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.
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.
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.
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 (email@example.com).
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.
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. One of the root causes of the lack of adoption in the UK is the lack of investment. According to the Manufacturing Digital Productivity Report from iBASEt, 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.
The 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.
Digitalisation 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 attributes
The 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 expertise
The 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.
The difficulty of accepting investment uncertainties inhibits investments into digitalisation.
The lack of openness and trust creates barriers to making effective investments into digitalisation.
The 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
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.
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.
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.
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.
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.
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.
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.
InterAct Co-Director and Dean of Loughborough University’s School of Business and Economics, Professor Janet Godsell, hosts a panel discussion on ‘Leading global manufacturing operations against the backdrop of a highly disrupted supply ecosystem’.
UK manufacturing supply chains have been tested to their limits by the global disruptions of recent years, from Brexit to COVID 19 and the crisis in Ukraine.
To regain competitiveness during this turbulent time, firms are urged to take stock of their supply chains and consider: • What could the future of UK manufacturing look like? • What are the associated business models? • How can they leverage industrial digital technologies to create a more sustainable, responsible future?
This webinar examined the results of a survey of manufacturing firms in the Midlands region and launching the ‘Future of Digital Manufacturing Ecosystems’ project. This is a joint programme between the InterAct Network led by Professor Jan Godsell (Dean of the School of Business and Economics, Loughborough University), Make UK and Midlands Engine.
This session, led by InterAct Co-director Professor Jan Godsell and featuring successful InterAct grant applicant Dr. Andreas Schroeder examines examples of successful applications, developing opportunities for networking/feedback, and through sharing our knowledge of navigating the administrative processes associated with funding calls.
Find out more about how you can develop better funding proposals and more effectively tie your research in to the overall aims and objectives of InterAct and Made Smarter Innovation.