Are industrial manufacturers seizing all the opportunities of a more digital world?
A recent article suggests that, by 2018, only of manufacturers investing in digital transformation will be able to maximize the outcome. The remaining 70 percent are hindered by outdated business models and technology.
This is concerning. The speed of business is fast and companies that aren’t successful in adopting, implementing, and optimizing new technologies run the risk of being left behind.
However, the key – and challenge – with digital transformation is it involves more than an investment in a new technology, that investment must be part of an overall cultural shift within a company.
The good news is executives are aware of the importance of digital transformation. A GT Nexus found 75 percent of respondents describe digital transformation of the supply chain as “important.”
While important, it takes more than executive buy-in to enable digital transformation. That same study found only 5 percent of those surveyed were very satisfied with their digital progress so far.
Let’s take a look at four reasons why digital transformation is an for industrial manufacturers:
Today’s customers have different expectations than they did even a few years ago. Customer experience and immediacy is prized. This is a universal shift that affects businesses up and down the supply chain, even manufacturers that don’t produce consumer goods.
Manufacturers need to rise to meet these new expectations – and one of the keys is through digital transformation. With smarter technology, greater visibility, and digital practices, there can be an increased focus on improvement and efficiency within manufacturers and throughout the supply chain.
Technology has created an extraordinary amount of data; within this data there is great opportunity, but it also can be overwhelming. The industrial internet of things (IIoT) has exponentially increased the amount of data produced. It provides visibility into business practices and can help pinpoint bottlenecks and find efficiencies. However, this data can fall flat if a company’s systems and employees are not prepared to leverage it.
Part of a digital transformation needs to be creating processes and empowering employees to transform the data coming from various sources into actionable insights.
Those actionable insights provided by big data can put a manufacturer on the right path to greater efficiency. Digital transformation leverages tools to help manage a business better. Cost savings, improved customer experience, and decreased time to market are all potential benefits of a digital transformation strategy.
Digital transformation lays the groundwork for innovative ideas. It provides a new framework for a business, it enables employees to do their jobs better, and, when successful, it frees up time and space for higher level work that can lead to business innovation and opportunities. This is vital because today’s industrial manufacturers are competing on a global scale and companies that maintain the status quo will be left behind.
As technology has advanced and become embedded in plants, warehouses, and throughout the supply chain, businesses have needed to adapt. Many already have, but the path toward digital transformation is different for every company – and it’s a process that’s never complete.
With a digital transformation strategy in place, industrial manufacturers can begin meet the demands and expectations of their customers and realize the benefits of a more efficient, responsive, and agile organization.
reduce—and sometimes eliminate—the need for human intervention in industrial tasks. Plain and simple.
When “touches”—human intervention—are reduced, costs are significantly impacted. These costs are often hidden, but once removed drop directly to bottom line profitability.
It’s for this reason that increasing numbers of industrial organizations are electing to automate as a means to minimize manufacturing costs by reducing human involvement. , in fact, shows the North American market for automated material handling is projected to grow at a CAGR of 8.1% over the next four years to reach $7.1 billion by 2019—up from $4.8 billion in 2014.
The advantages of automation are many: Improved production quality, improved working and safety conditions, maximized floor space, increased level of profits—the list goes on.
Let’s examine some of the driving factors for growth of automated material handling in the years to come and explore what this means for manufacturing operations:
Increased automation isn’t a new. (BCG) research shows roughly 10% of today’s manufacturing functions are fully automated—a number that’s predicted to reach 25% over the next decade, as robotic vision sensors, intelligence and gripping systems improve.
Indeed, robotics and automation have paved the way for more efficient, productive, and intelligence industrial operations in recent years. But that’s only the beginning. With such technological advancements comes the increasingly pervasive Internet of Things (IoT), which delivers increased data and sharing communication that Microsoft could lead to as much as $90 billion in added value for manufacturers annually.
According to BCC Research analyst Lisa Marshall in a on the technological revolution in material handling, advanced technologies such as robotics, autonomous control, driverless vehicles, and wearable computing will be key drivers of automated material handling growth over the next 15–20 years.
“Robotics is in the midst of a true revolution as capabilities increase and costs decrease,” she says. “Although most industrial robots are currently found in manufacturing applications, they are becoming more viable for material handling and logistics applications in the future.”
In years past, the significant expenditure associated with automation deterred many organizations from making the investment. However, as noted in a USA Today , automation costs are decreasing as advanced robotics becomes more and more prevalent across the U.S. and globally.
