Key points
Introduction
The COVID-19 outbreak has shocked our society and the manufacturing and process industry have been shaken in return. In this context, the power of digitalisation has been put in light as never before.
The most technologically advanced companies reacted better to this unexpected pandemic. Digitalisation is an effective tool to face crisis situations, giving flexibility, dynamicity and consistency to industrial processes.
As a new company’s must-have for competing in today businesses, digitalisation is one of the lessons learned from this crisis. Technology is no longer only a plus; accordingly with the operations management language, it moves from being an order winner to an order qualifier.
The COVID-19 pandemic caused huge problems to numerous fields and industrial sectors, though as we know, crisis periods often offer good opportunities to set changes.
Leaders should look at this period as an opportunity to lead improvements. Rather than simply reacting and adapting themselves to the new normal, they should actively design it.
In light of what stated above and keeping digital transformation as a continuum background theme, we can identify 4 trends that will lead the manufacturing industry in the coming future, in accordance with four key business macro-areas: Industrial Smart Working, Skills, Operations & Supply Chain and Business Models.
Industrial Smart Working
Smart Working has been widespread in the last period, proving to be extremely effective in guaranteeing business continuity and in enabling to carry out activities typically related with management and from-the-desk tasks.
Today, the practice of smart working is being extended by business leaders to other industrial and technical areas. In this perspective, Industry 4.0 technologies play a key role and can give a huge support in developing what can be defined as industrial smart working 4.0.
At present, some of the most technologically advanced companies have already implemented what is known as remote monitoring, that briefly consists in monitoring activities staying far away from the physical plant (e.g. remote maintenance).
However, in a business context characterised by unpredictable events such as the recent Covid-19 pandemic, remote monitoring cannot support business continuity alone, as we have seen. Hence, in the future, remote monitoring should come together with what is called remote execution.
Remote execution will be possible only after considerable investments, with Industry 4.0 technologies representing the backbone of this innovative industrial approach.
As reported in the image below, Internet of things, Big Data, Cloud and Digital Twin represent the bedrock, while Collaborative Robotics, Artificial Intelligence, Augmented and Virtual reality, 5G technology and Blockchain represent the pillars to support the Industrial Smart Working 4.0 paradigm.
Therefore, remote monitoring and remote execution represent key concepts towards the Industrial Smart Working 4.0 that can be briefly defined as “a system of methods and technologies that allows remote management and execution of industrial processes”.
Industrial smart working 4.0 will not only foster technological innovation but also promote organisational revolutions. As a title of example, new KPIs must be defined, whilst processes, competences and communication modalities must be reviewed.
Corporate culture needs to be innovated in favour of higher worker’s autonomy and new policies must be defined as well. Even factory’s layout will be modified.
Whilst today’s layout is designed with the aim of creating the most efficient space for worker (operator-centric), tomorrow’s layout will be created prioritising activity effectiveness (task-centric), instead of the single person, taking advantage of Industrial Smart Working 4.0 concepts.
Skills
Workers’ skills will be partially impacted by Covid-19 pandemic. Whilst probably not many new skills arise, many of the currently existing ones will see a reallocation of their importance and many workers will experience a redistribution of their role.
Blue collars will become light blue collars: in line with the principle of industrial smart working, industrial workers should be able to unify the cognitive way of acting typical of white collars with the manual way of acting typical of the blue ones. Hence, industrial workers have to be able to both take higher level decisions and analyse small sets of data.
In general, education covers a significant role and after this crisis it will be responsible for substantial changes. Digital roles, in line with the digital transformation trend, will assume a higher strategic importance.
Updated skills in IT, OT and data integration will turn out to be fundamental to aim at process business optimisation; skills focused on workers management and coordination will be necessary in order to ease remote communication; competences in risk management have to be spread in order to be able to compete effectively in a business context characterised by unpredictable events.
At the same time, a robust and reliable cybersecurity system will represent a key pillar to guarantee sensible data and information exchange protection as remote activities in security will become more and more pivotal.
Because of digital transformation, changes in competences will involve different levels and different areas. For example, at factory level new roles will be introduced in maintenance area (e.g. Remote Maintenance Supervisor) and in operations area (e.g. 3D printing expert).
At supply chain level, roles like the business process manager in digital modelling will increasingly gain importance. At Product lifecycle level, profiles like the project leader in digital transformation, the service manager 4.0 or the digital mentor will see an increase in their strategic relevance.
Operations and Supply Chain
Until today, operations and supply chain have been optimised taking into account the well-known lean management principles; but the crisis showed us that this approach is not enough. In the business context in which we are living, operations and supply chains have to be resilient.
