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Survey: Smarter Factories Are on the Way

Sustainability is rapidly becoming one of the key drivers of industrial transformation for the rest of the decade, reveals the MLC’s latest exclusive research results.  

The manufacturing industry’s urgent pursuit of more sustainable operations and approaches is accelerating rapidly. While there may still be a way to go for some companies, fundamental shifts are underway at an ever-increasing rate among manufacturers across many sectors as they strive to create more sustainable practices in multiple areas of their business. Alongside digital adoption, sustainability is rapidly becoming equally as important as a key driver of widespread industrial transformation for the years ahead.

The results of the MLC’s latest survey on Sustainability and the Circular Economy reveal marked progress in sustainable developments in manufacturing within just the last year – from an increased adoption of corporate-wide sustainability policies, to the number of formal commitments to Net Zero targets, the appointment of dedicated sustainability-focused roles to drive change, the importance of digital technologies in supporting more sustainable practices, and increasing senior-level recognition that sustainability is now essential to future competitiveness and growth.

Perhaps most influential for future progress, there is now an overwhelming belief among 90% of all senior manufacturing executives that, due to manufacturing’s use of raw materials and often complex production processes, the industry has a special responsibility to society to become more sustainable and move towards a future circular industrial economy.

A Competitive Issue

Over the last 12 months alone, the MLC survey clearly shows that the proportion of executives who now regard the importance of sustainability commitments as essential to future competitiveness and growth has leapt by a full 20 points, from 38% in 2021, to 58% this year (Chart 1). That marks an irreversible shift in attitude about how critical sustainability has now become for the future of their business.

The proportion of executives who now regard sustainability as essential to future competitiveness and growth has leapt by a full 20 points to 58% this year.

What’s more, a significantly greater number of those executives are actively implementing extensive corporatewide sustainability strategies across their organizations to support their sustainable goals, increasing from just 39% of companies in 2019, to 50% in 2021, and now to over two thirds of companies (68%) in 2022 (Chart 2).

And a third of those companies (33%) have now further formalized those strategies by appointing a dedicated Chief Sustainability Officer to help drive sustainable initiatives and change across the organization (Chart 3).

What’s Driving Change?

It’s also important to note that the underlying motivations driving this transformation are not simply about compliance in the face of rising regulatory requirements worldwide, or cost-cutting moves, though both of these are still significant.

The primary drivers today are very much about what the company stands for, and how it wants to be perceived by both internal and external influencers. Better alignment with corporate values (73%), a belief in creating a cleaner and healthier environment (68%), and improving the company’s reputation among customers and investors (66%), dominate the key priorities driving sustainable improvement in the latest survey (Chart 4).

Also interesting over the last year, is that significantly more companies are also now starting to regard their sustainability initiatives as opening up new business opportunities, with the number of companies citing new growth opportunities rising from the bottom of the 2021 motivation list at 30%, to 48% this year, now almost half of the companies in the survey.

Corporate-wide Goals

Those motivations are now driving change across a broad spectrum of corporate activities too, with over half the respondents reporting specific sustainability goals and metrics across almost all key functions in the company. These are most apparent in manufacturing and production (79%), supply chain (69%) and product design and development (67%), but also in areas that have attracted less attention in the past, such as transportation and logistics (56%) and partner compliance (51%) (Chart 5).

These goals and policies are also covering a broader range of key sustainability criteria, especially in energy efficiency and reduction (90%), waste reduction (84%), water usage reduction (74%) and materials efficiency (70%) (Chart 6).

Seventy percent of companies now say they believe 4.0 technologies will be ‘extremely’ or ‘fairly significant’ to reaching their sustainability targets by 2030.

There is also an indication that a number of companies, just under a third so far (30%), have now introduced specific goals for reductions in the use of plastics, too. It will be interesting to track how this figure changes in future surveys as external pressures to reduce plastics usage become more intense in the years ahead.

Net Zero Targets

The primary focus on energy efficiency and reduction, combined with the widespread transition to more renewable energy sources to power industrial facilities and offices, is intrinsically linked to meeting Net Zero goals, where 45% of respondents now report that they have announced formal Net Zero targets, compared to just 32% last year, further evidence of the accelerating sustainability shift now underway across the industry (Chart 7).

The timeline for achieving those critical Net Zero targets has also improved, with 30% of respondents now saying they aim to hit Net Zero by 2030 (Chart 8), compared to only 20% in 2021, an increase of 50% of companies in the last twelve months.

The Digital Dimension

A further significant shift has been the increase in the number of companies now recognizing the importance of applying digital solutions within their sustainability efforts, whether it’s in managing and monitoring key resources, using analytics to optimize operations, or measuring and reporting on sustainability progress. Seventy percent of companies now say they believe 4.0 digital technologies will be ‘extremely’ or ‘fairly significant’ to reaching their sustainability targets by 2030 (Chart 9), up from 52% in 2021.

Many of those 4.0 technologies are already being put to good use, with analytics, PLM, and IoT sensors regarded as currently having the most impact for companies in achieving their sustainability and Net Zero goals (Chart 10).

55% of companies now report that they are actively working with their supply chains and manufacturing partners to align sustainability efforts.

What’s more, many companies are now moving towards a more direct alignment between their corporate digital adoption approaches and sustainability strategies, so they better complement and support each other (50%) as companies strive to transform and green their operations for the future (Chart 11).

The People Factor

Engaging employees in sustainable progress is, of course, a key factor in any company’s ability to successfully implement its policies and meet its targets. This year’s survey reveals that almost two thirds (64%) of responding companies are taking employee education seriously and now have overall sustainability awareness programs in place (Chart 12). Almost a quarter (23%) have also introduced specific job training courses on sustainability, and 12% have established formal accreditation and certification programs.

