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News

Open Funding Call – successful applicants announced

In 2022 we launched our biggest funding call yet, offering a total of £400,000 of research funding to split among proposals from the InterAct community.

We were delighted with the response we received, competition was very strong and many teams submitted excellent project proposals. Unfortunately, though we wish we could fund all of them, we could only resource some of these. The nine proposals we elected to finance are:

Battery Passports: Readiness of the UK Battery Manufacturing Sector, Ecosystem Opportunities & Implications for UK Industrial Policy

Principal Investigator:

Melanie King – Loughborough University

Co-Investigators:

Paul Timms – Loughborough University

Project Outline:

“We both come from a Systems Engineering background and we wanted to look at a pressing issue in the form of battery manufacture from a broader ecosystem standpoint.

“A major element of the push for a net-zero world is the adoption of sustainable energy solutions, particularly for things like electric vehicles. Battery technology is a key component of this and it needs to be done right, such that the development of early solutions doesn’t preclude future opportunities and capabilities.

“We want to find out how ready UK manufacturers are to adopt product passport systems and technology into their business models. As a major trading partner, it is important businesses are aware of, and able to achieve standardisation with EU requirements to ensure they can continue to export products.

“Digital product passports are a really interesting technology that can provide increased efficiency, new business models and servitisation opportunities. They enable proactive maintenance, improved customer service and the possibility of greater circularity in business models which offers us exciting ways to achieve impact.”

The potential of coworking spaces to contribute to geographically distributed manufacturing activity and regional levelling up in the UK

Principal Investigator:

Felicia Fai – University of Bath

Co-Investigators:

Mariachiara Barzotto – University of Bath

Phil Tomlinson – University of Bath

Project Outline:

“This project came about as a result of our team’s shared interest in regional development and particularly the levelling up agenda within the UK.

“The development of co-working spaces was already underway before the onset of Covid, but the impact of the pandemic on remote working practices has accelerated this shift. There has been recognition that co-working spaces offer some separation between home and work for those practicing remote work and offer opportunities for social connection and networking. We wanted to further explore this trend, especially light of their growth in suburban areas as people moved out of cities in response to the pandemic.

“Traditionally remote working has been seen by many in the manufacturing sector as impractical given the requirements of physical production, but there are many back office, support, and engineering functions that could be facilitated through co-working spaces. We also plan to examine the impact of ‘maker spaces’ which offer flexible use machinery suitable for early stage testing, fabrication and training to allow more agile manufacturing.”

Exploring remanufacturing practices and business models in the Aerospace Industry: insights from SMEs

Principal Investigator:

Michael Rogerson – University of Surrey

Co-Investigators:

Rachael Lamb – University of Nottingham

Eun Sun Godwin – University of Wolverhampton

Project Outline:

“Our project will be examining the circularity of SMEs’ business models in the UK aerospace industry, specifically targeted towards remanufacturing. In practical terms this means examining the actual processes involved in supply chains and factories, the processes involved in reclaiming materials and recreating new products from existing products. Sometimes this means transitioning them into fuel or melting them down for component elements.

“Net-zero targets play a part in this, but the regulatory obligations aren’t pushing these practices as yet. What we want to get across is that business involvement needs to be ahead of likely requirements as a strategic imperative.

“The impact of aerospace industries on climate is a conversation that’s already prominent in the public domain. There is a temptation to see these corporations as distinct from the general public, but they are made up of people who are part of the general public and will likely share these sentiments. We hope that we can highlight the competitive advantage to businesses that being a leader here can offer.”

EVBatteries4Planet – Developing smart capabilities for sustainable and ethical EV battery supply chains

Principal Investigator:

Luciano Batista – Aston University

Co-Investigators:

Jun Du – Aston University

Oleksandr Shepotylo – Aston University

Nestor Lopez – KPMG

Project Outline:

“There are several problems with producing the rare metals for electric vehicle (EV) batteries. Most notably, there is a growing difference in supply and demand levels, as demand rapidly increases, with car manufacturers racing to adhere to emissions regulations. There are also concerns around serious political instability in some major rare metal producing countries and the environmental impacts of large scale mining operations. This is causing a practical and ethical bottleneck in the production process.

“We want to look at the provenance of resources in use and find ways to encourage recycling and reuse of materials to achieve a sustainable supply chain.