Business leaders need to inspect the current processes keeping lean principles and resilience principles at the same level of attention. Given that supply chains have to be reviewed, digital transformation and industry 4.0 technologies will provide essential support in reaching an effective resilient manufacturing.
Industry 4.0 however, has not to be interpreted as a stand-alone paradigm for companies, but rather it should be integrated to the already existing concept internalised within industries such as the above mentioned lean approach.
In fact, a short-sighted implementation of digital technologies would result in a transfer of wastes and inefficiencies, thus softening the benefits on the one hand and increasing the hesitation for future initiatives on the other.
Moreover, in response to the events occurred these last months, the manufacturing industry is likely to experience several reshoring phenomena. Supply chains will move from being global to glocal: they will be physically shorter but more virtually and digitally connected.
Furthermore, supply chains can also adopt some hybrid configurations specifically designed for focal companies to achieve both efficiency, by relying on efficient, though far, suppliers and resiliency, by parallelly keeping suppliers less physically distant and robust (i.e. less risky), even if more expensive.
The reshape of supply chains and operations, also enhanced by the use of Industry 4.0 technologies, will probably change different but inescapably related processes like the New Product Development. In particular, while supply chains and factories will need to reorganise themselves to strengthen the faults put in light during the pandemic, they also must adapt their “shape” according to what the market is asking for.
Hence, it is worth critically reasoning on how the need for resilience of supply, production and distribution processes will influence the new products development process and how the new product development process will be changed to guarantee the required resilience along the entire product lifecycle.
Finally, it is interesting to consider that, until today, we have always framed businesses referring to the triple bottom line (People, Planet, Profit), whereas maybe in a future characterised by more frequent harmful events, it will be necessary to consider also a dimension assessing health. This raises the question of how we will measure healthcare performances.
New metrics and instruments must be identified, and policies must be adapted. In this vision, traceability levers will be not only quality-driven but rather health & quality-driven. In doing so, technologies, and particularly data must be adapted accordingly.
In particular, two main technologies come in help in this scenario: IoT, for the collection and exchange of data, and Blockchain, to guarantee the trustworthiness of the information flows along all the tiers of the supply chain, until it reaches the customer.
Business Models
Another challenge that the recent pandemic has highlighted is related to the need for companies to redefine their business models in order to achieve a higher flexibility and parallelly implementing de-risking strategies. In this sense, a new feasible way to reduce risks for companies is given by the possibility of reducing the physical sources of the risk itself through the adoption of servitisation approaches.
Although servitisation was already an affirmed trend before Covid-19, after the pandemic it may be even more consolidated. A study recently published by Bain & Company affirms that industrial companies will more than double revenues related with advanced service contracts (Source: Bain & Company, 2020). Covid-19 has sped up services remotisation and more in general remote models.
However, the pandemic is not changing paradigms; it is simply accelerating transformation processes that were already happening. Businesses are going towards the creation of connected system of systems, where products are connected among them thanks to advanced digital technologies.
In line with what is written about servitisation and industrial smart working, Bain & Company affirmed that, for example, remote maintenance will increase of 95% by 2024, whilst more generally all services related with digitalisation and training will increase by 47% in the following 4 years. (Source: Bain & Company, 2020).
Speaking about new business models, it is interesting to consider the concept of booking economy, as an evolution of the sharing economy. If the sharing economy utilisation will increase a lot, it will be necessary to move towards a booking economy, where for example people will pay an entity to plan the day.
If services are becoming numerous and complex, a service integrator will be needed. Following the same trend, from manufacturing as a service (MaaS) we will go towards a plant as a service (PlaaS) business model. Some companies will no longer produce simply as a service, but place their machinery at customer’s plants while the client will pay by use.
Hence, performance-based contracts will be more frequent, as these new business models could be effective in reducing risks for customers, who usually own the machinery, thus generating a fixed cost. However, the new equilibrium between attest owned and resources exploited must have a significant impact on the methodologies and protocols in order to evaluate the real value of firms and in particular those realities that, as process orchestrators, will substitute physical assets management activities with data management ones.
Conclusion
To conclude, the Covid-19 outbreak has made explicit, at least at industrial level, several still hidden needs and emphasised other ones. Amongst them, the need for a methodology aimed at increasing resilience at factory, corporate and supply chain level is clear.
In most cases, the answer to fulfil those needs has to be found in the implementation of Industry 4.0 technologies when combined with a proper educational process.
However, as the experience of change management suggests, it is worth stressing that the digital transformation process and the consequent continuous updating approach needed, can be both effective and feasible only if the top management of companies will be able to support the technological advancement and, most importantly, will be able to recognise effectively (e.g. continuous training programmes) the central value that workers can provide in the new factories of the future.
