The Manufacturing Leadership Council’s latest survey on Manufacturing 4.0-related technologies reveals that companies are expecting big things from the IIoT, analytics, 3D printing, and other new technologies. But few are approaching their adoption strategically. By David R. Brousell
Over the next five years, manufacturers see a range of new technologies fundamentally changing they way they produce products. Whether it is the Internet of Things, 3D printing, or artificial intelligence, manufacturers expect these and other technologies to be potential game-changers in their operations.
At the same time, though, the path to realizing these changes for many manufacturers is anything but well paved. Few manufacturers have formal technology roadmaps in place today. Responsibility for devising and implementing technology strategies and their roadmaps is often diffused and unclear. And, particularly for small and medium-size companies, the capacity to evaluate and understand the potential of a growing set of new technologies emerging on the industrial scene is often lacking.
These are some of the key findings of the Manufacturing Leadership Council’s latest survey on Transformative Technologies in Manufacturing, one of the Council’s Critical Issues facing the industry. Survey respondents weighed in on the potential of new Manufacturing 4.0-related technologies, their investment plans, their challenges around adopting and using technologies, and where they think they stand in relation to competitors at this stage in the M4.0 journey.
The View in 5 Years
Today, many manufacturing organizations are at the beginning of the learning curve of understanding and realizing the potential of new production and information technologies. This is not to be unexpected. It takes time, experimentation, and experience to leverage capabilities in a new analytics software program or production platform.
But imagination has been unleashed. Manufacturers are seeing game-changing potential over the next few years in a range of technologies that will be used on factory and plant floors.
Take the Industrial Internet of Things. Today, only 16% of survey respondents think that the IIoT, which involves IP-enabling plant floor equipment, is a game-changer in their production operations (Chart 10). But over the next five years, that number catapults to 40% expecting a fundamental impact from the technology.
Over the next two years, manufacturers are looking to invest in a mixed bag of IT-related technologies.
A similar acceleration in expectations occurs with other M4.0 technologies. Only 10% of survey respondents today believe that artificial intelligence and machine learning, for example, are having a transformative impact in their operations. Over the next five years, however, a near-tidal wave builds as the number soars to 49% of respondents expecting that AI and machine learning will be a game-changer for their companies.
This quantum leap effect is evident with 3D printing technology, Big Data and advanced analytics software, and collaborative robots, all of which will enable manufacturing operations to become more information-driven, automated and autonomous, and flexible in how they produce products.
Near-Term Purchase Plans
Over the next two years, manufacturers are looking to invest in what has turned out to be a mixed bag of IT-related technologies, including already well-entrenched products such as enterprise resource planning (ERP) and manufacturing execution system (MES) software.
ERP and MES software have been in use in manufacturing companies for a long time, but many systems in place have aged. There is an increasing realization among these companies that, in order to move ahead with M4.0, these back-end systems need to be modernized first. As a result, the survey results indicate fairly robust investment intentions in these technologies in the years ahead.
But equal if not stronger intentions lie with some of the newer technologies (Chart 1). Artificial intelligence technology, for example, is in use in only 16% of survey respondent companies today, but over the next two years, 26% expect to invest in it, the strongest buying intention among 10 technologies examined in the survey. Not too far behind is augmented reality and virtual reality systems. Today, only 16% say they have already invested in these systems. Within the next two years, 19% say they will do so. Blockchain is another interesting example. Only 1% of survey respondents say they are using blockchain today, but 16% expect to invest in it over the next two years.
Part 1: Technology Investments and Plans
1 AI, MES Slated for Investments in Next 2 Years
Q: Please indicate your company’s investment posture for the following IT-related technologies.
2 More than One Third Plan IIoT Investments
Q: Please indicate your company’s investment posture for the following communications and networking technologies.
3 Predictive Maintenance, Machine Learning Top Production Plans
Q: Please indicate your company’s investment posture for the following production technologies.
Part 2: The Technology Assessment Process
4 Most Have Not Yet
Developed M4.0 Roadmaps
Q: Has your company developed a formal M4.0 roadmap to support transformative technology adoption?
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5 Informality Attends Most M4.0 Roadmap Approaches
Q: Which statement best describes your company’s
current approach to adopting a M4.0 Roadmap?
Within the realm of communications and networking technologies, IIoT-related technologies, now in use in 36% of respondent companies, will see significant growth as another 34% of respondents make investments in the technologies (Chart 2). And on the factory floor, predictive maintenance, IoT, machine learning, and collaborative robots garner the strongest buying intentions in the years ahead (Chart 3).
Along the way, manufacturers will be seeking competitive advantage from the technology, an edge, if found, that is always hard to sustain over time as new technologies emerge and the adoption/value cycle begins again. Right now, only about one-third of survey respondents say they are ahead of their competitors in the adoption of M4.0 transformative technologies. A nearly equal percentage says they are about equal with their competitors and 17% say they are behind (Chart 8).
