them more efficient, or begin to integrate digital capabilities across the factory. The digital factory, which integrates all functions, internal and external, is a horse of a different order. It will change the nature of manufacturing—from mass production to product customization—and allow companies to respond instantly to changes in customer demand or the inevitable production variation, such as supply disruption. It can lead to gains in productivity, performance, output, and market share as well as better control and visibility in the supply chain, and digital innovation can help manufacturers create capacity to enable more profitable growth.

Two current examples

We don’t entirely know what the digital factory will look like when all is said and done, but we can get a glimpse of what it could be by looking at a few forward-thinking companies. At the Fujitsu plant in Augsburg, Germany, as customer orders are received, parts are picked for assembly by robots, loaded onto self-driving electric vehicles, and transported to production stations. Product changes can be made immediately by onsite teams. There is less downtime because predictive maintenance procedures automatically address incipient problems. The entire production process is paperless, the factory leaves virtually no carbon footprint, and the daily output makes the plant among the most productive and cost-effective in the world.

At Adidas’ new “speed factories” in Germany and Atlanta, automated production lines are able to make and ship a pair of expensive, customized cross-trainers from start to finish in about five hours. By comparison, in Adidas’ less digital factories the process can take several weeks. According to the company, the speed factories will more than pay for themselves in the next few years when they are scaled up. In particular, the speed factories are expected to slash the long lead time for new shoe designs and allow Adidas to react quickly to customer preferences.

Next generation uses

Much of the impact of digital manufacturing will come from significant advances that are still evolving. For example, robots that can learn through repetition rather than programming would give workers the opportunity to train machines quickly to tackle multiple tasks, flexibly shifting robots from job to job. It will also not be surprising to see drones transporting a missing part to an assembly station and surveilling equipment performance or production flow.

The way forward

Manufacturers that decide to move ahead with creating an integrated factory should adopt a realistic roadmap. Here are six key ideas to keep in mind as you move ahead:

1. Map out a digital factory strategy, including specific value-creation opportunities, priorities, and the plan to raise the digital IQ of the organization.
2. Quickly test and learn, to create real insights on how the technologies and concepts that lead to value should be integrated into the operations. Pilots give you valuable experience and help generate buy-in for further digitization projects.
3. Assess your capabilities and define the additional capabilities you need to move forward. Your capabilities depend on your company’s production strategy, business goals, and your readiness and willingness to develop and adopt new technologies.
4. Master data analytics and connectivity. Since connectivity is the thread that holds the digital factory together, you need to understand the communication tools and systems that produce and communicate data and develop the analytical tools that improve efficiency and quality.
5. Manage the digital transformation and make it an organizational priority. It’s critical to partner with your employees and invest in their training and continuing education. Human-centric digital design teams need the mandate to collaborate across all levels of the operations, and given permission to cut through red tape.
6. Think boldly about integrating various digital applications internally and across your supply chain. For instance, you can insert digital features into products to capture data and offer services that deliver concrete value from that data. You should have a plan for how you will monetize the operational improvements and the data generated by the manufacturing process itself.

We can get a partial picture of the benefits of a fully digital factory by looking at current initiatives. The results to date are impressive, and the benefits will continue to unfold as the technology and operational design implications mature. It’s clear that the digital integration of factories is the wave of the future—a future that is approaching rapidly. Are you prepared?

Written by:  Todd Benigni and Juliane Stephan for PWC.com.