MANUFACTURING SERVICES

Digital transformation for manufacturers

Digital transformation for manufacturers

Overview

Industry 4.0

For more than two decades, digital technologies have provided manufacturers and fleet operators opportunities to increase efficiency and productivity while saving money. The integration of computer technology into planning, manufacturing, distribution, and transportation processes has shortened product development cycles, lowered production costs, and accelerated time to market, among other benefits.

A new generation of digital technologies is beginning to make an even more dramatic impact on these enterprises, offering manufacturers and fleet operators the possibility of genuine business transformation.

These technologies—which include the Internet of Things (IoT), data analytics, faster networks, artificial intelligence (AI), machine learning, and augmented reality (AR)—make up what is commonly referred to as Industry 4.0.

The components that fuel Industry 4.0 technologies are connectivity and data. Manufacturing and fleet enterprises are using IoT to transmit real-time information, creating a holistic picture of business operations. Connected devices and products can initiate an ongoing feedback loop from the manufacturing floor (or transportation vehicles) to cloud-based analytics platforms and back down to users on the factory floor, in engineering offices, or on the road.

Industry 4.0 technologies help manufacturers save money through better inventory management, improved asset utilization, and optimized production planning.

Better information gathering, and big data analytics enable a 360-degree cycle from the equipment to the cloud and back to decision-makers

“Better information gathering, and big data analytics enable a 360-degree cycle from the equipment to the cloud and back to decision-makers” explains Dan Miller, Director of Vertical Strategy for AT&T. “You can push data back down to mobile users on the floor or in engineering offices and into mobile apps and mobile dashboards. Manufacturers and fleet operators can continually iterate through better operational procedures."

Industry 4.0 technologies help manufacturers save money through better inventory management, improved asset utilization, and optimized production planning. They offer collaboration tools and automated notifications and functionality that can boost labor productivity. They also provide tools that improve safety and compliance through preventative measures—such as tracking the location and movements of field or factory workers—and safety metrics.

For fleet operators facing the perpetual challenges of meeting safety compliance requirements and reducing driver churn, Industry 4.0 technologies allow for the creation of “connected fleets” that can 1) make it safer and easier for drivers to communicate; 2) maximize the use of trailers and shipping containers; and 3) help the organization meet increasingly complex compliance rules.

A new IDG QuickPulse survey of manufacturing/fleet operation decision-makers reveals that a strong majority of these enterprises are aggressively pursuing digital transformation opportunities. Nearly four in five respondents (79%) said their enterprises already have made technology changes at the corporate or plant/factory level to optimize operations, while 60% said their organizations have plans to optimize operations through technology changes over the next year.

Most are doing so out of what they view as a competitive necessity. Two-thirds of QuickPulse survey respondents agreed that optimizing operations with technology is vital to creating a competitive advantage in their industries, with 60% indicating that the success of their organizations increasingly are “dependent on data from connected systems and devices.”

Nearly four in five respondents (79%) said their enterprises already have made technology changes at the corporate or plant/factory level to optimize operations

Opportunities

Challenges and objectives

The vast majority also reported ongoing challenges with data management. More than four out of five respondents (81%) said they strongly agreed or somewhat agreed that harnessing all the data their organizations generate is a challenge. This is no surprise: the manufacturing sector generates twice as much data as any other industry, research shows, with discrete manufacturing—the production of distinct items ranging from the simple (baby toys) to the complex (automobiles)—generating 60% of all manufacturing data.

The survey reveals some divergence between IT and operational technology (OT) respondents over the objectives and perceived benefits of digital optimization, as well as the actions they planned to take to improve safety and compliance. There also were marked differences between IT and OT respondents regarding planned investments to support digital optimization.

Yet, IT and OT respondents both regarded data analytics as the strongest focus of their digital optimization investments. This underscores the increasing role that data collection and cloud-based technologies are playing in improving manufacturing operations.

Both IT and OT survey respondents listed achieving greater efficiency and cost savings as the top two priorities of digital optimization, followed by ensuring safety and compliance, increasing labor productivity, and improving quality.

Industry 4.0 technologies such as IoT and data analytics can reduce costs in several ways. Dan Miller of AT&T says: “If you use data to identify equipment issues before they become a problem, you can alleviate downtime. You also can avoid unnecessary preventative maintenance, which is kind of the industry norm; check it every 30 days whether it needs it or not.”

The top benefits respondents said they expect from digital optimization were as follows

Benefits and solutions

Replacing experience with technology

In addition, digital optimization technologies can help manufacturers cope with the loss of manufacturing knowledge and expertise as older, high skilled employees exit the workforce. “Manufacturers are having trouble finding qualified people to backfill for retiring experts,” Miller says. “The skills aren’t there, and the desire to learn the skills isn’t there.”

Fortunately, digital technologies can bridge the gap, says Miller: “This gets into one of the cornerstones of Industry 4.0. Things like augmented reality, where you can put on some AR goggles that let you look into a piece of equipment that needs to be maintained, and the goggles can walk you through a process with overlays and instructions in your field of vision. You no longer need to know that equipment to be able to do that. That’s a huge step for a manufacturer that used to have very high cost engineering and maintenance experts on staff because they would learn the business and the infrastructure over 20 years and would be paid twice what the average line worker was getting.”

Among survey respondents employed in the fleet/transportation sector, improved safety ratings was by far the biggest expected benefit (83%) of digital optimization.

