A Look at Manufacturing Transformations in 2014

Manufacturing Transformations in 2014

Disruptive technologies, sound economics and innovative thinking will allow the sector to prosper in 2014.

 IndustryWeek asked CEOs from a variety of fields for their take on what next year will bring for manufacturers.

 

Rebirth of Auto Industry Will Contine to Drive 2014 Results

The recent trend of U.S. manufacturing growth will continue and most likely accelerate.  The conditions that have increasingly favored domestic manufacturing over offshore competitors will reach the tipping point.  And the disparity between U.S. wages and those of “low cost countries,, while still significant, is shrinking while the related supply chain costs continue to grow. 

Coupled with the comparatively low cost and stable supply of energy and minimal geopolitical risk, all of the ingredients are in place for solid manufacturing growth. 

But perhaps the largest factor favoring U.S. manufacturing is the rebirth of the American auto industry.  2013 saw 16 million cars and light trucks produced in North America.  Anytime there are that many or more vehicles produced, the trickle down effect on Tier 1 suppliers is substantial. 

If the recovery in home construction continues it will add even more demand for U.S. goods.  Unless some unforeseen event changes this trajectory, 2014 is poised to be one of the best years for U.S. manufacturers in decades.

Gerry Mendelbaum, president, Camber Advisors

 

 

Mobile Commerce Enables Manufacturing Success for 2014

2014 will see an increased focus on mobile commerce and mobile decision-making, and this will have major implications for manufacturers. Successful manufacturers in 2014 will focus on three things:

1. All digital touchpoints used by customers will have to be mobile friendly. Mobile-enabled marketing, websites and emails will become an essential part of staying in touch. Becoming fully mobile-friendly will be an urgent priority in 2014, and those that do not comply, will lose sales.

 2. There is an increasing trend towards retail shoppers using their mobile devices to drive decision-making at the point of purchase. Manufacturers will need to extend product marketing to accommodate this trend through use of QR codes and other tags, to link interactive content to help drive sales while the customer is standing in the store. Manufacturers need to start laying a foundation now, for when near field communication (NFC) becomes mainstream.

 3. The Internet of Things (IoT) is dawning, and 2014 will be a major leap as more manufacturers build in "smart" components to their products. Do you manufacture "things?"  Find ways to add value to your products by making them accessible and integratable. Look at Phillips' LED light bulbs that can be controlled via an app and consider how that type of thinking could apply to your product.

Howard Tiersky, president, Moving Interactive

 

 

3D Printing Technology Will Drive Future Manufacturing Education

In 2014 technology and education will merge in the manufacturing sector creating propelling the sector to new heights. In 10 years we face the very real prospect of a young highly-skilled manufacturing workforce all being fundamentally re-tooled with very state of the art additive manufacturing skills. 

The price of 3D printing technology is rapidly undergoing the effects of Moore’s Law; the speed and functionality of 3D printing is doubling every 18 months (holding cost constant).  Today a basic 3D printer can be purchased for $3,000.   That same 3D printer will only cost $1,500 in 18 months time for roughly the same functionality.  

With the reduced costs the education sector is taking notice.  MIT students (and others) are already working very cost effecive 3D printing solutions.

While accelerated learning is expected at the university level there is now a movement toward moving this  type of learning at much younger ages. For example the UK has recently announced a pilot program to invest $1 million into 3D printing in order to drive up standards in science and math.   Imagine a 6th grader who will have very regular access to 3D printing for the next decade, though high school and through college.  

As the benefits of primary age children experiencing ‘learning by doing’ become more widely known, combined with the low cost of 3D printing, these devices will soon rapidly explode in schools nationwide.  

