I have seen a lot in my 30 odd years of leading a manufacturing software company, but most recently I’ve been really intrigued by the ways small and mid-sized manufacturers are leveraging technology to be competitive. It reminds me of an article that I read about a year ago that made me chuckle, it was entitled something along the lines of the average manufacturer being smaller than you think and getting smaller.
“Technology is the great enabler – an equalizer for smaller manufacturers”
When I first started working with what industry calls the “tier two and tier three” level of manufacturers – meaning, businesses that are generally below a billion dollars in revenue, and often under $500 million-the playing field was pretty stratified. The “haves” in the tier one conglomerate world had access to the biggest and best technologies because, well, they could afford it. The smaller, but often far more innovative companies generally relied less on technology and more on their brains, brawn and connections to make things happen.
As IT companies in the software sector started looking downstream at the possibilities to cost effectively service smaller manufacturers, a funny thing started to happen. t Smaller manufacturers started outperforming their much bigger rivals on multiple fronts.
Let’s look at the data. Estimates indicate that there are around 250,000 manufacturers in the U.S. that have fewer than 500 employees. If we do the rough math and divide it by 50 states, that means that each state would have an average of a whopping 5,000 manufacturing companies headquartered there. That’s a lot of companies, and a lot of potential opportunity for those cities housing them.
So here’s where the data gets really interesting: these smaller businesses produce more innovations per employee than large manufacturers. What’s more, they not only bring business to their communities by way of the job sector, they are the catalyst for future innovation often later leveraged by the industry giants. Looking to the future, I see even more bright spots on the horizon for mid-market manufacturers, because there is a new wave of technology coming that either individually or collectively is going to be game changing.
Let us consider these developments that will shape the future of manufacturing floors:
• Embedded Smart Technologies and IoT (The internet of Things) - While I think we’ve all been a bit over-whelmed on the hype cycles surrounding Big Data, it’s really going to be what some call Small Data, and I call it “just plain smart” data. What I mean by this is that companies have at their disposal a wealth of disconnected data bytes that individual mean nothing, collectively can mean something, and when embedded into automated sensor-driven programs are nothing short of game changing. For example, the efficiency factor for production operations can be increased exponentially with built-in machinery diagnostic capabilities. Profit-killing downtime can be eliminated, performance can be continually monitored and predicted. Data for future requirements can pre-emptively predict that something needs to be adjusted before that big job is processed. This is just one very small example – there are many others that can affect logistics, transportation, supply chain management, and more.
• Wearables Will Change the Shop Floor Dynamics - Actually, you may be surprised that the proliferation of mobile devices and particularly smart phone apps has been an innovation fertilizer for how tomorrow’s production plants will operate. Wearables like Google Glass, with embedded key performance indicators (KPIs) and role-based visibility to guide users to “see” beyond ordinary vision will turn plant floor managers into a benevolent version of Arnold Schwarzenegger’s “Terminator”. In other words, they will see data that is inter-related with visual clues, and will be able to act with knowledge and precision to know whether something is or isn’t right. That can be enormously time saving, money saving and takes efficiency to new levels.
• 3D will become 4D Printing - The latest stream of 3D printing capabilities haven’t even scratched the surface with what manufacturing shop floors will soon be able to accomplish in the not-too-distant future. While 3D printing technologies offer new possibilities for parts and materials that can eventually change the entire supply chain matrix, 4D printing takes it one step further by delivering “self-heal” capabilities that are embedded as part of the manufactured part. For example, in the a automotive industry, vehicle coatings and/or windshields might change based on environmental conditions, brakes could sense and cool down emergency stop situations, a spare part could be auto-infused into an engine that’s about to blow. And that’s just a consumer example. Imagine a shop floor that pre-empts plant machinery that is about to seize by auto replacing a part from an adjacent cache?
Technology is the great enabler – an equalizer for smaller manufacturers. For example, having world class mobile capabilities can level the playing field for smaller manufacturers to compete effectively by doing work faster, smarter and more efficiently. Business-process enabled technologies that also benchmark performance are giving CIO’s new abilities to impact the bottom line in new ways. The CIO role is more valuable than ever to companies, and perhaps more strategic than ever before.