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The Megatrends That Push Manufacturers Towards Industry 4.0

The Megatrends That Push Manufacturers Towards Industry 4.0

Disruptive technologies and megatrends are shaping the future of manufacturing. The fourth industrial revolution has been gathering momentum in recent years and is set to be transformative for Southeast Asian manufacturers. Industry 4.0 refers to the digitisation of the manufacturing industry, and a realisation of the potential of the Internet of Things (IoT), combined with artificial intelligence and data science. Done right, Industry 4.0 will enable manufacturers to improve efficiencies whilst reducing costs. By Vincent Tang, Regional Vice President, North Asia, Epicor.

THE industrial revolution is far from surprising. By 2020, there will be 30 billion connected devices on earth. This will lead to the creation of a big data mountain that would have grown beyond recognition. Machines communicating with people as well as with other machines are creating so much data that we have generated more data in the past two years than in the previous 5,000 years of human history.

It is now up to manufacturers to unlock the potential of this data. The information generated by the increase numbers of connected devices and machines represents a significant opportunity. By determining how to best identify, capture and interpret this increased volume of data, it can help organisations understand their market and customers better, as well as gain market share.

Southeast Asia alone accounts for five percent of global manufacturing activity, and with deeper regional economic integration brought about by the establishment of the ASEAN Economic Community, it is poised to become a more competitive industrial centre. Two fifths (40 percent) of the industrial companies in Southeast Asia have already rated their level of digitisation as high, and this value is expected to rise to 69 percent within the next five years.

Manufacturers in Southeast Asia have an opportunity to leapfrog ahead of those in developed economies because they have fewer legacy issues such as outdated systems, processes, and technological capabilities that need to be addressed.

In today’s fast moving global markets, Southeast Asian manufacturers need to respond quickly to changing demands and maximise new market opportunities. From all indications, we are in an era of significant convergence, where information technology, operational technology, and global megatrends are on a collision course. This will drive changes in how we do business and how we interact with customers and suppliers.

Megatrend #1—Demographic Shifts

We are witnessing population growth in some nations and shrinkage in others as well as a growing middle class, consumer markets shifting from the west to the east and an ageing population with fewer people entering the manufacturing field.  Take heart though as the technology we are developing continues to make it easier to collaborate and is helping to attract the discerning millennial generation, which is anticipated to account for 75 per cent of the global workforce in 2025, and will play an important role in manufacturing as it continues to evolve.

Megatrend #2—The Globalisation Of Future Markets

Companies will expand their operations globally, with worldwide exports expected to triple by 2030. Exports from emerging and developing countries will quadruple, and regional and bilateral trade agreements are likely to further open the world’s borders. The share of GDP generated by the BRIC (Brazil, Russia, India, and China) countries will grow. Sub-cluster countries comprising Mexico, Indonesia, Nigeria and Turkey (MINT) and Mexico, Indonesia, South Korea, Turkey (MIST) are in a position to outperform the advanced world. Technology will continue to be a big enabler of globalisation. Not only through eCommerce and the opening up of additional markets, but also with regards to having enterprise resource planning (ERP) systems in place to support cross-border trading and multi-country manufacturing processes.

Megatrend #3—Scarce Resources

Due to increased energy use and requirements, we’re going to need more power. Resources are growing scarcer despite the focus on climate change and sustainability, and there will be continued reliance on fossil fuels. The majority of critical raw materials will be likely supplied by China by 2030, and certainly by countries outside the US and Europe. This could potentially be mitigated by innovative recycling technologies, and using technology platforms to streamline processes and improve efficiency so as to facilitate this shift.

Megatrend #4—Knowledge And Gender Gap

Manufacturers will feel the challenges incurred by a decreasing talent pool. As there may not be enough skilled people to perform the jobs of the future. The available pool of workers will likely come from developing countries as we see greater percentages of the population earning post-secondary degrees than their more developed counterparts. An ever increasing mobile workforce will continue to present challenges to employers and may lead to a global struggle for talent. Their wants and needs are very different to those of the generation before. Attracting millennials requires enhanced mobility, technology that meets their expectations with a sophisticated user experience and having more flexible working patterns than ever before.

Industry 4.0, ERP And The Transition Ahead

These four global megatrends, when combined with new and converging technologies, will require manufacturers to transform themselves. We are quickly entering an era of a new type of customer, a global customer who could be based anywhere in the world rather than in the countries that manufacturers have traditionally traded with. This new customer is more mobile, more aware, and more demanding.

In addition to the changing demographic of customers, new game-changing business models will cause continued disruption. Just take a look at what Uber has done to the taxi industry, Airbnb to the hotel industry, and Amazon to the retail sector. The frantic pace of change in every industry demands business owners to adopt new ways of thinking and execution.