There is also a growing trend for companies to create internal systems that monitor and directly link employee sustainability performance with some form of reward or target metrics. Almost two in five companies (38%) now have such systems in place (Chart 13).

An increasing number of companies are also beginning to acknowledge that their sustainability stance is having a growing influence on their ability to attract and retain staff as more and more employees seek to work for companies with a strong sustainability profile as their preferred employers. Forty four percent of companies in the latest survey (Chart 14) now believe that their company’s sustainability initiatives are a key factor in, or are actively used to support, their talent recruitment and retention efforts, up from 36% in 2019.

Greening the Supply Chain

As any manufacturer will know, being able to manage internal sustainability activities is significantly easier than trying to implement policies across often diverse and widely distributed partner networks, yet this is becoming an ever more pressing need as global Scope 3 sustainability regulations and reporting requirements develop. Manufacturers seem to be rising to the challenge, as 55% of responding companies now report that they are actively working with their supply chains and manufacturing partners to align sustainability efforts (Chart 15).

In addition, 55% also say that they either already have full Scope 3 reporting processes already in place (18%) or have partial processes in place and are currently rolling out further aspects across their partner networks (27%) (chart 16). Though a complex issue, this is one area that is likely to see increasing focus in the years ahead.

Manufacturing leaders continue to maintain a strong belief that sustainable change must happen, and that manufacturing’s sustainable shift will continue to transform industrial organizations at an ever-accelerating rate.

Seeking Circular Value

Greater progress is certainly being made in the use of more circular economy approaches to industrial operations. A substantial 88% of companies now believe that circular economy approaches will be either ‘highly impactful’ or ‘fairly impactful’ to the future of manufacturing (Chart 17).

As companies recognize that there may be new business opportunities or even revenue streams from better managing and recycling materials, components, and even products at end of life, many companies have introduced specific criteria into their new product design and development processes to ensure more sustainable, circular economy outcomes. For example, 64% of companies say they have design criteria to support the recycling of some or all materials at product end of life, while over a third (36%) plan for the reuse of some components, and one in five (22%) hope to be able to refurbish products to extend their usefulness (Chart 18).

ROI/Funding Challenges Remain 

Nevertheless, for all the significant progress the industry had made towards more sustainable operations and approaches over the last year, there are still some lingering issues facing many companies and sustainability teams in terms of preparing clear return on investment cases, and securing adequate funding for sustainability initiatives, especially in the current economic climate of rising interest rates, inflation, and global trade uncertainties.

A lack of a clear business case (46%) and a lack of funding (43%) are highlighted as the two primary barriers to further sustainability progress as companies move into 2023, with a third also citing a lack appropriate production technologies to support sustainable activities, probably reflecting the prevalence of less sustainable legacy assets that can often take a long time and significant investments to replace (Chart 19).

Overwhelming Support for Change

However, there is also evidence in this list of challenges that most senior leadership teams do not seem to lack either the understanding or the commitment to a more sustainable future – identified by only 14% of respondents as a potential barrier and ranked second from the bottom of the table.

This strongly supports the results of the final question in this year’s survey, designed to gauge individual attitudes among senior leaders about how they regard the importance of sustainability and more eco-friendly, circular approaches at an industrial level.

An overwhelming 90% of all the senior respondents agree that, due to its use of raw materials and often complex production processes, manufacturing does indeed bear a special responsibility to society to become more sustainable and accelerate the transition to a future circular industrial economy in the future (Chart 20).

That high percentage continues to be consistent and is even up slightly from the 87% last year, confirming that whatever the challenges ahead may be, manufacturing leaders continue to maintain a strong belief that sustainable change must happen, and that manufacturing’s sustainable shift will continue to transform industrial organizations at an ever-accelerating rate in the years ahead.  M

Part 1: SUSTAINABILITY STRATEGY

1. Significant Increase in Manufacturers Believing Sustainability Is Essential to Competitiveness and Future Growth

Q: How does your company regard the importance of sustainability commitments to its competitive profile and future growth?

 

2. Over Two Thirds Now Have Formal Corporate-wide Sustainability Strategies in Place

Q: How are your company’s sustainability initiatives organized and deployed?

3. A Third Also Have Dedicated Chief Sustainability Officers in Charge

Q: Who in your company is tasked to drive corporate sustainability initiatives?

 

4. Corporate Values, Environment, Reputation Drive Sustainability Efforts; New Growth Opportunities Rising in Importance (Ranked by ‘Most important’)

Q: What are your company’s primary motivations for embracing sustainable practices?

 

5. Manufacturing, Supply Chain, Product Development Key Areas of Focus

Q: Does your company’s sustainability strategy currently include specific goals and metrics for the following activities?

 

6. Energy, Waste, Materials and Water Top Sustainability Goals

Q: Which specific policies, codes of conduct, or goals covering the following sustainability criteria are included in your company’s sustainability approach?

 

7. Almost Half Have Already Announced Net Zero Targets

Q: Has your company publicly announced a Net Zero emissions target?

 

8. 30% Aim to Hit Net Zero by 2030

Q: What is the timeframe for achieving this Net Zero emissions target?

 

Part 2: TECHNOLOGY INVESTMENTS

9. 70% Now Believe M4.0 Technologies Significant to Reaching Sustainability Targets By 2030

Q: How important are Manufacturing 4.0 technologies to support your company’s current sustainability initiatives, including Net Zero targets, and to your ability to achieve future goals by 2030?