“The cost to purchase and start up an advanced robotic spot welder [for example] has plunged from $182,000 in 2005 to $133,000 in 2014, with the price forecast to drop another 22% by 2025,” reports BCG research cited in the article.
What this means for manufacturers is there is an increasing incentive to automate what has traditionally been manual operations. BCG says manufacturers tend to ratchet up their robotics investment when they realize at least a 15% cost savings compared with employing a worker, according to USA Today.
As industrial operations automate, manufacturers also have the opportunity to drive safety in the warehouse. Improving working and safety conditions is one of the primary drivers of manufacturers replacing their existing systems of material handling to automated systems, as noted in a recent MarketsandMarkets .
“Robots are ideal for tasks that are too dangerous for humans to undertake, and can work 24 hours a day at a lower cost than human workers,” says a World Economic Forum .
But automating dangerous or repetitive warehouse work isn’t just about putting employees out of harm’s way; it also results in increased employee satisfaction and engagement as workers pursue more value-added positions around the warehouse. Additionally, as automation increases, new jobs are created that need additional workers with specialized skills sets in programming and maintenance—particularly in light of the technological advancements on the horizon.
Automated material handling isn’t the wave of the future—it’s here now. As noted above, there are several factors fueling growth of automated industrial operations, including advanced technologies, reduced costs, and safely, to name a few.
The question to ask is: As this growth continues in the years to come, how will your company prepare itself?
Editor’s Note: This guest blog from Cisco-Eagle, , a provider of integrated material handling and storage systems for industrial operations, is the first post in which we will have a few blog posts on robotics, jobs, and how millennials figure into the future of manufacturing. This post is chock full of great statistics and other great articles to discover around these subjects. We hope you enjoy!
According to the most recent from the U.S. Bureau of Labor Statistics (BLS), manufacturing employment has changed very little in recent months. The one-month diffusion index, which measures the dispersion of employment change in manufacturing, fell from 51.9 in April to 48.8 in May (a value below 50 indicates that more manufacturing industries are losing jobs than adding).
A variety of factors may help to explain the decrease in manufacturing jobs (stabilizing economy, increase in production of goods, aging population, etc.). But one of the biggest centers around technological innovations (automation, robotics, Internet of Things, etc.) increasingly being used to drive more efficient warehouse and assembly operations.
A recent Pew Research Center shows roughly half (48%) of industry experts think robotic advancements will displace a significant number of blue and white collar jobs by 2025, while the other 52% predict these innovations will result in new skills and industries.
As noted by Adam Robinson in a post on the reasons there are fewer manufacturing jobs today, this “tech-savvy change in manufacturing” has led to a Catch 22 of sorts:
“The workers needed in manufacturing must [now] have a highly-developed set of skills to work in such technological environments. As a result, a worker may need a degree or other form of training beyond simple manufacturing, such as engineering, computer-electronics, or robotics.”
Let’s take a closer look at what this technological shift in manufacturing means for employees, both now and in the future:
Let’s face it: Humans will never be able to compete with the productivity and efficiency provided by machines. Robots offer something humans can’t deliver: accuracy, incredible consistency and unlimited performance. They perform the exact same motions millions of times without variation, complaint, or error. What’s more, they don’t need sick days or take vacations.
While many fear technological advancements are , the opposite is true. Automating repetitive, mundane, or dangerous work frees up employees to pursue jobs that require imagination, adaptability, and decision-making skills. In that sense, robots ultimately drive efficiency – not replace workers.
On the other hand, increased automation demands a certain skill set and educational training for employees to be able to operate a connected, technologically advanced manufacturing facility. Jennifer McNelly, president of , argues that manufacturers need to do more to develop their talent pool. “They can no longer wait for an educated and training next generation of manufacturing talent,” she says.
Roughly 1.2 million industrial robots are expected to be deployed by the year 2025, according to (BCG) research. While 10% of today’s manufacturing functions are automated, BCG predicts this number will rise to 25% as robotic vision sensors and gripping systems improve.
But what does this mean for manufacturing employment?
As noted in an Apple Rubber on the impact of robotics in manufacturing, increasing the use of robots will help to create jobs as well as keep manufacturing work in the U.S. “We are spending hundreds of billions of dollars doing this kind of work in China,” says Rodney Brooks, co-founder of Rethink Robots, in the article. “We want companies to spend that here, in a way that lets American workers be more productive.”
