In today’s high-tech factories, the use of composite materials is already resulting in lighter, stronger, more flexible, more durable and less expensive machine parts. 3-D printers punch out single components that used to require hundreds of parts. Giant robots safely assemble complex modules in collaboration with people. And cloud-based machine learning and data science systems are connecting the end-to-end production process to generate insightful information that improves decision making.
The digital transformation of manufacturing is a historic event altering hardened foreign production and supply chain trends, in which production was pushed overseas to reduce labor costs. Thanks to the extraordinary efficiencies and cost savings of smart manufacturing, in which data-powered machines efficiently and cost-effectively control the process of making goods, expectations are in place for a rebirth of manufacturing on American shores.
The business opportunities presented by the digital transformation of manufacturing drew more than 200 CEOs of midsized and larger manufacturers to Seattle in May to attend the fifth annual Smart Manufacturing Summit, hosted by Chief Executive and cosponsored by The Boeing Company. “Manufacturers have a rare opportunity to leverage digital technology to partake in a renaissance of American manufacturing,” said Wayne Cooper, executive chairman of the Chief Executive Group, which publishes Chief Executive, in his opening remarks.
“Manufacturers have a rare opportunity to leverage digital technology to partake in a renaissance of American manufacturing.”
THE JOURNEY AHEAD
Many large U.S. manufacturers are well along in leveraging these opportunities, among them Boeing, Stanley Black & Decker, Siemens, ThyssenKrupp and Cisco, whose current and former CEOs and other senior executives leaders gave presentations at the Summit. Many leaders of midsize companies in attendance were there to learn more about advanced manufacturing before making an investment. Several expressed concern about competing to win the skillsets needed to operationalize the new technologies, while others brought up the challenge of recruiting workers to run the machinery.
Nevertheless, the overwhelming consensus was that the opportunities of smart manufacturing are significant enough that companies should dive in now rather than risk playing catch-up down the road. Many midsize manufacturers are hungering for technologies to make operations leaner and more agile. Thanks to the resurgent U.S. economy and growing market demand, the timing may be right to allocate capital in smart manufacturing initiatives.
Certainly, the collected responses of the attendees after the Summit indicated that many are eager to follow the lead of larger manufacturers like Stanley Black & Decker. “A dozen years ago, so many manufacturers were offshoring to get their labor and wage rates and materials costs as low as possible, including us,” said John Lundgren, former CEO and current chairman of the maker of industrial tools, household hardware and security products.
While this tactic reaped dividends at the time, it did little to produce continuous improvements in operational flexibility, risk management, data transparency and the elimination of waste. When The Stanley Works and Black & Decker merged in 2010 to form Stanley Black & Decker, Lundgren ushered in an end-to-end digital transformation strategy.
“We became vastly more efficient, more agile and operationally leaner,” he said. “In 2000, we had 4.5 working capital turns. Last year, we had 10.6 working capital turns, versus industrial peers that were in the 5 to 6 range. Our digital transformation strategy was the jump-starter of the combined company.”
NEW WAYS OF MAKING STUFF
Smart manufacturing presents value across the value chain. A case in point is engineered composite materials—that is, materials that contain at least two constituent parts. The range of composites is limited only by the imagination, with different types of metals, resins, polymers, ceramics and natural fibers blended in different ratios to form the material.
Other manufacturers employ composites to build structures that have unique properties like thermal and electrical conductivity. “We’re seeing interest in different types of composites across many different manufacturing entities,” said Bryan Dods, CEO of the Institute for Advanced Composites Manufacturing Innovation, a two-year-old public-private partnership that seeks to increase composites production capacity and jobs. “We’re working with a manufacturer of compressed gas storage tanks to develop a new generation of tanks with 75% composite materials.”
The way structures are created is also changing as manufacturers adopt new technologies like 3-D printing—making an object from a three-dimensional digital design by laying down many thin layers of a composite material in succession. For the most part, the technology is used for rapid prototyping—physically printing out a 3-D design within hours, as opposed to days with a traditional development process.
While 3-D printing can be used to make virtually anything, cost is a challenge. “In a part-to-part comparison with traditional manufacturing, 3-D loses out in most cases because it’s expensive,” said Duann Scott, head of business development and strategy for digital manufacturing at Autodesk, a provider of 3-D design, engineering and entertainment software.
“In a part-to-part comparison with traditional manufacturing, 3-D loses out in most cases because it’s expensive.”