 

10. Analytics, PLM, IoT, New Materials, Having the Most Sustainability Impact Today

Q: Which of the following M4.0 technologies are already having the most impact on achieving your sustainability goals, including Net Zero targets, today? (Top 3)

 

11. M4.0 Strategies Increasingly Aligned with Sustainability Strategies

Q: Please indicate the extent that you would agree with the following statement: “Our company’s Manufacturing 4.0 strategy directly complements and is directly aligned with our corporate sustainability strategy”.

 

SECTION 3: ENGAGING EMPLOYEES IN SUSTAINBILITY

12. Around Two Thirds Educate Employees on Overall Sustainability Issues

Q: What level of sustainability awareness provision and/or formal training does your company provide for employees, either internally or in collaboration with outside agencies? (All that apply)

 

13. Two in Five Companies Also Reward Employees for Sustainability Performance

Q: Are manufacturing management and employees incented or measured on their sustainability performance?

14. Sustainability Becoming Increasingly Important to Talent Attraction and Retention

Q: Do you consider your company’s sustainability initiatives to be a key factor in, and are actively used to support, your talent recruitment and retention efforts?

SECTION 4: SUPPLY CHAINS AND CIRCULAR ECOSYSTEMS

15. Over Half Actively Work with Suppliers on Sustainability

Q: Do you actively work with your supply chain and manufacturing partners to align your sustainability efforts?

 

16. 55% Already Have Full or Partial Scope 3 Reporting Processes Underway

Q: Do you have a formal process in place for monitoring and reporting indirect emissions from upstream and downstream across your company’s value chain, known as Scope 3?

 

17. 88% Believe Circular Economy Approaches Will Increasingly Impact Manufacturing

Q: Looking forward, how impactful do you think the concept of a regenerative Circular Industrial Economy — where traditional ‘Take, Make, Dispose’ approaches increasingly give way to ‘Refurbish, Reuse, Recycle’ approaches — will be to the future of manufacturing?

 

18. Recycling Materials and Reuse of Components Increasing; Yet One in Five Still Not Designing for Sustainability

Q: During your product design and development process, which of the following are formal design criteria related to product end-of-life?

SECTION 5: SUSTAINABILITY CHALLENGES

19. Business Case and Funding Remain Inhibitors to More Sustainable Progress

Q: What do you feel are the most significant barriers to increasing sustainability in your manufacturing and production activities?

SECTION 6: SOCIETAL RESPONSIBILITY

20. Yet 90% Believe Manufacturing Has a Special Responsibility to Society to Become More Sustainable

Q: Due to the nature of manufacturing, with its use of raw materials and often complex production processes, do you think the industry has a special responsibility to society to become more sustainable and accelerate the transition to a future circular industrial economy?

 

 

About the authors:


Paul Tate
 is Co-founding Executive Editor and Senior Content Director for the Manufacturing Leadership Council. He is also Secretary to the MLC Board of Governors. 

 

Survey development was led by Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.

Business Operations

The Top 8 Manufacturing Trends for 2023

The NAM recently released its Top 8 Manufacturing Trends for 2023—a guide to the opportunities ahead and the resources that the NAM can offer. Here is what to look out for this year and beyond.  

Advanced and emerging technology: Manufacturers are investing in a multitude of new technologies, including artificial intelligence, virtual reality, machine learning and more. Automation and robotics are enhancing workers’ abilities but will also require many more high-skilled employees. Though the workforce shortage is a challenge, digital technologies will help manufacturers become more resilient, efficient and profitable.

Supply chain resilience: As manufacturers face long lead times, increased costs and a scarcity of raw materials, they are taking steps to boost supply chain resilience through reshoring, cybersecurity, increased supplier pools and more.

  • NAM resources: Manufacturers can benefit from resources like CONNEX Marketplace, which helps connect nearby manufacturers and suppliers; the NAM’s Supply Chain Hub—a continually updated collection of webinars and policy documents focusing on supply chain issues; and useful case studies highlighting best practices.

Talent disruptions and opportunities: Manufacturers are confronting a range of challenges around the workforce, including labor shortages and skills gaps, while also figuring out how to take advantage of previously untapped talent pools. 

Cybersecurity: The threat from bad actors is real, and strong cybersecurity has become critical to manufacturing operations up and down the supply chain. At the same time, manufacturers will have to be on the lookout for new cybersecurity reporting requirements.

  • NAM resources: The NAM can help, with support like the NAM’s complimentary Cyber Risk Assessment. NAM Cyber Cover offers cyber insurance and risk mitigation, and you can check out these videos from manufacturing executives laying out best practices for cybersecurity defenses. 

Post-pandemic growth and expansion: Long-term goals shouldn’t be downgraded, despite an uncertain economy. Manufacturers should keep pursuing technological advances, navigate government incentives and stay open to mergers, acquisitions and other investments.

  • NAM resources: The NAM Incentives Locator helps manufacturers find funds and tax credits to help their business, while the MLC offers networking opportunities for manufacturing leaders.

Tough economic outlook: There’s no doubt that manufacturers face economic headwinds. That means manufacturers need to look for ways to be nimble and responsive to changing realities and able to work more efficiently than ever. 

  • NAM resources: Tools like NAM Shipping & Logistics give manufacturers discounts on shipping and freight, while NAM Energy offers conversations with energy advisers who can help adjust energy use strategies. IRI Coffee Houses promote virtual conversations with innovation leaders to discuss new developments and opportunities.

Sustainability: Manufacturers are committed to strengthening operations and maintaining a healthy planet at the same time. More than ever, manufacturing companies are looking for ways to reduce carbon emissions.