“We want to see how digital technologies like blockchain can be used to help address the problems by creating visibility in global supply chains.”

Industrial digital technologies for UK SME exporting manufacturers

Principal Investigator:

Hanh Pham – University of Leeds

Co-Investigators:

Chee Yew Wong – University of Leeds

Richard Hodgett – University of Leeds

Neil Harriman – Oxford Innovation

David McKee – Slingshot Simulations

Project Outline:

“We are delighted to have received this award from InterAct to undertake this project investigating ‘Industrial digital technologies for UK SME exporting manufacturers’. We are aiming to develop a decision-making model for manufacturers’ adoption and utilisation of industrial digital technologies to enhance competitiveness in international markets both as a conceptual model and through web-based applications.

“We anticipate industrial digital technologies will be a game changer in global production networks in the next two decades and UK SME export manufacturers need to prepare to be ahead of the game.

“We hope the outcomes will be used by manufacturers, especially SMEs, as well as digital solution providers, UK policymakers and support agencies to enable an effective transition to the next stage of industrial development.”

Empirical investigation of the role of pairing industrial digital technologies and resource efficiency towards net zero

Principal Investigator:

Taofeeq Ibn-Mohammed – WMG, The University of Warwick

Co-Investigators:

Mehmet Chakkol – WMG, The University of Warwick

Temidayo Akenroye

Aitana Uclés Fuensanta – University of Warwick

Tristan Niesslein – Niesslein Sustainability Partners (NSP) Ltd

Project Outline:

“Our proposal is about investigating the challenges and barriers to adopting and implementing digital technologies to facilitate resource and energy efficiency.

“A lot of previous work has focused on how technology can drive supply and demand side efficiencies. Instead, we want to find out what barriers industry is facing and how these can be mitigated to improve technology uptake. We’re planning to interview key stakeholders from the sector to see if their thoughts mesh with our own findings and get practical, hands-on insight.

“We want to analyse the interconnected nature of these challenges to determine which are the most critical, and if certain key challenge resolutions will have a wider, cascading success across supply chains. This means looking across the board at manufacturing sub-sectors to see if the challenges faced by individual producers are generally applicable to different businesses.”

RESTRAIN: Socio-cultuRal bEhaviour of end-uSers To specific cybeR-threAts In maNufacturing

Principal Investigator:

Muttukrishnan Rajarajan – City University of London

Co-Investigators:

Rajkumar Roy – City University of London

Katy Tapper – City University of London

Paul Hide – Amdea

Jim Fairbairn – Megger Ltd.

Project Outline:

“Cybersecurity in the manufacturing environment is a growing area of interest and concern. With the increased adoption of digital technologies, manufacturing is becoming a major target for cyber attacks. One of the biggest vulnerabilities in this regard is human behaviour and attitudes towards cybersecurity.

“Since the pandemic, manufacturing has gone through a huge digital change which has opened up new avenues of attack. What we want to know is, how do we manage behavioural change to ensure cybersecurity improvements and use psychological models to plan new ways to adapt to these changes.

“We will be working with the cyber-resilience centres across the country to establish how the findings of this research can impact the wider manufacturing sector across the UK.”

Standardization and new technology adoption in the housing supply chain: Lessons from the 1930s

Principal Investigator:

Christopher Spencer – Loughborough University

Co-Investigators:

Paul Temple – Consultant (University of Surrey)

Project Outline:

“Our contribution to InterAct lies in exploring how Britain’s historical experience of technical standards adoption in the 1930s – particularly those associated with new and emerging technologies – has important lessons for the current and future adoption of industrial digital technologies (IDT).

“We will evaluate the strategic role of the British Standards Institution (BSI) on the housing supply chain during the 1930s. This exploration will be contrasted with the situation today, where the housing supply chain is complex, and for which there is a clear need for increased forward-looking planning and coordination regarding the increasing adoption of IDT and associated IDT standards.

“The project will result in a significant amount of new knowledge in academic, industry and policymaking circles that is relevant to IDT adoption, based on significant historical evidence and contextualisation.”

Business Model Innovation and Digital Servitization in UK Manufacturing Small and Medium Sized Enterprises.

Principal Investigator:

Dimitrios Dousios – University of East Anglia

Co-Investigators:

Antonios Karatzas – University of East Anglia

Project Outline:

“Servitization is the provision of products and services in an integrated bundle that can create and sustain value. One issue is that almost all the of existing research in this area has been focused on large firms, with very little focus on SMEs. Meta analysis and systematic reviews have confirmed there is a gap in research done to date.

