If you are working in manufacturing, you’re undoubtedly hearing phrases like “Industry 4.0”, “Smart Factory” and “Connected Worker”. What do all of these mean and where does your operation fit in?
You’re probably by now familiar with the evolution of Industry 1.0 to Industry 4.0:
We’re in the early stages of our next Industrial Revolution, Industry 4.0 and this continues the evolution of the industrial workforce. This revolution is again driven by technology advances, mostly in computing, that enable us to rethink what production processes should look like. In this case, however, a wide range of technologies are creating new opportunities to rethink industrial production, and in particular to think of new levels of connectivity between machines, workers, processes and the larger digital economy.
We view the forces driving Industry 4.0 as the culmination of the new connectedness of supply and demand. On the demand side, clearly E-commerce is the force driving changes in consumer behavior and expectations. The other forces are technology changes on the supply, or manufacturing, side of the connectedness equation.
It’s little talked about, but we believe that a major force behind the adoption of Industry 4.0 will be the continued growth of E-commerce. It’s probably no surprise to you that e-commerce, and in particular Amazon.com, are changing the ways that consumers buy things. However, the scope and scale of the revolution occurring are stunning. According to Walmart, The discount stores average 107,000 square feet, employ an average of 225 associates and offer 120,000 items while according to one source, Amazon has a total of 562,382,292 products available as of Jan 10th, 2018.
As Walmart and Amazon encroach on each other’s turf, this is becoming a supply chain management battle of epic proportions with Walmart’s own e-commerce sales escalating quickly and Amazon moving into and seeking to disrupt retail.
E-commerce is shaping the way that consumer expectations are shifting in regards to product consumption, and therefore, shaping entire supply chains.
Clearly, consumers are learning to expect the availability of a vast assortment of items that can be readily accessed.
They are learning to expect to be able to buy products in lot sizes as small as one and in any variation that is able to be offered.
Companies, on the other hand, are able to get insights into prospective demand far earlier in the purchase cycle. When someone is in a store and picks up an item off the shelf and then puts it back, nothing is learned. However, as online shoppers evaluate products, exchange products into and out of their shopping carts, view consumer reviews and ultimately write their own, all of this behavior provides signals that can be used back up the supply chain.
It’s now the Connected Economy and Connected Workers will be one dimension
E-commerce and the immediacy of information available to consumer products companies are creating new demands and creating new opportunities in the consumer products supply chain.
Just in Time inventory management enabled manufacturers to minimize the amount of capital tied up in having excess inventory on hand throughout the supply chain. The minimum value added is stored up throughout the system. With e-commerce, the same thing is happening with inventory on store shelves. An entire system of logistics, making things in batches and shipping skids of things to be distributed through a warehouse and onto the shelves of a store system is disrupted. Now things are ordered and shipped to consumers one at a time offering a similar reduction in investment in inventory capital but more importantly sending signals (including advanced signals of looming demand like product reviews) back through the manufacturing system.
E-commerce is revolutionizing the way that consumers purchase an ever wider range of products. However, this revolution is inevitably going to place pressure on the entire consumer products supply chain:
Manufacturers who wish to play a role and thrive in the e-commerce ecosystem will need to support e-commerce businesses with their ability to respond to ever more variable products and ever smaller lot sizes.
Manufacturers additionally will need to demonstrate an agile response to new real-time demand signals and adapt products quickly to consumer feedback in the form of pricing, reviews, and preferences for competitors products.
In 1913, the first Ford assembly line “simplified assembly of the Ford Model T’s 3,000 parts by breaking it into 84 distinct steps performed by groups of workers as a rope pulled the vehicle chassis down the line. The new process revolutionized production and dropped the assembly time for a single vehicle from 12 hours to about 90 minutes.”
Production efficiency increased radically due to the rigid application of highly repeatable discrete steps that minimized any possible errors in the final product. This approach has led to higher quality products at ever-larger scales.
However, when you see a migration from a ‘store’ that holds 120,000 products vs a ‘store’ that holds 562,000,000 clearly things are going to change for everyone connected to these systems.
Manufacturers that are a part of e-commerce supply chains will be faced with the need to cost-effectively produce products that are more varied, and more customized. The Just in Time ethos will extend from the consumer, all the way back to raw materials. These pressures will lead manufacturers who wish to thrive in these supply chains to adopt, and ultimately master mixed-model assembly practices.
Industry 4.0 is turning Industry 2.0 on its head. Mixed Model Assembly requires a re-thinking of the assembly line mantra of identical repeatable steps. Instead, manufacturers need to be agile in real-time and empower workers with the ability for the same people to perform a much wider range of tasks throughout the day.
This means that we need to think of ‘connected workers’ not just as being connected within a discrete production cell, area or plant, but rather as being connected directly to the larger supply chain, or become part of the connected economy. The question for manufacturers that are a part of e-commerce supply chains is how to hold onto the efficiencies of large-scale manufacturing in a mixed model assembly environment.
In the Ford assembly line, workers could be quickly trained to perform the highly repetitive tasks asked of them. Mistakes could be caught down the line and accidents minimized through work design. Implementing mixed-model assembly re-introduces the risk of errors and accidents dramatically.
Compounding this challenge is the challenge of managing businesses in an age of qualified worker scarcity. Companies are having to adapt to a workforce consisting of summer students and interns, new employees with little training and experience and skilled workers aging out and retiring.
Complex supply chains are often composed of vertical operations stacked one upon the next, with each step possibly creating alternative follow on steps to get to the ideal final product. Even if one company can pull through on all the above-mentioned points, you have many other suppliers along the way who need to do the same.
Being a part of the e-commerce revolution as a manufacturer amidst these workforce challenges will demand an equally revolutionary approach to supporting individual workers as product variations continue to proliferate and production moves to a model of N=1.
All of these forces mean that we are entering the age of the connected worker and essential to workers being ‘connected’ is having easily digestible, clear, accurate and up to date work instructions at each and every step of a product’s journey.
The digitization of work instructions is an essential strategy in Industry 4.0 and mixed-model assembly. It’s the only way to provide workers with the immediacy needed to accurately and efficiently produce an ever wider range of product variations.
Digital work instructions connect workers directly to the larger production system, ensuring that the right step is occurring at the right time, in a repeatable and consistent way. Digital work instructions lower costs, increase quality and deliver on the promise of mixed-model assembly with timely products that can meet the market price point and specifications in an ever-evolving production environment.
Connected workers are able to get just-in-time feedback on their work which speeds up quality control and reduces unseen errors and problems. Employees receiving step-by-step instructions in real-time reduces the amount of confusion and the amount of time it takes to do each task and enables agile production lines which move workers away from the repetitive
The Industry 2.0 single task focus was to empowering workers to be able to efficiently perform a large range of tasks.
By easing communication, instruction, and education, the worker is automatically that much more productive. This further relates to lower costs and reducing downtime.
An easy Industry 4.0 win is to adopt digital work instructions, thereby connecting workers directly to the larger connected economy.