Innovation is Building Growth
Driving towards Industry 4.0 will be the pinnacle to building growth in the sector. Having connectivity, utilising advanced analytic, automating and implementing advanced manufacturing technology will help manufacturers optimise their operations.
Although there may be greater demand for homegrown products, at the minute UK manufacturers don’t have the capacity to take on the full demand and cannot immediately scale. The transition to be able to scale up and make operations more efficient will be gradual, and digitalisation will be the right-hand man to help manufacturers to do so. Automation, AI and Robotic Process Automation (RPA) are poised to accelerate this change.
There are multiple examples of how digitisation has enabled manufacturers to pivot during the pandemic and quickly scale to produce large amounts of goods that they have previously never supplied. One example would be Project Oyster, which was a consortium on manufacturers including, Dyson, Formula One teams, Rolls-Royce, JCB, and more. All of which were being led by the High-Value Manufacturing Catapult, who were tasked with the UK ventilator shortage. Each of these businesses were able to move from design to production in a matter of days.
In a recent study conducted by PwC, it found that industrial manufacturers considered operational efficiency to the main area to drive revenue growth in the next 12 months. Whilst some manufacturers have adopted pilot programmes, there is still a lot of progress to be made when it comes to broad adoption of digital and especially when considering ‘smart factories’ to be commonplace.
For the level of efficiency needed to drive revenue growth, there needs to be a much higher rate of integration and digital needs to be embraced at scale. The industry was already experiencing a rapid pace of change, and the pandemic has propelled this even further, so that is a greater priority for the speed of adoption.
All our evidence shows that an overwhelming majority of manufacturers say Industrial Digital Technologies (IDTs) will be reality in their business by 2025 (80%). And there are a broad range of IDTs that manufacturers are adopting, including robotics and cobotics additive manufacturing (3D printing), industrial Internet of Things, virtual and augmented reality, and artificial intelligence. Nearly a quarter of manufacturers report having successfully introduced robotics and cobotics, and 28% have introduced additive manufacturing. But technologies like artificial intelligence (which can transform areas like predictive maintenance) or virtual reality and augmented reality (which can transform sales and service activities) have seen a much lower uptake.”
– Bhavina Bharkhada, Make UK
IM Leaders Look to Operational Efficiencies to Drive Revenue Growth
Manufacturers are beginning to embrace technology and the efficiency gains that can be derived from adoption. For example, Crystal Doors recently transformed their facility using IoT, to make better decisions from data, gain efficiencies and begin to automate.
“Technology has advanced from my first simple calculator I learned mathematics with. Yes, if rubbish was entered, then the answer would be wrong. However, if my calculator today gathers masses of data, all real and relevant it is easy to save money and be more efficient. Technology such as Internet of Things allows cost-effective digital recording of data to present in a way that managers see the reality, sometimes for the first time, making a sort of Eureka moment, as was the case with me. My machines were not at full capacity my employees believed, but only 14% real running time. From that point forwards, Crystal Doors is digitalising where possible to really deliver on the profit margins and allow the huge potential for sales increases year on year. Guesswork for manufacturing has fortunately gone, however, there are just a lot of old-style managers not gone to who need the right training to succeed. Unit costs are quantifiable and easy to manage with technology, where employees enjoy their upskilling being more valued. The future of manufacturing is the adoption of digital transformation, not excuses, lack of money or next year. Action now will save many UK manufacturers, and those whose companies fail are responsible to their employees and the community.” – Richard Hagan, Crystal Doors
Home Grown Production
Embracing the digital revolution can take manufacturers past just a ‘rebound’ and can deliver a ‘rebirth’. This pandemic has made businesses reconsider their complex globalised supply chains and investigate a closer to home strategy, but to make this change possible, digital has to play its part.
As mentioned earlier, there is a real opportunity for the UK to build a more competitive standing against international counterparts with the utilisation of technology. We can’t compete on cost, but we can compete on value. Prioritising the rapid digitalisation and ensuring innovation is supported, sits at the heart of improving the UK’s overall competitiveness. Below are just a few competitive advantages that can be derived from technological integration.
- Ability to produce unique products – Some UK innovative manufacturers already have prestige worldwide because of the unique products they create. In addition, technology will aid the production of completely unique products that others cannot replicate.
- Being more responsive to consumer needs – Shifts in demand can be quickly catered for when utilising technology and aligned with closer location means you can cater for shifts more rapidly.
- Faster turnaround times – Integrating some form of automation enables more products to be created in less time.
- Reduce waste levels and downtime – All areas of waste can be targeted with technology solutions. IoT enables energy waste to be significantly reduced and provides asset monitoring to conduct predictive maintenance, preventing unplanned downtime.
- Improved product design and quality – Not only can the operations be improved; the final product can be as well.