Looking ahead to 2030: Changes in the manufacturing industry and in the world around us—from population growth to the rise of a new middle class to increased interconnectivity—have manufacturers planning for big changes in the next decade. 

  • NAM resources: The IRI offers a forum for manufacturers to connect with R&D leaders, while the MLC’s Next Phase of Digital Evolution report shows how manufacturing leaders can plan their long-term futures.

 Learn more: Take a look at the full guide for more details and to find out more about the NAM resources that will help manufacturers deal with these key trends.

 

 

Business Operations

How Will AI Impact the Manufacturing Workforce?

AI is changing the way manufacturers do business—from the production line to the back office and across the supply chain. At the Manufacturing Leadership Council’s Manufacturing in 2030 Project: Let’s Talk about AI event last month in Nashville, Tennessee, panelists discussed how those sweeping changes would alter, and enhance, the manufacturing workforce.

A collaboration between the MLC (the NAM’s digital transformation arm) and the MI (the NAM’s 501(c)3 workforce development and education partner), the event provided key insights for manufacturers into how technology and workforce trends interact with each other. Here are a few key takeaways. 

Net positive: “The history of technology adoption is about improving the job quality of individuals on the shop floor. AI helps them to do the job better, provide them with better tools, gives them greater authority and ultimately increases the value-add of their jobs. All of that is a net positive for those individuals,” said MI Vice President of Workforce Solutions Gardner Carrick.

  • By leveraging data and enabling greater efficiency, AI will improve communication, increase collaboration across disciplines and stimulate innovation, according to the panel.
  • In addition, “AI can even inform the workforce’s creativity by working with it to design a new product or system,” said Jacey Heuer, lead, data science and advanced analytics, Pella Corporation.

Skills needed: While you might expect that implementing AI requires workers skilled in programming, data science and machine learning, manufacturers will also need to expand their bench of critical thinkers and problem-solvers. The panelists had a few tips to help companies along.

  • Invest in upskilling programs to make the AI integration process at your company smoother and develop the talent you already have.
  • Update job descriptions to reflect the skill sets the company will need in the next five to seven years.
  • Consider recruiting for and teaching adaptive skills—skills that enable individuals to adapt easily to changing demands and environments—which can increase the flexibility of your workforce.
  • Build partnerships with local schools, community colleges and technical and vocational schools to develop talent pipelines that will meet your needs.

The human-AI collaboration: While AI will take over monotonous, repetitive tasks, the panelists predicted that the industry will continue to center around human labor.

  • “You can teach AI to do X. You can teach AI to do Y. [However,] combining the two may be really difficult for AI, while a human can do it better. You’re going to continue to see humans in roles that center on making decisions and telling stories,” said Asi Klein, managing director, industrial products and organization transformation, Deloitte Consulting.
  • Meanwhile, AI adoption will likely lead to an increase in available jobs, as more skilled workers will be needed to guide and inform these new processes.

The last word: “Over the last 12 years, we’ve seen a lot of technology adoption, but we have not seen a lot of job loss. In fact, we’ve seen job gains,” said Carrick. “There is a lot of opportunity to reimagine jobs to add value that AI will help to illuminate.”

Blogs

A Guide to Digital Transformation in Manufacturing

PTC A Guide to Digital Transformation in ManufacturingDigital Transformation (DX) is a broad business strategy to solve traditional business challenges and create new disruptive opportunities using digital technology – such as maximize revenue, reduce cost, improve quality, and increase flexibility. Use cases range from asset optimization to workforce productivity to industrialization.

Why Manufacturers Need Digital Transformation

To remain competitive, DX for manufacturers is a necessity. Global market intelligence firm IDC predicts that in 2025 global DX spend among manufacturing industry companies will total more than $816 billion. Forrester Consulting found that more than 90% of manufacturing leaders believe that DX is important for their success. Clearly there is a lot at stake and developing a DX strategy is critical to capturing the most value.

The range of opportunities for DX in manufacturing is both a positive and negative. On the one hand, for whatever challenges facing an organization, there is likely a solution out there to address it. But manufacturers are faced with dozens of challenges. Such initiatives are usually driven by a scattergun, technology-driven approach. Ultimately, this results in resources being misdirected and just a small set of initiatives driving true transformation. Instead, companies must employ a laser-focused approach, that emphasizes impact, speed, and scale.

Manufacturers that have successfully adopted DX strategies are more efficient than their competition. That efficiency may be generated by greater worker productivity, asset uptime, better cross-organizational collaboration, or other DX opportunities. Ultimately, regardless of how efficiency is gained, it can be leveraged to increase revenue and/or reduce costs.

Achieving Transformation with Impact, Speed, and Scale

Regardless of the many different challenges an organization faces and the many different solutions on the market, there are fundamentally four objectives for manufacturers that have not changed: maximize revenue, reduce cost, improve quality, and increase flexibility. Impact, speed, and scale are the three key success factors for delivering transformational outcomes, and each must be tied to at least one of the objectives. Here’s how:

Impact – Focus resources on the most important constraints to drive P&L. Based on the dynamics of an industry and strategic roadmap, manufacturers should determine which of the fundamental goals are most important to improve upon and which are most likely to impact these goals in order of their criticality to the business.

Speed – With impactful opportunities identified, attention should turn to speed and scale. Quick wins can make or break a good initiative by building early, positive momentum. A quick win will generate team buy-in and can be leveraged for greater executive support. This rapid time to initial value is best achieved with proven off-the-shelf solutions.

