The Digital Transformation of the Factory: Smart Manufacturing
Manufacturing is experiencing an unprecedented acceleration of digital transformation, process automation, and human-machine interaction technologies amidst the backdrop of COVID-19. As firms begin to adjust to the serious dislocations caused by the pandemic and a protracted recovery process, investment in Smart Manufacturing/Industry 4.0 has become a key strategic priority for industries across the board.
The National Institute of Standards and Technology (NIST) defines Smart Manufacturing as systems that are “fully-integrated, collaborative manufacturing systems that respond in real time to meet changing demands and conditions in the factory, in the supply network, and in customer needs.” For industry players, the adoption of these systems is essential to driving greater operational agility and performance, addressing safety requirements and labor deficits caused by social distancing demands, and creating a fully networked manufacturing process that facilitates greater visibility across input/output variables and their connection to target KPIs.
The smart factory represents a new manufacturing paradigm for the coming decade — the emergence of commercially viable IoT devices, 5G connectivity, sophisticated cloud and edge computing applications, and big data analytics, combined with new technologies such as AR/VR, represents an unprecedented fusion of the physical and digital worlds.
The gains are significant: a Deloitte study published in 2019 estimates that the adoption of smart factory initiatives can help U.S. manufacturing triple the manufacturing sector labor productivity rate through 2030, with existing investments already contributing an average increase of 10% in production output, 11% in factory capacity utilization, and 12% in labor productivity. Furthermore, 86% of manufacturers believe smart factory initiatives will be the main driver of manufacturing competitiveness in five years and have earmarked 30% of the global factory budget for smart factory solutions. Companies are putting their money where their mouth is.
Key Smart Manufacturing technologies can be categorized into each of the three following categories:
Data & Connectivity: The deployment of IoT sensors across manufacturing processes and the supply chain allows companies to gather large amounts of data at an unprecedented scale — previously siloed systems can now seamlessly provide companies with greater visibility across the entire production process. Lower edge/cloud computing, storage, and bandwidth costs have brought the Digital Twin — a digital representation of the physical and behavioral characteristics of productive machinery and end-products — into reach, thereby allowing companies to quickly identify problems, conduct accurate simulations, and uncover operational inefficiencies in real-time.
Advanced Analytics: Advanced analytics allow manufacturers to take a deep dive into historical process data, identify patterns and relationships between inputs and outputs, and optimize factors that have the greatest impact on yield. For instance, the implementation of an AI analytics platform by Seagate Technologies, a manufacturer of data storage devices, has claimed an estimated 20% reduction in cleanroom investments, a 10% reduction in manufacturing throughput time, and up to a 300% return-on-investment. In addition to its application to improve manufacturing processes, data analytics have also been leveraged to improve worker productivity and safety through the analysis of health, injury, and incident data.
Advanced Human-Machine Interaction: The adoption of virtual reality (VR), augmented reality (AR), and collaborative robots (cobots) have allowed for a new level of human-machine interaction for manufacturers, thereby improving factory throughput, accelerating worker training, and reducing workplace hazards. For instance, the application of VR has allowed Ford to simulate the automobile building process and reduce workplace injuries by up to 70%. Using AR, technicians are able to quickly understand how to service and repair faulty devices by overlaying schematics or directions on top of the physical object. Cobots (safe enough to work alongside humans) facilitate work processes done in tandem with human workers to improve productivity — in some cases up to 50%.
To fully unlock the benefits of this emerging paradigm, manufacturers should look beyond traditional sources to proactively co-develop solutions with startups and other external partners. A thoughtful, targeted adoption of Smart Manufacturing technologies is critical to prepare both workers and businesses for long-term success in the coming decade — it will be crucial to adapting to and capitalizing on key developments, including artificial intelligence, manufacturing onshoring, and industrial 3D printing.