Still, Scott sees massive potential for mainstream manufacturing applications as 3-D design software and additive manufacturing processes become more seamless. “Right now making a small part using 3-D printing requires up to six pieces of software to get the print from the design stage into the machine and out,” he explained. “If there’s a mistake, it can take 24 hours to find the cause.”
Autodesk has narrowed down the process using a single simulation software solution called Netfabb that shares a common installer, file format and process definitions. “It can make small parts in minutes and complex ones in hours,” Scott said. “We can even make parts better than can be made traditionally, such as with holes that curve, rather than the straight holes made using a drill.”
Another advantage to 3-D printing is the ability to design and make large assemblies as a single part. GE Digital, for instance, was able to 3-D print half of a machine, paring down 900 separate components to just 16, including one component that previously had 300 different parts, reported Paul Boris, former vice president and head of Manufacturing Industries for GE Digital. Not only were the printed parts 40% lighter and 60% cheaper, but the process trimmed the number of suppliers from about a dozen to one. “This is true optimization of the supply chain,” said Boris, who left GE Digital in May for the chief operating officer post at Vuzix, a maker of virtual reality technologies.
ROBOTS AND PEOPLE
Another iteration in advanced manufacturing techniques, robotics, is often viewed as a way for manufacturers to reduce labor costs. The truth is more nuanced: Rather than replace people, robots efficiently and safely take on certain tasks, augmenting the work still being done by people. “We’re not going to see an exclusively robotic factory, but we will see the optimum use of robots and people,” said Dennis Muilenburg, CEO, president and chairman of Boeing.
An example is repetitive, unsafe and monotonous tasks that can cause ergonomic injuries and injuries. “Our goal is to balance our EHS [environmental, health and safety] initiatives with our productivity initiatives,” said Muilenburg. “Robots allow our employees to work safely, faster and at less cost.”
Greater strides will be taken in future to allow for robots and people to collaborate more effectively, said Sujeet Chand, senior vice president, advanced technology, and chief technology officer at Rockwell Automation, a provider of industrial automation and information products. As an example, he cited a company that produces electric vehicles. “The company wanted a way to enhance collaboration between people and robots, whereby the robots would pick up 14 heavy battery packs and put them in the chassis of the car, and then people would wire the battery packs together,” Chand said.
He added, “The future of robotics is collaborative robots.” David Mindell, a professor at MIT and the co-founder and CEO of Humatics, agreed. “Robots present huge opportunities for reducing stress and strain, bringing average workers up to the skill level of the most skilled workers,” said Mindell, author of Our Robots, Ourselves. “The factory of the future is a place where people and robots have this very well understood relationship to each other.”
Other speakers affirmed this prospect, predicting substantial growth in the robotics market. “Twenty percent of our business is coming from robotics, with lots of different companies making collaborative systems,” said Herb Lade, vice president, global solutions and services, at Cognex, a manufacturer of machine vision software and sensors used in robotics applications. “The payback [for the investments in robots] is in the 12- to 14-month range, with an overall 20% reduction in production costs.”
Lade pointed to the use of smaller industrial robots deployed in the assembly of components inside a smartphone as evidence. In the past, highly customized automation equipment was required to undertake this task. Since the product essentially has a one-year life cycle, the manufacturer had to write off the capital equipment each year as new automation equipment was needed. “Robots not only allow for more functionality to be crammed into a smartphone, they do it at a more manageable cost basis,” Lade said.
“The payback [for the investments in robots] is in the 12- to 14-month range, with an overall 20% reduction in production costs.”
DIGITAL THREADS
If smart manufacturing were an orchestra, the Internet of Things (IoT) would be the conductor. By digitally transforming the end-to-end product life cycle, data can be extracted in the cloud from the manufacturing value chain to make products much closer to market demand. “Cloud-based analytics give you all the feedback you need on how your [manufacturing] assets are really performing,” said Caglayan Arkan, general manager, worldwide manufacturing and resources industry, at Microsoft.
With the IoT, the goal is for billions of intelligent devices, machines and other sources of data to connect and provide instant business value. “When you go to a factory and you look at all the sensors and actuators and every piece of machinery on the floor, even something as simple as a little power supply in every panel, it’s all generating tremendous amounts of data,” said Raj Batra, president, digital factory, at Siemens USA, the U.S.-based division of the large German industrial manufacturing conglomerate.