Scale – Scalability must be considered early. No initiative should take place without a comprehensive and actionable scaling plan. If a project is slow to scale it is more likely to lose support and fold. If it cannot scale, then it is not delivering transformational value. The most reliable way to build a scalable plan is to model it after approaches that have already proven to be successful. The key here is finding repeatable use cases, that check off the high impact requirement and can be deployed with off-the-shelf solutions.

Final Thoughts

A recent PTC survey found that there is a stark difference between the companies that succeed in DX and those that do not. Companies that meet ROI goals expectations beat them by an average of 50%; those that fail miss expectations by an average of 30%.

This insight underscores the requirement for strategic DX for manufacturing organizations, and the PTC Impact, Speed, and Value Framework described here creates a foundation for DX success.

 

Will Hastings is Director of Product Marketing, PLM for PTC.

Blogs

Achieving Measurable Value through Data-Driven Manufacturing

“Data collection doesn’t equal success” and other observations from a powerful visit to EY’s Digital Operations Hub @ MxD

The Manufacturing Leadership Council recently partnered with EY for a two-day event focused on preparing for the future of manufacturing. Hosted at MxD in Chicago, Ill., the event focused on data-driven manufacturing and included a tour of EY’s Digital Operations Hub, several discussion panels and presentations, and a collaborative workshop.

EY Digital Operations Hub - MxD, Chicago, Ill.

Diving deep into manufacturing at EY’s Digital Operations Hub: Day one featured a round-robin visit to a selection of experience modules within the EY Digital Operations Hub. Participants had the option to visit five of the hub’s 31 modules where they heard about topics including workforce upskilling, intelligent demand forecasting and planning, digital performance management, digital worker enablement, edge computing, and more.

As participants made their way around the Digital Operations Hub, led by EY’s Mark Heidenreich, who leads the Digital Operations Hub, EY’s expert team and partners shared a deep dive into each topic, demonstrating the latest technologies and thinking on this important array of manufacturing topics.

Focusing on the future: The second day of programming kicked off with a conversation between David Brousell, MLC’s Co-Founder and Executive Director, and Scott Dixon, EY’s Managing Director – Advanced Manufacturing Technology Leader. The topic at hand was MLC’s latest white paper, The Next Phase of Digital Evolution and what it tells us about the future of manufacturing.

EY Digital Operations Hub - MxD, Chicago, Ill.The two focused on data and its important role in manufacturing. While data may be difficult to get to – particularly on-demand – it is an important driver of decisions and value. However, they cautioned that data collection doesn’t equal success. Instead, Brousell and Dixon urged organizations to balance resilience while adding complexity. Brousell recommended that organizations not focus on data’s ability to “knock down silos.” That phrase, he warned, can be scary for subject matter experts. Instead, he recommended weaving silos together so that systems are integrated and domain expertise can be maintained.

Becoming data-driven: Next up, the event covered the top challenges for data-driven manufacturing with a presentation by EY’s Sachin Lulla and Amy Burke, the Americas Consulting Sector Leader – Advanced Manufacturing & Mobility and Advanced Manufacturing & Mobility Markets Leader, respectively. With a survey of 400 manufacturing companies as its basis, the presenters shared how only 10% were experimenting with digital, while only six percent were tackling digital at scale.

EY Digital Operations Hub - MxD, Chicago, Ill.Throughout the conversation Lulla and Burke emphasized the need to put humans at the center of any transformation, building digitization and operational excellence around that core. For Lulla, the purpose of technology is to augment human intelligence. The pair agreed that starting with an end goal in mind is important when formulating a data strategy. The organization and employees need to know “the why” behind the data collection and use.

Further, Burke and Lulla recommended that organizations should not just look at gaps in their current workforce, but at what employee skills exist on the team and how upskilling and a learning environment can cultivate a fertile ground for data to be used successfully.

Driving digital with data: Pfizer’s Vice President of Digital Manufacturing, Mike Tomasco, was on hand to share how the pharmaceutical and biotechnology company uses data-driven decision making to create value. Tomasco shared how the company’s initial failures with capturing and using data led to significant successes and allowed Pfizer to move beyond pilot purgatory to large-scale transformation.

EY Digital Operations Hub - MxD, Chicago, Ill.Moving beyond: The idea of moving beyond pilot purgatory was explored further to start the final panel discussion moderated by Brousell. Panelist Jim Fledderjohn, Dell’s Manufacturing Vertical Field Director, advised organizations to align pilots to the bigger strategic vision and fail fast. According to fellow panelist Terry Davenport, Rheem’s Executive Vice President, Global Operations, leaders should use the scientific method to learn from pilot projects and prove the value before scaling. From a collaboration standpoint, Microsoft’s Americas Regional Business Lead – Manufacturing, David Breaugh suggests that cross-functional teams help keep an eye on the big picture and unlock insights faster. Meanwhile, James Zhan, PTC’s Vice President, Market Development, IoT Solutions cautioned the audience not to focus solely on pilot purgatory and to be sure to keep an eye on workforce skills purgatory.

The panel also tackled the topic of data measurement, with Fledderjohn urging organizations to be selective about what data they collect – a proactive strategy that will help ensure the data is used and useful. Any process should have a metric that makes things faster, safer, eases worker burden, and offers higher quality and cheaper outputs, added Davenport. To that end, panelist Steve Pavlosky, GE Digital’s Vice President of Product Management, shared that GE shifted its technology roadmap to help customers move data into a single system so operators could make decisions quicker.

