global-digitization-resizedWhen global corporate and financial leaders convened for the annual World Economic Forum in Davos, Switzerland in mid-January, one of the prevailing themes that came out of the conference was the anti-globalization sentiment being shared in the wake of the Brexit vote and the rise of nationalism.

It’s an issue that carries significant consequences, both for emerging nations that have been building their economies on the expansion of manufacturing and exports, and for mature industrialized nations like the U.S. that are looking to reshore industrial production and revitalize domestic manufacturing.

The rise of nationalism has also led to a dramatic shift in the global economy. Last year, global trade grew just 1.7%, lagging world economic growth for the first time in 15 years and for only the second time since 1982, according to research by the World Trade Organization.

The path towards digitization

As mature markets such as the U.S. and the Eurozone look to expand domestic manufacturing, this offers manufacturing companies rich opportunities to further digitize their operations, lower production costs, and increase productivity in order to remain competitive.

In smart factories where processes across the full spectrum of the supply chain have been digitized, manufacturers can produce orders more efficiently with fewer people. Oliver Wyman estimates that digital manufacturing will increase annual margin potential by more than $1.4 trillion, with the absolute largest gains occurring in the automotive, machinery, aerospace, and rail industries, respectively.

Meanwhile, intelligent sensors can be used to identify anomalies with manufacturing systems, offering additional opportunities for applying digitization for cost avoidance. Data generated by equipment sensors used in manufacturing can be analyzed and provide alerts to shop floor supervisors notifying them when a particular system requires maintenance and to catch equipment failures before they occur. These types of data-driven plant floors can help to reduce unscheduled downtime and to further strengthen productivity.

For its part, Stanley Black & Decker has incorporated Internet of Things (IoT) sensors and technologies in one of its plants in Mexico to monitor the status of production lines in real time using mobile devices and WiFi RFID tags, according to PwC. As a result, overall equipment effectiveness in the company’s plant has increased by 24%, labor utilization by 10% and throughput by 10%.

There are several ways in which the CIO can add value in helping a manufacturer to digitize its operations. One is by working closely with plant floor and other executives to better understand processes that can be streamlined and automated. To help support these efforts on an ongoing basis, the CIO can also embed business architects and other IT-business liaisons into different areas of the manufacturing plant and supply chain.

Meanwhile, CIOs can also partner with manufacturing executives to identify their top pain points and to brainstorm on opportunities for applying digital technologies to address those. For instance, machine data can be analyzed to determine opportunities for reducing waste and improving efficiencies with materials.

CIOs can also set up low-budget skunkworks test labs to experiment with use cases for emerging technologies such as 3D printing, robotics, and machine learning.

In addition, CIOs can help manufacturing executives obtain a deeper understanding of what customers want and how digitization can potentially be applied to deliver on these requirements. This can include the creation of online forums, voice of the customer (VoC) programs, and other feedback vehicles for obtaining, analyzing, and acting on customer input.

“For us, going digital is speeding up the cycle of engineering design into the machine floor and allowing us to course correct more quickly,” said Daniel Fallon, COO at GMFI Metalcrafters Inc. in an HMG Strategy video.

Key Takeaways

  • At the annual World Economic Forum in Davos, Switzerland, one of the prevailing themes that came out of the conference was the anti-globalization sentiment being shared in the wake of the Brexit vote and the rise of nationalism.
  • As mature markets such as the U.S. and the Eurozone look to expand domestic manufacturing, this offers manufacturing companies rich opportunities to further digitize their operations, lower production costs and increase productivity in order to remain competitive.
  • There are several ways the CIO can add value in helping a manufacturer to digitize its operations. One is by working closely with plant floor supervisors to identify processes that can be automated and streamlined.