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This is an exciting time to be a forward-looking manufacturer. We’re entering a new era that’s being dubbed the Fourth Industrial Revolution …
It’s a world in which everything is connected.
Smart factories improve productivity and efficiency while a wealth of data offers insights for continuous improvement across the supply chain. The future is most-promising for those who adapt to change and adopt strategies for successful digital transformation (DX).
The question that remains, however, is how to effectively transition from where your manufacturing operation is now to one that embraces the opportunities knocking on your door.
To understand how we’ve arrived at the Fourth Industrial Revolution, it helps to look at how far manufacturing has come over the last 250 years, including how quickly technology accelerated change.
The First Industrial Revolution
During the late 18th and early 19th centuries, many hand production methods were replaced by machines such as the loom. James Watt’s steam engine entered the scene, powering productivity in factories just as mechanization increased agricultural output. This sent people to cities looking for work, causing a shift from agrarian societies to widespread urbanization.
The Second Industrial Revolution
Following the American Civil War, the expansion of railroads and steel production brought about another revolution. It was a time characterized by electrification and processes that improved mass production. The U.S. meatpacking industry is credited with being among the first to use assembly lines, which were perfected by Henry Ford and Ford Motor Co.
The Third Industrial Revolution
Beginning in the 1970s, this era is known as the Digital Revolution, and it signaled the start of the Information Age. Advancements such as personal computing, the internet and mobile phones gave birth to information technology (IT). Industries shifted from the use of analog electronics to digital solutions. Computers and advanced robotics also opened the door for automation in the modern factory.
The Fourth Industrial Revolution
The next phase of manufacturing will be an evolution of the Digital Age led by the advantages of connectivity in the cloud. It includes the Industrial Internet of Things (IIoT), machine learning, artificial intelligence (AI) and in-depth analytics. Physical and digital technologies are combining to create networks that drive decision-making, impacting your processes, employees and society at large.
The most innovative manufacturers have already begun implementing Industry 4.0 technology into their operations. In food & beverage for example, factors including shifts in consumer preferences, demands of the ecommerce supply chain, regulatory compliance, increased competition and the requirements of major retailers are prompting searches for innovative IT solutions.
With the right strategy, smart
manufacturing has the potential to:
Improve supply chain traceability and transparency
Reduce downtime and boost production
Increase speed to market
Decrease labor costs
Expand quality control efforts
Enhance productivity and efficiency
Support new product development
Provide data-driven insights
But you need to
walk before you
can run …
Is your organization prepared to embrace the disruption that comes with Industry 4.0?
According to Deloitte’s survey of 1,600 C-level executives, only 14 percent are highly confident in their company’s ability to take advantage of emerging technology associated with the Fourth Industrial Revolution.
The Deloitte survey uncovered common answers ranging from lack of internal alignment concerning which strategies to pursue, to the absence of a vision from leadership, a focus on short-term thinking and failure to effectively collaborate with external partners.
IT departments and solutions providers must play a pivotal role in the transition to Industry 4.0, because this revolution begins with a comprehensive view of data across value chains, as well as a dependence on cloud computing and storage.
Without a firm foundation upon which to build and integrate new technologies, the impact of these industrial breakthroughs cannot be fully realized. Your organization needs you to help pave the way for Industry 4.0 by laying out a strategic roadmap for key digital transformations.
The right IT solutions have the power to give manufacturers the confidence needed to implement new technology while addressing risks and navigating roadblocks that impede progress.
As an IT leader, your vision will clear the way for Industry 4.0 …
However, there are several key issues on which you’ll need to focus:
How will you move your organization away from legacy systems?
How will you integrate platforms and modernize applications in the cloud?
How will you tackle cyber security concerns?
How will you maximize in-house talent and capabilities?
How will you manage accessibility and data visibility?
How will you help the company leverage data into business insights?
Continue exploring the move towards Industry 4.0 below. Find out more about the specific risks, impressive opportunities and initial steps manufacturers must take to be prepared for the changes ahead. We’ll look at the exciting promises of the Fourth Industrial Revolution, roadblocks and challenges facing IT leaders, and a way to build a path toward the future.
Automated Factories
Advanced robotics promise to help manufacturers reduce labor costs and increase productivity on the factory floor. Automation ensures precision that brings quality assurance and reliability to production.
McKinsey estimates that 64% of working hours in manufacturing are automatable using current technology.
The Industrial Internet of Things
The future of manufacturing includes a network of physical objects implanted with technology allowing for communication between equipment and applications. Devices such as sensors and employee wearables promise to improve safety, efficiency and operations.
Accenture estimates investments in IIoT technology will contribute $14.2 trillion to the global economy by 2030.
AI and Machine Learning
Artificial intelligence, including machine learning, will help manufacturers eliminate waste and reduce downtime. For example, predictive maintenance alerts factories to address problems with equipment before it breaks.
The Price Waterhouse Cooper survey, Digital Factories 2020, found 66% of manufacturers expect to use predictive maintenance within five years.
