Why manufacturers should embrace disruption

The manufacturing sector is undergoing a seismic shift. Whether you call it “Industry 4.0,” the “Industrial Internet of Things” or the “digital factory,” the Fourth Industrial Revolution is alive and well. In fact, it’s doing so well that industrial companies globally plan to invest over US$900 billion to double their level of digitization, as indicated by a 2016 survey from PwC.

What’s driving this shift? McKinsey & Company credits four disruptions—big data and connectivity, advanced analytics and artificial intelligence, human-machine interaction, and digital-to-physical transfer—with paving the way for the ultimate ideal: fully automated smart factories. Factories that, globally, are expected to deliver between $500 billion and $1.5 trillion to the economy by 2022. And, yes, that’s trillion with a capital T.

All the hype aside, it’s clear that companies that embrace the onslaught of new technology and use it to improve their efficiency and productivity will take over the control panel, while those that don’t will either need to uncover a new competitive advantage or suffer the Kodak-ian consequences.

Why are so many factories left in the dust? Despite all the data that factories collect, up to 73% of the data collected on the manufacturing floor goes unused, reports Forrester. The reality is that the path to a fully automatic data-driven factory—the ultimate smart factory dream—is riddled with obstacles. The lack of clarity around economic benefits, siloed data systems, overwhelming amounts of data and lack of buy-in from decision-makers all stand in the way of companies making the leap into true efficiency. So, where does one get started?

Say hello to our new colleague, disruption

With the launch of Ontario’s Advanced Manufacturing Supercluster, bridging the gap between manufacturers and tech companies is more important than ever. That’s why, at the beginning of May, MaRS Venture Programming and MaRS Energy & Environment brought manufacturers and innovative manufacturing tech companies together for Modernizing Manufacturing, a discussion around the importance and challenges of adopting Industry 4.0, as part of the MaRS Tech Disruptors Series.

As outlined below, the event explored four key disruptions and addressed the challenges of adopting new tech.

1. Call me nosy

As in every other industry, artificial intelligence (AI) and advanced analytics are all the rage. They’re the underlying magic behind improvements in productivity, efficiency and, ultimately, a company’s bottom line.

With AI, manufacturers should start being proactive rather than reactive when it comes to disruptions in their processes. For example, companies like Canvass Analytics offer solutions that layer AI overtop a manufacturer’s existing data and processes, making it possible to optimize processes and worker and machine productivity—fundamentally decreasing time to market and boosting competitive advantage.

Of course, implementing AI comes with its own challenges. How can a company start using AI? Humera Malik, the founder and CEO of Canvass, asks her clients the following questions.

• What is your process?
• What are your metrics, costs and quality checks for the process?
• What data are you collecting and what are its influencing factors?
• What is the algorithm you follow for your process?

At the end of the day, it’s not enough to blanket your process in AI and analytics. These trends are only impactful if the underlying process and the data collected are accurate and meaningful, and if you have the types of data you need.

2. What’s my data?

Everyone is gushing about big data. Most manufacturers have an abundance of data, but to have the competitive advantage you need to ensure you have relevant data and be strategic about how you analyze and pull insights from it.

One big aspect of this (no pun intended) is the use of data transparency and evidence in motivating productivity and asset management—specifically, in cyber-physical systems. Essentially, this means connecting computers to processes without human intervention. It includes things like quick response (QR) code scanners or radio-frequency identification (RFID), Bluetooth technology or wireless sensor networks (WSN), and systems akin to indoor GPS, called real-time location systems (RTLS).

Experimentations combining these technologies have married the best of different worlds. For example, Peytec has created a technology that brings together GPS localization and sensor technology in what Peyman Moeini, the company’s founder and CEO, calls a wireless positioning and sensing network. Multiple sensors and tracking technologies are combined in one tag, allowing for more data that’s actually meaningful.

3. Agile is in

Cleaning up data is important, but so is cleaning up processes that are critical to your production line. Often, for manufacturers, this means cleaning up the actual equipment and hardware.

With the rise of the digital era come new efficiencies for digital-to-physical transfer. Long gone are the days of detailed, slow product development. Agile is in, and the lean startup approach has been brought into everything—including classic hardware manufacturing.

It’s time for design automation to shine, and companies like Vention have been able to shorten months-long design cycles into mere days—three, in Vention’s case. Through its digital manufacturing platform, Vention enables companies to complete quick and easy iterative hardware development. It’s “agile” for hardware.

In today’s day and age, where we see companies collapsing left and right under the pressure of constantly pushing out new innovative products, natural selection favours those that can keep up. And as Mathieu Provencher, the COO and CFO of Vention, says, physical and hardware manufacturers must shrink the design cycle period if they hope to maintain a competitive edge.

4. IoT couples counselling

Now that you have your data and your processes, it’s time to feed that data into your processes to optimize your production line. However, your data may be siloed or in a different format that doesn’t match up. How do you address your fragmented data and mitigate inconsistencies?

To effectively leverage the benefits of connected systems, your data and processes must communicate effectively together. Companies that offer system integration, like Litmus Automation, have become top of mind in driving efficiency. Litmus is able to collect and manage data across all of its vendors and create multiple applications and workflows—all while adhering to compliance standards and cybersecurity needs.

Integrated platforms are the first step to a truly connected factory—one that identifies its own flaws, optimizes itself and is a real dream for the manufacturing futurist.

Amazon is coming

The Amazon of manufacturing is coming—and you bet it’s fast and furious (and just as predictable). Just as it happened for big retailers and taxis, the disruption of manufacturing is on its way. As the industry becomes more demand and usage based, the question is: who is ready to bear the onslaught?

A word of caution

It’s easy to jump on the first venture-backed startup that pitches a magic pill to fix one of your machines. And for startups, it’s easy to narrow your focus to just one machine, or one symptom. Both of you, just don’t.

As Jon Sobel, the co-founder and CEO of Sight Machine, said in an interview with Knowledge@Wharton, with the hundreds of factories in companies, and the (likely) thousands of factories lined up in a supply chain, curing the symptoms of only one type of problem is not economical. Going forward, success for both startups and manufacturers will involve solutions that scale—that is, creating and employing solutions that offer enterprise-level results and insights across the supply chain. How forward thinking!

Keeping in mind the obstacles a manufacturer is likely to face in becoming a smart factory, an overarching theme arises. Bring the lean startup approach into your company, design digital sprints and test to see if your theories translate to realities. In other words: start small to go big.

That’s how the disrupted can use disruptions to, in turn, become disruptors themselves.

Thank you to our incredible speakers from Modernizing Manufacturing for contributing some of these key insights.

About the MaRS Tech Disruptor Series
Our MaRS Tech Disruptors Series brings together visionary founders and thought leaders to educate attendees on emerging trends and topics critical to the success of many leading companies today. Our mission is to create a conversation across and between the industries at the heart of innovation. The goal: to help those being disrupted to become the disruptors and embrace change.

MaRS Cleantech
Our Cleantech Venture Services team works with high-growth ventures that are addressing a range of complex global challenges—from improving energy storage, generation and distribution to defining the future of transportation. We help at every stage of growth—providing them with expert advice, connections to talent and capital, and access to global markets.