Manufacturing the Next Industrial Revolution

PERSPECTIVE

MANUFACTURING THE NEXT INDUSTRIAL REVOLUTION

Abstract Until recently, there was a clear route for success in manufacturing. The changes in the business environment today call for a ‘Renew- New’ approach – transform existing systems to meet current business needs and simultaneously, add new propositions that will make companies future-ready. In this paper, we present the possibilities awaiting the manufacturing industry. Renew and New: Manufacturing the Next Industrial Revolution

From mass production to mass as automation, Artificial Intelligence (AI), must adopt a dual strategy focusing on customization, selling products to selling Internet of Things (IoT), and digital. renewing core systems and functionalities embedded services, operational excellence for efficiency and performance, and But inasmuch as this renaissance opens to continuous innovation, and efficient embracing new capabilities that open up up new possibilities for improved factories to intelligent ecosystems. This unprecedented possibilities. productivity, performance, and profitability is how the plot will read for the next for manufacturing, it also compels a We believe manufacturers will adopt industrial revolution. It will be led by transformation of the manufacturing the following strategies when they take global shifts in macroeconomics and enterprise in which traditional structures, the ‘renew and new’ route to enterprise consumption, emphasis on value creation, systems, and strategies will be reimagined. transformation. experiential customers, and a convergent To effect this transformation, manufacturers set of transformational technologies such

The next big shift in the industrial manufacturing industry is not just about quality and numbers, but also about adapting to the digital age of technology and information.

It is now necessary to be in sync with the customers’ requirements, as companies can no longer expect them to just consume what is manufactured.

This is making it even more imperative for manufacturing incumbents to explore the following opportunities for renewal.

External Document © 2018 Infosys Limited External Document © 2018 Infosys Limited • Build smart factories: When provide real-time and end-to-end have benefited greatly from the traditional manufacturing equipment visibility and control. From a central globalization of manufacturing and and processes are amplified by command center, companies can now today, these countries are major technologies such as robotics, wireless monitor and manage virtually every hubs of production and innovation. sensors, Internet Protocol (IP)-based parameter on the factory floor – at the Rising prosperity has created a networking, and big data and analytics, point-of-sale, and anywhere in between huge customer demand in these the result is a fully integrated and – that has an impact on manufacturing markets and is accelerating the connected production model that operations. Companies such as Dell shift in manufacturing’s center of enables a quantum leap in efficiency and Lockheed Martin, for instance, gravity from the developed world and productivity. The shift to IP- manage supply chain operations from to the developing world. Further, it based networks not only opens up such a command center. helps that governments are directly communication channels between investing or encouraging investment A smart supply chain, integrated across assets on the factory floor but also in manufacturing through programs all business processes and systems streamlines integration with mobile such as ‘Make in India’ to develop can also leverage real-time data and devices and back-end ERP systems. their respective countries into global analytics to enable more accurate manufacturing hubs. As manufacturers Real-time data from the factory forecasting, shorter response times, follow their lead by making their own equipment can not only improve optimized supply chain processes, and investments in technology, innovation, operational efficiency but also enable faster decisions. And as technologies and business expansion, they will also better decisions on asset management, such as IoT and AI evolve, supply chains have to invest in employee education, quality control, and safety and of the near future will become largely, training, and skill development to compliance. A connected factory floor if not completely, autonomous systems renew their workforce. enables real-time data generation, and that will respond automatically and the analysis required to optimize asset appropriately to changes anywhere in utilization and maintenance schedules, Focus on security: A highly connected the supply chain. • predict faults, streamline procurement, world comes with an increasing risk of security breaches. While the recent and enhance return on assets. Focus on product quality: But before • attacks on large media corporations While smart manufacturing is still in the making the big leap to smart factories and retailers have sparked much pilot stage, demonstrations by several and supply chains, manufacturers debate, other incidents such as the German companies and the German must ensure that they are getting the hacking of a German steel mill which research center for Artificial Intelligence basics right. While the automobile resulted in physical damage, have already point to its potential. A case recalls in the U.S. last year garnered a gone largely unnoticed. in point is BASF’s fully customized line lot of attention, a number of products of personal care products where RFID from home appliances to bicycle Such events serve as a warning for tags on empty bottles instruct the helmets and children’s toys have faced connected manufacturing whose production equipment on the type of similar problems in recent years across practitioners will have to balance soap, fragrance, and labeling required the globe. Therefore, manufacturers strategic opportunities with a clear as soon as an order reaches the system should renew their focus on essential focus on systems and data security. – potentially filling each bottle with a parameters such as product quality, Security must be embedded into the completely different order, if need be. even as they aspire to take their design of manufacturing infrastructure organizations to an industry 4.0 and extended to every system, • Build smarter supply chains: A smart end-state or a ‘fully connected way of process, and device on the network. manufacturing setup without a smart making things’. Besides implementing sophisticated supply chain makes for a suboptimal security technologies, manufacturers scenario. As technology erases the • Increase investments: The must also lay down clear security distinctions between the virtual and the manufacturing sector is a key policies, educate employees about physical, it gives rise to an opportunity contributor to a nation’s prosperity. endpoint safety, and establish an to create intelligent, analytics-driven, The economies of emerging markets auditing and monitoring mechanism next-generation supply chains that such as India, China, and Brazil to ensure compliance.

