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Digital Transformation: The Key to Competitiveness?

Posted By David Brousell, November 06, 2017 at 7:00 AM, in Category: Factories of the Future

Forcamphoto.jpgExcept for having to make a connecting flight in September on my way to China, I hadn’t been in Chicago in about a year. Late last month I had an opportunity to visit the Windy City to speak at the third annual Smart Factory World Symposium, organized by shop floor management technology vendor FORCAM and held at the Digital Manufacturing and Design Innovation Institute, one of 14 such institutes established under the Obama Administration as part of the Manufacturing USA national effort to enhance U.S. manufacturing competitiveness.

The DMDII, a public-private partnership whose mission is to help U.S. manufacturers to become more competitive in the digital age, was the perfect venue for the symposium, whose theme this year was the rules of Manufacturing 4.0.

Digital transformation has been touted by many as a key way to keep U.S. manufacturers competitive, but a number of other issues, including better coordination between industry, academia, and the government, will play important roles in ensuring U.S. manufacturing strength in the years ahead.

This was one of the key takeaways from a panel discussion at the Symposium entitled “Is American Manufacturing Still Competitive?” John Fleming, the former executive vice president of global manufacturing and labor affairs at the Ford Motor Co. and a member of the Board of Governors of the Manufacturing Leadership Council, said that many manufacturers need a clearer sense of the things that will truly make them more competitive.

[Photo at top: (left to right)Bob Vavra, Content Manager at Plant Engineering magazine and panel moderator; Gary A, Silberg, a Partner at KPMG; and John Fleming, former EVP at Ford.]

Fleming said that over the years, manufacturers had “ripped out” cost and people from operations but that this was not enough to ensure competitiveness. “That’s not a way to be competitive,” Fleming told the symposium’s attendees. “It’s a way to stay in business. It isn’t that we’re not just competitive on wage rates, but also around management processes. Maybe we’re doing ourselves a bit of a disservice by building up Manufacturing 4.0 so much. Let’s start with improvements and go from there.”

Gary A. Silberg, a partner and national sector lead for the automotive industry at KPMG, brought up the politically charged subject of outsourcing and protectionism, saying that outsourcing decisions were made on the basis of absolute landed cost, a calculation that favored basing plants in Mexico and in other offshore locations.

“The 35% tax will just make us less competitive,” Silberg said. “It’s great publicity, but not great sense.”

And on the subject of competition from China, which is organized around its state-sponsored Made in China 2025 program, Fleming warned that the competitive stakes are rising.

“China will kill us on costs,” he said. “The government there is absolutely clear about what it wants to do. What’s not clear here (in the U.S.) is that government, academia and industry are aligned. I don’t think we have an industrial strategy in the U.S.”

The adoption of Manufacturing 4.0 concepts and technologies offers a new way for manufacturers to compete in the global market, but the complexity of the journey to this cyber/physical world is considerable and will take much time for many companies, particularly those just starting down the path.

In my talk at the Symposium, I urged manufacturers to think about and plan for the three dimensions of change inherent in Manufacturing 4.0 – the technological, organizational, and leadership opportunities and challenges that must be understood and whose impacts have to be calculated and orchestrated. The skill brought to bear in this complex orchestration, I believe, will separate winners from losers in the M4.0 era.

For many at this point in time, though, the biggest challenge is figuring out how to mobilize for M4.0. Speakers on a Symposium panel on strategies for successful digital transformations drove home the point. Bryan Little, plant manager at MiTec Powertrain, Inc., said that his company’s biggest challenge with M4.0 has been to find a person and a team that would lead the effort.

And Bob Luthy, continuous improvement manager at Richards Industries, a manufacturer of valves, said, in response to the question of whether M4.0 might enables companies to go into entirely new businesses or change their business models, that his company hasn’t thought that far ahead yet.

But as the third Smart Factory World Symposium underscored, the M4.0 train is fast leaving the station. Companies are jumping aboard, and may very well figure out their journeys as they take them.

 

 

 

 


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Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council



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