- Greater potential for a wider product range – Technology-enabled operations means diversification is easier and switching from one product line to another can become autonomous.
- Being closer to the customer – Rather than having to import, a greater proportion can now be produced in the UK due to efficiency gains.
- Sustainable credentials – Technology can reduce manufacturing waste and help manufacturers on their path to carbon neutral, which in the future will become more integral in buying decisions.
The integration of technology can help shape and strengthen the manufacturing sector and is key to bringing manufacturing home.
From an outsider perspective, the manufacturing sector may not be the most digitally advanced sector, but the inside is showing a different story. There’s still some progress to be made, but there are many in the sector that have begun embracing the next-generation of technology, with 50% already integrating technology that will improve productivity.
Those being supported by government initiatives are experiencing even higher rates of adoption.
Almost 75% of SME manufacturers supported by Made Smarter with digitalisation are putting data and systems integration at the heart of their productivity and growth plans. They are embracing industrial digital technologies to connect their disparate systems and unify data residing in different sources. Integrating a variety of systems and consolidating data sources is allowing business leaders to spot trends in production and labour, correct maintenance and quality issues, and minimise safety, business risk and operational downtime throughout their production. The benefits of these can be seen in the entire supply chain eco-system.
– Jude Holmes, Made Smarter
These productivity gains can also be critical to manufacturers international competitiveness.
“One of the main drivers for digitalisation is the need to retain the international competitiveness of the UK manufacturing sector. Other countries – such as Germany and Japan – have extensive support systems in place to help their manufacturing SMEs modernise, and it is important that their UK counterparts are not left behind. But only 9% of manufacturers in the Make UK Bouncing Back Smarter: Innovation Monitor survey agreed that the UK was in a leadership position compared to other countries when it comes to the adoption of IDTs. Perhaps reflecting this, only 15% of manufacturers agreed that it would be possible to realise the full potential of IDTs without Government support.
The other driver has been impact of the Covid-19. Manufacturers took quick and significant steps towards digitalisation when the pandemic struck, with nearly half moving to digital working practices within two weeks of lockdown, according to new research. With just a fortnight’s digital installation and planning, 94% of companies said they had staff working successfully from home in industries often associated with manual tasks and an extremely high proportion of production-based work.”
– Bhavina Bharkhada, Make UK
Some areas of manufacturing are more ahead of the curve than others, when it comes to digitalising their operations, and there are some discrepancies between which industries are embracing which form of technology. For example, pharmaceutical manufacturing is leading the way when it comes to utilising AI, whereas automotive is more focused on robotics and automation, to automate parts of their production line.
The automotive sector has already been undergoing massive changes that is being driven by Industry 4.0. Over the past 30 years the industry has invested billions into advanced technologies and solutions. The integration of the likes of IoT, robotics, AI and VR have allowed automotive manufacturers to become more efficient and agile.
One key industry example has to be Tesla, who are disrupting industry norms, taking a completely new approach to manufacturing. Only being founded in 2003, they have quickly shifted from an EV start-up to an industry leader, making $34.51 billion in revenue in 2020 (and that was in 2020!)
Both the Fremont factory and Gigafactory are some of the most advanced in the world. These sites utilise robotics throughout, either on the assembly line, but also to move materials around the site, and these can navigate freely through the use of digital maps and sensors to detect obstacles.
Elon Musk talked about the realisation of “how important it is to build the machine that builds the machine”.
Not only has the industry had to deal with the largest decline in production they have ever possibly experienced and rebound predictions are still a while away as stockpiles of cars remain unsold. They are simultaneously dealing with the massive upheaval preparing for the switch to electric and hybrid vehicles, which has meant for many huge changes to their production lines.
Whilst food production remains the UK’s largest manufacturing sector, we still import twice38 as much, particularly fresh fruits and vegetables. To tackle one of our biggest import areas, the UK would have to begin producing a higher quantity of fruit and vegetables all year-round. For some goods this simply won’t be possible, especially when following traditional production methods.
The integration of technology can kill two birds with one stone, delivering efficiency gains for cost-saving and automating aspects of the factory could make it more agile to switch production lines.
Food makers are having to constantly adapt their processes to keep up with the changing market. The combination of more e-commerce food shopping and new food trends, means producers need to be more agile. As food is such an expansive supply chain, technology is able to be integrated at all stages, not just in the production facility. From satellites that monitor crop yields or robots that can package food, there is so much potential in this sector. And with an ever growing population, food manufacturing is going to need to keep up.
This innovation is not restricted to those multinational businesses either, SME’s in the area are seeing major production improvements. For example, chocolate makers Frairs is experiencing huge spikes in productivity due to automating their processes. This integration enables the firm to increase its output from 30kg to 250kg a day, a 733% increase, alongside making it three times cheaper to produce the same amount.
