Digital manufacturing: The revolution will be virtualized
While manufacturers are recognizing the
opportunities—and threats—of digitization, few are responding in a
comprehensive, coordinated way. That needs to change.
The digital revolution is now breaching the walls of
manufacturing as it continues to disrupt media, finance, consumer products,
healthcare, and other sectors. Indeed, the explosion in data and new computing
capabilities—along with advances in other areas such as artificial
intelligence, automation and robotics, additive technology, and human-machine
interaction—are unleashing innovations that will change the nature of
manufacturing itself. Industry and academic leaders agree that
digital-manufacturing technologies will transform every link in the
manufacturing value chain, from research and development, supply chain, and
factory operations to marketing, sales, and service. Digital connectivity among
designers, managers, workers, consumers, and physical industrial assets will
unlock enormous value and change the manufacturing landscape forever.
Yet while manufacturing generates more data
than any other sector of the economy, few companies are harnessing it. One
oil-and-gas company, for example, discards 99 percent of its data before
decision makers have a chance to use it. We believe that companies that can
close this gap by tapping the data they generate (and what’s publicly
available) will uncover valuable insights to drive profits and growth. Consider
traditional car manufacturers and Uber, which are both—at the highest level—in
the business of moving people around. Car makers meet that need on the floors
of factories and showrooms, using a century of manufacturing experience. Uber
meets people’s transportation needs not with steel, glass, rubber, and
salespeople but with data, matching individual riders and vehicles via smart
phones. Barely five years into its existence, it is valued at about $50
billion. Uber’s data, algorithms, and enormous growth prospects have already
made it more valuable than all of the physical assets, intellectual property,
and brand names of some of the world’s biggest car manufacturers.
It comes as no
surprise, then, that manufacturers are waking up to the opportunities and
threats of digitization. In the United States, the National Network for
Manufacturing Innovation is organizing six major research institutes to speed
new manufacturing technologies to market. While all of these institutes have a
digital component, one is focused specifically on digital manufacturing.1 Similar efforts are underway across the globe, including
Germany’s Industry 4.0 effort and China’s Made in China 2025. One global
convening organization, the Industrial Internet Consortium, was founded just 18
months ago and already has 175 members.
How leading companies
are responding
The ways people and organizations use information
has shifted dramatically. Data storage is cheap and flexible, and advanced
analytics and artificial intelligence are giving us new abilities to draw
insights from large amounts of data. Advances in virtual and augmented reality,
next-level interfaces, advanced robotics, and additive manufacturing are all
opening the gates to digital disruption. And in the next decade, digital
manufacturing technologies will allow companies to connect physical assets by a
“digital thread”—unleashing a seamless flow of data across the value chain that
will link every phase of the product life cycle, from design, sourcing,
testing, and production to distribution, point of sale, and use.
While this digital
transformation of the $10-trillion-plus global manufacturing sector will play
out over a decade or more, pioneers are moving to drive bottom-line and
top-line impact in the near term. When we examine manufacturing value drivers
and map them to digital levers, we find several opportunities for companies to
create value by improving operational effectiveness and product innovation, as
well as by unlocking new sources of revenue.2 Some examples include the following:
·
Many large
manufacturers are starting to use data analytics to optimize factory
operations, boosting equipment utilization and product quality while reducing
energy consumption. With new supply-network management tools, factory managers
have a clearer view of raw materials and manufactured parts flowing through a
manufacturing network, which can help them schedule factory operations and
product deliveries to cut costs and improve efficiency. Smart, connected products
are sending customer experience data to product managers to help them
anticipate demand and maintenance needs and design better products. Players in
a wide range of industries are deploying digital technologies in different ways
to drive value.
A major metal plant, for example, has used
digital tools to make step-change improvements in throughput. Real-time
performance visualization in operator pulpits combined with daily problem
solving led to a 50 percent increase in production rate in one of its lines. By
mining data, engineers are gaining new insights into the failure
characteristics of major equipment modes and making continuous improvements in
reliability. The company expects to use condition monitoring and predictive
maintenance, in conjunction with process controls and automated material
tracking made possible with big data analysis, to drive a 30 percent increase
in production without a substantial increase in operational costs.
·
Pharmaceutical
manufacturers are using their deeper understanding of end-to-end processes to
develop continuous manufacturing suites with footprints less than half the size
of conventional factories. Some have even developed portable factories that can
be built in 40-foot trailers. They are also using the digital thread to improve
quality control: continuously monitoring conditions within mixing vessels,
tablet presses, lyophilizers, and other critical equipment. A few companies are
now relying on infrared technology to detect counterfeit medicines and
contaminants without the conventional destructive tests—at production-line
speeds. As the industry brings these advances to the market, leaders will
transform the Three Sigma industry performance to peer industry performance of
Six Sigma or greater.
·
Leading
consumer-packaged-goods companies are using digital tools to improve
distribution and build bonds with consumers. Global fashion retailer Zara is
already renowned for developing and shipping new products within two weeks. It
is now using digital tools to respond even faster to consumer preferences and
reduce supply-chain costs, attaching reusable radio-frequency identification
(RFID) tags to every item of clothing in more than 700 of its 2,000-plus
stores. Ten staff members can now update a store’s inventory in a couple of
hours—work that used to take 40 employees more than five hours—by waving small
handheld computers at racks of clothing. The retailer expects to complete the
shift to wireless inventory in 2016. We believe the falling costs of RFID
hardware and associated software are likely to aid this transition.
·
The
aerospace-and-defense industry is using digital tools to integrate an
enormously complex supply network. A modern jet turbine engine has hundreds of
individual parts, for example, some of which the engine manufacturer makes
in-house and others it sources from a network of dozens of vendors. The
complexity of sourcing can multiply quickly, since making one design
modification can impact the manufacturing of many other components. Cloud
computing–based tools allow suppliers to collaborate faster and more
efficiently: an engine maker can share three-dimensional models of component
design within its network, and each supplier in turn can share information
about price, delivery, and quality. This type of information sharing and
transparency reduces the labor required to manage design changes, reduces risk
for the engine maker and suppliers, and speeds changes across the supply
network. Boeing developed its two most recent airframes, for the 777 and 787,
using all-virtual design, reducing time to market by more than 50 percent.
Questions the C-suite
should ask
The digital revolution is only beginning to
take shape. But we do know that leaders in digital manufacturing, including
some smaller players, are already gaining significant competitive advantage by
harnessing the capabilities of workers, designers, managers, and suppliers,
speeding the pace of innovation, lowering the costs of production and
maintenance, and increasing the impact of marketing. We believe that every
player should be asking five questions:
1.
How will digital
disrupt my industry in the next five to ten years, and what new ecosystems will
emerge?
2.
Where is the value for
my company, and how can we maximize it?
3.
How close is the
revolution to our factory doors, and where should I make investments in
infrastructure, cybersecurity, and partnerships?
4.
What new capabilities,
skills, and mind-sets will we need in our organization? How will we identify,
recruit, and retain the right new talent?
5.
What should we pilot
now to start capturing this value?
No company has harnessed every possible digital advance, but
many have begun to make real progress. One thing seems certain: in marketplaces
where profit margins are thin and consumers demand ever more sophisticated
products and better service, the digital thread will lead some companies to
great success while slow-moving competitors fall further behind.
By Brian Hartmann, William P. King, and Subu Narayan
http://www.mckinsey.com/insights/operations/digital_manufacturing_the_revolution_will_be_virtualized?cid=digital-eml-alt-mip-mck-oth-1507
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