“Why is this important? SMEs are facing an increasingly competitive, unstable environment with major negative impacts spilling out from energy crises, conflict, and the pandemic. We’re offering our assistance and research insights to help them become more stable and complete by adding service elements to their package offering.

“We’re looking to create infographics, video tutorials, and a roadmap for SMEs to understand their competitive position and to learn how they can use these advanced business models from larger firms to improve competitiveness.

“99.3% of manufacturing firms in the UK are SME’s, but at the moment we don’t understand the boundary conditions that can vary wildly between firms in different stages of their development. By introducing a servitization toolkit, we are providing a hands-on kit of actionable insights that can set them on the road to improvement.”

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News

InterAct launches Actionable Insights Fund

The InterAct Network has now opened the Actionable Insights Fund for applications.

Designed as a way to facilitate the transformation of human insights gleaned from existing research into outputs providing actionable business intelligence to industry and policymakers, this call offers applicants up to £18,000 of funding to enable this.

Discussing the funding call, InterAct Co-director Professor Janet Godsell said: “We know there is lots of excellent research out there examining the sorts of themes we’re looking at with InterAct. What we want to achieve with this funding opportunity is to spark the creativity of researchers who have carried out this work and provide them with the resources to turn their valuable insights into the kinds of formats that are going to best resonate with those groups that can make use of them.

We want to give people some creative freedom with this, for example researchers may wish to develop reports, videos, apps or website content to name a few ideas. We’re excited to engage with the wider academic community and see what proposals they come up with.”

Opening on Tuesday 24th January 2023, the call will be accepting applications until Friday 21st April 2023.

You can find full details about the funding and apply here.

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Resources

InterAct Conference 2022

As we embark on the next stage of our industrial evolution, digitalisation will shape the future of our economy, manufacturing ecosystem, and workplace. Digital technologies can enable us to create the future we want and move beyond consumption driven economic growth.

Our challenge is to create a future digital manufacturing ecosystem that meets our net-zero ambitions, whilst being resilient and productive. Thus, ensuring that everyone has the things that they need, at a price that they can afford, without damaging the environment or society.

To create the future digital manufacturing ecosystem we want, we need to work together. In order to combine our expertise from the broadest range of perspectives around this common goal, we need to InterAct.

Find out more about the outcomes of our first annual conference below.

How did the InterAct conference benefit attendees?

  • Gaining actionable human insights into the future manufacturing environment.
  • Networking and building relationships with cross-sector experts interested in creating a positive, forward-thinking vision for UK industry.
  • Building narrative development skills to enhance the reach of messaging in the digital environment.
  • The opportunity to take part in a collaborative workshop on the theme ‘How do we create the digital manufacturing futures we want to see, together’.
  • Engagement with a panel of highly regarded speakers from the world of manufacturing, policy, and academia during an interactive Q&A session.

Speakers

We were delighted to welcome a roster of world-leading speakers, who shared unique insights and perspectives on their areas of expertise in relation to the theme of ‘Creating the digital manufacturing future we want’.

Our speakers were drawn from a wide range of backgrounds across industry, policy, think-tanks, and academia. Together they represent a diverse collection of voices that we want to draw into the wider conversation about what it will take to build a future that delivers for everyone.

View or download artwork of all talks below.

Sean Culey

Keynote Speaker

Futurist and author


Tamim Bayoumi

Keynote Speaker

Deputy Director at the International Monetary Fund


Kim Lloyd

Speaker – Future of Digital Manufacturing Ecosystems

EMEA Director at SupplyVue


Professor John Hart

Speaker – Future of Digital Manufacturing Ecosystems

Professor of Mechanical Engineering at MIT
Director, Laboratory for Manufacturing and Productivity


Jason Southern

Speaker – Future of Digital Manufacturing Ecosystems

EMEA Head of Enterprise Software & Visualisation Segments at Nvidia


Bhavina Bharkada

Speaker – Future of Work

Head of Policy and Campaigns at Make UK


Troy Barratt

Speaker – Future of Work

Managing Director at BAMUK Group Ltd


Aimee Doole

Speaker – Future of Work

Strategy, Communications & Marketing Head at Booth Welsh


Professor Philip McCann

Speaker – Future of the Economy

Chair of Urban and Regional Economics at Alliance Manchester Business School.


