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.

There’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.

But in crossing the “valley of death,” American manufacturing has much to learn from others. In Germany, for example, the Fraunhofer Society does research for both the public and private sectors, examining early-stage ideas, determining if they can be affordably scaled up and then readying the best ones nearly to the point of commercial launch. There are 67 locations spread throughout Germany, each focusing on different fields, from an applied polymer research facility in Potsdam to a laser-technology redoubt in Aachen.

DMDII wants to accomplish something similar for digitization of manufacturing in America, but there are three obstacles. The first is that manufacturing today remains largely a “pencil-and-paper industry” outside of the very biggest companies, King says. The second is that designers and “makers” continue to be separated, in part because of inefficient structural legacies and also partly because U.S. manufacturers have outsourced and offshored so much engineering and production. The third challenge in the U.S. is an acute shortage of workers who are skilled and capable enough to work in today’s advanced-manufacturing environment.

Digitization can help solve each of these problems to varying but great degrees, King says, which is the raison d’étre for DMDII. In fact, the institute calculated that a digital revolution could create almost $500 billion a year in total value among only the 41 companies that are funding the institute—and they’re among the most digitally savvy manufacturers in the world. Such gains would come from accelerating R&D, improving production operations and many other areas. “This is a staggering opportunity,” King says.

“In crossing the “valley of death,” American manufacturing has much to learn from others.”

To take advantage, the institute’s overarching goal is to create a “digital thread” of data that is generated across the lifecycle of a manufactured product, enabling a seamless flow of information among all functions and members of a supply chain. The organization of the Goose Island facility itself illustrates this objective, including a “collaboration space” to stage teamwork and a technology-demonstration facility stocked with robots, 3D printers and other digital equipment.

Three of DMDII’s first pilots also point to this approach. One is testing how to aggregate images of products and processes that are generated by “wearable” computers donned by factory-floor workers, learn from the results and use them to train the workforce. A second project feeds data from factory sensors into “visualization tools” that can be analyzed for improvements at each level of an operation, from individual worker to plant manager. A third pilot is creating an open-source software project called a “manufacturing commons” in a project led by General Electric.

Like Fairfield, Connecticut-based GE, other supporting companies are buzzing around DMDII expectantly. Aurora, Illinois-based Illinois Tool Works, for instance, is particularly interested in how the institute might be able to help it harness intelligent machines and advanced analytics to “open new opportunities across our businesses,” Pivonka says. Its participation helps put Norwalk, Connecticut-based Xerox “on the cusp of significant disruption and the tectonic shift brought by digitization,” said PARC’s Kurtoglu.

This is the kind of enthusiasm about DMDII that will be crucial to success in its mission of creating a digital thread that easily connects manufacturers, big to small, across the supply chain. “It’s about advanced technologies and rapid innovation, and how do we get these digital tools in the hands of lots of people,” King says, “so that American manufacturing looks a lot more like the way the software industry has been democratized over the last decade.”


Driving Digital Manufacturing
The DMDII aims to help mid-market enterprises harness the power of digitization

Pilot Projects and Test Initiatives
Two dozen pilot programs will test new methods and concepts in the Midwest

Creating a Common Thread
Creating a “digital manufacturing commons” lets all participants in a manufacturing supply chain collaborate with maximum transparency and efficiency

DMDII: For the Common Good

Software writers and even video-game players long have been able to collaborate on “open-source” web platforms that have made their digital products better, and more thoroughly vetted, more quickly. Now one of the first pilot projects of the Digital Manufacturing & Design Innovation Institute—a “digital manufacturing commons”—aims at helping American manufacturers do something similar.

GE is leading the pilot that will build a “digital thread” on an open-source platform that GE scientists demonstrated a few years ago and “truly will democratize access to the tools of manufacturing innovation for companies, universities, institutes and entrepreneurs big and small,” says Joseph Salvo, manager of the complex systems engineering lab at GE Global Research.
Or, as another GE Global Research executive, Christine Furstoss, said at a conference in Detroit, the commons is “like massive multi-player online gaming meeting the real world of manufacturing.”

“The DMDII will democratize access to the tools of manufacturing innovation.”

William King, chief technology officer of the institute, says that the idea of the web-based “community” is to “give people a place where they can put the data and a way to have digital collaboration across the life cycle of a product.

“So we’re looking for tech-savvy manufacturing leaders to come and participate as alpha customers,” he says. “And it won’t cost you anything.”

Developing Digital Threads

Two examples—one surprising, the other probably not so—illustrate what digital-manufacturing advocates mean when they talk about how “digital threads” can revolutionize American manufacturing.

