ONLINE EXCLUSIVE: 2012’s Top 10 Manufacturing Trends
Jeannette Spalding, contributing editor
Aligning supply and demand clock speeds, focusing factory capacity on customer fulfillment rather than production capability, and initiating lean innovation throughout the product life cycle — these were among the top 10 manufacturing trends for 2012 projected by IDC Manufacturing Insights, a business line of the International Data Corporation (IDC) that assists manufacturing businesses and IT leaders in making technology decisions.
“The reason we do predictions is to identify trends that impact technology decisions and ultimately IT spending,” said Bob Parker, group vice president of IDC Manufacturing Insights and IDC Retail Insights. “We work with our client base on the buyer side and the seller side to identify those trends. We have a bias toward the intersection of process and technology.”
Here are the trends that IDC Manufacturing Insights expertspredict will shape successful manufacturing for 2012:
1. Success in the intelligent economy will be achieved through engaged organizations. These are organizations that will master complexity, as well as combine financial flexibility with organizational fluidity to achieve an improved market response. Talent shortfall of qualified individuals will continue to be a challenge for 2012.
“It’s not about reducing complexity,” Parker said. “If you are better at mastering complexity, you’ll have a competitive advantage. We are changing to the engaged organization. It is getting the information out and seeing how people work with it to take advantage of opportunities.”
2. IT organizations will make foundational investments in the four forces that deliver both IT productivity and business value. These forces include mobility, big data, cloud (electronic data networks), and social business.
The four forces will create new business capabilities with IT investment, Parker said. Integrated business intelligence will combine big data and social business. Mobility in the cloud will result in such initiatives as IT departments placing consumer-grade applications in corporate applications stores. This consumer-user interface will be equivalent to applications accessible via iPhone or Android.
3. Manufacturers will focus on clock-speed alignment across the supply and demand sides of their supply chains. Currently, the supply and demand sides function at different speeds, with the demand side operating at a faster clock speed, said Simon Ellis, practice director of supply chain strategies, IDC Manufacturing Insights.
To align clock speeds, different manufacturing chains will respond with a different focus. Brand-oriented, value-chain manufacturers are expected to synchronize through better inventory management and demand signal utilization. Technology-oriented, value-chain manufacturers will seek faster planning and supply side responsiveness capabilities. Engineering-oriented, value-chain manufacturers will look for more agile supply networks and comprehensive risk management capabilities.
4. The requirement for speed and the ubiquity of information creates a new landscape for IT support of the supply chain. “The supply side of the supply chain may have a slower cadence than the demand side, and IT has a slower cadence than both of those,” Ellis said. “We are very much looking for IT folks to deliver faster, more nimble capabilities and tools to the business.”
A more responsive supply chain will require new capabilities to leverage social business tools and big data, he said. Cloud computing and mobility will converge in collaborative connectivity, requiring new ways of consuming IT capabilities and a more practical alignment in techonology clock speed. Automated and instrumented supply chain processes will re-emerge as a key driver for business-process improvement and data utilization.
5. Manufacturers will adopt lean innovation throughout the product life cycle. “It is not uncommon to find companies that spend nearly half their resources on innovation that in the end is unsuccessful,” said Joe Barkai, research vice president, Product Life Cycle Strategies, IDC Manufacturing Insights. “Companies realize they need better ways to manage innovation.”
He predicts that more companies will adopt lean thinking and apply the same level of scrutiny throughout the life cycle of a product. They will work on managing multidisciplinary decisions early in the product life cycle and improve reuse of existing formal Internet protocol (IP) and unstructured knowledge early in the life cycle. Additionally, companies will exploit communication and mobile technologies, combined with analytics, to shorten the latency of decision-making to improve asset availability and output quality.
6. Greater visibility and deeper understanding of all aspects of product life cycle will enable context for innovation. “Complexity induced by the number and multidisciplinary nature of decision drivers requires a stronger IT foundation to enable visibility to all aspects of product life cycle, within and outside the enterprise,” Barkai said. “IT is expected to provide complete, accurate, and real-time context for multiple stakeholders.”
Unstructured social interaction tools, coupled with structured data from instrumented devices, provide deep, ongoing understanding of users and products and their interaction, he noted. Mobile technology and connected devices can provide a continuous stream of information from products and users. Cloud computing and analytic tools can harvest information from multiple sources, allowing multiple stakeholders with potentially conflicting business drivers to collaborate effectively. Tight integration of product life-cycle management and enterprise resource planning, as well as business context visualization tools, are critical to bringing the value of data to decision-makers.
7. The factory of the future will be driven by capabilities to fulfill customer demand rather than pure production capacity. “Productivity gains in up-pacing markets create idle capacity, which, in turn, creates more inventories, pressure on downward prices, and calls for discounts,” said Pierfrancesco Manenti, head of research practice for Europe, Middle East, and Africa (EMEA), IDC Manufacturing Insights. “Manufacturers today need to break this cycle and focus on their capability to fulfill customer requests rather than just making sure production capability of fulfillment is the driving principle.”
This strategy calls for creating more flexibility on the plant floor to respond to variable market demand. Confirming this trend, he cited a recent IDC Manufacturing Insights’ survey that showed 52 percent of respondents said factories of the future will be measured according to their production capability and flexibility rather than merely efficiency or production capacity.
8. The factory of the future will require a new approach to operations applications. “Manufacturers know the weaknesses of the current multiple loosely integrated manufacturing distribution systems,” Manenti said. “The common practice of factory isolation does not work. We anticipate that manufacturers will make foundational investments in 2012 to support the factory of the future”
More than 90 percent of manufacturers interviewed in a recent IDC survey said that the forces of mobility, big data, cloud, and social business will change the way they work, he said. Thirty-five percent of those survey respondents said technology will completely change the way business is managed. Current IT structures are inadequate to meet plant structure needs, Manenti noted. IDC surveys also show that 60 percent of manufacturers believe that having common practices and processes across multiple sites will be significantly important to support the factory of the future.
9. Engaged manufacturers will look ahead by creating a culture of learning. “We need to have learning and technology-enabled employees, whether it’s for the supply chain, on the factory floor, for the product life cycle, or for the greater business,” said Kimberly Knickle, practice director, IDC Manufacturing Insights. “We are working in an environment where it is important to share information and to collaborate. We are really at the point where IT can support that very well with these new technologies — social business, cloud, mobility, and big data.”
10. Manufacturers will shine the environmental sustainability spotlight on the factory as a means of getting to the product. Knickle said she is looking at 2012 as the year for manufacturers to make progress in taking facility-level details and making decisions on a product-family level.
“Most manufacturers are feeling the pressure to produce detailed corporate sustainability reports on their sustainability progress,” she said. “If you are a manufacturer, you know that has to have the kind of data that is coming from your factories. We also see that focus on the factory by making it about lean and green. It is a way of essentially funding sustainability improvements without creating new projects.”
In addition to the Top 10 manufacturing trends, IDC Manufacturing Insights presented additional forecasts in late December and early January in the specific process domains such as supply chain, product life cycle strategies, and manufacturing operating technologies.