Lord Jim O’Neill of Gatley

Speaker – Future of the Economy

Member of House of Lords, former Chief Economist at Goldman Sachs.


Katy Davies

Speaker – Future of the Economy

Managing Director at CamdenBoss Ltd


Chris Courtney

Panelist and Keynote Speaker

UKRI Challenge Director for Made Smarter Innovation


Clare Porter

Panelist

Head of Manufacturing Policy at the Department for Business, Energy & Industrial Strategy


Fhaheen Khan

Panelist

Senior Economist at Make UK


Professor Jan Godsell

InterAct Co-director and host

Dean of the School of Business and Economics at Loughborough University


Dr. Antonia Liguori

Storytelling and critical question formulation workshop lead

Senior Lecturer in Applied Storytelling


Agenda

09:00  Arrival and coffee
09:30Welcome and objectives
09:45Keynote speakers
Tamim Bayoumi
Chris Courtney
10:15Future of Digital Manufacturing Ecosystems
Kim Lloyd
John Hart
Jason Southern
11:00   Break
11:30Future of Work
Troy Barratt
Aimee Doole
Bhavina Bharkada
12:15Future of the Economy
Katy Davies
Lord Jim O’Neill
Professor Philip McCann
13:00Lunch
13:45Keynote speaker
Sean Culey
14:00Storytelling and critical question formulation workshop
15:00Break
15:30‘Critical questions’ panel debate
Chris Courtney
Clare Porter
Troy Barratt
Katy Davies
16:20Closing comments
17:00Storytelling screening and drinks reception
Categories
InterAct Blog

Supply Chains need buoyancy, not just resilience

Professor Janet Godsell, John Burdett and Dave Food

Pre-pandemic, businesses were already working through the challenges of a VUCA world – where volatility, uncertainty, complexity, and ambiguity in general conditions and situations were often seen. Faster technological changes, digitization, shortening product life cycles, rapid changes in consumer preferences, and political changes all contribute to this view.

The events of the last three years have created even more instability in Supply Chains, and resilience is now a key topic of debate. We can define resilience as the “capacity to recover quickly from difficulties,” but this implies a return to how things were rather than a new, constantly changing paradigm. It is the challenge of an increasingly uncertain future that forces the question of Supply Chains’ purpose and how they should be designed, governed, and operated to continue running productively in the face of whatever challenges are thrown at them.

Just as a ball will float in a storm on the sea, so must our Supply Chains! They need to be buoyant.

Purposeful Supply Chain design

The purpose of a Supply Chain is to get products to people who need them, when they need them, and at an affordable price. This is the definition of a productive Supply Chain.

supply chain productivity model

This should be done sustainably and responsibly. Supply Chains often operate in a non-responsible way, presenting numerous examples of unfairness in the distribution of value along the chain. The control of data and information is a key enabler of negotiating power plays between parties – it is incredibly challenging to get two entities to collaboratively plan just for mutual benefit.

Large enterprises often optimize their operations to the cost of their SME suppliers. From a Supply Chain finance perspective, the bigger players have better credit terms but pass the risk and costs to their supply base – increasing their own cost and risk and leaving the Supply Chain sub-optimized.

Key supply chain design considerations

As part of a Business Model Design, product and marketing strategies should inform and drive Supply Chain strategy and ensure strategic alignment.

supply chain business model design

In a fast-moving consumer goods context, the Supply Chain design requirements for an everyday low-price (EDLP) pricing strategy with relatively stable demand differs from one with deep-dive Hi-Lo promotions and unpredictable demand. The challenge of the Supply Chain design is that within the life cycle of assets, a business may switch between EDLP and Hi-Lo many times. If the design is optimized for EDLP or has high predictability, there will be issues!

The design principles need to work through the infrastructure and operating model to deliver the necessary level of structural flexibility and dynamic flexibility.

Structural flexibility concerns the infrastructure and set-up of the physical Supply Chain and the assets. This includes:

  • in-house capacity
  • outsourced manufacture capability
  • multiple supplier capability
  • geographic location (in-country, near-shore, off-shore)
  • the option to extend or move nodes in the supply chain.

Dynamic flexibility focuses on the operating model – how the physical assets will be managed. The model covers the following:

  • business processes
  • governance and decision rights
  • organizational design
  • performance management processes (e.g. who determines the levels of stock, where it should be held, and the approval processes for those decisions).