Capping it off with idea sharing: The event was capped off by a series of collaborative breakout sessions during which participants brainstormed go-forward ideas and feedback around the topics covered throughout the course of the entire event. Beyond the content that participants absorbed throughout the event, the breakouts gave them a chance to add their own two cents to the discussion, share their own experiences, and take away new perspectives that can be applied to their organizations.

Visit https://www.mxdusa.org/partners/ey/ to learn more.

 

All photos courtesy of EY.

Business Operations

How Digital Manufacturing Creates Business Opportunities

It’s time to think way outside the proverbial box, according to the Manufacturing Leadership Council, the NAM’s digital transformation arm. In fact, as we get closer to 2030, manufacturers are creating entirely new boxes—including new digital business models, products and services, revenue streams, ways to serve customers and opportunities to increase competitiveness.

Collaborative innovation: By 2030, metaverse technologies will provide rich virtual environments for the collaborative development of new ideas. These shared virtual spaces will enable contributors from multiple remote locations to collaborate in real time.

  • These collaborations may include manufacturers, partners, academic institutions and research institutes.
  • New concepts can be tested in a virtual world before moving to physical prototyping or production.

Outcome-based products and services: As digital platforms mature and products become increasingly smart and connected, the decade ahead may see a boom in more outcome-based services. This is where the customer doesn’t buy a physical product, but instead signs up to pay for the guaranteed outcomes that product or system delivers.

  • This shift will require manufacturers to establish new infrastructure rich in predictive analytics, remote communications and consumption monitoring.
  • It also requires a mindset change for traditional manufacturing, from a focus on units and costs to product lifecycles, performance levels and usage.

Blockchain networks: By 2030, blockchain could be leveraged for most world trade, helping to provide the secure traceability and provenance needed to prevent physical product counterfeiting, grey markets in medicines and even the adulteration of the global food supply chain.

  • A blockchain is an electronically distributed ledger accessible to multiple users. Blockchains record, process and verify every transaction, making them safe, trusted, permanent and transparent.
  • Blockchain technologies promise to be a viable solution to manufacturers’ need to automate, secure and accelerate the processing of key transactions across industrial ecosystems.

E-manufacturing marketplaces: Digitally empowered production-line adaptability, such as the kind that emerged during the pandemic, will provide a foundation for companies to offer spare production capacity to other companies in different sectors.

  • This maximizes the return on a company’s production-line investments and can generate new revenue streams for the future.
  • Combined with e-commerce, e-manufacturing will enable designers, engineers and/or smaller companies to more easily connect with a large pool of qualified producers to deliver and scale a final product.

Manufacturing in 2030 Project: New Boxes is just one of the industry trends and themes identified by the Manufacturing in 2030 Project, a future-focused initiative of the MLC. For more details on megatrends, industry trends and key themes for Manufacturing in 2030, download the MLC’s new white paper “The Next Phase of Digital Evolution.”

Business Operations

Top Manufacturing Tech Trends of 2022

Now that 2023 is here, we’re looking back on 2022’s top tech trends in manufacturing. The NAM’s digital transformation arm, the Manufacturing Leadership Council, and its innovation management division, the Innovation Research Interchange, gave us an overview.

AI everywhere: From automatically responding to shifts in production demand to anticipating breakdowns in the supply chain, artificial intelligence showed up more than ever before throughout manufacturing operations.

  • More than two-thirds of manufacturers are either using AI now or will be doing so within two years, according to MLC research.
  • Current use cases include predicting needed maintenance for equipment, forecasting product demand and monitoring performance metrics such as productivity and efficiency. Future use cases could include fully autonomous factories that run continuously with minimal human intervention.

Training on demand: Training for technicians and frontline operators used to mean time in a classroom with a live instructor. In 2022, more manufacturers turned to virtual, on-demand learning tools that allowed workers the freedom to learn at their own pace.

  • This ran the gamut from video content libraries to immersive augmented reality/virtual reality experiences that guide and correct trainees.
  • In 2023 and beyond, this type of learning experience will be essential to attracting and retaining younger workers who are familiar with digital learning and want the latitude to gain new skills on their own schedules.

Digital twins: Manufacturers used digital twins—virtual models designed to reflect a physical object, system or process accurately—to create design prototypes and test their performance.

  • Digital twins will continue to allow for new levels of design optimization, improved product development and performance and significant waste reduction for manufacturers.

Robotic collaboration: Once confined to steel cages and bolted to floors, industrial robots took center stage in 2022.

  • No longer limited to repetitive tasks and kept far from human workers, new-generation robots are safe enough to work alongside employees, can be moved quickly around shop floors and are programmed easily to do multiple tasks.
  • Since they’ve also become more affordable, they’re an economically feasible investment for companies of all sizes.

Cybersecurity as safety: A rise in connected factories also meant a rise in cyberattacks on manufacturers. In an industrial setting, a cyberattack can be very dangerous, as it can cause equipment to malfunction.

  • Last year, more companies began addressing the threat with cyber drills, tabletop exercises for simulated attacks and other training exercises designed to keep businesses—and workers—safe and secure.

Low-code/no-code development platforms: In 2022, more manufacturers embraced the use of mobile and web apps to build applications quickly. Using these platforms, enterprise and citizen developers can drag and drop application components and connect them to create apps—without line-by-line code writing.

  • Business teams with no software development experience built and tested applications without any knowledge of programming languages, machine code or the development work behind a platform’s configurable components. We can expect to see more of it this year.

Smart glasses move beyond the pandemic: Many manufacturers kept up their pandemic-era use of smart glasses, which they had used to troubleshoot issues on the ground when travel was restricted and engineers and technicians couldn’t reach sites.

  • They also expanded smart glasses’ use to include scanning sensor data so users can see visual data “mapped” onto equipment to better identify issues and fixes.

