The Digital Future of Manufacturing: Are Asian Manufacturers Ready?

The Digital Future of Manufacturing: Are Asian
Manufacturers Ready?

By Prasad Satyavolu, Head of Innovation,
Manufacturing & Logistics, Cognizant

Industry 4.0 is
characterised by the interconnection of highly
intelligent cyber-physical systems, to create the “Internet of
Things”[1]. Today, it is
changing the face of manufacturing globally, promising increased productivity,
lower costs and greater customer satisfaction. But despite the massive shift in
value chain configurations and consumer preferences reshaping the manufacturing
sector in the last decade, less than half of
manufacturing sector leaders in Southeast Asia believe they are ready to take
advantage of Industry 4.0[2]. Why are
manufacturers not fully embracing digital and Industry 4.0?

Traditionally, Asia has
been known as a cost-effective manufacturing hub thanks to its vast labour
pool. While manufacturing and design quality improvements have come a long way,
next-generation smart connected products pose new challenges for the entire
ecosystem. A combination of legacies in operations, information and product
technologies, and manufacturing culture needs to be thoroughly re-evaluated in
this changing context.

Several Asian manufacturing
hubs in areas ranging from automobiles to smart phones and consumer electronics
have done well to create world-class products. As the advantage of labour
arbitrage recedes, newer paradigms of productivity, operational visibility and
risk management are needed for Asian manufacturers to stay competitive. Asia is
well-placed to maintain its hub status if the region’s manufacturers quickly
move to adopt a digital mind-set. By integrating the best of the physical and
digital worlds, and getting rid of their traditional approaches to maintaining
competitiveness, Asian manufacturers can fully capture the benefits of digital.

But first, three old ways
of thinking must be rooted out. These include being reluctant to invest
strategically in digital, fearing automation, and not understanding the
importance of securing data effectively.

Spend money
to make money

For long, Asian
manufacturers have focused on maintaining cost competitiveness by using
inexpensive labour, and failed to recognise the numerous opportunities
available to better operations in a digital economy. Elements in the
manufacturing process such as design, planning and engineering were implemented
in silos. Today, through digital manufacturing and forces such as 3D printing,
IoT sensors and manufacturing robots, there are opportunities to seamlessly
integrate these processes.

To do this, manufacturers
need to double down on digital and adopt a digital manufacturing strategy. The
benefits of doing so are clear. Cognizant’s recent study[3] showed that
manufacturers investing in digital strategies have already seen a 5.4%
improvement in revenue. What’s more, these manufacturers expect the growth in
revenue to soar to 9% over the course of the next year.  

For example, a large paint
company in India has used the combination of industrialised sensors, automation
and social media analytics to catalyse both internal operations and customer-driven
product development and marketing outreach. By developing smarter and more
agile demand-driven supply chains, manufacturers can hope to generate growth
rates well above what they would have enjoyed in the pre-digital era.

Harnessing
the potential of digitalisation

Barely a day goes by
without someone mentioning that machines will steal our jobs. But the reality
is that automated tasks still require human intervention in improving quality
and thus consumer experience. Today, digital tools help us work faster and as the
world moves towards automation, the onus is on humans to find ways to work even
smarter with the aid of technology.

Manufacturers believe that
as future tasks become more automated, greater technical expertise will be
required, and the talent and skills required will undergo significant change[4]. This means that
workers will not be replaced by machines, but will simply need to develop
higher-value skill sets.

Working alongside humans in
modern manufacturing, new automated systems will create new and better
outcomes. A great example is the Airbus factory, in which robots are strapped
to the side of fuselages, drilling thousands of rivet holes, with operators “piloting”
the robots. This reduces any human intervention except when issues need to be
addressed, driving down labour costs in the long run.

Increasingly, manufacturers
need to turn their business inside out in order to adapt and respond to demand
volatility and business pressures. Manufacturers need to become digital at
their core. This will enable them to integrate and deliver better outcomes for
all the key players across the manufacturing value chain.

As digital spurs the need
for new skills, manufacturers in Asia should upskill their workers, focusing on
developing and capitalising on the capabilities that are uniquely human and
cannot be replicated by machines.

Watch out for
“data spills”

As manufacturers increase
investment across social, mobile, analytics and cloud, and work towards
upskilling their talent pool for the digital age, they need to be wary of what
happens to their data.

Oil spills are considered
one of the worst disasters because of the wide-reaching impact they have on
countries, communities, corporations and the environment. The digital
equivalent of an oil spill is a “data spill” or any sort of cybersecurity
breach. It is no surprise then that with so much data swirling around, 90% of manufacturers are concerned about
the security and privacy risks of information getting into the wrong hands[5].

The recent WannaCry ransomware attack[6] shows that
even manufacturers are extremely vulnerable to hackers. For instance, one of
the world’s major car manufacturers, Renault-Nissan was affected by the
cyber-attack causing widespread disruption at
several of the auto alliance’s sites[7].

Regardless of the product
being made, Asian manufacturers need a robust data security strategy in place
to secure their systems. They also need to be resilient and should be able to
quickly mitigate the damage.

Business leaders should
adopt a proactive stance toward cybersecurity. When it comes to planning for
digital manufacturing, security issues must be addressed upfront, rather than
as follow-on tasks. Companies that do not put in place a comprehensive security
strategy are putting themselves at both monetary and reputational risks.

Asian consumers are coming
of age in demanding products that are world-class in design and quality, and
personalised to deliver great experiences. Industry 4.0 is creating a
manufacturing renaissance globally to address these aspects of consumer demand.
While manufacturing is still about making things, the future of manufacturing
requires analytical thinking, collaboration, communication, and creative
problem-solving.

Asian manufacturers must
act today or risk becoming obsolete. Leaders need to make critical choices that
will quickly allow the benefits of digital to help their businesses succeed.
The scale of the opportunity is massive. By leveraging digital to improve
quality, productivity and delivery, Asian manufacturers can future-proof their
businesses and maintain the region’s standing as a leader in the sector.

[1] Cognizant, Informed Manufacturing: The Next
Industrial Revolution, 2014

[2] McKinsey &
Company, Bringing Industry 4.0 to life for
companies in Southeast Asia, March 2017

[3] Cognizant, The Work Ahead – Designing
Manufacturing’s Digital Future

[4] Cognizant, The Work Ahead – Designing
Manufacturing’s Digital Future

[5] Cognizant, The Work Ahead – Designing
Manufacturing’s Digital Future

[6] CNN, Ransomware attack: Who’s been hit, May 2017

[7] Business Insider, Renault-Nissan is resuming production
after a global cyberattack caused stoppages at 5 plants, May 2017