Manufacturers are under pressure to enhance their competitive differentiation – and the novelty and ingenuity of Artificial Intelligence offering various new ideas for achieving that. But AI is not the only resource making manufacturing companies rethink their conventional approaches to competition. From shop floor to the top floor, new technologies are providing a timely way to achieve manufacturing benefits at scale and a better bottom line.
Following here are four of these newly available tools. Manufacturing companies that do not avail themselves of these new technologies to enhance efficiency and resiliency run a very serious risk of losing their bid for competitiveness.
1) Connect workers to raise productivity
The manufacturing sector is facing a talent crisis so deep it could threaten its growth and recovery. In the U.S. alone, manufacturers are forecast to have 2.1 million unfilled jobs by 2030. Aging workforces and ‘disintegrating behaviors (including changes in work ethics and demands) are key causes of this talent crisis.
Increasingly, workers expect more flexibility and other non-monetary rewards, a phenomenon likely accelerated by the Covid-19 pandemic. Meanwhile, growing rates of employee turnover have significantly disrupted shop floor productivity, schedules, and workflows.
However, as highlighted in a recent IFS Customer Advisory Board meeting, “capturing the right skills is only half the battle; training and retaining talent is the bigger one.” Moreover, new hires may not be as efficient or experienced as departing employees, resulting in lower productivity and potential quality issues.
To address this, manufacturers are integrating technology to improve productivity. Indeed, a recent study has shown that almost two-thirds (62%) of employees could get more work done if they had better tech tools, with more than half (58%) claiming that their technology needs have increased in the past five years.
An IDC study commissioned by IFS revealed that 45% of manufacturers have made it a priority to augment the worker experience with the help of technology. Embedding technology by involving workers in the process—a concept known as the ‘connected worker’—will help manufacturers to drive productivity and efficiency, and to improve the shop-floor workers’ experience.
Adopting connected worker technology and digital collaboration offers potential to unlock more than $100 billion in value for the manufacturing sector. In addition, it could boost productivity by 20-30% for intensive work processes.
As people remain a company’s most critical asset, connected worker tools and platforms can enhance engagement, boost productivity, and improve job satisfaction—driving competitive differentiation. In the future, AI will also play an important role in further empowering the connected worker, by providing insight and accuracy to improve efficiency.
2) Go circular to reduce waste
There is evidence that manufacturers’ “take-make-waste” linear business models are unsustainable and unpopular, and expose them to more business risk. Nealy half of global manufacturers are worried about the lack of key supplies, with the same percentage expressing concern about the increasing costs for raw materials.
To reduce the dependence on the availability and cost-volatility of raw materials, and to make their business more resilient, manufacturers should rethink existing business models to embrace ‘circularity’ – the principle that emphasizes reuse of materials and resources in ways that create economic opportunities and environmental benefits.
Meanwhile, Bain & Consulting found that 33% of executives expect their industry to be disrupted by circularity start-ups that put products or materials back into the supply chain. By re-using materials over and over again, companies not only create resilience by decreasing dependence on virgin materials, but also yield more profitability from those products.
For manufacturers, there is increasing urgency on this subject as the regulatory landscape and circular economy policies evolve rapidly. These already are having, or shortly will have, a profound influence on the ways manufacturers operate, near-term and long-term. As various regulations come into effect, such as the SEC disclosure requirement, the transition to circular economics has been accelerated.
To ensure manufacturers are prepared for their transition to a circular business model, they need to be enabled by the right technology.
Manufacturers must design for circularity. Indeed, approximately 80% of all product-related environmental impacts are determined during the design phase of a product. It’s at this stage that manufacturers must think about their choice of suppliers, and also how redesigning products can make them easier to disassemble, repair, and recycle in the future, to promote circularity.
Going further, the manufacturing sector at large must gain the means to handle returns, and to incorporate reverse logistics, which Gartner recognizes as a driver for circularity strategies. Using a circular business model, reverse logistics allows manufacturers to return goods at their end-of-life, creating an efficient flow of goods and reducing waste.
Finally, traceability is a primary tool that manufacturers need for circularity, so that they can track and trace materials, parts, and products throughout their lifecycles, never losing sight of a product’s journey and environmental impact.
3) Think digital… starting with EAM, ERP
The conventional, static approach to planning is no longer sufficient for modern manufacturing. According to a McKinsey report, using AI pattern-recognition tools can lead to a 4% increase in revenue, up to 20% reduction in inventory, and a decrease in supply chain costs up to 10%.
Recent IFS research has shown that manufacturers continue to face supply-chain difficulties. However, by leveraging AI, Enterprise Resource Planning, and Enterprise Asset Management technologies, manufacturers can optimize inventories with real-time machine data. With the addition of AI-powered tools, manufacturers will have the ability to respond swiftly to demand shifts, supply-chain disruptions, and market changes.
For example, using AI embedded in ERP systems, manufacturers will be able to swiftly adapt to unexpected raw material changes, predicting potential supplier delays. By doing so, manufacturers can enhance adaptability, reduce lead time, and minimize the impact of supply-chain disruption for efficient production.
4) Add AI to prevent data surges
In just a few years, AI spending in IT is expected to rise by 40%. This rise in investment will help manufacturers improve efficiency through AI data pattern recognition. By using historical data, AI swiftly analyses real-time production data, identifying patterns and anomalies. The long-term value of AI and data pattern recognition will provide manufacturers with ongoing root cause analysis, streamlining work, and predicting potential product quality issues by comparing various data points.
As manufacturing systems becoming more complex, AI-driven data pattern recognition is crucial for sharpening quality control, predicting equipment issues, and optimizing production for fewer defects, higher OEE, and significant cost savings. With Industry 4.0 and the emerging Industry 5.0, there will be too much data being generated every second for the human mind to cope with—AI will become an indispensable tool for manufacturers.
Dealing with a challenging marketplace is nothing new for today’s manufacturing companies – but the steer away from familiar, traditional processes with technology is high on the priority list for the industry. Maintaining a competitive edge will require a new approach to efficiency and operational optimization, and in 2024, it’s where technology will play a huge role.
Maggie Slowik and Andrew Burton are Industry Directors for Manufacturing at IFS, an enterprise software solution developer and supplier of ERP, EAM, FSM and ESM platforms to businesses worldwide.