The Challenges Ahead
Best intentions aside, the technology assessment process currently in place in many companies could end up being a constraint on adopting and deriving value from many IT and operational technologies.
At this point in time, only 6% of survey respondents say they have a formal roadmap for M4.0 transformative technologies in place in their companies. Another 11% say they are working on such roadmaps, while 39% say roadmaps are under consideration but not yet started (Chart 4).
What’s apparently going on in some companies is that different groups within companies are investing in specific technologies often to deal with immediate issues. This reactive, tactical approach was cited by 70% of survey takers (Chart 5).
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6 Responsibility for M4.0 Roadmaps is Diffused
Q: Who is responsible for implementing your M4.0 roadmap/strategy?
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7 Majority Indicates Difficulty
in Vetting New Technologies
Q: Please indicate the extent to which you agree with the following statement: The accelerating pace at which new technologies are emerging is causing us to fall behind in our efforts to evaluate and understand their potential.
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8 Less Than One-Third Think They are Competitive With M4.0
Q: Where do you think your company stands in relation to its primary competitors’ adoption of transformative M4.0 technologies? (Check one)
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9 Measuring ROI, Assessing Cost/Benefit Are Top Challenges
Q: What are the most significant challenges related to adopting and using M4.0 technologies?
Part of the challenge here may be found in survey findings regarding who within manufacturing companies has responsibility for M4.0 technology strategy and road-mapping. The picture appears to show a diffusion of responsibility. For example, 26% of the survey respondents identified their CEO as the responsible executive, which certainly makes sense in smaller manufacturing companies where the CEO is wearing many hats (Chart 6).
But even more, 36%, said it is their chief operating officer or manufacturing head. Thirteen percent said their plant manager had the responsibility and 9% identified their CIO as the responsible authority.
Layered on top of this issue is the challenge of measuring the impact and effectiveness of M4.0 technologies, an issue that has cropped up in prior surveys. The most significant challenge with the technologies, say survey respondents, is in measuring the return on investment, followed by assessing cost/benefit, and migrating from or integrating with legacy systems still in place (Chart 9).
Taken as a whole, though, these challenges are pretty typical of the cycle that always surrounds the adoption of new technologies. Over time, as they get more experience with the technologies, manufacturers will get better at deriving benefits and measuring both hard and soft returns.
As they do, one challenge that has all the markings of an issue that seemingly will become more pronounced over time is the growing wave of data that is inundating companies. With now near-ubiquitous connectivity and more instruments in place for generating data from both objects and people, today’s manufacturing enterprise is hard at work to not only hold back the flood but also to manage its flow in ways that will benefit the business.
This is no easy task as the data volumes grow. The survey has revealed the dimensions of the problem. When asked how well prepared their companies are to organize, evaluate, and make decisions on the volumes of data that are or will be generated from greater connectivity of devices and equipment, only 9% of survey respondents indicated that their organizations were well prepared today. Another 44% said moderately prepared and 39% said poorly prepared (Chart 15).
This may very well be the chief challenge of our digital age. We asked for more information. Now, we are going to have to figure out what to do with it. M
Part 3: Collaborative Innovation
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10 Strong Potential Seen for the IIoT
Q: What is your assessment of the potential of the Industrial Internet of Things IIOT), specifically IP-enabling your plant floor equipment and products, both today and in five years time?
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11 Nearly a Majority Sees 3D as a Game-Changer Ahead
Q: What is your assessment of the potential of 3D printing, both today and in five years time?
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12 Potential for Analytics Seen
as Strong in Next 5 Years
Q: What is your current assessment of the potential of Big Data/advanced analytics, both today and in five years time?
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13 More Than One-Third See Key Role for Collaborative Robots
Q: What is your current assessment of the potential of collaborative robots, both today and in five years time?
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14 More Than One-Third See Key
Role for Collaborative Robots
Q: What is your current assessment of the potential of
collaborative robots, both today and in five years time?
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15 Only a Fraction Say They Are Well Prepared for the Data Tsunami
Q: How prepared is your company to organize,
evaluate, and make decisions on the volumes of data that are or will be generated from greater connectivity of devices and equipment?
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16 44% Indicate Some Understanding of Digital Threads
Q: How well understood is the concept of a Digital Thread that connects and shares data across multiple functions in your organization?
Facing an urgent need to satisfy escalating customer expectations, manufacturers are pushing to elevate both the speed and the collaborative nature of innovation. By Jeff Moad
For years, manufacturers have excelled at applying their prodigious powers of innovation to achieving and sustaining operational improvement. Through the application of standard production practices and lean principals, increasingly capable plant automation, and robust supply chain optimization and practices, manufacturers have achieved lower costs, increased productivity, and more efficient use of assets, all while supporting the flow of new products to market.
