VUCA – a term introduced at the end of the Cold War to reflect volatility, uncertainty, complexity and ambiguity – has gripped organisations with change in our markets. It is often driven by disruptive technologies, new mobility solutions, connectivity, new players entering the market, and new legislations. The repercussions are tremendous, but survival is the core nature of successful collaborations between the demands of the market and the ability of an organisation to cater to these needs. India is the best example of a market that consistently keeps bouncing back into the green. The Make in India initiative, for instance, has opened new horizons for the manufacturing industry, and highlighted the importance of the quality of goods manufactured, the localisation of various processes, a strong bond between the Indian government and manufacturers, and, largely, a positive impact on the economy.
India’s manufacturing sector has the potential to touch $1 trillion by 2025. It is likely that the sector will account for 25-30 per cent of the country’s GDP, and create up to 90 million domestic jobs by 2025. Emerging from the shadow of the services sector, the manufacturing industry can seize more of the global market, now more than ever. With business conditions in the Indian manufacturing sector booming, a market of more than a billion consumers and increasing purchasing power, a few questions come to mind: what does all this mean for manufacturing in India? What changes must one expect? Are there opportunities or risks? What is the approach one must take to be successful? Are we prepared for the future?
Productivity and Quality: Closing the Gap
For decades now, India has been benefiting from its competitive labour costs, and a more-or-less protected market. Quality, however, has proved challenging for the Indian industry. Passe quality has been considered acceptable in the past, and investment in new manufacturing technologies has been limited – always decided based on affordability. Recognising this, a few leading manufacturers are upgrading their competitiveness by bolstering their operations to improve the productivity of labour and capital, while launching targeted programs to train plant operators, managers, maintenance engineers, and other professionals to reach their manufacturing potential. Bridging the gap to reinforce the economy, the manufacturing industry is shifting its focus to smart or low-cost automation, extended utilisation of robotics, implementation of time standardisation modules like MTM and REFA to optimize ergonomics (efficiency in the working environment), manual processes and production lines, and digitisation of manufacturing.
These focus areas leave room for optimum production of goods specifically tailored to the customer’s needs. Not only is it well-made, the products also tend to be consistent throughout.
India has been gearing up for Industry 4.0, surpassing another industrial revolution, and lunging unwaveringly into the Internet of Things. Humans and humans, humans and machines, and machines and machines – interaction between these variables has been possible for the last decade through connectivity. The present scenario, however, dictates forward and chic methods of technology. The India which was lurking behind political red tape and conservative policies is now the hotspot of most industrial activities made possible by our IT stronghold. Industry 4.0 reveals some powerful emerging currents with strong potential to change the way factories work. So, what is Industry 4.0, and how is it applicable to manufacturing in India?
Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of Things and cloud computing. It is the future of manufacturing. Its enhanced technology, digital systems and automated processes makes it optimum for manufacturing of quality products. McKinsey, for example, helps explain these disruptive trends defining Industry 4.0:
Big data: An African gold mine found ways to capture more data from its sensors. New data showed some unsuspected fluctuations in oxygen levels during leaching, a key process. Fixing this increased the yield by 3.7 per cent, worth up to $20 million annually.
Advanced analytics: Stronger analysis can dramatically improve product development. One automaker uses data from its online configurator, together with purchasing data, to identify options that customers are willing to pay a premium for. With this knowledge, it reduced the options on one model to just 13,000 – three orders of magnitude fewer than its competitor who offered 27,000,000. Development time and production costs fell dramatically; most companies can improve gross margin by 30 per cent within 24 months.
Logistics company Knapp AG developed a picking technology using augmented reality. Pickers wear a headset that presents vital information on a see-through display, helping them locate items more quickly and precisely. And with both hands free, they can build stronger and more efficient pallets, with fragile items safeguarded. An integrated camera captures serial and lot ID numbers for real-time stock tracking. Error rates are down by 40 per cent, among many other benefits.
Local Motors builds cars almost entirely through 3-D printing, with a design crowd-sourced from an online community. It can build a new model from scratch in a year, far less than the industry average of six. Vauxhall and GM, among others, still bend a lot of metal, but also use 3-D printing and rapid prototyping to minimise their time to market.
