As we close the year of 2015, we want to take a look at some manufacturing trends for 2016. We look at 6 core areas that manufacturing companies will take a long look at as they gear up for a successful 2016.
E-Commerce for Manufacturing
The Internet’s large-scale global penetration has spawned an increasingly large number of technology and web-savvy consumers, creating a huge opportunity for both industrial manufacturers and their end customers. Over the past decade, the application of e-commerce in manufacturing and industrial distribution, has evolved from basic communication and transaction channel between buyer and seller, to an end-to-end collaboration medium between all stakeholders. This collaboration is driven by companies looking to increase sales by offering online product recommendations and promotions, as well as end-customers seeking the rich and personalized online experience that many retail websites offer.
E-commerce is a way for manufacturers to experiment with new products without risking a significant investment. Instead of setting up brick-and-mortar stores, or keeping inventory on hand, you can start offering this new product on your new store.
Manufacturing Business Technology recently wrote the 5 e-commerce trends for 2016 for manufacturers to look at that include:
- Manufacturers will seek to increase their share of aftermarket parts sales.
- Manufacturers will seek custom (or specifically tailored) e-commerce solutions.
- Manufacturers will integrate e-commerce systems with IoT (Internet of Things) initiatives.
- Equipment manufacturers will require dealers to adopt modern parts management systems, and to integrate those systems with their own.
- Manufacturers will sell more parts directly to consumers, even if it’s still through their dealer channel.
A recent report by Frost & Sullivan, “The Future of Parts and Service Retailing in the Automotive Aftermarket” , predicts that by 2025, 10 to 15 percent of all global parts sales will be made online. This trend will be seen in the Equipment Manufacturing sector as well, especially in international markets.
The hindrance for manufacturers in the past was having a system in place to handle opening up to multi-channel or even omnichannel sales. However, with the various supply chain systems manufacturers use, such as ERP, WMS, and TMS, the systems must all provide options to integrate together with such e-commerce platforms like Magento, Shopify, and others in order to take hold in 2016.
Advanced Analytics Continue to Get a Bigger Plate at the Manufacturing Dinner Table
Advanced analytics will be further involved in everyday manufacturing operations. The workplace will become more efficient and safer due to the digitalization of assets, known as digital manufacturing, which allows for digital design and even distributed manufacturing.
Manufacturers will be able to improve their inventory due to the information presented by both supply chain and operations data.
Logistics and Transportation Managers at manufacturers will have reports at their fingertips on how to continue to reduce transportation costs, a heavy portion of the expense budget, by leaning on data to continually improve.
Manufacturers are turning to advanced analytics to predict when a machine on the production floor is going to fail so they can perform preventative maintenance before a failure causes expensive unscheduled downtime.
These few areas of the application of advanced analytics are some of the applications by manufacturers. This article from Toolbox.com’s 4 other broad uses of advanced analytics for manufacturers:
Databases and data storage improvements, complemented by easy-to-use, analytical software are the biggest changes when it comes improving the quality of a company’s products, says Studio B analyst David Gillman, author of the article.
Understanding the changes in demand for their products enables manufacturers to better determine how to allocate their resources, according to Gillman. Predictive analytics help manufacturers forecast future sales based on past sales.
“Good predictive analytics modelers find additional factors that influenced sales in the past and apply those factors into forecasted sales models,” he notes.
Maximizing Equipment Value
Manufacturing engineers spend a lot of their time ensuring their companies get the most value out of the equipment in their factories. Predictive analytics help them do this by automating much of the analysis processes so even people without high-level skills can perform various analyses, according to Gillman.
Increasing Equipment Uptime
Predictive analytics can also help manufacturing companies ensure that their production equipment keeps running by comparing past machine failures to sensor data from the machines to identify patterns before breakdowns occurs, Gillman says.
Having that information allows a manufacturer to perform the necessary maintenance on a machine in nonemergency conditions without having to shut down production.
The Role of Robotics
We have written quite extensively about the role of robotics in manufacturing as well as the impact on supply chain and logistics. The Role of Robotics in the list of manufacturing trends in 2016 cannot be understated or ignored. In fact, just today, in the MIT Technology Review, China is looking to retool their own manufacturing industry by heavily investing in robotics, stating:
China is laying the groundwork for a robot revolution by planning to automate the work currently done by millions of low-paid workers.
The government’s plan will be crucial to a broader effort to reform China’s economy while also meeting the ambitious production goals laid out in its latest economic blueprint, which aims to double per capita income by 2020 from 2016 levels with at least 6.5 percent annual growth. The success of this effort could, in turn, affect the vitality of the global economy.
Robotics have been in the manufacturing industry since the 1950s. Early industrial robots had limited “intelligence”, autonomy and operational degrees of freedom. They were mostly designed to perform one or two sets of repetitive tasks in a highly controlled environment. However, industrial robots are increasingly becoming more “intelligent” and versatile. In the future, they are expected to be capable of working without human intervention and take over most of the manufacturing processes.