Among survey respondents employed in the fleet/transportation sector, improved safety ratings was by far the biggest expected benefit (83%) of digital optimization. Fleet/transportation companies must meet numerous regulations regarding the safety of their vehicles and the conditions under which their drivers operate. The U.S. Department of Transportation’s Federal Motor Carrier Safety Administration (FMCSA), for example, conducts roadside inspections to assess the safety of commercial vehicles and uses data analytics to flag fleet operators that may be violating driver and equipment compliance regulations. Carriers that receive unsatisfactory ratings can have their fleets taken off the road.

More than two-thirds (68%) of IDG QuickPulse survey respondents said they plan to improve safety and compliance by improving equipment maintenance.

Other actions planned to accomplish these goals include:

Industry 4.0 technologies offer a number of products and services for manufacturers and fleet operators striving for safer work environments and stricter adherence to compliance mandates:

  • Predictive maintenance powered by IoT sensors and analytics can prevent equipment failures that could be hazardous on the road or on the plant floor.
  • Connected sensors and cameras can monitor hazardous materials storage facilities to detect activity or changes.
  • Digital signage keeps employees safer.
  • Mobile apps and remote conferencing provide interactive employee training.
  • Sensors in truck brakes can detect signs of fatigue in drivers, alerting dispatchers who then can contact the driver with information about motels or rest areas.
Industry 4.0 technologies offer a number of products and services for manufacturers and fleet operators striving for safer work environments and stricter adherence to compliance mandates:
OT respondents were far more likely than their IT counterparts to say that their enterprise plan to improve safety and compliance

Diverging expectations and plans

While IT and OT respondents to the IDG QuickPulse survey were in general agreement concerning the expected benefits of digital optimization, OT professionals were much more likely than IT pros (69% to 47%) to expect increased factory output. Likewise, 63% of OT respondents said they expected digital optimization to result in better inventory management, versus 50% of IT pros. OT survey respondents also were more likely than IT respondents to expect improved asset utilization (54% to 47%) and improved safety ratings (54% to 50%).

Similarly, sharp differences emerged between OT and IT respondents around planned actions to improve safety and compliance. Nearly three-quarters of OT respondents (74%) said their organizations intended to provide interactive work training for employees, twice the percentage of IT pros (37%). Though the divergences weren’t as sharp, OT respondents also were far more likely than their IT counterparts to say their enterprises plan to improve safety and compliance through easy measurement and reporting of relevant metrics (63% to 47%, respectively), the deployment of clear, well-placed signage (57% to 34%), and better-maintained equipment (74% to 63%).

Both IT and OT respondents recognize the critical role played by data in digital optimization

Asked to specify the general technology areas in which their organizations will focus digital optimization spending, the top choice was data analytics, followed by content delivery, mobility, and IoT.

The survey shows; still more divergence, however, between the IT and OT sides of manufacturers and fleet operators over specific digital optimization spending plans. OT respondents were more likely than IT to favor spending on predictive maintenance (46% to 39%, respectively), content delivery networks (40% to 29%), consulting services (37% to 26%), and VPN technology (31% to 18%). Conversely, IT was more likely than OT to target digital optimization spending on IoT devices and sensors (53% to 29%), mobile app development (42% to37%), collaborative voice services (32% to 20%), and secure Wi-Fi (34% to 17%).

It is essential that IT and OT professionals become more collaborative and share a common vision regarding ways to improve efficiency and productivity while controlling costs.

The coming convergence

OT and IT decision-makers in the manufacturing and fleet/transportation sectors are roughly on the same page when it comes to recognizing the competitive necessity of digital optimization. However, the differing viewpoints expressed by OT and IT survey respondents over the expected benefits of Industry 4.0 technologies, along with divergent spending priorities, raise the possibility of strategic and spending disagreements that could sidetrack the optimization plans of manufacturers and fleet operators.

In the hyper-fast digital economy, competing internal visions over technology spending priorities and plans can be disastrous. Further, the convergence of IT and OT through Industry 4.0 technologies makes closer alignment of IT and OT imperative.

“Operations is becoming more dependent on data collection and cloud-based technologies for analysis of that information,” Miller says. “At some point, the two will converge where they can’t do without each other.” For manufacturers to effectively leverage emerging technologies to optimize operations as their workforces age and competitive pressures increase, it is essential that IT and OT professionals become more collaborative and share a common vision regarding ways to improve efficiency and productivity while controlling costs.

The IDG QuickPulse survey shows that manufacturers and fleet operators recognize that Industry 4.0—digital optimization and the convergence of IT and OT—already is under way. Manufacturers and fleet operators that prepare for and embrace this convergence will see immediate operational improvements, which will result in better product quality in the long term.

IT and OT decision-makers sitting at the same table is critical, as is choosing the right solutions and services. The real key to successful digital optimization, however, is finding the right technology partner—one with the necessary breadth of experience in the manufacturing and fleet/ transportation industries.

AT&T delivers the technologies essential to digital transformation and the expertise to help you implement and scale these solution across your business. With a capabilities reach including high-speed connectivity, industrial Wi-Fi mobility services, the Internet of Things, mobile apps development, content delivery networks, content management, digital signage, and more—we can help you sense and adapt to rapid industry changes impacting today’s manufacturing, transportation, and supply chain providers.

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This survey is conducted by an independent company ForeSee for AT&T.
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