Senior Research Analyst, IDC Manufacturing Insights
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Manufacturing is undergoing a transformation. Fueled by disruptive forces such as digital transformation and Industry 4.0, a major overhaul of key business processes is needed — across product innovation, production, and supply chain.
At the same time, the shift from products to services and the need to bypass traditional sales channels to exploit the value-added activities of the digital economy are blurring the lines between industry players and contributing to the formation of business ecosystems.
In line with this, and fueled by our observations made at Hannover Messe in April, key market developments making the news since then, and our own research, we recently published a report summarizing the biggest disruptors worth keeping an eye on. Manufacturing, as we know it, is changing, and here are four reasons why from the report.
1. Data-Driven Manufacturing Is Here
According to IDC FutureScape: Worldwide Smart Manufacturing 2019 Predictions, by 2020 80% of manufacturers will need to extensively restructure, placing data at the center of their processes, to increase speed, agility, efficiency, and innovation. Within a plant or shop floor, a constant stream of process data captured through connected, smart automation can be analyzed and used for better product and asset design, faster engineering and R&D changes, and reliable, quality automation. We saw evidence of this showcased at Hannover Messe as the vendor community liaised with end users to help enable faster and more cost-effective innovation in the manufacturing sector.
Volkswagen, for instance, has selected Siemens as its integration partner to help connect its 122 global plants to the AWS cloud. Siemens will play a key role in ensuring that machinery and equipment from different manufacturers at the 122 Volkswagen plants are networked efficiently in the cloud. This is a breakthrough in helping companies to link and integrate data produced from plants, machines, and systems to improve and standardize production processes.
Another example is Microsoft and the BMW Group launching the Open Manufacturing Platform. Built on the Microsoft Azure industrial Internet of Things (IIoT) cloud platform, the Open Manufacturing Platform is intended to provide a reference architecture with open source components based on open industrial standards and an open data model. By the end of 2019, the goal is to have an initial set of four to six partners in place and a minimum of 15 use cases rolled out into select production environments. Manufacturers and suppliers, including companies from outside the automotive industry, will be encouraged to join the community.
The next wave of continuous improvement will come only from systematic and advanced data analysis. This is the time to start looking at the data that factories generate to reap value. Technology is finally here (data collection, cleaning, storage, analysis, and distribution) to support companies in this ambitious endeavor.
2. The Official Debut of Industrial 5G
After the launch of high-speed mobile internet, the next generation of connectivity is the much anticipated 5G. With performance levels outpacing its 4G and LTE predecessors, this new standard can achieve 100 times the data speed at 1,000 times the capacity. According to a recent IDC report, 5G in Vertical Applications: Manufacturing, 5G has the potential to provide the enabling connectivity fabric for several applications that would be challenging to support with traditional enterprise networking technologies or with today’s public mobile network services.
Industry 4.0 objectives that these 5G applications can support include making workers more effective and productive, introducing automation into new areas of the production process, and extending process information more pervasively throughout the supply chain.
At Hannover Messe, Qualcomm Technologies and Nokia were selected to provide over-the-air 5G connectivity for a number of selected demonstrations in the 5G Arena, including a human-machine interface with 5G-enabled emergency stop capabilities (by Bosch Rexroth) and a 5G-connected process quality control system for the automotive industry (by ZEISS). Also, Ericsson and ABB announced they had joined forces to accelerate wireless automation for flexible factories. This streak of 5G announcements did not stop at Hannover Messe. More recently, Mercedes-Benz Cars and Telefónica Deutschland established the world’s first 5G network for automobile production, while Ericsson, Vodafone, and e.GO launched 5G car manufacturing in Germany.
IDC estimates that 5G will open up opportunities to foster business agility and manufacturing process customization for different products and services. 5G technology improves speed and flexibility in the factory, so as these projects start mushrooming at an accelerated pace and with more industrial-level capabilities, be prepared to assess whether your factories are ready for this revolution or if you need to reconsider your strategy to leverage the benefits from the technology.
