Future Promise vs. Current Reality
Manufacturers are embracing the vision of highly automated and intelligent future factories, but many still have a long way to go on their digital transformation journeys.
Although everyone has a slightly different vision in mind, the hallmark of factories of the future is automation and technology enablement throughout the shop floor. Benefits such as increased efficiency and productivity, cost optimization, flexibility in manufacturing, sustainability, value chain integration, and greater scalability are top-of-mind for manufacturers in their future factory visions.
The transformation of factories requires a robust integration of people, processes, and technologies to achieve desired business outcomes. While these parameters have been a part of how factory operations have been designed and conceived over time, Industry 4.0 technology adoption has started a new era in defining future factories. Therefore, it is safe to say that factories of the future will look and operate much differently from current factories; hence, why the vision should have a strong digital focus, in addition to traditional considerations.
Functionally, factories of the future will be more integrated, beyond automation within the four walls, and fully able to serve rapidly changing customer needs. Integration of processes and people will take a new shape, transcending the boundaries of a traditional factory. Integrating demand, supply, design, a network of factories, and backend IT, engineering, and technology will be critical to achieving an effective factory transformation.
While the jury is out on the true definition or standard of a factory of the future, terms like Zero Touch, paperless, lights-out, green, and sustainable all emerge to define future maturity levels. Yet, at the same time, the current state of reality is driven by a combination of factors, including legacy, economic, market, industry segment, geography, size of business, and regulatory challenges.
‘Lighthouses’ Set a Standard
The World Economic Forum established a Global Lighthouse Network project in 2018 to identify factories that have scaled up Industry 4.0 technologies to a specified level of achievement. The project identifies a list of 90 factories across the globe, with 36 materializing in the last 15 months. However, while indicators of global acceleration are imminent, it is still a long way from reaching an inflection point.
Geographically, most of the leading lighthouse factories are in Asia and Europe, which means there is a tremendous opportunity for scope in North America.
Recently, NTT DATA partnered with Oxford Economics to survey manufacturers on the state of the industry. While there has been considerable progress on the path to the factory of the future, it is limited.
Nearly all manufacturers — more than 95% — are at least in the early stages of transforming internal operations, but very few have completed the journey. For example, only about one-quarter have fully implemented proactive manufacturing equipment maintenance (27%); product maintenance and after-sales service (26%); flexible production lines (24%); and sensor-based process controls (19%).
Factories of the future will be more integrated and fully able to serve rapidly changing customer requirements.
Even the flagship concept of automation has been implemented only to a limited degree. Only about half of respondent manufacturers (49%) are reportedly using automated workflows in day-to-day workforce operations at this time. Still, fewer are using them in production operations and maintenance duties (43%).
The survey also indicates a significant digital divide between large and small-to-medium enterprises.
Even so, the gap could be narrowing. As the industry collectively begins to see viability and proof of returns, Industry 4.0 initiatives are being considered similarly by both small and large enterprises. Smaller enterprises tend to show more flexibility towards automating and changing production processes (56% vs. 47%) vs. large industries focusing on customer-facing Industry 4.0 initiatives. In addition, smaller organizations report they are more actively hiring new skills (76% vs. 61%) required for transformation. While these are positive indicators, smaller organizations face challenges updating their legacy and obsolete technologies.
Additionally, the World Economic Forum reports that 70% of the firms are stuck in pilot purgatory. This statistic suggests that factory transformation at scale has yet to reach an inflection point.
The Key Technology Drivers
Investments in critical technologies will power the transformation to Industry 4.0 and factories of the future. Leaders invest in AI, IoT/sensorization, automated workflows, cloud, data analytics, edge, AR/VR, blockchain, cybersecurity, and network modernization.
In the NTT DATA/Oxford Economics survey, artificial intelligence/machine learning and the Internet of Things have gained a strong foothold and adoption in production operations and maintenance (48% AI/ML, 43% IoT). Automated workflows are used in day-to-day workforce operations by almost half of manufacturing companies (49%), but fewer are using them in production operations and maintenance duties (43%). Data and analytics are gaining traction, with 35% reporting effective adoption in production operations and maintenance. Emerging technologies like AR/VR, blockchain, and Edge have not yet significantly penetrated manufacturing, and investments are comparatively lesser, with just 15-19% of respondents indicating usage of these technologies. In addition to the above, cybersecurity for hyper-connected factories continues to be a top priority to ensure the operational assets are hardened from targeted attacks on operational networks. Lastly, advances in connectivity technology, including private 5G, have enabled high-bandwidth, low-latency use cases in factories using augmented reality, machine vision, and AGVs.
