From 'can make' to 'can do': three strategic approaches to help seize the opportunity in rapid industry change

IFS Australia

By Antony Bourne, Industry Director, Global Manufacturing, IFS
Wednesday, 18 May, 2016

From 'can make' to 'can do': three strategic approaches to help seize the opportunity in rapid industry change

The manufacturing industry is going through a period of tremendous change as it responds to new and potentially disruptive technologies like the Internet of Things. Focusing on a product’s capabilities and moving towards a more service-oriented approach is just the first step in adapting to these changes. You’ll also need to identify the right solution to get you there and invest in the right people skills.

Sell capabilities, not just products

Changing from a product- to a service-centred approach can boost growth: typically, manufacturers that incorporate useful services into their products realise average business growth of 5–10% a year. Imagine you were producing printers, for example. As a successful manufacturer, your focus would be on selling the machine’s capabilities, not just the machine itself (“with this machine you can print 10,000 sheets per day”, rather than “this machine does…”). Tying service contracts (in consumables, training, maintenance, repairs, etc) to your product sales creates growth across the board.

In addition to that, disposing of products is now being offered as a service by a growing a number of companies. That way, customers can always be sure that the product will be recycled in a sustainable way at the end of its life. One proof point of the strong connection between manufacturing and services is that every job in manufacturing creates another 2.5 new jobs in local goods and services and, for every dollar invested in manufacturing, $1.37 of added value is created in other sectors.

Service contracts cement long-term customer relationships too. A 2015 survey found that 74% of manufacturers said their principal motive for offering services was ‘closer relationships with their customer’. Build your strategy around your customer’s needs, not historical requirements. Talk to them. Find out how open they are to buying contracted services, as well as just physical units. You’ll need to be sure you, and they, have the right technological platform in place; an enterprise solution that can handle the services being delivered, record and control them and schedule people (including subcontractors) to carry out and record services in the field.

First identify your problem, then your solution

Like all technologies, the Internet of Things (IoT) is basically a tool, and it’s always better to figure out what you want to fix before deciding which tool to use. My advice to customers caught up in the ongoing hype of IoT is to focus on the problem before you start exploring solutions. Ask yourself, “What exactly am I trying to solve?” Write it down. Quantify it. Nine times out of 10 it comes down to “I need to make something more efficient” or “I need to save money”. Figuring out the exact time and cost savings gained from connecting machine X to machine Y allows you to calculate the investment needed and exactly what your ROI will be. Then is the time to ask “Is IoT the best solution here?” before rushing to buy extra servers that will only end up gathering dust.

We still tend to think of IoT as something that happens ‘out in the field’, but many companies are finding that ‘smart manufacturing’ or Industry 4.0 is as effective. Smart manufacturing is a method of building greater, more effective digital interconnectedness internally, between supply and production chains, by incorporating the latest advances in sensors, robotics, big data, controllers and machine learning.

One example is an innovative German customer of IFS’s. The company uses the CAD System Pulsonix to create bills of materials directly into IFS Applications, then show the assembled printed circuit board whilst sending the bill of materials to the surface-mount device machine. The results have made the company’s operations more cost- and time-efficient. Was this solution based on IoT? No. Did it solve a clearly identified problem efficiently, cutting costs and saving time? Yes.

Smart tech needs smart people

Emerging technologies need new talent to drive and develop them. Almost 70% of manufacturers surveyed saw availability of resources as the main obstacle to increasing their service portfolio, according to the annual Manufacturing Report 2016. While the report covered the UK, we face similar issues in Australia. UK manufacturers over the next 10 years will need almost 3.5 million skilled jobs, but only two million of them are expected to be filled. A combination of factors also makes skills shortage a pressing problem in Australia: baby boomer retirement, negative images of manufacturing amongst younger generations, a lack of STEM (science, technology, engineering and maths) skills, the decline of technical education programs and the loss of embedded knowledge due to an increasingly mobile experienced workforce. Meanwhile, technology gets ever more complex and mind-to-market product cycles get shorter.

Focusing on finding, keeping and growing skills to harness new technology will be as vital as the new technology itself. Today’s workers need a rich skills range. Problem solving, for example, to autonomously adjust robots and production systems in real time. Math skills for applied competencies in measurement and spatial reasoning. Technical skills for areas like metallurgy and technical system operations such as fluid power electrical controls. Algorithmic and advanced computing skills to develop advanced technologies such as 3D modelling and advanced robotics. As product development and manufacturing systems become more interwoven and cycle times shorten, workers need to have higher levels of STEM and analytical skills to influence design changes as well as production efficiency.

The good news is that technological advance tends to go hand in hand with educational advance: the more we invest in new technology, the more we learn. The more we learn, the more new technology we create. New forms of machine-to-machine and artificial intelligence will transform our industry, but human intelligence will create and drive it.

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