An example in the U.S. is Bullis Charter School (BCS) in the Silicon Valley community of Los Altos. It is one of the first elementary schools in the U.S. to have a 3D printer in a lab-like facility accessible by all elementary students and also incorporated into the core curriculum.  It’s part of BCS's FabLab initiative, a pioneering elementary education program where technology such as 3D printing is used in a broader project-based learning (PBL) curriculum.   Project-based learning suggests ‘learning by doing’ offers a myriad of benefits to the students:

  • requires critical thinking, problem solving, collaboration, and various forms of communication, often known as "21st Century Skills.”
  • increases retention
  • fosters creativity
  • requires student to create something new
  • provides feedback
  • keeps learning exciting, and 
  • accelerates the overall pace of learning

Mark Zawacki, founder, 650 Labs

 

 

Breaking Silos with Big Data

Manufacturers who will prosper in today's hyper competitive business environment are those who can gain new insights and improve profitability by leveraging their Big Data.  With the implementation of ERP systems, companies have begun accumulating vast troves of Big Data, but they have not yet learned how to take full advantage of that data to improve the competitiveness and profitability of their business.  

Despite the availability of integrated systems, manufacturers are very siloed because they don't have a common set of operating data on which to make day-to-day decisions.  Sales rely on margin/unit while production looks at speed through the production process. Genuine cooperation between sales, marketing and the production side remains limited, which does not promote the overall interests of the business. The companies that will prosper will learn how to harness their Big Data to achieve seamless integration and deeper insights, and pierce the silos.  This is the next frontier for manufacturers.

Michael Rothschild, founder, Profit Velocity Solutions

 

 

Smart Strategic Planning Will Pay Off in 2014

Manufacturers who have positioned themselves over the past three years for taking market leadership position through profitable growth initiatives should see 2014 as positive.  The types of decisions that needed to be made include streamlining of go to market, successful new product introductions from a strong pipeline and steady global business investment.  Those will be key characteristics for manufacturers poised for higher growth levels.

Continued low debt costs and an inventory of bolt on acquisitions may allow solid companies with strategic planning in place to expand market share and enter new market segments.

Product segments that hold interesting growth potential include niche manufacturers of process control instrumentation and automation and data acquisition/process management software and related mobile and handheld communication devices and protocols. Even cyclical high growth segments like Tier 1 automotive, energy and semiconductor will invest in such technology to enhance their businesses and have a technical edge and strength position in their respective markets.

For the Private Equity investor, bolt on acquisitions for solid platforms will be in abundance.  The strength of the add-ons that are lower middle market (revenues of $20-200 million) will have modest to flat recent performances.  Supply will be from all sources ranging from divesture, to long term held private equity investments through family owned companies. The market for these sellers is about as good as it will get and the poorly performing ones will race to exit before 2014 into 2015 as long awaiting rise in interest rates may begin to be felt.

John Bova, director, MTN Capital Partners LLC

 

 

Don't Be Surprised by Innovation from China in 2014
 

U.S. manufacturers are gearing up for a big year in 2014.  Growth is returning, and most companies are cautiously adding capacity and labor. Some companies are re-activating five-year old plans mothballed during the recession, while others are making more dramatic changes like re-shoring production to the U.S. because of cost inflation in emerging markets.  The largest risk to U.S. manufacturers today is that they deploy their plans without paying enough attention to how global manufacturing has changed, particularly in China. 

Globalization has become an immutable fact of business, and today it is more alive than ever and evolving fast.  Yes, costs have risen in China and elsewhere along with middle class ambitions -- but companies have been responding by moving, shifting, and creating.  The shoes now too expensive to produce in China are being made in Sri Lanka; the airplane formerly made in a few plants worldwide is now network-manufactured across a dozen sites in a dozen countries. 

China, via the huge companies the nation directs, is pivoting toward invention and greater quality and away from production in order to increase its competitive advantage.  This new "double-threat" of superior production and superior innovation, forecast long ago but doubted by outsiders, now appears to be reaching a turning point. 