That historic focus on innovation in the service of operational performance will, no doubt, continue, necessitated by global competitive pressures and enhanced by emerging Manufacturing 4.0 technologies such as advanced robotics, machine learning, and IoT on the plant floor.
Now, however, there is evidence that manufacturers are responding not only to a need to dramatically upgrade the pace and impact of innovation but also to redirect it in ways that will allow them to satisfy the soaring expectations of customers for everything from mass customization to shorter cycle times and smart products.
Manufacturers believe that M4.0 technologies such as advanced data analytics, IoT tools, and 3D printing platforms and prototyping techniques will help them accelerate innovation and better satisfy customers. And they realize that this customer-centric approach to innovation will require their company cultures and their approaches to innovation to become more collaborative.
These are some of the key findings of the Manufacturing Leadership Council’s latest research survey on Innovation in Manufacturing conducted in June of this year.
Customer Expectations Drive the Pace of Innovation
As they did last year, an overwhelming majority (84%) of manufacturers participating in the ML Council Innovation survey said the competitive importance and pace of innovation are increasing as the industry continues to embrace M4.0 digital transformation (Chart 1). Only 15% said they are seeing no change.
“Customer requirements and expectations are the most significant factors driving the growing importance and accelerating pace of innovation.”
And, while manufacturers said that M4.0 technologies are enabling them to step up the pace of innovation, the largest group by a significant margin (36%) said that customer requirements and expectations are the most significant factors driving the growing importance and accelerating pace of innovation (Chart 3). Like many members of the Manufacturing Leadership Council, these respondents no doubt are being pushed by customers for shorter turn-around times, more customized products, and new value-added service offerings, among other things.
Accompanying this need to innovate faster in response to rising customer expectations, manufacturers report a noticeable shift in terms of where they will be placing their innovation emphasis in coming years. While they report that product innovation and manufacturing process innovation will continue to be the top areas of innovation emphasis, other innovation priorities are growing much faster. Over the next five years, manufacturers said they will be significantly increasing their emphasis on business model and service innovation as well as supply chain innovation (Chart 2). This suggests that manufacturers are anticipating customer expectations for new types of value-added service offerings such as preemptive maintenance that leverage IoT data.
The largest group of manufacturers (36%) say the primary goal of their innovation efforts is to deliver new products to market, and they say that the most critical factor influencing innovation success is the presence of a strong culture of innovation among all employees (Chart 4). While the presence of visionary leadership was ranked as the second-most-important factor determining the success of innovation efforts, the largest group of manufacturers (43%) also said that the senior executive team has the most significant impact on driving innovation, followed by cross-functional teams (22%).
Part 1: Innovation Strategy and Organization
1 M4.0 Drives Importance of Innovation
Q: As the industry deepens its adoption of M4.0 and digitization, do you see the competitive importance and pace of innovation as … (check one)
2 Emphasis Shifts to Service, Supply Chain, Business Model Innovation
Q: What degree of emphasis does your company place on the following areas of innovation today, and what will be the emphasis in five years?
3 Customer Requirements
Drive the Pace of Innovation
Q: What is the most significant factor driving the importance and pace of innovation? (check one)
4 Culture and Leadership
Still Key to Innovation
Q: What do you see as the most important enabler that drives a successful innovation strategy for a manufacturing enterprise? (check one)
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5 But Most Still Lack Standard
Innovation Processes
Q: Does your company have a formal corporate-wide innovation process — including metrics and incentives – in place?
Despite manufacturers’ overwhelming belief that the pace and importance of innovation is rising, most manufacturers are still managing innovation as a coordinated set of activities but without standard, enterprise-wide processes or metrics that are directly linked to company strategy. Seventy-two percent of manufacturers said their companies do not have formal, corporate-wide innovation processes that include metrics and incentives (Chart 5). At the same time, the largest group of respondents (43%) characterized their companies’ innovation approach as informal, but coordinated initiatives, and only 36% said it was driven by formal and coordinated strategic goals. Twenty one percent said innovation efforts at their companies are ad hoc.
Perhaps as a result, most manufacturers (53%) say their companies place the greatest emphasis on innovation efforts aimed at delivering incremental improvements to products and services in the short term. Only 30% of manufacturers said their companies place a high degree of emphasis on exploring potentially game-changing ideas that would come to fruition over the long term.
M4.0 Technologies Seen Enabling Innovation
Manufacturers do expect rapidly-maturing M4.0 technologies to play key roles in enabling the accelerating pace of innovation. As they did in last year’s ML Council Innovation in Manufacturing survey, manufacturers see the greatest benefits flowing from sensors and IoT technologies, advanced analytics, and 3D printing and rapid prototyping tools (Chart 6).