Blockchain
Storing supply chain and transactional data using decentralized blockchain technology promises to improve traceability and security in manufacturing. Blockchain will be a key factor in helping food manufacturers track and avoid product recalls. A Food Marketing Institute and Grocery Manufacturer’s Association study found the direct costs of a food recall averages $10 million.
A Capgemini Research Institute survey found that, at 81%, enhancing traceability is one of the three most-cited reasons for investing in blockchain.
Augmented and Virtual Reality
AR and VR promise to help manufacturers bridge the talent gap with high-tech training opportunities, as well as technology that supports product development and innovative engineering solutions.
A Bank of America/Merrill Lynch report found AR platforms provide a 25% to 60% cost-savings on installation and maintenance of equipment.
Additive Manufacturing
The future of manufacturing includes 3D-printed replacement parts and products. Additive manufacturing also reduces downtime. Why wait for a part when you can print one from schematics shared by the equipment maker?
According to Statista, the size of the global additive manufacturing market more than doubled between 2015 and 2018 to $12.8 billion.
Driven by Data
There’s a connecting thread among the many aspects of Industry 4.0. At their core is data.
Whether solutions and applications create data, share data or use data to make continuous improvements in a smart factory, it’s clear that leaders and winners in the Fourth Industrial Revolution will be the manufacturers who identify ways to harness the power of all that information.
Discussions around technology including artificial intelligence, machine learning, blockchain and Big Data indicate that manufacturers want to leverage their data to inform decision-making and support business outcomes.
“Without the water wheel or steam engine, an engineer wouldn’t be able to develop a powered weaving loom. Likewise, without compute services, cloud platforms wouldn’t have the power to bring together automation, robotics or IoT to deliver new and innovative applications.” ~ Pascal Giraud, Senior Director IaaS Foundation and Cloud Platform, Oracle EMEA
With every iteration of industrial revolution throughout history, there was something that enabled a leap forward. As the Fourth Industrial Revolution takes off, it is the cloud and cloud services (Iaas, PaaS) enabling manufacturers to achieve new levels of productivity and innovation.
According to the Oracle report, Cloud: Opening Up the Road to Industry 4.0, 60% of businesses believe an integrated enterprise cloud platform is fundamental to applying the power of technology such as robotics and artificial intelligence. Yet, the same number (60%) indicate that a “rigid IT structure” keeps them from pursuing innovation.
Derek DeHaan, Manager of Hosting Architecture at OneNeck says he’s noticed a shift in recent years as companies take advantage of hyperscale cloud providers to leverage data analytics. He describes the question many manufacturers are asking and how cloud provides an answer.
Derek DeHaan
Manager of Hosting Architecture
Have a question? Ask Derek!
“How do we get our supply chain so that it operates the most efficiently with all these data points that are running through it, send that data out to machine learning, AI, internet of things, give it all the data, and let it help us become more operationally efficient? The way that’s been enabled in my mind is hyper scale public cloud and leveraging those technologies whether it’s Azure or AWS, in their marketplace, tapping into those services so they can hopefully better themselves, become more operationally efficient, save costs, and ship stuff quicker.”
Industry 4.0 represents the combination of information technology (IT) with operational technology (OT). Yet, to realize the full potential of these changes, manufacturers must consider how they will integrate across a network of partners, vendors and collaborators.
Digital ecosystems are now being built in which data across the supply chain intertwines from suppliers and manufacturers through distributors, retailers and end users. As with ecosystems in nature, a disruption in one portion can impact all areas.
In some cases, important partners to CPG manufacturers, such as retailers, may require the adoption of major digital transformations. For example, Walmart is requiring some fresh food suppliers to be on the blockchain to improve food safety through traceability.
Two Essentials of the Industry 4.0 Ecosystem
If manufacturers want an effective ecosystem in the cloud, two things need to happen:
1
2
Agree on the Language
The manufacturer and all the participants in the ecosystem must agree on taxonomy, format and transport of data to ensure it is understandable and beneficial to all partners and can be shared across the network.
Establish Trust
Manufacturers and all others in the ecosystem must know the data is accurate and reliable from a product’s conception through production and distribution. Data should be managed in such a way that all parties know where it came from, how it was transported and how it is being used.
Where to Start
If you want to pursue the advantages of a smarter, connected factory, but the Fourth Industrial Revolution seems a million miles away, Industry experts suggest a simple, two-step approach to help manufacturers start clearing a path for the future.
Step 1
Step 2
Step 1
First, manufacturers must take inventory of applications and workloads big and small to gain a comprehensive understanding of IT and how it impacts the business in its current state. OneNeck calls this process “Discover and Document”.
“What are the applications that this data flows through? What locations, execution venues or clouds or other platforms do those applications sit on? How is that data then captured and moved between those components? As I talk with customers, a lot of them have an idea of the intuitive and obvious ones and bigger ones. But sometimes, it’s the smaller, complementary pieces that are still needed to make sure that all of the things take place that need to.”
“We call it discover and document. We have more and more customers saying ‘Can you just come in and help us understand our business’ current state and then help us create better documentation that’s more intuitive, not just to technology audiences, but to business audiences? So, we can then take a look at all the things we’re having to deal with and make sure we don’t miss a piece.’”