There is a tremendous opportunity for manufacturers. However, it can only be realised by using emerging information technologies like social, mobile, analytics, and cloud alongside operational technologies like sensors, machine-to-machine communication, additive manufacturing, and robotics.

Industry 4.0 challenges the way that manufacturing, which is at its very core a risk averse sector, functions with centralised and offline systems that are not interconnected. We would further predict that their factories will soon evolve to become ‘smart’ with the capability to self-manage issues and internal processes.

Crucially, manufacturers need to address whether their existing ERP environment is ready to support their journey towards Industry 4.0.

For manufacturers, growth in an Industry 4.0 environment will be intrinsically linked with a business’s ERP system. Certainly, the boundaries between production and management must disappear, and ERP and manufacturing execution systems (MES) must form an integrated unit if businesses are to realise the growth opportunities presented by this new age of intelligent manufacturing. Taking a critical look at the existing IT environment in your business is the first step towards understanding how ready or unprepared you are for Industry 4.0.

Interview With Mr. Gary Cantrell, SVP & CIO Of Jabil

Image: Gary Cantrell, SVP & CIO, Jabil
Image credit: Chuck Vosburgh,

 

 

 

 

 

 

 

 

 

 

Asia Pacific Metalworking Equipment News is pleased to conduct an interview with Mr. Gary Cantrell, SVP & CIO of Jabil regarding his views on the associated technologies, challenges and future of manufacturing in Asia.

1.Could you provide us with an overview of the latest technologies shaping the manufacturing industry in Asia?

This is a really exciting time for the manufacturing industry as manufacturers discover how new technologies can play a critical role in transforming and improving functions along the value chain. In fact, IDC confirmed that investments in Internet of Things (IoT) are largely led by manufacturing and transportation industries.

Three particular technologies stand out and these are likely to dramatically alter the manufacturing landscape globally. They are:

  • Additive Manufacturing: this technology is maturing rapidly and enabling mass customization, smaller lot sizes and reduced capital outlays. It will enable us to customise product designs for our customers, vary locations and increase speed of production.
  • Connected Factories (aka Digital Factories): connecting equipment throughout the factory will enable new levels of efficiency and improve factory productivity.
  • Automation and equipment self-optimisation: although still early in the maturity cycle, these technologies will provide the information to plan and control manufacturing real time by predicting unplanned events and automatic adjustments to prevent outages. These technologies will significantly alter the current human-machine interface in the factory.

2. What do you think are the main challenges when it comes to the digitalisation of manufacturing processes in Asia?

The equipment variation – both in terms of age and technical currency – will be a great challenge.  In order to digitise the factory, we need to get data to and from the machines for analysis and control. Older equipment, which is not equipped with such features, will require investment in upgrades in the short-term.

This also brings in the issue of cost. New equipment and the peripheral technology required to support the connected factory and automation – such as edge computing, wide area networks and time-sensitive local area networks – require significant investments in time and money.

3. How do you think these challenges can be overcome?

These challenges can be overcome with machine connectivity. In particular, getting data to and from older machines is a challenge and a great deal of innovative work is ongoing to improve both the connectivity and cost challenges. The same is true for aspects of the peripheral costs with the maturing of technologies like software defined networks and edge computing.

More importantly, as we learn the true efficiencies achievable with these technologies, the business cases for investing will become compelling. As these technologies get deployed, we will also learn where we can free-up people to do more value added work and what skills will be required for these new roles.

4. With the digitalisation of manufacturing, how will supply chains evolve to keep up?

Our Enterprise Resource Planning (ERP) tools will become more integrated with real-time visibility:

  • Connectivity: connecting customers, manufacturer and supplier systems, enabling visibility across the ecosystem, will help ensure continuity in driving materials velocity and on-time delivery with less manual effort.
  • Smart Planning: enabling digital transmission and receipt of customer forecasts, auto validation and synchronization of forecast, and advanced statistical analysis will allow teams to plan and manage better. Combined with integrated production scheduling and performance tracking, in the future, we will be able to efficiently manage customer’s product cycles.
  • Smart Purchasing: intelligent Materials Requirements Planning (MRP) filtering, enhanced digital interchanges with electronic commits into manufacturing systems can help improve overall purchasing process such as order quantities, product cycles, etc.
  • Smart Warehouse: improved velocity and availability through end-to-end connection will enable us to manage inventory and logistics.

5. In your opinion, what are the trends that will shape the industry for the next 5 to 10 years?

I believe that the continued development of additive manufacturing will dramatically change the way we design, manufacture and develop products. Although this may vary by industry, the potential for additive manufacturing to improve speed, quality and cost will result in significant shifts in our manufacturing processes.