3. End-to-End Solutions to Create a Digital Thread
In the age of digitization, the smart factory must be connected to other related domains in the organization. This includes design and engineering, where out-of-tolerance and quality issues communicate to enable necessary engineering changes, supply chain for asset optimization, and service for accurate planning and execution. To achieve this approach where digital manufacturing is connected upstream to design and planning, and downstream to delivery and operations, the manufacturing role must shift to become a strategic contributor to the rest of the business. IDC often hears from organizations that their regular, cross-functional meetings include their production organizations, whether the meeting is for design and innovation, product planning, supply chain, or service.
One of the biggest challenges in this journey is to manage IT not as an isolated solution but to connect all data and systems together in such a way as to provide the greatest possible benefit for business success. We saw good evidence of this digital continuity at Hannover Messe this year. For instance, SAP announced manufacturing technology innovations, including augmented reality (AR), AI-powered management systems, and 3D visualization and self-guided vehicles, from the SAP Manufacturing Suite and the SAP Startup Accelerator for Digital Supply Chain program. Similarly, Oracle’s Connected Digital Innovation solution is a modern cloud platform that enables a digital thread to track the product life cycle, from idea inception through release, in-field use, and service.
In the industrial software space, Schneider Electric merged with AVEVA. The new AVEVA covers all aspects of the digital asset life cycle, from design to operations and back again. Siemens, a vendor with a similarly comprehensive mission, showcased its PlantSight solution, built on the integration of different kinds of data sources to create a holistic digital context for aligned digital components. The solution also enables real-time, digital-twin-supported visibility on all plant operations, synchronizing the real plant and its engineering representations.
Another vendor that has elaborated on this value proposition is Dassault Systèmes, which now offers a model-based systems engineering solution. It is essentially an integrated engineering platform that supports the rapid development of intelligent products, cross-domain simulation of complex systems, and the reuse of artifacts across multiple product configurations.
4. Edge Computing Hits Mainstream Shop Floor — Coming to Cloud’s Rescue
With growing data volumes and a need for real-time data, cloud-centric solutions with centrally managed data storage and processing no longer suffice in many IoT scenarios. Expectations have shifted to edge computing. Even though edge computing was limited to collecting, aggregating, and forwarding data to the cloud until recently, it has now matured to a point where industrial companies can turn large amounts of data into actionable intelligence, available right at the edge. Hannover Messe 2019 reflected the sentiment that machine builders increasingly see the benefits of edge computing, enabling them to understand more about their individual machinery on the shop floor. With that insight, they can react faster to machine behavior, and therefore differentiate themselves from their competitors. The “edge as a platform” concept is also gaining popularity among end users that operate on minimal operating costs and resources.
We see manufacturers starting to deploy cloud-based execution models that depend on edge analytics to enable the seamless handover of data to enterprise applications and to achieve real-time visibility, supply chain integration, and increased operational flexibility.
IDC believes that the capability to collect and analyze data and provide derived insights immediately creates a revolution in support of organizational tasks. This is a key component of the aforementioned digital thread that supports most factory applications (manufacturing execution systems or MES, enterprise asset management or EAM, quality, materials handling, just-in-time, etc.) and links them with other enterprise applications (enterprise resource planning or ERP, supply chain management or SCM, product life-cycle management or PLM). And this is where IT/OT integration must happen. Converting raw data from the machine level into enterprise-grade information will transform and elevate the role of shop floors in manufacturing organizations and make them central in the fulfillment process.
Conclusion: Avoid Becoming a Digital Laggard
In the past few years, IDC has witnessed the evolution of digitization and the disruptions and opportunities it creates for business and society. Organizations of every size and industry must adapt to new technologies, new players, new ecosystems, and new ways of doing business. Digitalization acts as a force multiplier that creates faster, more dynamic, and competitive market places, widening the gap between the few thriving companies — the best performers that leverage their capabilities to create new digital products and services, expand digital ecosystems, and foster digitally savvy workforces — and the rest. To this end, not all manufacturers need to be at the same stage when it comes to digitization, as shown by the examples in this blog. But if they want to keep up with the competition, let alone stay relevant, they need to invest in a digital road map now.
To access the entire report or to talk to us about digital transformation in manufacturing, please get in touch with us HERE