Step 2
Next, manufacturers must examine potential costs and benefits of the courses of action for modernizing and moving workloads and applications to the cloud, which connects to an Industry 4.0 ecosystem. This often leads to a hybrid IT solution, especially during transitions.
“Once you understand the applications and start to look at, ‘Okay app A is my top priority. How much would it cost for me to run that on prem, how much would that cost for me to run that co-located, how much would it cost for me to run that private cloud, public cloud?’ In some cases, the answer will be no you shouldn’t do that, in some cases it will be you can do that in these three different ways. And, here’s what the differences in cost will be.
That’s what hybrid IT is all about. All of those answers are correct, in that we can see trends by industry or technology type. But largely, we need to work with the customer to understand their situation, see the different options and form a path forward from there.”
When Sunny Delight Beverage Co. needed to modernize its ERP and migrate to the cloud, they trusted their partnership with OneNeck. Find out how we worked together to develop a hybrid IT solution that made the switch from Microsoft Dynamics AX 2009 to Microsoft Dynamics AX 2012 on Azure simple and seamless, allowing operations to continue, uninterrupted.
Lack of Strategy
Deloitte research shows a “lack of internal alignment about which strategy to follow” was the top challenge in adopting new technologies.
Accenture found only 7% of business leaders say their organizations have a strategy for using IIoT.
SOLUTION
Help with development of strategic initiatives requires evaluation and prioritization. Expert guidance, including IT Assessments and insights from OneNeck’s Advisory Consulting service lead to a roadmap of solutions customized for your organization.
Legacy Systems
Deloitte’s 2018 Global CIO Survey notes that many IT executives realize outdated legacy systems are impeding their organization’s ability to innovate and scale. That’s why 64% say they are modernizing their ERP systems.
SOLUTION
Derek DeHaan says manufacturers need to make their ERPs cloud-ready and recommends utilizing reputable public or private cloud platforms that can support Industry 4.0 initiatives.
“If you have a legacy ERP system, the legacy ERP system needs to be modernized first before you start going out to platforms like Microsoft Azure and Amazon. What I mean by modernize is it needs to be made cloud-ready so that it can leverage the redundancy of multiple servers and things like that to be relevant and leverage IoT and all these other things.
Absolutely the ERP system has to be in the cloud whether it’s Dynamics 365, whether it’s SAP on Amazon, Oracle on Oracle’s cloud, whichever one you pick, the first step is that has to be out in some sort of providers’ platform. That then gives those manufacturing customers access to the things I talked about in the marketplaces and IoT and all these other services that integrate pretty seamlessly once you’re out in those ‘as a service’ ERP platforms.”
Security Concerns
Smart factories are more vulnerable to cybersecurity concerns simply because they are more connected. An increase in connected devices means an increase in exposure and more potential entryways for malicious attackers.
SOLUTION
Manufacturers shouldn’t have to choose between playing it safe and implementing beneficial technology.
OneNeck offers Advanced Services including IT security assessments, data and application security and identity/access management.
Plus, with a virtual Chief Information Security Officer (vCISO), manufacturers gain access to OneNeck experts who can assess your security posture, and then design and implement a cybersecurity strategy you can count on.
Obtaining Buy-In
The acceleration of technology may have some manufacturers feeling hesitant to invest in something new. There have only been a few decades between the Third and Fourth Industrial Revolutions. Many small to mid-sized manufacturers are still playing catch-up. Convincing board members to invest in new technology is a challenge.
SOLUTION
The best way for technology visionaries including CIOs and CTOs to communicate their strategy to the board and other decision-makers is to show how investments in digital transformation support key business objectives.
Inside our free DX Toolkit you’ll find advice from OneNeck experts who’ve helped CIOs present and implement major IT projects.
Integrating with Partners
Since a digital ecosystem is the new reality, manufacturers need strategies for integrating applications in different types of clouds and execution platforms.
Beyond the functionality of what an application does, IT departments must make sure it can connect and communicate.
SOLUTION
To operate in an Industry 4.0 ecosystem, manufacturers should adopt a multi-cloud strategy. The Voice of the Enterprise survey from 451 Research estimates 69% of organizations will run a multi-cloud environment in 2019.
Cybersecurity
Security risks for manufacturers include:
- DDoS attacks through connected devices
- A cybersecurity talent shortage
- Theft of intellectual property
- Mobile workforce and endpoint protection
- Potential to shut down production
In 2017, a Cadbury chocolate factory fell victim to the global Petya cyberattack. The massive ransomware issue caused computers to stop working and forced a shutdown of production. Parent company Mondelez International said the security breach came at a cost of $140 million in lost revenue and $7 million in additional expenses.
The Path Forward for the Future of Manufacturing
While the opportunities of Industry 4.0 are exciting, implementing change is difficult, and with new technology comes new challenges. OneNeck is prepared to be the IT partner you need.
When you work with OneNeck, you'll get help navigating the complexities of IT, so you can make sense of where you are and plan where you need to go. This allows manufactureers to modernize IT solutions and free up internal resources to pursue innovation. And, with OneNeck, you can implement trusted and advanced security solutions that provide protection as threats increase.