The challenge for companies is processing this data, he added. “Half of the world’s data was generated last year,” said Batra. “Yet, only 0.5% of it has been used or analyzed. We’re in a data-driven environment and the only way to really capture this is with digitization. So if you’re not in the business of digitizing your manufacturing operations—and small and midsized enterprises have a long, long way to go—you’re at risk of missing the boat.”
Digitizing is the first step toward reaping the productivity and efficiency gains promised by the data connectivity of the IoT. Muilenburg acknowledged that Boeing is just beginning to create what he called a “digital thread” connecting the company’s machines, processes and systems, from design to manufacture to customer delivery to service. “We’re about 10% of the way there now,” he said.
ThyssenKrupp, a global manufacturer of elevators and escalators, is leveraging the IoT for improvements in the maintenance of its transport systems, work that represents a large share of the company’s revenue. “When an elevator broke down in the old days, we’d send someone to fix it,” said Rory Smith, director of strategic development, Americas at ThyssenKrupp Elevator Americas. “We’ve now embarked on data-driven maintenance, using the IoT to know when an elevator will break down before it actually does.”
ThyssenKrupp partnered with Microsoft in the project, dubbed MAX. Here’s how it works: Data emerging from sensors and semiconductors affixed to the elevator to gauge its performance is sent every 12 hours through a 4G LTE modem to a control center in the cloud. Based on an algorithmic analysis, specific maintenance protocols are advised. “The data tells us everything—every door opening, every movement, every time it goes from one floor to the next,” said Smith. “Our goal is to never have an elevator fail, fixing it before it does.”
THE TALENT DIVIDE
Smart manufacturing presents extraordinary opportunities to all manufacturers. But finding the talent to make the best of these tools is a major challenge for many companies. This talent comprises both highly skilled individuals able to maximize the potential of these new technologies and lower skilled workers who can operate the machinery.
Regarding the latter, the tasks are not necessarily traditional production jobs. Augmented virtual reality devices like Microsoft’s HoloLens provide the means for less skilled individuals to take on highly skilled manual tasks. The headset has a holographic computer built within it that lets users see, hear and interact with complex machines. In other words, a user need not be trained how to operate a new machine or to fix it; HoloLens duplicates the equipment in a virtual environment to provide real-time instructions.
This opens up vistas of employment opportunities for less skilled individuals. The problem is finding and retaining these workers. Several midsize manufacturers cited employee absenteeism and failed drug tests as key recruitment and retention challenges. Others like Lori Osterback-Boettner, chief of staff and senior director of supply chain operations at Cisco Systems, cited the need for employees and other stakeholders to buy into a manufacturer’s digital transformation as a critical challenge.
The IT and networking provider embarked on such an effort two and a half years ago with regard to its 24,000 supply chain partners across 25 locations in 13 countries. Cisco outsources manufacturing to these locations and was in the thick of reimagining itself as a software, not a hardware, provider. “We realized that the core of our behind when their employers moved production overseas.
For example, Shinola, a Detroit-based manufacturer of luxury watches, leather bags, bicycles and accessories that blend mechanization with artisanal cool, is leveraging its home city’s once dormant local manufacturing workforce by training workers to become skilled craftsmen. In many ways, Shinola and sister company Filson (Bedrock Manufacturing is the parent of the two iconic American brands) indicate that manufacturing need not be high-tech smart to succeed.
At both companies, Bedrock is emphasizing high quality merchandise with an America ethos—in Shinola’s case Made in Detroit. In doing so, Bedrock has provided much-needed jobs in a down on its luck city once considered the temple of U.S. manufacturing.
Unskilled people from in and around the Motor City were hired and trained to become skilled watchmakers at Shinola. “We pay more than the minimum wage and provide an environment in which people feel they are providing value, making things that they can feel a sense of pride and ownership about,” explained Steve
Bock, president of Bedrock.
As the Summit concluded, spirits were high among the attendees that they were at the threshold of momentous change for the better, assuming their embrace of smart manufacturing.
“For American manufacturing to compete in future, we need to be the best,” said Muilenburg. “Incremental improvements of 1% to 4% just won’t do it. To win, we need substantial and continuous improvements in product quality, leaner operations and skill sets. The convergence of information, engineering and manufacturing
provides the opportunity to achieve these aims.”
Seizing this opportunity, the world will clamor once again for products Made in America.
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