Posted: 27 Jul. 2020 4 min. read

Implementing the smart factory: New perspectives for driving value

By Gérald Faustino, National Leader, Aerospace & Defence, Deloitte Canada

Smart factories are a smart investment. But while their importance is straightforward, their implementation is complicated. While 86 percent of surveyed manufacturers say smart factories will be the main driver of competitiveness in five years, only five percent operate a fully converted facility.

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The Canadian aerospace industry is already smart. We’ve travelled a long way toward smart manufacturing, and there’s already strong adoption of advanced technologies. Statistics show that in Canada, aerospace companies outpace their competitors in industrial manufacturing with regard to the use of advanced manufacturing technologies. Research and development spending in Canadian aerospace manufacturing is also five times higher than in other parts of the manufacturing industry, and we’re more advanced in terms of investing in new processes, technologies, and manufacturing capabilities.

How can we continue to advance? As aerospace in Canada evolves to get smarter, and matures to an advanced stage of Industry 4.0, we’re seeing the adoption of emerging technologies. Three that are particularly significant are the “internet of things,” artificial intelligence, and geomatics or geospatial technologies:

  • In recent years, the internet of things (IoT) has become commonplace, and just as consumers use smart devices in everyday life, IoT in aerospace refers to an ecosystem in which applications and services are driven by data collected from devices
  • Artificial intelligence (AI) is about computer systems that complete tasks that normally require human intelligence, or systems that can learn without being explicitly programmed.
  • Geomatics, or geospatial technologies, is the science of how technology is used to gather, analyze, interpret, distribute, and use geographic information.

If we’re going to see more widespread adoption of these technologies, however, Canadian aerospace manufacturers will have to deal with certain challenges. With respect to IoT, cybersecurity and maintaining data privacy are essential, along with ensuring that systems are resilient. There are similar concerns about the safe use of AI, though it’s also worth noting that Canada is a recognized AI hub, and this raises the chances that adoption will happen both quickly and responsibly. As for geomatics, it will take coordination and leadership to move the locus of influence beyond academic and select corporate sectors to the overall emerging technology ecosystem. Finally, Canadian aerospace companies face challenges related to size and scale—this makes for a difficult return on investment when compared to larger international peers—and, like other industries in the emerging tech ecosystem, they also face critical challenges retaining and developing talent.

On the flip side, Canada also has several unique strengths that put its aerospace industry in a good position to overcome these challenges:

  • Canada is the third-ranking global aerospace centre of expertise, after Toulouse and Seattle.
  • There is strong federal government support through tax credits, the Strategic Innovation Fund, the Canada Economic Development Program, and Innovation Superclusters Initiative.
  • Provincial government support includes tax credits for scientific research and experimental development, the ESSOR investment program, tax holidays for foreign researchers and experts, and financial assistance for job creation and training.
  • The industry encompasses a rich ecosystem including original equipment manufacturers (OEMs), Tier 1 to 3 companies that are connected to a network of research centres and clusters, universities and training centres, industry associations, and international aviation organizations headquartered in Canada.

As the aerospace industry looks for ways to continue their upward trajectory—turning smart into smarter, and reaching Industry 4.0 maturity—here are some key points to consider:

  • Develop an Industry 4.0 roadmap. This should start with planning for smart components and machines and the conversion of a single site to a smart factory. The next stage would be the conversion or establishment of multiple connected factories, and the final stage of maturity includes a smart supply chain that has a high degree of digital integration with your ecosystem. A successful roadmap will also consider opportunities to partner with or acquire the assets of a company that has these advanced capabilities.
  • Get started with what you have. While organizations often believe that greenfield investments are needed to use these technologies, in many cases they have existing technology that has the potential to bring smart functionality to a brownfield environment.
  • Start smaller. Look to point solutions that address existing issues first, and move on to transformation only when the time is right. For example, AI can be used to balance demand and supply for spare-parts inventory, or to reduce inventory carrying costs and production lead times./li>
  • Put people first. The move to smart manufacturing and Industry 4.0 transformation involves radical change for aerospace organizations. The strategy and roadmap should consider the human capabilities that are needed to support the transformation, identify those that will be grown internally, and consider how external providers can augment internal skills and experience.

Aerospace has always looked to go beyond, to extend the range of what is possible. In Canada, the drive toward progress has been helped by strong government support, a rich local ecosystem, and robust public-private collaboration. Emerging technologies will build on these existing strengths, letting us continue to innovate as we transform ideas into the new opportunities of Smart Factory 2.0. The real challenge now will be how high to set the bar.

Implementing the smart factory

Key contact

Gérald Faustino

Gérald Faustino

National Leader, Aerospace & Defense

Gerry Faustino is the Eastern Region Lead Partner in the Value Creation Services practice and the National Leader for the Aerospace and Defense sector at Deloitte Canada. With over 20 years of serving clients across industry sectors, his primary focus is helping to improve enterprise profitability, leading operational due diligence, and executing M&A integration and separation programs. Gerry draws from his diverse industry experiences, serving clients domestically and internationally, to develop distinct insights for the Aerospace and Defense sector.