Building manufacturing resilience through Industry 4.0

Paul looked at connected risks associated with manufacturing in a global economy and how digital transformation can help mitigate these risks. He also touched on how short-term digital implementation can help resilience during the current global crisis and how long term the adoption of digital technologies is essential in order to retain resilience and protect against future global shocks. Below are some of the key questions and responses.

What do you mean by connected risks?

Connected risks are when a local shock somewhere in the world spreads to become a global shock. COVID is an example of this but it is not the first nor will it be the last local shock to have caused a global shock. Another example is the 2008 global financial crisis caused by the selling of subprime mortgages in the USA.

These local shocks whether caused by a virus, terrorist attack, technical failure, natural disaster, climate change, or political or industrial action, can have an immediate or contagious global impact on manufacturing. 

Building manufacturing resilience

We need to understand where connected risks exist for global manufacturing and take actions to mitigate them.

How do these connected risks affect manufacturers and how are they reacting?

We need to understand the impact from connected risks which can be categorised into four areas; changes in demand, access to supplies, infrastructure failure and Societal Impacts. Companies are reacting to the current global shock by; right-sizing, vertically integrating by moving work from the supply chain in house, consolidating through M&A, diversifying into new markets, and, reviewing their lean philosophy so that they have stock and capacity to survive disruption. Companies need to undertake a risk assessment on connected risks and have in place actions to mitigate these risks and contingency plans to react to them.

How can digital technologies help manufacturers to overcome these challenges?

Companies should consider three immediate areas; improve insight and improve communications, undertake modelling and real-time monitoring and intervention. Insight and communication can be improved by implementing off the shelf online tools such as Accounting, MRP, CRM, CADCAM and Digital Marketing tools. Whilst modelling can be used to improve demand forecasting, design safe factory layouts and analysis supplier risks. Once real-time data collection is established, predictive analytics can be used to reduce machine downtime, reduce waste and optimise production. Most of these tools can be integrated through APIs and company-specific dashboards. 

Which digital technologies should we be looking to implement that will improve our resilience in the longer term?

We will develop a cognitive capability that not only augments human skills for undertaking routine and repetitive tasks, e.g. implementing robots and 3D printing, but machines will combine with humans to provide intelligent insight to assist with decision making and critical thinking, eventually even making some of the decisions themselves. A fundamental to this is the ability of machines to predict, with accuracy, events that will happen in the short-term future than to decide what actions to take to alter the predicted future. Any company that is not in tune with this will be left far behind – very rapidly.