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Getting ‘Smart’ in Manufacturing

It is more a truism than trend that digitalization is transforming manufacturing today. Among enabling technologies, operational data analytics are deployed or in pilot at 94% of large manufacturing companies, according to the 2019 Deloitte and MAPI Smart Factory Study 

More intriguing are the aggregate capabilities of enabling technologies in the form of smart factories. At their best, the “sum of the parts” of these technologies and processes create flexible systems to self-optimize performance across a broader network of factories, suppliers, and partners. They self-adapt to and learn from new conditions in near-to-real time and autonomously run to ensure production processes. 

Fifty-one percent of the large industrial manufacturing leaders surveyed report one smart factory initiative or use case in place. (Think quality sensing and detecting, factory asset intelligence, and plant consumption and energy management among other applications.) 

So, is this research finding a story of the industry’s glass being half empty or half full when it comes to smart manufacturing? 

There is a case to be made for half empty, partly because the upside from these smart initiatives are more compelling than the adoption levels indicate. On average, companies that introduced smart initiatives have seen gains of more than 10% in the past three years in labor productivity, in factory capacity utilization, and in total output. That benefit doubles for the top quintile of companies – we called them “trailblazers” – where 3 in 5 maintain full smart production lines. 

As in other sectors, digitalization has moved from a peripheral value add into a core, must-have value generator and a yardstick for competitiveness. Eighty-three percent of manufacturing leaders believe smart initiatives will transform the way products are made. It’s hard to argue with productivity and competitiveness. 

But what about the cost? Here the case for “half full” becomes clearer in the need for a business case and in accounting for risk. Transitioning mature, aging manufacturing infrastructures into factories of the future requires significant change, careful (ROI) calculus, and coordinated support from all levels for IT/OT convergence, legacy system conversions, cybersecurity, and of course, talent management. 

Paul Wellener, Vice Chairman, US Industrial Products & Construction Leader at Deloitte, and contributor to our collaborative research, observed in a recent interview, success requires “heavy doses of communication, and measuring results to demonstrate business benefits.” Overall spending need not rise if it is redirected from old tech to new tech, for example, by retrofitting existing equipment with smart sensors. The formerly prohibitive cost of some robotics and other technologies are dropping dramatically, too. 

As barriers fall, adoption levels will rise. The glass is filling. Ultimately, what is smart business for manufacturers is unique to companies and leaders, not a summary statistic. As Industry 4.0 expectations give way to cost-effective, sustainable solutions and success stories, all cups should clink in a toast to “smart” manufacturers.   

Read the full Deloitte and MAPI study on Capturing Value through the Digital Journey. Join MAPI in Orlando next month to focus and accelerate your efforts through the Data in Smart Manufacturing Conference.