With the launch of ChatGPT, the physical and virtual world have come closer by a quantum step. The impact of which is only going to be visible in computing, but throughout the entire manufacturing industry.
The challenges for manufacturers and individuals are alike, there is tectonic shift – everybody is discovering new was of operating, while the old challenges remain well anchored in the society. With products and services becoming more digital, hence connected, the opportunity to implement change and to get disrupted are ever more realistic. According to an EY research paper, 68% of CEOs of some of the largest global industrial products companies are increasing digital/technology investments this year. Furthermore, these CEOs also cite business disruption by non-traditional players as one of their top three risks.
Software service providers are well advised to understand this large and overarching business trend. In fact, digital development can support multiple areas be it through bundled hardware services and customer enabled interfaces which all will aim at improving the company’s operational efficiency.
The digital transformation is part of a larger secular growth trend, i.e. IIoT which incorporates the rollout of 5G, automation and digitalization of products and services, Cloud computing, and to some extent re-industrialization of DM through reshoring.
Today, digital transformation is driven by three main developments:
- The geopolitical situation drive near and re-shoring of industrial activities
The most recent macroeconomic shocks have evidenced the supply-chain and the just in-time business model weaknesses. As of today, 53% of US and European manufacturing companies say they have near-shored or re-shored operations in the last 24 months. Relocating or increasing existing production in Europe and the US will put high demands on automation and digitalization to maintain competitive production costs. But according to a Bloomberg survey, the US employee productivity dropped by 2.7% while better and more industrialized process were available! At the same time, labor costs surged by 6.3%. The question of which can be addressed here is: Is this irregular situation due to ongoing economic uncertainty? - Skilled labor shortages
New technologies require different trained people, which the educational system does not provide in abundance. The result is that discrete manufacturers that entered the digitalization process are short of white-collar people. More important, the next generation engineers expect simplified user interfaces, enabled by low- or no-code solutions, rather than the more complex interfaces used on many factory floors. - Sustainability
Oftentimes, meeting Zero CO2 standards requires digital technologies. The traceability of the CO2 emission is key for the manufacturing industry; in fact, a well-managed process will allow a focus on yield and energy optimization across the entire supply base. The good thing is that a full automation will allow both, suppliers and customers, to monitor in full transparency the operators CO2 evolution.
The digital transformation will lead to developments in the following areas:
- Customers’ data access
> the boom in data availability will increase demands on software suppliers to provide seamless data flow across multiple applications. - Cloud manufacturing:
> Digital solutions are changing customer requirements, i.e., customers will require more than ever customization, responsiveness, and excellent UX and UI. - Connectivity and responsiveness
> Connected products require discrete manufacturers with greater transparency, enabling customers to become more empowered consumers. - Digital customer interfaces
> The future manufactory may look totally different from the one of today – One can think of a factory that provides online its production capacities. - Smaller batches
> Highly automated industrial process will allow the production of multiple shorter and smaller production cycles resulting in a higher level of on-demand production cycles.
Manufacturing as-a-service model
Digital solutions will result in the fact that manufacturing is going to change a lot. Manufacturing as-a-service (MaaS) business model is most likely going to be the future. MaaS model actually bode well with IIoT, AI, and AM (additive manufacturing). While there are still some technical and economic barriers to implement this business model type, we believe that MaaS has a great future as data-driven and end-user driven system are most likely the future of self-directed manufacturing with less wasted material and higher quality products.