Manufacturers also continue to have high expectations for Product Lifecycle Management tools and for digital design technologies that enable a digital twin approach to driving innovation.
These tools are expected to deliver a variety of benefits. Manufacturers, for example, expect the greatest benefits from IoT technologies to flow from the process improvements that they enable (Chart 7). Analytics and artificial intelligence are expected to make their greatest contribution in helping manufacturers to improve quality, and 3D printing and digital design tools will help most in enabling manufacturers to get products to market faster. Augmented and virtual reality tools, meanwhile, will help manufacturers most by enhancing ideation, respondents said.
Part 2: Manufacturing Innovation: M4.0 Technology Enablers
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6 Top Innovation Enablers: IoT, Analytics, and 3D Printing
Q: Which technology enablers do you think will have the most positive impact on your innovation performance in manufacturing over the next five years? (check top three)
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7 Technologies Expected to Streamline Processes, Reduce Costs
Q: What do you see as the top three most important benefits of using the following M4.0 technologies to help drive innovation?
Part 3: Collaborative Innovation
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8 Collaborative Innovation Still a Work in Progress
Q: Which statement best describes your company’s current level of involvement in collaborative innovation? (check one)
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9 Finding and Managing Partners Looms as a Challenge to Collaborative Innovation
Q: What do you regard as your top three challenges in seeking to achieve successful collaborative innovation? (check top three)
Manufacturers See Value in but Struggle with Collaboration
Manufacturers also believe they can improve and accelerate innovation by enhancing collaboration inside and outside their enterprises, particularly with customers. Manufacturers responding to the survey said engaging in more collaborative approaches to innovation will allow them to deliver greater new product development and operational improvements (Chart 10). At the same time, 30% of manufacturers said they see greater collaboration leading directly to greater customer-centricity. By comparison, 25% said the same in last year’s survey.
Going forward, manufacturers expect that collaborative approaches to innovation will be focused much more than today on driving customer engagement and creating product-related services (Chart 11). While 28% of manufacturers said driving customer engagement is a major focus of collaborative innovation today, 41% said it will be in five years. Similarly, just 13% said product-related services are a major focus of collaborative innovation today, but that number jumps to 20% in five years. Clearly manufacturers see a connection between more collaborative approaches to innovation and meeting escalating customer expectations.
That connection was reinforced when manufacturers were asked with which external groups their companies will engage in collaborative innovation over the next two years (Chart 12). The largest group by far, 78%, said key customers will be their greatest focus for collaborative innovation, suggesting that manufacturers are striving to understand and satisfy evolving customer demands.
Another 67% said they will have a greater focus on collaborating with technology providers, suggesting again the important role that M4.0 technologies such as IoT, artificial intelligence, and analytics will play in innovation going forward.
Despite manufacturers’ optimism about the potential for more collaborative approaches to innovation, however, the transition to collaborative cultures, processes, and organizational structures continues to be slow (Chart 8). Only 16% of manufacturers described their companies’ current approaches to innovation as highly collaborative across the enterprise. That figure was actually down from the number saying so in last year’s survey (20%).
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10 Collaboration Will Benefit Product Development, Improvement
Q: What do you see as the top three business benefits from collaborative innovation? (check top three))
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11 Customer Engagement, Service to Be Greater Focus of Collaborative Innovation
Q: What do you see as the top three areas of focus for collaborative innovation today and in five years’ time?
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12 Customers, Tech Providers Seen as More Important Collaboration Partners
Q: To what degree does your company plan to engage in collaborative innovation activities with the following external groups over the next one to two years?
The largest group of manufacturers (48%) said collaborative innovation today happens only in some areas of the company.
To the extent that manufacturers struggle with implementing collaborative innovation, the primary challenge revolves around finding the right collaboration partners and managing those relationships (Chart 9). Manufacturers also cited challenges turning ideas generated from collaboration into new products and internal reluctance to adopt externally-generated ideas.
Clearly, at some companies, the ‘not invented here’ culture still obstructs collaboration. That suggests that changing company culture will be a major prerequisite to adopting a more collaborative approach to innovation, more important even than the embrace of emerging technologies that may enhance collaboration. To that point, only 8% of respondents said they are currently using crowd-sourcing platforms to enhance collaborative innovation. Sixty-three percent said their companies have no plans to do so.
While it is clear that manufacturers face challenges in migrating to a more collaborative approach to innovation, it is certain that they will continue to strive to do so while also pushing to pick up the pace on innovation. Why? Because manufacturers are aware that innovation, besides driving down costs and driving up productivity, is a critical competitive tool allowing them to understand and quickly respond to the evolving requirements of increasingly well-informed and demanding customers. M