Interested in learning more? Check out the MLC and IRI for more insights into manufacturing’s exciting, high-tech future.

Business Operations

Sustainability Is a Top Manufacturer Priority, Survey Shows

Manufacturers are pursuing sustainability like never before.

That’s according to recent polling conducted by the Manufacturing Leadership Council, the NAM’s digital transformation division. The annual Sustainability and the Circular Economy research survey seeks to determine the progress made in sustainable manufacturing.

Competitiveness: There has been a surge in the number of manufacturing executives who view sustainability as critical to the future of their businesses.

  • 58% of respondents in 2022 believe sustainability is essential to future competitiveness compared to 38% in 2021.
  • 68% of executives say they are implementing extensive, corporate-wide sustainability strategies. That’s up from just 39% in 2019.

What’s driving change: The motivations go beyond regulatory compliance and cost savings.

  • 78% say sustainability is about better alignment with corporate values.
  • 68% believe in creating a cleaner, healthier environment.
  • 66% seek to improve company reputation with customers and investors.

Top corporate goals: More than half of survey respondents reported having specific sustainability goals and metrics across almost all key functions in the company.

  • Goals were most apparent in manufacturing and production (79%), supply chain (69%) and product design and development (67%).
  • Additional goals were cited in transportation and logistics (56%) and partner compliance (51%).

Energy efficiency is No. 1: The primary sustainability focus of manufacturers, according to survey results, is energy efficiency and reduction, combined with the transition to renewable energy sources. These efforts are linked intrinsically to meeting net-zero emissions goals.

  • 45% of respondents report having announced formal net-zero goals.
  • 30% aim to hit net zero by 2030.

Digital tech, employee training play a role: Also on the rise is the number of companies that recognize the importance of digital solutions in their sustainability efforts.

  • These tools are being used to manage and monitor materials and energy consumption, optimize operations to improve efficiency and report sustainability progress.
  • Respondents also say meeting sustainability targets must include engaging employees through education and training, as well as greening their supply chain.

The last word: An overwhelming 90% of all respondents agree that manufacturing has a special responsibility to society to become more sustainable and accelerate the transition to a future circular industrial economy.

Interested in putting some renewable energy solutions into action, including solar power, battery storage and LED lighting? Programs from utility companies and other entities enable efficiency upgrades with little or no upfront capital. Connect with NAM Energy to explore your options!

Blogs

Effective Communication – The Start-Up’s Biggest Challenge

Camvas GFX blog Patricia HumeIf you were looking for a dose of optimism to counter the troubling reality of the post-pandemic world, you could do a lot worse than turn to the start-up community. Even in the best of times, the odds are stacked ruthlessly against anyone considering starting a business. And these are hardly the best of times. Yet new ideas and the magic combination of hope and conviction that supports them, continue to pour forth in a torrent. According to the U.S. Census Bureau, Americans started 4.3 million businesses in 2020, a 24% increase from 2019, and by far the biggest number in a calendar year in the previous decade and a half.

As an investor, and a mentor for Creative Destruction Labs (CDL) I meet a lot of founders, and I watch a lot of introductory pitches. And while the enthusiasm is ever-present, it is not uncommon, after the founder has left the room, for those who have just watched the pitch to turn to one another and say something like: “I still don’t know what they actually do.”

The effective communication of a new product’s value and function is, I believe, the biggest challenge facing any start-up founder. This is about knowledge transfer. It is a prerequisite of every progressive step the company hopes to take. And it is particularly difficult for companies that are bringing to market – either as a core product or as part of a wider service or solution – a complex mechanical object (CDL focuses on science and technology start-ups).

These founders have to convince investors to fund their project; they have to explain defensible intellectual property to patent attorneys and granting authorities; they have to communicate requirements to sub-component suppliers and manufacturing partners; they need to convince buyers and users that the product can deliver; they must ensure anyone responsible for maintenance and repair knows exactly what’s required to keep it operational.

That is a broad audience, each with a specific set of knowledge transfer needs. So to be effective, communication needs to be highly versatile, and to deliver absolute clarity through the most efficient processes. If this capability isn’t baked into the organization from the outset, the best case scenario is that the challenge scales as the company becomes successful, creating a much bigger problem which can have a direct impact on operational KPIs.

As products come to market they bring with them a host of documentation and content requirements associated with that knowledge transfer. Creating and maintaining this content is a huge task and one that can easily become a bottleneck. If the content isn’t ready, the product can’t be promoted or sold. If it isn’t completely accurate, if it’s hard to access, if doesn’t tell the full story, you could be looking at fabrication or maintenance errors and costly downtime.

Advances in manufacturing technology – the adoption of agile workflows and additive manufacturing – actually make things worse. These processes accelerate product development and iteration, making the documentation and content bottleneck even more damaging.

Macro realities compound the problem yet further. Once upon a time a new company would start by bringing a core team together at a new premises. However, full-time, on-site work looks like a thing of the past. Studies suggest 70% of the workforce will remain working remotely five days per month by 2025 with others opting to work part-time on-site and part-time at home. And, in any case, start-ups tend to rely on a distributed ecosystem of product and service suppliers from the outset, for obvious reasons.

And according to a 2020 McKinsey report, Unlocking growth in small and medium-size enterprises, SMEs have innate productivity challenges, exacerbated by lack of access to high-cost enterprise software solutions. So, to ensure effective communication – to give themselves the best possible chance of success – start-ups today must find a way to drive effective teamwork and collaboration among a distributed workforce and ecosystem, at an affordable price point, all while driving productivity, in order to become competitive.

