Using ecosystems to accelerate smart manufacturing
A regional analysis
Even before the arrival of COVID-19, rapid technological advancements in the manufacturing field—and associated promises of increased gains—warranted the need to invest in digital infrastructures. But once the pandemic hit in full force, many such companies struggled to improve production and replace their legacy systems. However, organizations that had already started on their paths to digital transformation continued to thrive—by ramping up production, improving turnaround times, and allowing for better collaboration. These promising results effectively illustrate the value of ecosystems and digital tools—and demonstrate that the need to transform is more important now than ever.
To delve deeper into this, Deloitte together with the Manufacturers Alliance for Productivity and Innovation (MAPI) ran a survey to examine whether smart manufacturing ecosystems could help accelerate overall production. The study included an online survey of more than 850 executives at manufacturing companies across three regions: North America, Europe, and Asia. It also included executive interviews with more than 30 leaders from manufacturing companies and ecosystem participants.
In our Canadian perspective Accelerating smart manufacturing in Canada: Finding potential in Industry 4.0, we examine how the COVID-19 crisis has affected smart-technology initiatives and how an ecosystem approach can help organizations to stay the course, accelerate their digital transformation, and drive productivity and performance into the fourth industrial revolution.
Accelerating smart manufacturing in Canada: Finding the potential in Industry 4.0
Since the widespread emergence of COVID-19 in early 2020, manufacturers have experienced significant disruptions, from supply/demand imbalances to regional work stoppages. While many in-progress digital-transformation initiatives were affected, these impediments also highlighted another concern: the substantial number of companies that have so far been hesitant to dive into digital and Industry 4.0 technologies—that is, the digital-manufacturing developments aimed to create “smart” factories of interconnected systems that define the so-called fourth industrial revolution. Many of these cautious businesses have clear aspirations to be part of the Industry 4.0 wave, but without knowing how or where to begin, they won’t be able to realize the potential of this next phase.
A game plan for adopting Industry 4.0 The first step for companies to progress to this new, interconnected way of manufacturing is to define how Industry 4.0 can work for them. A useful approach is to consider any needed or hoped-for updates from a business perspective rather than a technological one. Asking a series of questions to help clarify the path to be taken can help in this pursuit. For example: “What do we want to achieve as a result of this transformation? What types of improvements are we seeking—e.g., higher-quality products or services, increased throughput, better customer service? Which challenges do we want to overcome?”
At Deloitte Canada, we’ve found that a great way to approach the need for digital transformation is to be ambitious yet realistic about what can be achieved, and how. Only after thoughtful assessment should leaders begin to consider digital ecosystems—that is, interconnected sets of digitally based services—as a means to help realize their companies’ goals.
Next, leaders must familiarize themselves with the available technology, including how to incorporate it into their business models. They can do this by focusing on the practical applications of this new framework, such as by determining the use cases—i.e., real-world client needs and the scenarios for fulfilling them—that can bring the most value to their organizations. It’s prudent to begin with smaller adjustments that promise to deliver the most value to these proposed new smart factories. Prioritizing solutions to the most pressing and crucial challenges and needs is essential, too.
In order to capture the data required to drive smart technologies, it’s helpful at this point for leaders to assess how their companies will use and benefit from systems and architecture—that is, evaluate which digitized systems will be needed and how they might be used as a whole to benefit the company. Again, it’s worthwhile to ask specific questions in pursuit of these goals, including: “How do we want to capture data—e.g., from machines, from manufacturing lines? Which systems will allow us to do this, and how should these be organized and connected? How can we use this newly captured data to our benefit—e.g., to improve quality/throughput/yield?”
Finding value in ecosystems
Companies with shared business objectives can benefit from teaming up as members of a shared digital ecosystem: For example, organizations in the manufacturing fields might collaborate with those in the hardware, software, cybersecurity, and cloud-computing fields, with the goal of equipping each with the tools needed to overcome their specific business challenges. This type of collaboration can also help member companies establish and strengthen vendor relationships within the alliance.
Of course, as ecosystems become more complex, coordination and communication between the players become even more important. Cybersecurity, too, becomes essential, with assets, systems, and even members expanding—often beyond their original bricks-and-mortar set-ups.
How Industry 4.0 can help
Recent years have seen manufacturing companies invest a lot of time and effort in Lean Six Sigma tools, which aim to streamline processes and improve overall quality of output for a better bottom line. But while these tools have enabled significant improvements and ensuing profits, they don’t offer limitless gains. Embracing digital systems and emerging technologies is critical for a company’s evolution to the next levels of industry.
This type of ongoing transformation is important because a more integrated digital approach can help offer innovative, cost-cutting solutions to current workforce challenges, thus helping to drive a company’s value. For example, facing an aging workforce and an emerging generation that won’t be satisfied simply to take over the outdated tasks of their elders, manufacturing companies would benefit from embracing a grouped series of digital strategies and procedures to streamline their future workplaces.
But while most Canadian manufacturers have invested time, effort, and resources in addressing a handful of client needs and creating smart-technology scenarios for fulfilling them—this includes companies that focus on factory-asset intelligence/performance management, plant consumption and energy management, and quality-sensing and detecting—only a small fraction have moved forward with these processes. In fact, more than 40% have paused their investments in this area altogether1 as companies assess the impact of the pandemic on the relative benefits of such overhauls.
More significantly, although progressing from smart-manufacturing initiatives to ecosystems is the key to unlocking and maximizing the technology’s intrinsic value, only 5% of Canadian firms2 are currently using these types of ecosystem approaches. Given that manufacturers have been collecting operational data for a while, the next logical step is to embrace smart-manufacturing ecosystems in order to derive value from the captured data. Ultimately, moving forward with such interconnected, cloud-enabled systems is how companies might realistically succeed in harnessing and unleashing the full potential of machine learning (ML) and Artificial Intelligence (AI) to their benefit.
It’s time for Canadian leaders in the industrial product and manufacturing fields to make the necessary targeted investments in smart-manufacturing initiatives that will allow their organizations to thrive beyond the pandemic, into the next normal. And with the aid and encouragement of federal and provincial programs, companies can begin on their transformative paths to digital innovation.
1 Deloitte, Using ecosystems to accelerate smart manufacturing: A regional analysis, February, 2021
2 Deloitte, 2020 Deloitte and MAPI Smart manufacturing ecosystems study, accessed February 24, 2021