Companies as diverse as Huawei, Haier, Lenovo, and Tencent are increasingly dominating their categories not because of cost advantages but because of R&D, design, and new-standard-setting products.  Invention policies put into place a decade ago are now creating massive numbers of new patent applications, and even though the majority does not yet show profound innovation, the likelihood of true breakthroughs is fast approaching.  China's push into space is further energizing the nation and congealing its commitment to science and technology just as the NASA program did for the U.S. in the sixties and seventies. 

U.S. firms should not be surprised to see Chinese competitors strive for higher quality and unique design in 2014.  Chinese companies are deftly adapting foreign technologies and business models to the Chinese marketplace and rapidly leveraging these experiences into new variations.  These companies have also absorbed process technology more completely than most imagined possible, as demonstrated by the nearly labor-less auto plants now operating in China.  The nation's quest for so-called indigenous innovation is now the new mantra of China - and should be a siren call to U.S. manufacturers to avoid complacency.  Time to fasten the chinstrap - collision ahead.

Tom Manning, affiliate partner, Waterstone Management Group

 

 

Wearable Devices Next Evolution in Manufacturing

Although it may be too early for the Amazon Prime Air Octocopter to impact manufacturing and distribution in 2014, there are a number of other technologies that will begin to gain notice.  Wearable devices are the next evolution/extension of the mobile boom that has been raging for the last few years. Some forecasts project this emerging area to be as much as a $50 billion market over the next 5 years. 

Spurred on by smartphones, mobile operating systems and easy to use apps, these new wearable devices have gained an initial foothold in the consumer market.  Vendors such as Fitbit, Pebble, Nike and others have started with relatively simple implementations to get traction in the health and fitness arena.

In 2014 these devices will start migrating into the enterprise. You can expect to hear about initial trials as early adopters and innovators in manufacturing, distribution, maintenance services and related industrial sectors begin to experiment with wearable technologies and platforms.  Anticipate initial trials and use cases like the following:

•Wrist bands and smart rings monitoring roaming workers vital signs for health status, well-being and alerts

•Wearable clothing and devices monitoring the environment for carbon monoxide or other hazardous materials and issuing alerts to ensure safety

•Internet enhanced eyewear to bring real-time, hands-free information (manuals, data, order status, repair videos…) to maintenance, warehouse and service personnel for greater efficiency

•Integrated wearable device network platforms that combine data from multiple wearable devices on workers throughout a facility and feed Big Data applications for more insights into improving productivity.

Although it is early days in 2014, this is a new opportunity space where maturing technology platforms, declining costs, and future ubiquity, will enable wearable devices to make enterprise and industrial workers all part of the network. It may seem a little like “Big Brother” is watching but it will also enable much greater safety, accuracy and efficiency in many job roles as we all become part of the Internet of Things in the coming years.

Chris Kocher, managing director, Grey Heron

 

Domestic Manufacturing Upward Trend Continues

The future of manufacturing in the U.S. is looking up. We conducted an informal survey of manufacturing CEOs, and the general consensus is that manufacturing will make a comeback in the US. The reason is partly because of perceived poor quality coming out of other countries, mostly China. China's increased industrialization has resulted in improved quality of life in the country and a growing middle class, and as a result, Chinese factories are finding it necessary to pay higher salaries to attract workers. While this is the natural result of industrialization, the higher salaries also make the Chinese market less competitive in the global marketplace.

The perception of poor quality coming out of China is by no means universal. The iPhone, which is produced in China, is just one example of a top-quality product sold in the global marketplace, and which adheres to Apple's rigorous quality standards. Some respondents also pointed to a lack of competitive spirit among U.S.-based CEOs however, stating that those CEOs spend too much time complaining about foreign competition and not enough time competing.

Still others believe we are not educating and training the work force necessary to support high-end manufacturing in the U.S., and point to the need for a more sophisticated focus on STEM education. These high-end manufacturing jobs command higher salaries and are more likely to form the basis of U.S.-based manufacturing in the future, and are absolutely essential for the U.S. manufacturer to remain competitive.