Coca-Cola’s “Share a Coke” promotion is actually a perfect example. Launched in 2014, under this campaign Coke printed individual names on its 20-ounce bottles, from “Erin” to “John,” as well as other bonding monikers such as “family.” Sales took off, giving the brand its first significant volume bump in years. So Atlanta-based beverage giant Coca-Cola expanded the program this year to thousands more names.

What does that have to do with manufacturing? “This is an innovation that came from Coke’s manufacturing people and moved the needle,” explained William King, chief technology officer for the DMDII. “They needed to have digital capabilities, agility, robotics and all kinds of information technology to make that kind of mass customization happen.”

A more typical example of the magic of the digital thread comes from Local Motors. Earlier this year, this Phoenix-based startup demonstrated live 3D printing of the polymer body of a working car prototype, based entirely on a digital blueprint, to rapt audiences ranging from President Obama to journalists at the North American International Auto Show in Detroit. Local Motors’ designs “are crowdsourced from an online community,” McKinsey consultants noted recently. It “can build a new model from scratch in a year, far [shorter] than the industry average of six years.”

A Midsize Makover

Big manufacturers and the federal government are the founding forces behind the Digital Manufacturing and Design Innovation Institute (DMDII), but mid-market companies are its future. That’s how institute principals view things, anyway. “We really want to get a lot of small and medium-sized businesses involved,” says William King, chief technology officer of the DMDII. “That’s really where we’re going to move the needle. That’s where the job creation is going to be. That’s where the wealth creation is going to be, more than in the biggest manufacturing OEMs.”

Some mid-market companies already know how they want the institute to help them. AskPower, for instance, is an Aurora, Illinois-based maker of terminal lugs, electrical splices and other fasteners and connectors for the booming telecommunications-infrastructure industry and other verticals, with sales of tens of millions of dollars a year.

CEO Steve Kase believes it may be existential for suppliers like AskPower to leverage DMDII’s help in tapping into the “digital thread” within their customers’ supply chains. “The same kinds of consolidation that we have seen at the top of the [telecom] market, where there used to be 15 competitors and now there are just two or three, now is also happening at the component level of small and medium-sized manufacturers,” Kase says. Buttressing these suppliers “is totally critical, because it’s one thing to have the front end of the supply chain—the major manufacturers like GE—geeked up for digital manufacturing, but what if there are no suppliers to play with them?”

“If you dig into the companies that are in the ecosystems of the big manufacturers, they are smaller outfits with fewer digital experts.”

Specifically, AskPower wants DMDII’s guidance in bolstering the company’s digital chops in both product development and process improvements in designing, costing, manufacturing and replicating its components—and ensuring that in every step along the way AskPower is as completely integrated as possible with customers’ digital environments. “One area is: How can we connect our products to the customers’ assembly process and demonstrate that simulation, because normally our simulation is about how we make the part?” Kase says.

AskPower has been investing heavily in capabilities to simulate the final assemblies of its customers in three dimensions so that its own product designers understand exactly how the company’s components are expected to fit and perform in concert with everything else. If the final product is a grounding cable for a telecom-transmission tower, for example, AskPower understands “the cable [the customer is] using, the lightning-protection aspects of the tower, the electronics they’re trying to preserve at the bottom of the tower and what the installation process is on the tower,” Kase explains. “What we want to be able to do is simulate for our customer how our product will fit into its system. That’s something [DMDII] will help us with.”

In the process arena, AskPower is looking to the institute to help it link the company’s computer-aided design capabilities more effectively with its computer-aided manufacturing capabilities by ensuring that the supplier is in complete digital synchronization with what customers require.

“We want to understand where our product fits into their system, design it in their system, test it for manufacturability and run it through a simulation on manufacturing software,” Kase explains. “We also want to be able to template our materials and processes to come up with a digital cross-lead system that enables us to quote with confidence.”

DMDII’s King said that AskPower’s notions of how the institute can help the company are right on point. Unfortunately, he says, the numbers of mid-market manufacturers that don’t address or don’t even recognize their digital predicament are legion.

“If you dig into the companies that are in the ecosystems of the big manufacturers, they are smaller outfits with fewer digital experts, and the ones they do have will be focused on day-to-day, tactical kinds of things—and probably not keeping up with the latest digital technology,” King says. “So as we’re putting together our portfolio of pilot projects, we’re doing our best to include both big OEMs and mid-size and small manufacturers because the links between them is where the value is created in the manufacturing-value chain.”


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