Even more impactful are the areas of factory automation, machine self-optimisation and the application of artificial intelligence. In a mature vision of these technologies, it’s easy to envision ultra-lean factories managed remotely which self-correct and optimise the manufacturing process.

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Interview With Mr. Vincent Tang, Regional Vice President of Asia in Epicor

Asia Pacific Metalworking Equipment News is pleased to conduct an interview with Mr. Vincent Tang, Regional Vice President of Asia in Epicor on his views on Industry 4.0 megatrends in Southeast Asia.

1. In your opinion, what are the top three megatrends that are shaping Industry 4.0 in Southeast Asia?

Industry 4.0 is a hot topic in Southeast Asia, North Asia as well as regions outside of Asia such as the U.S. The term originated in Germany and is known by different names globally. For example, in China it is known as “Made In China 2025” and in the U.S it is known as smart manufacturing.

The trends shaping Industry 4.0 does not just involve ERP systems, it involves manufacturing execution systems, the extraction of data and its translation into meaningful information, big data, product lifecycle management (PLM) and the integration of robotics into processes. This means that Industry 4.0 is a long journey and companies begin their journeys at different points. For example, some companies may begin first with the implementation of an ERP system while others may not.

In Southeast Asia, Industry 4.0 is encouraged by government support through means such as grants and funding. This has allowed the region to advance in terms of the manufacturing technologies.

2. What are the key challenges that prevent manufacturers in Southeast Asia from digitalising and integrating artificial intelligence as well as data science into their manufacturing processes?

Retaining and attracting talent is the top challenge that prevents manufacturers from digitalising. In factories that are not fully automated, factors such as the increased amount of paperwork and high surrounding temperatures and harsh external environments may contribute to staff turnovers.

Additionally, the integrated implementation of automation is a challenge to some manufacturers in the region. This can occur because manufacturers may implement automation as a phase by phase process instead of as an integrated solution. For example, the accountancy department may be automated first before the inventory control department is automated.

Finally, manufacturers may find it challenging to successfully implement ERP systems. This could be because the successful implementation of ERP systems involves more than one key user, as it is a team effort. One that involves more than monetary investments and individual contributions. For mid-market companies, they possess limited ERP resources and budgets for ERP implementation and also require ERP systems to be installed in a short period of time – typically within six to nine months. These companies also tend to require flexibility.

3. How do you suggest that the above challenges be solved?

Departments can be integrated to increase the opportunities for rapid decision making and for different issues to be highlighted.

Productivity can also be increased due to the shortage of labour globally, especially in China which is also the largest manufacturer in the world. Although labour costs in China used to be lower, factors such as the one child policy has caused labour shortages and increased labour costs. While in Southeast Asia labour shortages are less severe and labour costs are cheaper, as in the case of countries such as Vietnam, Indonesia and Thailand.

Overall, the solution that is applied needs to be an integrated end to end solution. For example, processes that range from manufacturing to scheduling to finances have to be integrated. The solution that is applied has to also be multi-dimensional, multi-language based and focused on multi-localisation. This is because of the differing regulations in different countries that would require localised solutions to cater to it.

4. In 5 to 10 years time, how do you think the manufacturing industry in Southeast Asia will evolve?

The industry will continue to grow. This is because of the China-US trade war, as a lot of manufacturing companies are considering subcontracting their manufacturing operations to countries outside of China, such as Vietnam, to overcome restrictions when it comes to exporting to the U.S. This can be seen in the case of South Korean manufacturer, Samsung, which has moved its operations to Vietnam.

Thus, in Southeast Asia, manufacturing will continue to grow and this will be facilitated by Industry 4.0 and infrastructural developments such as the Belt and Road Initiative that will connect Bangkok and China via a high speed train.

5. What are your thoughts on the Industrial Transformation Asia Pacific event? Do you think this is the right time for an event like this?

The event occurred at just the right time. Different countries are at different stages of their development and the delegates that attend the event are keen to find out how they can engage in Industry 4.0 and where they are in their journeys towards Industry 4.0.

The event has also attracted over 1,800 registrations and I am able to meet a lot of individuals from Indonesia, Thailand and China. Everybody is working around the concept of industrial automation and it involves areas such as PLM, big data, manufacturing execution systems (MES), robotics, ERPs and integrated solutions.

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Epicor: IScala 3.1

Epicor: iScala 3.1

The new version of Epicor’s iScala ERP introduces both online and offline mobile application for Google Android and Apple IOS.

The iScala 3.1 software’s key features and enhancements include: continued security enhancements in the Epicor Service, connect integration and business collaboration platform, new capabilities in the Electronic Compliance Platform designed to deliver structured output reports, and the introduction of mobile applications that simplify key operational tasks.

All iScala routines now run in a single application window, making it easier to see what is running, and also to switch between different areas.

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