How Digitization Will Drive Future Manufacturing Success

Digitization is key to the future success of American manufacturing—which is why dozens of major manufacturers and the federal government backed the creation of the $320-million Digital Manufacturing and Design Innovation Institute (DMDII) on Goose Island in the Chicago River. Now the Obama administration and some of the icons of American manufacturing—including GE, John Deere, Procter & Gamble, Caterpillar, Lockheed Martin and Boeing—want to see DMDII over the next five years synergize the digital acumen of U.S. fabricators into the sort of determinative global advantage in manufacturing that domestic firms enjoy in software.

“Digital is how the U.S. wins in manufacturing,” says William King, chief technology officer of DMDII, the organization led by the University of Illinois that launched in 2014 with $70 million in funding from the Department of Defense and $250 million in corporate commitments, and just opened its doors in the spring. “The whole world looks to the U.S. for digital innovation, [and] digital is a really good fit for the American way of doing things, for our business and culture and education system. As manufacturing becomes much more of an information industry, we’re really poised to win because of the things that have helped America to win at digital in other industries.”

David Pivonka, chief scientist for electronics and software at Illinois Tool Works, agrees that DMDII’s work “will significantly affect the way products are designed and manufactured here in the U.S. These changes will help U.S. manufacturing gain a competitive edge.”

“Digital is how
the U.S. will win in manufacturing.”

DMDII is one of just six public-private partnerships launched over the last couple of years under the Obama Administration’s National Network for Manufacturing Innovation, also including outfits devoted to lightweight manufacturing materials and to electronics manufacturing with “next-generation” power. But DMDII’s mission might be the most critical because of how digitization is rapidly redefining manufacturing prowess. In fact, digitization is unfolding as “the fourth major upheaval in modern manufacturing,” McKinsey consultants recently concluded, following the lean revolution of the 1970s, the outsourcing phenomenon of the 1990s, and the automation that took off in the 2000s.

In its effort to lead what McKinsey calls “Industry 4.0,” the U.S. “is certainly not ahead,” the institute’s King maintains. There are “pockets of excellence,” he notes—such as GE’s Brilliant Factory concept, Boeing’s complete digitization of aircraft design and the way that engine companies such as Pratt & Whitney track parts through the entire life cycle of their products–but similar outcroppings of sublime digitization of manufacturing are evident around the world. America is already behind in some areas, he argues, including the extent to which small- and mid-sized manufacturers are digitized in Germany.

Backers’ dream is that the “nodes” of the National Network for Manufacturing Innovation duplicate the success of Sematech a quarter-century ago. Formed in 1988, the Semiconductor Manufacturing Technology consortium successfully organized leaders in semiconductor tech, such as Intel and Texas Instruments, to help the U.S. memory-chip economy regain
its competitive edge by cutting manufacturing costs and product defects.

A similar outcome for DMDII, King said, “would be awesome.” Even in its very inception, some participants argue, the DMDII already accomplished much. The institute executed the “tall order” of “bringing together a really credible mix of public and private partnerships” to act on the digital-manufacturing challenge, says Tolga Kurtoglu, vice president and director of the system-sciences lab for the Palo Alto Research Center (PARC), an advanced-research outfit owned by Xerox. The new organization is aiming at the right sweet spot for accelerating factory digitization, he says: bridging the “valley of death” where early-stage and risky ideas go to die for lack of a guaranteed return on investment.

With about 30 staffers on site and as many as another 50 on the way to its 94,000-square-foot facility, the institute has already been disbursing a total of about $50 million in awards to a few dozen pilot projects that will unfold over the next two years, not only at Goose Island but all over the Midwest, mostly at clusters consisting of a manufacturing OEM, a university, a software company and some mid-market suppliers. Many teams will be competing with one another to come up with the best solutions for a given challenge.

By the NumbersThere’s a lot of work ahead to make America an undisputed No. 1 in digital manufacturing. U.S. universities and research institutes are considered the best in the world at creating knowledge. American manufacturers also have become astute at generating mind-boggling quantities of data—more than any other part of the economy, actually—about their operations, products and other measurables, from the first concept entered into a 3D computer model to information about how long a product sits on a store shelf. What’s more, the U.S. retains the best system of commercialization and taking things to market.

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Dale Buss

Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.