Orchestration and synchronization of the Supply Chain are critical enablers for ensuring it is as productive as possible. This is achievable by maximizing flow through the Supply Chain and rightsizing the buffers for stock and spare capacity.

Actions are driven from the source

The signal from the head of the chain closest to the point of final demand should drive actions across the whole chain. Essentially, interactions between business entities within the Supply Chain should be principally taken from a planning perspective rather than a procurement perspective.

There is a need to understand the constituent elements of the buying demand behavior, such as surge and base volumes, to inform the decisions taken in the chain. For example, increased demand for mobile phone gifts may be seasonally driven by Christmas versus purchases for birthday presents or end-of-contract replacements, which are more likely to be spread throughout the year.

A segmentation approach to the demand signal is required to determine the right supply action – an example being the setting of production wheels within a factory or a runners/repeaters/strangers approach to planning.

supply chain flexibility model

Decisions on the required level of dynamic and structural flexibility are critical for businesses. There is a direct cost for resilience as businesses choose to move to lower-cost, more efficient Supply Chains from ones more sensitive to shocks. The positive financial impacts are facilitated by delivering a more responsive approach. An adaptable Supply Chain model, in short, brings new capabilities into the network.

We can consider this cost in a similar way to an insurance premium. Business cases for resilience will be needed – but how is that developed, measured, and articulated against traditional business cases optimized to ROI cash? A traditional business case based on a single number and set of assumptions is inadequate for the unknown storms which may lie ahead. They must incorporate tolerance for different assumptions to give range and richness to thinking.

A balanced response enabling flexibility

Business processes need to develop. One example would be the S&OP process. A traditional S&OP process focuses on dynamic flexibility – aligning Sales and Supply Chain plans to meet demand – often over a relatively short time frame. So, what is the trigger for a structural network design change? How would a review of structural flexibility sit alongside the S&OP process?

Supplier resilience strategies also need development. If one of the needs for structural flexibility is multi-sourcing – how will volume be allocated? Will businesses pay for suppliers to be ready to supply (just in case they are needed), even in a high-inflation economy? Supplier relationship management will need to develop longer-term, more collaborative processes rather than playing a zero-sum transactional game where the price is the key focus.

Top tips for improving Supply Chain flexibility and resilience

So, what are the actionable insights?

  • Commercial and Supply Chain Strategies need to work together over the lead time for structural flexibility.
  • Creating the capability to react to unknown future Supply Chain shocks will increase upfront costs. This needs to be reflected in business cases. Scenario evaluation tools provide insight into the decision-making process.
  • Design for uncertainty and segment the Supply Chain. Actively manage the inventory and capacity buffers to enable a stable beat.
  • Collaboration for network orchestration, both within and between enterprises, needs visibility of data across end-to-end Supply Chains. The use of advanced planning systems is an enabler for decision-making. Procurement’s role and behavior are likewise critical to supplier relationship management.
  • Businesses need to develop collaboration and governance processes for business process design and decision-making. Self-sufficient, empowered teams are enablers for dynamic flexibility.

One of the lessons from the last five years within Supply Chain management is that simply being resilient to recreate the previous conditions and Supply Chain set-up is no longer sufficient for future success. Teams constantly battle from one shock to another – and this is not sustainable. A reactive way of working creates burnout and costs businesses money.

Businesses must actively decide the right level of dynamic and structural flexibility they need. This creates the required capabilities, so they can bounce back from Supply chain Disruptions, use the next crisis to produce opportunities, and create competitive advantages.

Supply Chains need buoyancy, not just resilience.

Ready to learn more?

The insights in this blog are taken from our Innovating Profitable Manufacturing Supply Chains with Resilience webinar organised by
Board InternationalWatch it on-demand now to take a deeper dive!

Categories
News

InterAct takes part in Digital Manufacturing Week 2022

The InterAct team once again joined a host of manufacturers and digital technology providers from across the UK at this year’s Smart Factory Expo in Liverpool, as part of Digital Manufacturing Week 2022.

Bringing together all the technologies enabling the digital manufacturing revolution under one roof, the Smart Factory Expo provided an opportunity to develop the ongoing collaborations between InterAct’s research programme and the wider sector stakeholders.