Manufacturers need to leverage emerging technologies such as the Internet of things (IoT), analytics, sensing, and 3D printing to increase operational efficiency and reduce equipment downtime. Producing classy and efficient products is not enough; they should be clubbed with performance-based services that bind customers into a sustained relationship. These services must be tightly integrated with the product along with a robust support ecosystem to create a success story. Here are some of the opportunities that await them:

External Document © 2018 Infosys Limited External Document © 2018 Infosys Limited • Servitization of products: In the Though sensors and automation are Uberization is the result of one such traditional manufacturing context, not really new to the manufacturing model which takes a software or app- value creation commenced on the ecosystem, IoT extends the same utility driven approach to instantaneously, factory floor and consummated when to a broad range of systems, processes, and efficiently align supply and the product reached the customer. Take and devices, and even beyond demand and deliver a quantum leap in the auto sector where the post-sale corporate and geographic boundaries. efficiency and convenience. ecosystem is predominated by a mostly In the industry 4.0 paradigm, big data Since the model went mainstream independent network of third-party and analytics technologies will convert and profitable, predictions have been service providers. a constant real-time stream of data flying about how it could disrupt from a range of cyber-physical systems In contrast, servitization shifts the everything from the way we work into actionable insights that will emphasis from mere sale of products to the way we buy products and contribute to enterprise efficiency and to the cultivation of customer services and the way we live. In the business growth. relationships through a product’s manufacturing context, uberization lifetime. Going back to the auto will probably create new business 3D printing: As a technology, 3D example, connected cars today link • models and opportunities in the areas printing is still nascent, but as it evolves back to the manufacturer through a of product design (crowdsourcing in terms of economy, efficiency, and continuous stream of performance of ideas), product sales and service versatility, it is finding increasing data to set the stage for a strategic, (marketplaces and other channels), application on the factory floor. Even proprietary, and commercial and the manufacturing supply chain in its current state of evolutionary relationship between the manufacturer (crowdsourcing of input components development, 3D printing is beginning and the customer extending into and transportation services). to help manufacturers bring down the support and service phase. And the cost, time, and resources needed let us not forget the potential to add Designing product experiences: to prototype, develop, and test new • more services to the existing pipeline When customers today are looking products. As the technology matures, which can open up additional revenue for game-changing experiences, it could help address the demand streams for the manufacturer. serving up a product, even one that for mass customization without the is a generation ahead in terms of Servitization, therefore, is not just expenditure of retooling. It could also technology components or utility, about improving customer relationship help manufacturers streamline spare will simply not suffice. As software and intimacy but also about enabling parts inventory by printing out rather and AI become integral components manufacturers to leverage it to deliver than storing parts with infrequent of the manufactured product, there additional services that the customer is demand. Take the example of Nike is a huge opportunity to deliver an willing to pay for. which is using 3D printing to create individualized and comprehensive custom-made shoes in-store with experience that differentiates a Internet of Things: IoT is a key building great results and is planning to use this • product from its competition. block that enables the concepts of smart technology for other products in future. manufacturing and industry 4.0. It makes Likewise, an approach that focuses As the technology matures further, the manufacturing enterprise more on designing a compelling, bespoke 3D printing will become a critical efficient, productive, and innovative experience, rather than just a physical component of the manufacturing by enabling an architecture that spans product, will differ greatly from the enterprise, both for its potential to operations and business systems, and traditional approach to product bring down the complexity, time, and allows real-time visibility into a range of design. With the added capabilities cost of certain processes as well as KPIs that ultimately define performance provided by sensors, AI, and big data its promise to create new business and profitability. GM, for instance, uses technologies, the product experience opportunities. sensors to determine if existing humidity is no longer about just the UI or levels are favorable to automobile industrial design. Increasingly, it is Uberization: Once in a while, there painting. If not, the system automatically • about a product’s ability to intuit a comes along a business model moves the car to some other process, customer need, and call up the service innovation that upends traditionally saving time and mitigating the risk of a that fulfills it. held notions of business structures. deficient paint job.

External Document © 2018 Infosys Limited External Document © 2018 Infosys Limited Conclusion The ability of manufacturers to harness the principles of smart manufacturing, industry 4.0, and servitization will be determined by how they drive systematic transformation across their existing structures, systems, processes, and strategies. An approach that prioritizes renewal of existing systems over the opportunity presented by new technologies or vice-versa, will deliver results that are suboptimal at best. To create the manufacturing setup of the future, enterprises will need to evolve existing systems to meet current business dynamics while simultaneously adding new functionality that will be critical to their competitive advantage and profitability in the near future. Most importantly, these new technologies have immense potential to empower various stakeholders in the manufacturing ecosystem to provide a quantum leap in value and experience to customers, leading to new business models and profitable growth.

© 2018 Infosys Limited, Bengaluru, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice. Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted, neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.

Infosys.com | NYSE: INFY Stay Connected