In addition to the digital technologies that enable the coveted automation and flexibility of future factories, one must consider the effects of integrating operational technologies (OT), information technologies (IT), and engineering technologies (ET). Converging these aspects is vital to realizing a high-functioning and seamless future factory.
Investments in critical technologies will power the transformation to Industry 4.0 and future factories.
Additive manufacturing could bring about the democratization of manufacturing. For example, the establishment of 3D printing farms and factories that employ additive manufacturing technologies enable the production of less-complicated components with a shorter lead time directly from a software design. As this evolves, the ability to manufacture such items will become commonplace, eliminating old constraints around availability, and creating new dynamics and scalability.
Changing Workforce Requirements
Progressive digitization, a major characteristic of future factories, will significantly affect the people who work in them. Staff will need greater technological proficiency once much of the equipment is automated and connected. Workers will depend on visualization and rely less on touch and feel. The workforce operating within future factories will have to co-exist with technology augmentation. New ways of working also mean new skills and operating models for internal teams.
The baseline skillset for factory workers will include being adept at using data. Understanding the data and assessing whether the data is consistent with expectations in each situation will be valuable skills. Future factories will be in flux, and the workforce must be open, flexible, and agile to thrive in the new environment.
Roles in the factory of the future will also evolve, requiring workforce transformation. For example, there will be a greater need for maintenance of automated equipment throughout the factory, and the maintenance will include a significant IT component even for standard OT machinery. In addition, the extensive use of automation will increase the need for careful and accurate production planning and put a premium on logistics skills. More broadly, the factory of the future will call for staff that can think in terms of digital enablement of processes and workflows. The reconfiguration of standard processes requires a redefinition of roles.
Manufacturers are progressing in their preparation for some of these impacts. Among those surveyed, 70% report having reskilled workers to some extent to leverage digital technologies, and 63% have hired people with new types of skills. About half, 53%, have redesigned processes for advanced technologies and standardized processes across the organization (49%), and 66% report having trained employees around such new approaches. However, only 20% have made changes to their company culture in alignment with an Industry 4.0 environment, and about one in three have made associated changes to their leadership structure.
What Executives Need to Do
Successful transformation into a factory of the future requires overcoming significant impediments. Chief among them is ensuring that the data fueling a data-driven factory has adequate governance and security in place. That was the primary impediment cited by 51% of leaders surveyed. A related issue was the lack of necessary data, cited by 23%.
In another internal obstacle related to infrastructure, 38% of leaders reported that updating legacy IT infrastructure was a key challenge, with another 20% pointing to dated legacy equipment as a stumbling block. In addition, the labor shortage affecting virtually all industries slows progress to factories of the future as well, with one in four respondents citing the lack of available skills in the marketplace in their geography and one in five pointing to difficulty retaining top talent.
Even aside from internal issues, forces outside the business present impediments to establishing the factory of the future. For example, one in four respondents named customer resistance to data sharing and new business models a barrier to progress. A similar one in four found integrating with partners challenging.
Transformation is an infinite game that requires constant experimentation, learning, iteration, and progress.
As a push for sustainability and a circular economy gain prominence, factory managers and executives must consider adopting more innovative and future-focused priorities. Linear legacy manufacturing models and non-standardized product architectures could pose challenges to creating a sustainable and flexible factory of the future.
Considering these impediments, executives should focus on a few key aspects while embarking on the journey to the factory of the future, including:
- A clear business vision and objective
- Flexible manufacturing that is responsive to demand and supply
- An operative workforce transformation, enablement, and engagement strategy
- A cutting-edge digital and technology vision
- Data-driven culture
- Top-of-mind security
- IT, OT, and ET integration
Transformation is an infinite game that requires constant experimentation, learning, iteration, and progress. It is important for organizations to maintain a long-term vision and an agile mindset that favors quick learnings and course corrections from challenges and failures. The days of on-demand manufacturing through design exchange through eCommerce portals are here. As such advances mature, the demand on factories keeps shifting. The most resilient factories will be the ones built on a digital-first and technology-centered foundation.M
About the authors:
Siva Gurupackiam is Vice President of Manufacturing Industry Strategy and Solutions
Baskar Radhakrishnan is Strategic Advisor, Manufacturing Industry Solutions at NTT DATA. The company is a member of MLC