Featured among a great array of expert speakers, InterAct Co-directors Professor Jan Godsell and Professor Jillian MacBryde participated in important talks and discussions on the future of manufacturing, what adaptations are needed and how the workforce must change to ensure the industry’s continued success.

Professor Jan Godsell delivers her talk on how we discuss and describe manufacturing
Professor Jill MacBryde takes part in the panel discussion on ‘Women in Manufacturing’

Examining the way we talk about manufacturing as an industry, Professor Godsell said: “We need to talk about manufacturing in words people can connect with. Its about providing us with the things we need, when we need them, at the lowest cost, but in a sustainable way”.

This theme was further explored through a collaboration with Made Smarter, prefacing upcoming work from Professor MacBryde’s ‘Future of Work’ research team, creating a wall for attendees to share their own perceptions on what manufacturing is.

Attendees were invited to share their own perceptions and thoughts about manufacturing through this wall of contributions

As InterAct continues to explore exciting themes around the future of UK manufacturing, we look forward to meeting and interacting with more stakeholders to build the network.

If you are interested in contributing to our understanding of manufacturing, please take part in our ‘New Technologies, Agility & People’ survey..

Categories
News

Future of Work team launches survey on ‘New Technologies, Agility & People’

The InterAct ‘Future of Work’ team based in the business school at Strathclyde University are conducting a survey of UK Manufacturers about New Technologies, Agility & People.

Led by InterAct Co-director, Professor Jillian MacBryde, the ‘Future of Work’ research group is seeking to better understand the ways in which we work, how technology will impact the future of these practices and how businesses can adapt to cope with a rapidly shifting competitive environment.

We often hear about how new manufacturing technologies will shape and transform jobs in the sector. Part of the challenge facing many UK employers is trying to understand how these new technologies help productivity. The team want to know how the jobs and skills of today blend into new job and people practices that sit alongside emerging technologies. This survey offers you an opportunity to share your opinions and experience of working within the sector.

The Future of Work group are looking for senior representatives of UK manufacturers to take part in a short 15-minute survey about how their organisation uses these new manufacturing technologies to shape their people practices and facilitate innovation and productivity.

If you would like to hear more about the background of the survey or discuss taking part, please contact project researcher Dr Robert Stewart (robert.stewart.100@strath.ac.uk).

If you would prefer an electronic paper copy of the survey or would prefer to take part in a telephone interview, please send a text to 07901841087 and a member of the team will be in touch.

The survey is completely confidential. Your opinions and your responses are secure and we do not disclose or identify you or your company in any reporting.

Categories
InterAct Blog

Making investments into digitalisation – the manufacturer’s perspective

Dr. Andreas Schroeder, Dr. Yang Zhao and Dan Andrews

Digitalisation offers significant opportunities for manufacturers. By leveraging digital technologies and data, manufacturers can generate substantial efficiency gains in their own processes, create new forms of value for their customers, and develop innovative business models. These digitalisation opportunities are critical to address the productivity and sustainability demands the manufacturing industry is facing.

Although the range of opportunities digitalisation offers to the manufacturing industry is widely recognized it is of concern that only 35% of surveyed firms have adopted digitalisation solutions at scale[1]. One of the root causes of the lack of adoption in the UK is the lack of investment[2]. According to the Manufacturing Digital Productivity Report from iBASEt[3], 94% of UK manufacturers believe their industry has already fallen behind the US because of a lack of investment into digitalisation, and more than half of UK manufacturers are losing sales as a result. It is even more worrying that 93% of respondents expect that this lack of investment into digitalisation will lead to many UK manufacturers going out of business in the next decade.

To help manufacturers invest effectively in digitalisation, it is important to understand the range of challenges manufacturers commonly face. Only then can the appropriate solutions be identified and put in place. Aston University used a systematic review method to study the challenges for manufacturers and identify critical questions. The results are summarised in Table 1 and discussed below.

