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Industry 4.0 Pushes Manufacturers to Digitize Operations

March 31, 2021
A widening “expectations gap” between suppliers and buyers means that manufacturers' investments must create a seamless digital experience and quick-response capabilities.

The effects of Industry 4.0 may feel like a double-edged sword for many manufacturers. On one hand, Industry 4.0 has enacted positive progress throughout the manufacturing sector. Shops are more focused than ever on leveraging data and automation to make their operations more efficient as emerging technologies become available to them. At the same time, however, the mismatch between the opportunity for improvement and the pace that manufacturers adapt to the changes is creating an expectations gap that some companies are starting to take advantage of. 

A good example of this is the recent Protolabs acquisition of 3DHubs for $280 million to access the front-end buyer experience and customer base that they have built. Similarly, companies like Fictiv, Xometry, and Mfg.com have invested hundreds of millions of dollars into their digital-sourcing platforms for buyers. These are just a few individual cases that highlight how digital-first companies are investing to fill the expanding expectations gap and capture large portions of the market with technology to improve the buyer experience. Investments like these continue to drive the change in what buyers expect and demand from their manufacturing partners, further widening the disparity between buyers’ expectations and what the average manufacturer can provide.

It is also evident that the evolving role of the industrial buyer is playing a part in widening the gap, as OEMs look to reduce their spending on procurement and supply-chain management. At one time it was standard for buyers and manufacturers to maintain working relationships over long periods, but as buyers are forced to manage more line items each year and must increase their efficiency through the use of software, those relationships have become more -- or entirely -- transactional.

The way buyers are measured is evolving too, as a focus on speed and risk mitigation have become a critical aspect of their role.

All of these forces are creating an opportunity for those who are willing to invest early in Industry 4.0 technology. While this may seem daunting, the onus is on the manufacturer to continually improve its processes and adopt new technologies, to gain a competitive advantage over shops that are slower to modernize.

Most manufacturers focus the bulk of their technology investment on the shop floor to drive efficiency, but opportunity created by this gap in expectations can only be filled through changes in the front office. Activities like sales, estimating, quoting, and procurement are all at the tip of the spear when it comes to filling the expectation gap, and often are fraught with inefficiency in the average manufacturer. These activities require a lot of collaboration, and benefit from a secure cloud platform that can streamline efforts and protect against cyber security breaches, now one of the greatest threats to the manufacturing sector. Simple investments in these areas will dramatically improve a manufacturer's ability to compete as the market evolves and the expectations gap grows.

To help manufacturers improve their business strategies and technology investments for Industry 4.0, Paperless Parts surveyed more than 400 part buyers for its 2020 Part Buyer Expectations Survey Report. The findings of the survey highlighted the changing role of industrial buyers and the growing expectation gap that is starting to be filled by sourcing networks and more modern machine shops.

The report found that 67% of industrial buyers expect a quote in less than 24 hours from the time they submit a request for quote (RFQ), and only four percent are willing to wait up to a week for a response. The findings also show that to fill this expectations gap and meet new demands, 48% of both prototype and production buyers always or often send RFQs to sourcing networks; and 18% are sending to those networks first when they have an urgent need.

These findings alone point to why manufacturers need to modernize the front office to support a more streamlined sales and quoting process. As buyers regularly work with manufacturing networks, they expect a seamless digital experience and quick service. Manufacturers need to invest in modern digital solutions that enable them to deliver the same capabilities and services in order to compete with the networks rather than becoming dependent on them.

By digitizing the front-office in the manufacturing facility, manufacturers improve collaboration and reduce risks that cause issues downstream from the quoting process. By leveraging tools that reduce silos of information and consolidate it into a single, secure location -- sometimes known as a Digital Thread -- manufacturers can gain a competitive edge and meet buyers’ changing expectations. As manufacturers assess solutions, there are several capabilities they should prioritize in their search:

 Secure, cloud-based file sharing. With one central tool that stores all the files and tribal knowledge, manufacturers can quote faster and more consistently.

 Immediate searchability. Build a library of historic data and ensure no time is wasted re-quoting parts by being able to search and reference past quotes for similar RFQs in seconds.

 In-context collaboration tools. Communicate securely and effectively in real time without needing additional software. Users can quickly and easily annotate PDFs to better communicate with other team members around specific content. Imagine being able to make time stamped notes for the future, mark specific areas of prints, and assign tasks in the context of a drawing.

  Analytics. Every shop generates terabytes of data every year, so manufacturers should look for software with an analytics engine to help prioritize quotes for optimal win-rates, and to drive insights using data gathered from past jobs to evaluate current RFQs and decide the best way to quote them.

Ease of use also should be a top priority as manufacturers compare solutions, ensuring less-experienced sales reps and estimators can participate in the quoting process. The right software partner will listen to manufacturers’ needs, understand the challenges they are up against, and constantly tailor the solution to help the organization be successful and competitive in the new reality shaped by Industry 4.0.

Jason Ray is the CEO of Paperless Parts, an online marketplace for custom parts, with proprietary technology to eliminate costs associated with sourcing and quoting. Contact Ray at [email protected]

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