No pressure.

But start-ups have an advantage. Their primary strength in addressing these challenges is their capacity for continuous innovation, not just in terms of products and services but also – crucially – in terms of processes. This owes a huge amount to that optimism which got them started on the journey in the first place. According to McKinsey, “Because they are unhindered by legacy systems and outdated strategies, new market entrants are often able to rethink established practices and cut through traditional industry boundaries.”

Here’s a great example: Impossible Sensing is a CDL alumnus that develops and manufactures autonomous exploration tools designed to function in extreme environments from deep ocean to deep space. Their products are used to detect valuable minerals in off-planet environments. Prior to the pandemic, Impossible Sensing’s founder used 3D-printed models to enable prospective buyers – a Mars scientist at NASA, for example – to get a tangible sense of the firm’s products.

Restrictions on face-to-face meetings put an end to that, leaving this CEO suddenly missing a key part of his sales pitch. He overcame this by using interactive 3D communication which allows customers to play with the 3D models of his product (the closest thing to handling that 3D-printed object) wherever they were located. Video calling is great for replicating the conversation, but there are a number of critical communication experiences that it simply cannot deliver.

Many people might have focused on the frustration of being unable to continue to operate as they had before. But the start-up’s optimism will always find another way.

A start-up’s Big Idea is only as good as the extent to which it can be understood by everyone whose participation is required to make it successful. Get in front of that effective communication challenge as early as possible – solve that knowledge transfer problem across the board – and not only will you be giving yourself the best possible shot at success, you’ll be future-proofing your business against problems which can undermine you as you grow.

About the author:

Patricia Hume is Chief Executive Officer of Canvas GFX.

Blogs

Exploring Sustainability and Resilience at Schneider Electric’s Smart Factory

Schneider Electric Smart Factory Tour - Nov. 2022 - Lexington, KYAbout 100 Manufacturing Leadership Council members, associate members, guests, and staff descended on Lexington, Ky., in November for a tour of Schneider Electric’s smart factory – a 65-year-old brownfield facility that showcases artificial intelligence, augmented reality, remote monitoring, and predictive maintenance.

The factory was recognized in 2020 as a Fourth Industrial Revolution Advanced Lighthouse by the World Economic Forum (WEF) and later as a Sustainability Lighthouse, one of only ten globally and the first of two for Schneider Electric. It is one of several Schneider Electric factories to achieve this designation, and the company’s first on U.S. soil. Schneider Electric, a 180-year-old company, had E28.9 billion in revenues in its 2021 fiscal year. The company provides industrial automation and control, energy management, and building automation and control products and services.

What They Saw: During the 11-stop tour, participants experienced the complete breadth of Schneider Electric’s manufacturing process. The Lexington smart factory houses a complete, vertically integrated process including a typical assembly line, conveyance, fabrication center, paint room, and more – all connected through Schneider Electric’s Industrial Internet of Things-based (IIoT) EcoStruxure platform.

The tour showcased how Schneider Electric’s digital transformation increased energy efficiency and reduced downtime. AVEVA and Schneider Electric partner on integrated digital transformation solutions that bring together energy management and automation tools with industrial software. In Lexington, the company utilizes both its EcoStructure and AVEVA platforms throughout the facility. For example, at tour stop nine participants saw how the EcoStructure Lean Digitization System calculates true labor efficiency with e-performance and e-andon — digital data-sharing and production monitoring of performance and defects for immediate response. Meanwhile at stop seven in the paint room, the group learned how AVEVA Edge processes data and populates the company’s dashboards in real-time.

In a fascinating application of AI and machine learning, the company has set up a 5G networked camera to photograph and analyze every link in the mile-long conveyer chain. The photos are then automatically compared to thousands of images of broken and unbroken chain links, and the AI-powered system identifies broken and breaking links that need to be repaired and relays this information to the operator.

Schneider Electric Smart Factory Tour - Nov. 2022 - Lexington, KYInsights from Digital Subject Matter Experts: Beyond the smart factory tour, participants joined breakout sessions where they heard directly from Schneider Electric experts about hardware and software tools used in the company’s digital transformation journey to help breakdown data silos and empower employees to make effective decisions at the gemba – the real place where they do their work. Breakout topics included Smart Factory Execution, EcoStruxure Deep Dive, EcoStruxure & Industry Automation, Cybersecurity and Operations, Advanced Analytics in Supply Chain, and Supply Chain Sustainability.

Unfettered Access to Company Leaders: The day ended with a discussion panel during which Schneider Electric leaders answered questions from both the audience and moderator, Jeff Puma, MLC’s Content Director. The panel featured Greg McManaway, Business Process Leader; Fabrice Meunier, Vice President, Industrial End User, System Integrator and Software Business; Anand Varahala, Environment and Sustainability Manager; and Bharat Virmani, Vice President, Supply Chain Performance and MTS/MTO Cluster. The panelists shared their insights on topics including the factory’s digital transformation journey, the WEF Lighthouse process, setting priorities, and scaling digital advances.

A Chance to Rub Elbows: In addition to witnessing the innovations and smart factory implementation at Schneider Electric’s Lexington facility, the tour offered an opportunity to interact with nearly 100 industry leaders in attendance including digital pioneers from both the host company and other MLC member companies. Like all MLC tours, the formal and informal networking opportunities allowed participants to ask questions, discuss hurdles, and seek solutions from other participants on the digital transformation journey. These relationships are invaluable to members’ efforts to expand their connections and Manufacturing 4.0 understanding.

All photos by Ian Wagreich; Copyright: capitolhillphoto.com

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