Digitalisation goalsThe lack of agreement on the goals of digitalisation encumbers the investment process.
The lack of ambitions in the goals of digitalisation limits the leaders’ ability to justify significant investments.
Investment processDigitalisation integrates a wide scope of investment domains which makes it difficult to apply established processes to assess and prioritise investments. 
The metrics used to evaluate business cases for investment do not relate to the opportunities that are particular to digitalisation.
Digital technology attributesThe high cost of digitalisation and the high uncertainty of return make it difficult to justify investments.
The rapid innovation (and obsolescence) of digital technology acts as a discouragement to making substantial investments.
People and their expertiseThe lack of expertise on acquiring external funding for digitalisation creates an investment barrier.
The lack of senior leaders with digitalisation expertise hampers investments into digitalisation.
Organisational cultureThe difficulty of accepting investment uncertainties inhibits investments into digitalisation.
The lack of openness and trust creates barriers to making effective investments into digitalisation.
Business networkThe lack of digital readiness of the wider network limits investments into digitalisation.
The lack of experienced or relevant finance partners reduces the opportunities for making investments into digitalisation.
Table 1. Challenges for manufacturers investing in digitalisation
Digitalisation goals

In manufacturing, digitalisation affects a wide range of stakeholders and they all feed into the development of the goals. The lack of a specific and widely agreed goal is a critical barrier to making investments into digitalisation.

Digitalisation offers manufacturers opportunities to significantly change how they operate, what kind of relationship they have with their customers, what products or services they offer and who they offer these to. However, many manufacturers restrict their goals to incremental changes and, therefore, struggle to justify making the necessary investments.

Investment process

Digitalisation cuts across established investment categories as it involves aspects of R&D, employee training, and education, as well as the acquisition and implementation of technology solutions. The multi-dimensional nature of digitalisation challenges the traditional investment processes of manufacturers.

Manufacturers traditionally rely on internal rates of return or net present values to justify their investment decisions, and these are not well suited to the possibility of dynamically adjusting an investment after it has been initiated. With digitalisation opening future and potentially unknown opportunities, metrics are required that reflect the flexibility to adjust an investment, change a technology or even abandon it.

Digital technology attributes

The research identified the high costs of required technologies as a major reason that manufacturers do not carry out investments into digitalisation. The cost of technology is particularly high to early adopters, before economies of scale are achieved. Furthermore, while digital solutions are highly scalable, the returns on investments are limited if scale is not achieved.

The pace at which digital technologies develop is unprecedented. Any technology manufacturers choose could become outdated rapidly and require updating, which increases costs. Manufacturers may, therefore, decide to wait for the next digital technology generation to become available or for further standards to emerge before making investments.

People and their expertise

To make significant investments requires manufacturers to raise external finance; but manufacturers often lack the expertise to raise external finance for investments into digitalisation, which significantly differs from raising finance for investments into capital equipment: it requires different funders, business case details and preparations.

Also, decisions on investments in production machinery are often made at the plant level, and are aligned with responsibilities for performance and quality. As digitalisation affects the direction of manufacturers, with implications for their customers and wider networks, identifying the right locus of decision-making is critical for making effective investments. It requires a senior leader with the authority and expertise to make such wide-reaching decisions.

Organisational culture

Creating value with digital technologies requires product and process experimentation following test-learn-tweak cycles. Organisations need to develop a ‘tolerance for uncertainty’ to make effective investment decisions within this context. For manufacturers with limited R&D activities, dealing with these uncertainties is particularly difficult.

Although digitalisation will require changes in organisational roles and processes, the creativity and imagination of staff members across the organisation need to be drawn on to capture the opportunities presented. It is critical to ensure that digitalisation is not perceived as a cost-cutting exercise aiming to create redundancies to ensure the widespread support and effectiveness of investments.

Business network

It is not only the manufacturer’s own investment into digitalisation but also that of their customer and wider network that is critical to making an effective business case. Ultimately, value is co-created by the customer and the wider network, and if these parties do not make investments into digitalisation themselves then the manufacturer’s chances of deriving a return from their investments are reduced.

Making investments into digitalisation also puts a focus on the external finance partner as a member of the network. Finance partners are often overlooked in industrial value networks, but in a digitalisation context their role is critical. This is because these partners are not just financing a machine but also a business process or business development, which requires a much closer relationship.

Making effective investments into digitalisation is a critical challenge for manufacturers. These investments not only determine the success of current digitalisation initiatives but also affect the viability of future digitalisation journeys. It is today’s investments into digitalisation that enable the future competitiveness of the manufacturing industry. Manufacturers need to rethink their established investment processes and organisational practices as many of them stand in the way of making effective investment decisions into digitalisation.