Each year, manufacturers lose valuable manpower to slips, falls, and other accidents that cause employees to miss work and cost companies hundreds of thousands of dollars in workers’ compensation claims. In fact, BLS reports slightly more than 3.0 million nonfatal workplace injuries and illnesses occurred in 2013, resulting in an incidence rate of 3.3 cases per 100 equivalent full-time workers.
But, with robots and automated systems replacing workers in many positions, another significant benefit emerges: improved employee safety.
As noted in a World Economic Forum on the top emerging technologies in 2015, “Robots are ideal for tasks that are too dangerous for humans to undertake, and can work 24 hours a day at a lower cost than human workers.”
Interestingly enough, the article notes that new-generation robotic machines are likely to collaborate with humans rather than replace them. And, with a between employee health and workplace engagement, the likely result of such a collaboration is more fulfilled employees who can focus on more challenging work instead of safety concerns around the warehouse.
With Millennial workers will comprise 75% of the manufacturing workforce by the year 2025, the overall impact of technological advancements on the manufacturing employment landscape remains to be seen.
But this much is clear: From automation and robotics to computer-controlled systems, the manufacturing environment looks much different today than it did in years past. How does your company view the impact of this technological shift in manufacturing? What does it mean for your employees?
The manufacturing industry is undergoing steady as economic activity continues to expand. In fact, there are a multitude of exciting changes on the horizon, including lean operations, improved automation, reshoring, technology and innovation, and more.
But with OSHA regulations becoming increasingly stringent, manufacturers need to make sure warehouse safety remains top-of-mind as the economy expands and productivity demands increase. OSHA’s top (e.g., forklifts, hazard communication, electrical, wiring methods/system design, etc.) can result in financial penalties up to $7,000 for non-serious violations and $70,000 for repeat offenders. Aside from the financial costs, the human costs of an unsafe operation are staggering. The number of people injured or killed every year may increase as the economy continues to heat up.
So what are some ways manufacturers can increase warehouse safety – both now and in the future? Here’s a look at 3 areas for forward-thinking organizations to consider:
As noted in a recent Accenture , the most conservative estimates place spending on the Industrial Internet of Things (IIoT) at $500 billion worldwide by 2020. “More optimistic predictions of the value created by the IIoT range as high as $15 trillion of global GDP by 2030,” says Accenture.
What this tells us is that companies will increasingly look to the IIoT for more efficient, productive, and intelligent industrial operations. One example of how the IIoT might also pave the way for increased safety can be seen in the video below:
Wearables such as Google Glass could lead to not only improved efficiency, but to increased material handling as well. For example, the video showcases a forklift “malfunction detected” and instructs the operator to “proceed to the maintenance area.” While the Retail Innovation on Google Glass in the warehouse notes “the technology isn’t quite ready yet,” it also states “as battery life improves and the technology matures, it is almost certain that this will be in widespread use across retail.”
in manufacturing is not a new concept. Already much of the repetitive and high-precision work in large factories has been taken over by industrial robots, who have high computing capabilities and a level of accuracy unmatched by their human counterparts.
But one of the biggest benefits of workplace automation translates to increased safety for workers. As stated by Amanda Merrell, Marketing Director for one of our partner companies, , “Forklifts are the cause of serious employee-related accidents.” This year, she notes “[Seegrid] is seeing more customer turning to forklift-free initiatives and deploying vision guided vehicles to improve facility safety.”
Other manufacturers highlighted in our recent blog post agree this year will see advances in automation, such as 3D machine vision and collaborative robots, in an effort to both increase speed/accuracy and make the workplace safer for employees.
According to the , approximately 10,000 Baby Boomers will turn 65 every day for the next 19 years, which corresponds to increasing numbers of older workers retiring – at a rapid rate. A recent Polytron notes that the aging workforce will have a significant impact on manufacturing safety because older workers have the highest skills in operating machines and equipment safely.
To establish “a stable, consistent safety culture to support the younger workforce,” Polytron recommends that manufacturers create a knowledge transfer process to effectively capture the safety knowledge of the retiring workforce. Other ways to set up a culture of safety for younger workers include making safety training a priority, conducting risk assessments of the work environment, and keeping employees involved in and informed about safety at all times.
For the manufacturing industry, the future looks bright on account of advancements in technology, improvements in warehouse operations, and U.S. jobs returning from overseas. But, with the exciting changes ahead comes the need to prioritize safety – both now and in the future.
