What are the Threats and Opportunities of Digital Transformation for Manufacturers?

Armin Fahnle, head of the Australian and Indonesian divisions of ATS Global, looks at how the opportunities of digital transformation are shaping the future of manufacturing.”

What opportunities do you predict for growth in your industry in 2021?

A 2018 PwC study of CEOs found that 74% of CEOs see driving operational efficiency as a priority. To this end, many manufacturing businesses have engaged in digital transformation by focusing on improving IT infrastructure and consumer-facing systems over the last decade.

There is now growing interest in what digital transformation means for the factory floor as manufacturers need to become more agile, more productive and more innovative. Agility and productivity should be the end goal to improve the ability for manufacturers to meet market demand competitively. Innovation is a key success factor in long-term sustainability and positively correlated with shareholder returns.

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For many, this challenge can be met by realising a transition from disconnected islands of paper-driven manufacturing process management and isolated software applications to digitally operated and digitally connected manufacturing systems that integrate both manufacturing plant and IT systems with operations planning, execution and analysis in a seamless way.

ATS Global works with manufacturers to apply a range of digital technologies and our experience to build digital solutions. In response to supply chain issues I expect to see opportunities to support manufacturers to re-think how they manage their manufacturing operations and how they can commence or accelerate a process of digital transition that can target high-priority opportunities for ‘quick wins’.

What are the biggest challenges and threats facing your industry in 2021?

A major challenge over the last two decades has been the lack of genuine productivity growth in manufacturing. The gains in labour productivity due to increased capital intensity have been offset by the cost of that capital investment so that multi-factor productivity has barely moved. Limiting the aspiration of investment to labour savings, a purely financially driven perspective, overlooks the opportunity for manufacturers to be truly innovative, find new business opportunities and adopt new business models.

The question I often ask is: can Australia rebuild a culture that values manufacturing? Can we rebuild a community of industrialists — owners and executives — who have a passion for making things, rather than taking things? Is it possible for publicly owned companies to make the long-term investments in technology, innovation, skills and expertise that are typical of the large privately held Mittelstand in Germany? And has the loss of engineering expertise from public boards created an unsustainable focus on finance and risk rather than wealth creation?

What impact has COVID-19 had on your industry and your business strategies for 2021?

As an automation and manufacturing software business we have been able to do most of what we normally do, working from home, during 2020. Most of our customers have continued operations and we have been permitted to work on-site, when necessary.

Remote access has been important, but in most cases was already in place. The most difficult challenge has been commissioning from home rather than on-site — nothing is as good as being ‘on the spot’.

There is no doubt, however, that there are limits to working from home and there is a significant impact on the sense of being a team and the effectiveness and fluidity of collaboration that is so essential to quality engineering and innovation.

What are your thoughts about the post-COVID-19 ‘new normal’ in relation to remote working technologies and supporting staff?

As we move to COVID-normal we will continue to refine our remote working processes. We have created regular online gatherings of smaller teams that allow for unstructured interaction so that there is an aspect of sharing excitement at what’s happening in our lives, what challenges are troubling us in our work, and how we can support each other.

Although we will return to the office, we have all come to better appreciate the potential for loneliness and abandonment that people working from home may feel. Our mental health and motivation are priorities and we look to come out of the other side of the pandemic as an organisation that communicates better than it did and supports every team member well.

How is your industry preparing for AI developments or advanced manufacturing?

AI is certainly starting to make an impact amongst ATS Global customers. The challenge we see with AI is one of confidence in what it produces. It is that it is often difficult to understand how the AI makes its decision and difficult to build confidence that the decision is reliable.

ATS has a collaboration with Rulex, which has developed Explainable Artificial Intelligence that makes room for creativity, human knowledge and collaboration. I expect that artificial intelligence that can be explained and behave like a member of a team will begin to win more confidence in the core technology and improve adoption.

For our business there are applications in supply chain activities like scheduling, in process performance optimisation, and in general manufacturing decision support that we have already seen produce substantially performance improvements.

This article first appeared on processonline.com.

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