According to the International Federation of Robotics:
In 2014, robot sales increased by 29% to 229,261 units, by far the highest level ever recorded for one year. Sales of industrial robots to all industries increased compared to 2013. The automotive parts suppliers and the electrical/electronics industry were the main drivers of the growth. China has considerably expanded its leading position as the biggest market with a share of 25% of the total supply in 2014.
Since 2010, the demand for industrial robots has accelerated considerably due to the ongoing trend toward automation and the continued innovative technical improvements of industrial robots. Between 2010 and 2014, the average robot sales increase was at 17% per year (CAGR). The number of robot installations had never increased so heavily before. Between 2005 and 2008, the average annual number of robots sold was about 115,000 units. Between 2010 and 2014, the number rose to about 171,000 units. This is an increase of about 48% and a clear sign of the significant rise in demand for industrial robots worldwide.
The IFR predicts double-digit growth in industrial robots worldwide between this year and the end of 2018, citing the following reasons why we are seeing such adoption of robotics:
- Industry 4.0, linking the real-life factory with virtual reality, will play an increasingly important role in global manufacturing.
- Human-robot collaboration will have a breakthrough in this period.
- Simplification of the use of robots will open up huge potentials in all industries including small and medium-sized companies.
- Global competition requires continued modernization of production facilities.
- Energy-efficiency and using new materials, e.g. carbon-composites, require continued retooling of production.
- Growing consumer markets require expansion of production capacities.
- Decline in products? life cycle and an increase in the variety of products require flexible automation.
- There is an increasing demand, particularly from manufacturers of electronics products such as smart phones, tablets etc., for easy to use robots with limited applications and short life cycle that have a low price, e.g. for simple assembly tasks which do not require high precision.
- Continuous quality improvement requires sophisticated high tech robot systems.
- Robots improve the quality of work by taking over dangerous, tedious and dirty jobs that are not possible or safe for humans to perform.
Between 2015 and 2018, it is estimated that about 1.3 million new industrial robots will be installed in factories around the world.
The Industry Image of Dirty Factories Going Away
The use of Advanced Technologies such as application development, the internet of things, the increased use of robotics and also 3D Printing will take away the old perception that manufacturing is a dirty place to work where only boring, route, tedious jobs are available.
With an estimated skills gap in manufacturing estimated to be 2 million unfulfilled jobs by 2025, manufacturing companies will promote the use of such advanced technologies to bridge the skills gap and attract millennials and procure the talent that typically goes to Silicon Valley.
This is never more so true than the hilarious current commercial video series by General Electric about a young man recently out of college who says he got a job at GE, a long time American manufacturing company, as a software developer. Watch the YouTube video below of one of the commercials, and you’ll get the point about the historical image of manufacturing when the young man’s parents gift him a hammer upon hearing the news of his new job:
Further companies will partner with both local community colleges and large university to bridge the skills gap by developing STEM partnerships.
Security for Internal Peace of Mind and Customers’ Peace of Mind
As manufacturing moves further and further into the Internet of Things and increases the use of e-commerce as a sales channel, in order to prevent hacking of intellectual property and keep customers’ personal data secure, manufacturers will look to increase their investment in security for their networks. According to a recent report by Booz Allen about manufacturing trends in 2016 as it relates to security:
When a cyber-attack does occur, companies will also have to demonstrate a propensity for responding in a timely manner. Security must be enhanced during the design, production, sourcing, and distribution phases, and even after the purchase is made.
As we noted in the post, “Penetration Testing: Reasons Manufacturers and Businesses Need to Take This Key Network Security Step Now:”
The growth of the Industrial Internet of Things has increased the number of opportunities for hackers to try and steal some trade secrets and intellectual property through a coordinated series of attacks.
This very real threat to your business is why you should consider a rethink your security standards and look at how to start a penetration test.
Good penetration testing involves testing a company’s network to make sure that there are no threats that can break through the company or organization’s security. But, it also involves testing non-technical security threats, like social engineering.
Manufacturers Look towards Logistics Efficiency to Stay Competitive
Manufacturers will also continue to invest in logistics efficiency to keep up with competitors. This requires a more efficient factory floor space and time to ensure that manufacturers can expedite the delivery of their products. They will also work to provide updates and fixes to products almost immediately. To accomplish these fixes, companies will rely on customer feedback provided by product sensors and on social media and a sound reverse logistics strategy to handle returns seamlessly.
Manufacturers of all sizes, not just larger ones, will look to invest in logistics efficiency to not only include warehouse efficiency but as well as more investment in web-based tools such as a transportation management system to more efficiently process shipments and have more visibility and control in the supply chain.
These are just a few of the myriad of trends that are starting manufacturing right in the face for 2016 and beyond. If you haven’t already, check out e-book on the technologies looking to shape manufacturing, supply chain, logistics, and transportation now and in the future. What big trends for manufacturing do you see affecting the industry in 2016? Let us know in the comments below!