LAS VEGAS— If you look at all the companies that were on the Fortune 500 list in 1990, “a very large percentage of them are not there anymore, David Brousell, executive director of the Manufacturing Leadership Council, told people attending his talk on “Manufacturing 4.0” at Oracle’s recent Modern Business Experience conference here.
That’s because they could not adapt to the Internet, the precursor to the Internet of Things (IoT), he said. “They didn’t see the digital train coming down the track.”
Manufacturing 4.0, which includes the IoT, “is indeed going to affect every manufacturing company, and they need to look at it as an opportunity,” Brousell said.
It is important to recognize that “the cultural change piece is the biggest challenge going forward with manufacturing 4.0.,” and that that involves company leaders understanding the IoT benefits and demonstrating digital-first thinking, he said. “The technological component, while seemingly daunting, is actually the easier part of the transition to the digital mindset.”
Of course, there are examples of companies that embraced digitization and are faring well as a result, including:
- Merck, which set up an “advanced logic planning support” project and created a tool that facilitates a “data-driven optimization model and a smart algorithm around what they’re doing with some of the medicines they’re producing,” Brousell said. “It enabled them to cut their lead times, lower their inventory and produce more customized, small batches.” Overall, the tool improved the company’s equipment utilization. “So, a great example of greater efficiency through an M4.0 project.”
- Cisco, which came up with a digital design and manufacturing platform that enabled advances in how it deals with contract manufacturers. “As you probably know, Cisco doesn’t make anything of its own; it outsources its manufacturing,” he said, adding that the project saves the company “a ton of money” by reducing the company’s part in tooling costs. It also gave the company more prototyping time.
- Lexmark, which devised a predictive-service project and put sensors in all their printers and customers sites that let the company monitor and be proactive about servicing its printers. “It really drove much greater customer satisfaction,” Brousell said.
- Dow Chemical, which undertook an “operations talent development initiative” that helps them identify emerging digitization roles and recruit people to fill them. “It has improved not only their ability to identify new people, but also to improve retention and employee engagement, he said. “It’s a great example of a company that is thinking proactively about what the workforce of the future is going to look like around digitization.”
What’s driving ‘M4.0’?
Mass customization is, in part, driving “M4.0,” Brousell said. “Yesterday, in the customer experience track here at this meeting, there was a lot of talk about hyper personalization and need to satisfy individual consumer needs. And that’s what’s driving a lot of this. The move from mass production to mass customization. “We’re seeing it across manufacturing, whether it’s a car or a medicine that’s specifically targeted to what may be happening to you.”
At the same time, when companies digitize, “it tends to knock down silos in an organization,” he said. “Most of our manufacturing companies are very siloed—even today,” particularly when it comes to IT (information technology) and OT (operations technology). “Digitization is going to change all of that.”
Eventually, he added, all the parts of one company must “come together in what some organizations call a digital thread or digital enterprise model.”