[1] https://stories.ability.abb.com/better-decisions

[2] https://www.makeuk.org/-/media/files/insights/reports/infor-make-uk-innovation-monitor-report-final.pdf

[3] https://info.ibaset.com/hubfs/ibase_PDM_090522.pdf

Categories
InterAct Blog

Actionable insights from the past: what can we learn from history in the new industrial transition?

Dr. Brian Sudlow and Dr. Ahmad Beltagui

Consider a company like Mueller Inc, an American manufacturer of steel buildings and metal roofing, among other things. Prior to their digital transformation, they were facing multiple issues. Their open-source management system lacked flexibility and their online presence was outdated. The buyer journey was far from clear, and customers needed to visit stores to complete purchases. In short, their future seemed increasingly uncertain. Could the answer to these dilemmas have lain in the past?

***

‘History is the teacher of life,’ goes the saying of the Roman statesman Cicero. But is that still true? More to the point, can it be true in this period of the Fourth Industrial Revolution when the rate of innovation far outstrips anything seen during previous industrial revolutions?

Our project for InterAct, undertaken by teams at Aston and Cranfield, is currently testing the hypothesis that historical examples provide actionable insights for contemporary manufacturers, and that manufacturers can leverage such histories as they adopt the next generation of industrial technologies. Our preference is not to talk about revolutions, but rather about transitions: periods of occasionally spectacular innovation, followed by a halting or gradual readjustment across industry, with occasional sallies back into earlier practices or technologies. Industrial transitions are less like sudden grand revolutions and more like the stop-start evolution of our own lives. As Melvin Kranzberg, one of the pioneers of the history of technology, said “Technology is a very human activity.”

Discovering actionable insights in history

For our project, the team at Cranfield set out to tackle a systematic search of literature about the challenges of digitalisation in industry, finding and analysing 278 articles. Most of the present-day challenges they identified concerned questions of technical innovation, marketisation, or the future of employment.

The Aston team (the authors of this blog post) set out to look at mechanization (18th and 19th centuries), electrification (late 19th and 20th centuries) and computerization (20th century) – the earlier processes of industrial transition.  What was clear from their review, however, was that the spectrum of industrial transition challenges is a lot broader than the perceived issues around technology and its monetisation. In this light, it is reasonable to argue that understanding digitalization needs a wider field of vision, one that is broadened by history, to tackle the challenges of the future and avoid the mistakes of the past.

By widening their field of vision through cases from history, we argue that today’s manufacturers have the chance during this digital transition to increase their appreciation of the potential risks and opportunities that lie ahead, and perhaps even stimulate creative solutions to them. Our historical case search reveals that there are dozens of issues that merit attention both within manufacturing operations (new safety questions, choices of innovation pathways, naivety about technical solutions) and outside of them (the power of location, globalization and culture, negative social consequences of innovation) which hardly figure on the lists of challenges for digitalization.

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Returning to Mueller Inc’s dilemma, perhaps inspiration could have been found in historical cases such as the electrification of Zurich’s streetlighting. Over 100 years ago, the town council’s dilemma was whether to invest in AC, DC, or their alternatives. There was little room to manoeuvre, and the recently installed gas-powered streetlighting could have risked looking like an expensive mistake.

Zurich’s response, however, was to focus on stakeholders and to choose the technology that would be more affordable and scalable – AC as it happened – allowing the city to grow by serving surrounding populations more effectively. The solution was technically elegant, but above all politically savvy. Likewise, our friends at Mueller Inc did not focus on which technology was best in its class, but on which digital solution would help their customers achieve their needs. The company opted to move their business to a major digital platform that greatly improved the customer experience while providing big data and analytic tools for their management.

If you want to learn more about the team’s research, register below for our workshop on 8 November on the lessons of history for manufacturers today.

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Is your supply chain sustainable?

Sustainability in manufacturing is a hot topic. And rightly so – many manufacturers produce large amounts of waste, much of which the supply chain creates. Rather worryingly, our supply chains make up 60% of carbon emissions in the UK.

The UK government’s initiative to reach net zero by 2050, as well as the legal obligations under the UN’s 2030 Agenda for Sustainable Development and the OECD Guidelines for Multinational Enterprises, is now well known. However, there is much, much more that can be done to reduce emissions – and digital technologies have a crucial role to play.

Click below to read more about the five best ways to promote sustainable practices within your supply chain.

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Welcome to the InterAct Network

Find out more about InterAct, our aims and how we’re helping to build a more sustainable, effective manufacturing future.