Focusing on the Industrial Internet of Things, automation, and talent investment are just a few of the ways manufacturers can do so. How is your organization considering safety for the future?
According to recent from the Census of Fatal Occupational Injuries conducted by the U.S. Bureau of Labor Statistics (BLS), fatal injuries in the workplace have declined by nearly 25% over the past decade. (non-fatal) workplace injuries and illnesses have also declined in recent years, resulting in an incidence rate of 3.4 cases per 100 equivalent full-time workers in 2012, as compared to 3.5 in 2011.
While these statistics may represent employers becoming increasingly focused on safety in the workplace, they also reinforce that workplace safety should be made a priority. This is an issue of particular concern in industries such as manufacturing, which has a statistically higher percentage of workplace-related injuries and illnesses. (Additional BLS shows occupations such as laborers and freight and stock and material movers have a higher incidence rate of injury/illness than the average 375 cases per 10,000 full-time workers.)
Warehouse safety is too frequently viewed from a managerial perspective (i.e., what do managers and supervisors need to do to comply with OSHA standards and prepare themselves for workplace inspections?). But it’s just as important for employees to understand why it’s critical to obey safety rules and regulations.
The following is a list of 5 steps facilities can take to reinforce the importance of safety with warehouse staff:
Perhaps the best way to emphasize the importance of safety is to integrate it into company culture. Establishing a company culture of should encourage workers to report unsafe conditions (for example, people working too closely to conveyors with unrestrained hair or clothes) so that they can be dealt with in a way that helps make equipment and procedures safer for everyone.
As noted in a recent Thomasholmes blog on manufacturing safety, doing so requires 24/7/365 focus and employee and managerial participation. When Paul O’Neil, CEO of Alcoa, made a commitment to employee safety, he “let his staff know that his goal was to improve the employees’ quality of life and ensure they reach[ed] home safely at the end of the day.” By reinforcing safety from the top down, O’Neil demonstrated to employees that they needed to do the same.
A big part of building manufacturing safety into company DNA involves training employees on safety precautions and protocols. Regular, frequent updates and refresher courses should be included in a training program and preventing unsafe acts should be a part of the company culture. In addition to employees, visitors should also be informed of safe behavior standards if they are going to be near conveyors, forklifts, or other dangerous machinery.
During an at supply chain expo Modex, Hytrol’s Boyce Bonham, Director of Integrated Systems, and J. Mitch Johnson, Director of Systems Development, told us that safety training is increasingly becoming an area of focus for manufacturers. “We know companies are getting a lot more engaged in training programs focused on safety and doing regular safety training,” they said. “They’re also getting more focused on the type of equipment that’s going into a facility, including the safety of it.”
While training is the foundation of all good safety programs—training and retraining not only reminds employees how to be safe, it also reminds them why to be safe—training programs can (and should) be augmented by safety automation. Safety automation comes in two forms: safety systems (e.g., , safety gates, , etc.) and automation technology that makes workers safer by removing them from some of the most dangerous tasks (e.g., robotics, carousels, palletizers, sortation systems, etc.).
When integrated into a well-planned safety training and safety process, automation can be a valuable asset because it reduces the need for workers to be in high-risk areas. The advantage is two-fold: 1) Workers can be redeployed to areas where they can be more productive and efficient, and 2) The importance of safety can be reinforced to workers.
By law, employers are responsible for keeping employees informed about OSHA regulations, as well as the various safety and health matters with which they are involved. This means, according to , employers must post occupational safety and health program information in prominent workplace locations.
Another way to keep employees informed about their safety is to establish . Doing so can be beneficial to both employees and management alike because it helps to uncover issues that may exist in the facility, as well as areas where people could be injured. Safety committees can frequently and comprehensively advise, evaluate, and investigate a facility’s material handling processes. The key for management is to get involved and ensure the committees meet, stay on-focus, and set standards.
Of the many things manufacturing employees can do to ensure they stay safe at work and return home every night, one of the most important is simply to pay attention to their surroundings. A (highlighted in a recent Manufacturing Leadership Community ) advises that employees take the following simple precautions to stay smart (and safe) in the warehouse:
Safety rules and regulations exist for one very simple reason: To protect employees from workplace hazards (to the extent possible) and allow them to be as healthy, safe, and productive as possible. The 5 points referenced above are by no means an exhaustive list of all of the ways managers can help employees make safety a priority, but they’re a good place to start.
How is your organization emphasizing the importance of safety to employees? What best practices would you add to our list?
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