In my last post, I challenged our readers to consider the development of more than just a “Smart Factory” but instead, to develop a “Smart Enterprise.” This concept has been evolving over the past 20+ years, progressing from smart cells, to smart lines and factories, and finally to what we’re starting to see today: the smart enterprise. Under this scenario, all systems and processes are globally interconnected across functions, lines, and plants, all the way up to the corner office.
Through technology such as demand sensing, manufacturing intelligence, load balancing, directed manufacturing processes and supply chain management, it is becoming possible for a smart manufacturing enterprise to act like a single, highly efficient global organism, almost able to respond to change on its own. One of the driving forces behind this shift, according to IDC Manufacturing Insights, is that companies are attempting to build resilience into their approach to operational management by investing in more consistent performance measurements, greater visibility to current status, and analytics to provide retrospective, perspective, and predictive capabilities to operational management.
[Register to attend a free webinar on this topic, hosted by Bob Parker of IDC Manufacturing Insights, and myself, which offers insights on how to improve your resilience to change by improving visibility to operations intelligence.]
This is a big evolutionary step in manufacturing. As part of the drive to increase flexibility across operations, there is now growing focus to merge Engineering with Production to better manage product complexity and proliferation, gaining visibility into operations before the end of the quarter, when it may too late.
With all of these factors at work, where is the Smart Factory headed, how will it become a Smart Enterprise, and how will this change impact our global marketplace?
Based on some of the feedback I have heard and articles I have read, here are some of the implications that are being predicted, and what we might expect to see over the next few years:
- Build Resilience. As industries become more customer-driven in the most literal sense, Smart Enterprises will better enable mass customization, with everything from ordering to volume manufacturing and shipping directed by customers, executed by corporate rules and automated systems. In Smart Enterprises, the customers run the production line, which then drives supply chain fulfillment. This is already happening at select organizations. This trend should expand into ever more complex manufacturing sectors as the technologies mature and market leaders force competitors to keep up.
- Lean is not enough. The move to Lean manufacturing will hardly go away, but now these programs must also be more responsive to change while delivering continuous improvement and reducing costs. There must be tight feedback mechanisms, built on a foundation of manufacturing intelligence, to enable continuous improvement within highly dynamic environments.
- Simplify the core. Resilient systems are not built on complex foundations. In fact, it is just the opposite. The need for resilience will trump added complexity. Simplified at the core might be translated for our purposes as “standard” at the core – standard metrics, processes, and decision approaches – while allowing for some latitude at the edge (the factory) to satisfy customer needs in the most effective way possible.
- Greater visibility. Improving yield and other complex challenges will become more manageable with smart enterprises. For the first time, manufacturers will have true visibility combined with the ability to take action across a range of interrelated manufacturing operations. For example, smart enterprises make it possible to see how suppliers, production, equipment, processes, and workers affect the quality of every part manufactured. This trend is well underway in industries such as Automotive, A&D, and Life Sciences. Expect more industries to follow.
- Razor’s edge. Industries with historically razor-thin profit margins, such as packaging and glass, will see greater pressure on their bottom line. As factories and enterprises become smarter, productivity will increase, which will generate even greater profit expectations. This can drive an ugly productivity “vice,” which could translate into even more pressure to grow profit from even tighter margins.
As manufacturers and their far-flung operations become more networked and interconnected, these developments seem like sure things. In fact, they are likely just the tip of the iceberg. What will it mean to companies and global marketplaces when a manufacturing enterprise in any industry can truly respond on a dime, anywhere in the world, and always in the most efficient and profitable way? “Paradigm shift” is a term that’s often overused, but in the case of smart enterprises, I have a feeling it’s an understatement.
Do you have a good example of a smart factory? How about a smart enterprise? I would be interested in hearing back from you with a comment below.