While Industry 4.0 is still a work in progress, many leading companies are working their way through new methods of digitisation and automation in order to define the future of manufacturing. While we are acquainted with a multitude of benefits that Industry 4.0 can bolster the market with, there are still a few loopholes.
Having said this, India is still better equipped with the right set-up to make this possible. The vision is a digital factory concept that includes intelligent sensors with web servers built into them that can connect to the internet providing big data. Secure IT infrastructure would then be needed to connect machine-to-machine, shop floor to the office environment, and from there out to the supply chain. A mammoth IT hub, skilled labour, lenient policies by the government, a new and digitised India, access to land, and resources – India is an incubator, slowly building up speed, and surely heading towards Industry 4.0 with help from local and foreign manufacturers who find this environment conducive for change.
Creativity, Innovation and Connectivity
Consumers are the driving force behind Industry 4.0, demanding that new and complex products reach the market in a shorter span of time. This is consistently pushing manufacturers to be on top of their game. They must innovate technologies to keep up with the market demands,
use creativity to help the products cater to different sectors in the industry, and install digital systems that enable connectivity. The three terms often go together, intertwining to make the most useful technology. For example, a combination of technology with connectivity has resulted in an early warning system for quality incidents. In an assembly line, all stations are connected. If a process goes wrong during any stage of production, an alarm is initiated; the line stops immediately and a centralised app signals distress to the quality check teams as well as the line manager, who are contacted on their mobile phones.
Containment and corrective actions, including risk evaluation, is immediately put in motion.
A result of this is the decrease in costs related to defects, a learning system based on mistakes and the perfect end product. Not only is time conserved, but fixing a product after the defect escalates is not an issue anymore.
Resource efficiency in manufacturing
Assessing products with regard to their durability, functional usefulness, use of materials, etc. is one aspect of regarding efficiency. The other is actual production operations and the search for in-plant inefficiencies. What happens during the production process is that a large chunk of waste is generated, sometimes more than the actual product waste itself. This is a disregard of the wealth of material resources, time, labour and energy that has gone into sourcing the basis of the product. Many more processes later, there is an immense loss of residual materials. Industry 4.0 has the potential to change this. Key players in the manufacturing industry are setting standards to curb waste production, maximize the use of resources and thus reduce the cost of manufacturing a product.
While resource efficiency also means maximising the supply of money, human resources, and other assets, in addition to material resources, can be drawn on by the organization in order to function effectively, albeit with minimum wasted (natural) resources. This also means using the earths limited resources in a sustainable manner while minimising environmental impact.
Future of manufacturing in India
The future of manufacturing belongs to those who think 10 steps ahead, who leap in bounds and still emerge at the top. Catering to the future involves an emulsion of innovative and holistic new technology that increases efficiency, automation of technology to eliminate errors and drive consistency, and the digital connectivity to do so. To get the most out of Industry 4.0 technologies, and to get past square one with a digital business model, companies must prepare for digital transformation. Data management and cyber security will be the most critical problems to solve. India however, is equipped with the technological know-how and the best resources that money can buy. But the most significant of all is the Digital India initiative by the government of India. This ties in other processes that sync together harmoniously, and opens the market for new players in the industry with renewed income resources that impact the economy.
Changes in the manufacturing industry, however, do not act on technology alone. Leaders play a pivotal role in steering the path that technology takes. Having a greater vision for the future that is not limited to what we know of the past, but one that is dynamic enough to absorb advanced ideas and a sense of the impossible can revolutionise the industry. Not only do leaders make key decisions, they are the guiding forces that influence an organisation.
Another aspect of changing dynamics in manufacturing is to have an increasingly positive impact on the planet. The move towards the future is more aligned with a clean and green environment. The term “green” manufacturing can be looked at in two ways: the manufacturing of ‘green’ products, particularly those used in renewable energy systems and clean technology equipment of all kinds, and the ‘greening’ of manufacturing – reducing pollution and waste by minimising natural resource use, recycling and reusing what was considered waste, and reducing emissions. A green earth is the new cool, but unlike a fad, it has real consequences.
Manufacturers of the future are making sure that production processes are environmentally friendly.CO2 emissions have been downsized with the use of renewable resources like solar and wind power. India’s growth in the renewable energy sector will only aid manufacturers in creating sustainable and smart factories.
Published in Business Today (January, 2017)