Some believe electronics manufacturing will not return to the U.S. but the medical devices industry and other heavily regulated products will become stronger in the U.S. Manufacturers will continue to improve profits by seeking the least expensive countries in which to manufacture their products.

We are now seeing manufacturing of low end products like some clothing moving out of China to even lower cost locations like Bangladesh. Will Africa and Cambodia be next?

Dr. Sarah Layton,  CEO, Corporate Strategy Institute, Inc

 

Five Big Data Trends

While 2014 may not be the watershed moment for Big Data in manufacturing, it sure will enlighten a number of leaders in learning about the smarter ways to monetize Big Data. And, Apps would turn out to be one of the smartest strategies.

Here are five trends in Big Data:

1) Big Data will gain more visibility at the board room level. This will lead to incrementally more explorations by top executives. Leaders in manufacturing organizations will want to explore how Big Data could generate positive business impact for their organizations.

What this means is we will find a number of consulting firms and specialists hawking strategies for manufacturing organizations in helping them navigate the Big Data waters…where to begin? How to begin? How much to invest? These will become the key questions in the minds of the executives even before they think about how much value they get out of a Big Data initiative.

2) Big Data will become more consumer-centric fueled by the availability of machine data. We will find in 2014 manufacturing organizations look at Big Data as a means to collect more data on their consumers, learn about their behaviors and design better services and products.

Take an example of the automobile of today, which generates hundreds of gigabytes of data on a daily basis on all the driving aspects of a consumer. Manufacturing organizations would be looking at ways and means to tap into this consumer behavior and machine data to enhance product reliability, introduce newer safety standards, innovative product designs, and predict product lifecycles.

3) Big Data will become Bigger. What does this mean? in spite of all the popular press and noise around how organizations are deriving huge value from Big Data, we will find most organizations still in the hunt to collect and amass large amounts of data in the hopes (and, sometimes out of fear of losing out to their competition) that all these data will give them some “golden” insights which will deliver “golden” results for their bottom line and top line.

The reality, however, is going to be one that will see us saying good bye to 2014 and most organizations would have realized that they have been mostly collecting data and have focused on storage vs. solving problems. However, we will see some smarter organizations putting whatever Big Data they have to use in solving real problems. These organizations would be looking at technologies, frameworks and strategies from the Big Data realm for enabling their business processes smarter in relatively shorter time periods and with incrementally smaller investments as opposed to taking a “Big Bang” approach.

4) Big Data & Cloud will intersect even more. Manufacturing organizations will continue to learn more about the cost-effective ways to harness the power of Big Data without investing massive amounts of capital in infrastructure. They will explore newer technologies based on cloud platforms that enable them to collect, store & process large amounts of machine and consumer data without incurring huge implementation costs & failures as well as longer timelines.

5) Big Data will deliver value through Apps. Increasingly we will find the manifestation of value from Big Data happen through problem-specific Apps. We will find organizations adopting best-practices driven Big Data Analytics Apps that are capable of analyzing all the Big Data streams but are focused on solving a specific set of related problems. Organizations will realize that this is the most effective way to quickly monetize value from Big Data.

Phani Nagarjuna, CEO, Nuevora

 

New Methods of Utilizing Information 

We see a trend toward companies improving supply chain visibility by extending traditional customer- centric EDI transaction sets to also include vendor based EDI transaction sets. 

Also, we see manufacturers integrating process monitoring running on their PLC network with their core ERP application running on the business data network.  

Another industry trend for the coming year is the move to implementing dimensional financial reporting to create product line balance sheet and income statements using customer and geographic-centric data. 

In addition, we see the importance of improving customer lead times by identifying domestic sources for critical components engineered to reduce assemble while differentiating product offerings.  

Finally, in the Engineer to Order and Configure to Order (ETO & CTO) manufacturing space, companies are beginning to implement project based operational and fiscal controls.

Greg Torski, director, Performance Improvement Partners

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