Barriers Preventing Adoption
Whilst there are some incredible examples of how technology is revolutionising manufacturing, not everyone has jumped on the bandwagon just yet.
After research into hundreds of manufacturers, Make UK have identified major barriers that are preventing manufacturers from adoption.
The key barriers to adoption of technology have remained consistent over the past two years: action on skills, change management, impartial advice and financing models are needed to overcome them. The main change is that more manufacturers reported finance as a barrier in 2020 than they did in 2018, when previously asked. This may be because the 2020 survey was carried out during the COVID-19 pandemic when manufacturing – and the economy as a whole – was experiencing a profound economic downturn.
However, we know high up-front costs are a big barrier to adoption of technology. Despite the Government providing financial support for innovation in various ways, principally through fiscal incentives (such as tax credits or allowances) and through grants channelled through bodies such as Innovate UK, Make UK’s policy work has identified that Grand Challenges funded by the Innovate UK are not fitted for the SMEs, due to the complex and highly competitive nature of its grant allocation process. Compounding this problem is that awareness of many Government support measures for innovation is extremely low. The Government funding schemes are often not easy to understand for a busy CEO of a SME and its applications processes are too grand for them to swallow. We need to make them simpler.
– Bhavina Bharkhada, Make UK
Another core piece of research conducted by Made Smarter highlighted additional barriers that are preventing companies from beginning their digital journey.
There are a whole host of barriers preventing SMES from adopting technology. SME leaders are often juggling many things and don’t always have the time to focus on strategy and growth planning, due to the day-to-day need to react. Manufacturers cited that a lack of capital/funds to invest was their core barrier in a Made Smarter survey. Followed by external factors, lack of time, lack of understanding of the technologies and lack of in-house skills. We often hear from business leaders that the rhetoric around technologies is very confusing, which is why at Made Smarter we explore the business challenges the SME is facing rather than the technology solution itself. The potential technology solutions are selected once the core business challenges have been identified.
Business leaders who have adopted digital tools have often found that not having digital as part of their overall business strategy has led to disconnected hardware and software, which provides its own set of challenges. One of the key starting points we find for many businesses is connecting their systems. This provides them with clearer data in order to make better decisions.
– Jude Holmes, Made Smarter
These barriers are those found across the board, but there are those that are sector specific, with different industries facing their own challenges. Some areas may face greater regulatory barriers than others, for instance the pharmaceutical is one of the most regulated and integrating a new form of technology is a slow process that is covered in red tape.
Tom Martin, of Jetsoft, a solution that enables the improvement of quality control processes explains the exact barriers he faces when engaging clients to adopt.
From our perspective, we provide a very niche product that doesn’t have too many competitors and the client probably hasn’t come across our type of solution before. So, educating the market is the biggest barrier we face, and we have to explain the benefits they can gain from using our technology and how they can utilise it. Aside from this, we work with a highly regulated area of the advanced manufacturing sector and high regulation tends to mean lower adoption rates.
In order to achieve a successful ‘rebirth’ that allows them to come back fighting, manufacturers require team members with the right skillset. At the minute, the training and development of staff, it’s not keeping pace with the ever-growing digital adoption and for many finding the right talent is extremely difficult.
Digital skills have been of paramount importance in effectively responding to the crisis in the short-term, and will be as important, if not more so in transforming manufacturers to respond to the aftermath of the crisis in the longer-term. In fact, almost two-thirds (64%) of manufacturers had undertaken training to improve digital skills in the last 12 months. Acquiring digital skills isn’t just a short-term benefit. Make UK research found that a lack of digital skills remains the biggest barrier to adoption of Industrial Digital Technologies (IDTs).
– Bhavina Bharkhada, Make UK
Ironically the reason for the skills gap could also be the solution. Digital technology could allow the training process to be completed faster and more effectively and allow shop floor workers to perform more complex tasks. Manufacturing runs of the back of specialised skill sets, some of which can take can years to fully train.
There are a few ways that technology could speed up this process. For example, real-time analytics of facilities could help members make more informed decisions and the latest innovations in no-code means members can make floor-ready applications without any training in software development.
Jude Holmes talks about how the Made Smarter initiative is helping SME’s close their digital skills gap.
There are ways you can bridge the skills gaps with support from programmes like Made Smarter. Our digital technology internship programme matches SME manufacturers looking to adopt technology to a digital native to help them with their adoption. Meanwhile, undergraduates, masters and PhD students, as well as graduates from UK universities, are benefitting from paid work experience, valuable hands-on practical work experience, a taste of a potential career path, and a foot in the door of a forward-thinking company or industry. I suspect this culture of transformation, agility and iterative implementation will remain long after the pandemic.
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From all of us at Halston Marketing, we hope you enjoy reading!