Is Your Factory Intelligent Enough to Withstand the Next Business Crisis?

Mass-produced personalized products sound like an oxymoron. Not so according to manufacturing industry experts who say that companies need the intelligence that allows factories to turn on a dime so they can meet whiplash-fast customer demand signals in a market rocked by anything from extreme weather to geopolitical conflicts.

“Manufacturers can no longer create one product for one set of customers,” said Mike Lackey, global vice president of Solution Management for Digital Manufacturing at SAP. “They have to be agile enough to deliver mass-produced and individualized products at scale. The intelligent factory delivers on highly changeable customer expectations by connecting business data directly with the shop floor for agility based on unexpected events as they arise. Leading manufacturers are digitally transforming to infuse intelligence into every aspect of the business and the factory while controlling costs and quality for a stronger future.”

Why Market Leaders are Transforming to Industry 4.0

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Why Market Leaders are Transforming to Industry 4.0

Connected Data across Ecosystems Boosts Business Agility

Automating processes on the factory floor was just the first step in modern manufacturing. The next step is gaining intelligence by connecting data from business systems like finance and planning and demand to factories, warehouse distribution, and logistics providers. Information needs to flow securely between customers, suppliers, and other partners. IDC analysts said that due to increased competition for wallet share, 65% of G2000 original equipment manufacturers (OEMs) will integrate customer insights with service work orders to better personalize engagements, increasing satisfaction by 15% by 2025. By next year, IDC analysts expected 30% of manufacturers will share applications with industry ecosystem partners to improve visibility and operational efficiency and ensure safety, security, and quality.

“Intelligence means that you can’t look at a single factor or a single factory,” said Lackey. “The intelligent factory links together your entire global operation as one entity to become the Intelligent Enterprise. As a manufacturer, your intelligent factory drives your intelligent supply chain that’s able to adapt quickly moving production lines between facilities when disruptions happen, sourcing alternate materials if supply chains are disrupted, or even switching out production for completely new products should consumer demand suddenly spike.”

Bringing Intelligence Supply Chain-Wide

Technology advances are making yesterday’s impossibilities everyday realities. By next year, IDC analysts expected 50% of all supply chain forecasts will be automated using artificial intelligence (AI), improving accuracy by five percentage points. By 2025, IDC researchers predicted 30% of G2000 manufacturers will embed connected technologies to increase product reliability using operational insights that ensure uptime and support an optimized maintenance supply chain.

“The intelligent factory is self-correcting and self-learning,” said Lackey. “For example, machine learning builds intelligence into your processes for more robust and continuous improvements in quality control. When you combine business information like market demand drivers, cost structures, inventory, suppliers, and delivery dates with shop floor data, you have the intelligence to reduce inefficiencies and focus on benefits for the greatest competitive advantage. This is how our customers are digitally transforming using SAP Digital Manufacturing Cloud.”

Technology Advances Energize Business Transformation

With greater intelligence from digital innovations like AI, machine learning, and the Internet of Things (IoT), manufacturers are using previously unused data to adapt operations and cross industry boundaries for expanded business opportunities. Gartner analysts predicted that by 2025, 65% of global manufacturers will invest in edge AI as a part of their IoT-enabled hyper-automation strategy, up from less than 10% today. In just a few years, IDC analysts expected 40% of G2000 organizations will use AI, data governance, and a transformed organization to develop a resilient and distributed operational decision-making framework that drives 25% faster change execution. Products-as-a-service is among the biggest market growth areas. IDC analysts predicted that by 2026, 30% of software development teams will focus on turning traditional products into outcomes-as-a-service.

“The intelligent factory supports new cloud-based services models as they emerge from board-level strategies,” said Lackey. “Intelligence from connected data across factory operations and the business is crucial to deliver on the contract for usage-based services where the manufacturer owns the product throughout its entire life cycle.”

Delivering products against the plan is all well and good, but we live in a world of disruptions. It could be floods and wildfire shutdowns impacting the flow of materials, spiking consumer demands after an influencer’s social media post goes viral, or ongoing pandemic lockdowns anywhere in the world. In this kind of market, manufacturers have discovered that factory automation alone won’t build business resilience. As lot sizes decrease and customer expectations rise, Industry 4.0 initiatives are making factories more intelligent for agile business that builds customer loyalty.


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This also appeared on SAP BrandVoice on Forbes.