Report: 2016 State of Manufacturing Technology
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Manufacturers are leveraging technology to effectively manage their business operations. This report captures how 200 manufacturers, representing all aspects of the industry, connect machines, mobile devices, #wearables, and people to the cloud to access real-time data for real-time decision making.
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Report: 2016 State of Manufacturing Technology
- 1. 1 State of Manufacturing Technology – 2016
- 2. 2 Overview Annual manufacturing industry survey
- 3. 3 Participant Profiles • Nearly 200 companies • Seven primary industries • Global presence
- 5. 5 Manufacturing Growth Q: How much has your revenue changed over the last five years? 53% 18% 10% 8% 12% Increased by 0-20% Increased by 21-50% Increased by 51-100% Increased by more than 100% Revenue has declined 88% Increased revenue in the last five years 46% Technology had an effect on growth
- 6. 6 Growth of Connected Manufacturing 1. Technology must align with the workforce. 2. Industrial Internet of Things (IIoT) connects the manufacturing environment. 3. Big data starts on the plant floor. 4. Consumer mobility is influencing industry- specific solutions. 5. Cloud is the catalyst for manufacturers to leverage mobility, big data, and IIoT.
- 7. 7 Technology Investment • Quality • Smart, connected tools • Production planning • Lean • Inventory management Q: Where do you plan to make your next investment in technologies for manufacturing operations? Inventory management, 12% Lean Manufacturing, 16% Production planning, 16% Quality management, 19% Smart/connected tools and equipment, 18%
- 8. 8 28% 22% 17% 9% 9% 5% 4% 3% 0% 5% 10% 15% 20% 25% 30% Shortage of skilled workers Lower-cost competitors Weak demand among U.S. customers Shortage of capital Weak demand outside the U.S. Inability to take advantage of new technology New competitors Regulation Workforce Trends • Manufacturing is changing • Skillset demands are changing Q: What do you see as the biggest obstacle to your company’s growth next year?
- 9. 9 38% 22% 21% 6% 5% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Lean manufacturing Data analysis Mechanical engineering Software engineering Design Electrical engineering High-Demand Skills Align to Modern Technology • Engineering • Lean knowledge • Data skills Q: What skills are most important for the next- generation of employees?
- 10. 10 Big Data Dashboards and Reports True Data Insight
- 11. 11 38% 22% 21% 6% 5% 3% 0% 5% 10% 15% 20% 25% 30% 35% 40% Lean manufacturing Data analysis Mechanical engineering Software engineering Design Electrical engineering Big Data Planning Nearly 40% of those surveyed are evaluating, planning or have implemented big data initiatives Q: What skills are most important for the next- generation of employees?
- 12. 12 IIoT Connectivity • Smart manufacturing/IIoT listed as a key factor in near-term growth • Manufacturers are on the cutting-edge of modern technologies • Modern technologies drive high data capture Q: What connected devices do you employ in your manufacturing operations today? 94% 79% 50% 46% 37% 32% 24% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Hand scanners Consumer mobile devices (e.g., phone, tablet) Sensors IP-enabled tools and machines Low-power Bluetooth devices Quality scanners Smart thermostats or lighting controls
- 13. 13 Technology Evolution Tools that make manufacturers more efficient and more connected Q: What emerging technologies and processes do you employ in your manufacturing operations today? 64% 57% 38% 26% 4% 4% 2% 1% 1% 1% 1% 0% 10% 20% 30% 40% 50% 60% 70% Consumer tablets Robotics Webcams 3D printers/additive manufacturing Other (please specify) Autonomous vehicles in-plant (e.g. self-driving forklifts) Smart watches (e.g., Apple Watch) iBeacons Drones Smart glasses (e.g., Google Glass) Autonomous vehicles on-road (e.g. self-driving cars or trucks)
- 15. 15 Consumer Mobile Changing Manufacturing Connectivity • System access, untethered workers, more efficient and faster decisions • Consumer device usage growing 20% per year Q: What devices and platforms does your company currently provide to employees today? 90% 70% 56% 54% 14% 7% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Windows laptop or computer Apple devices Android devices Windows devices Apple laptop or computer Blackberry devices Linux laptop or computer
- 16. 16 Mobile Technology will Continue Evolving to Serve Manufacturing
- 17. 17 Cloud Manages New Business Demands VS. Today’s Business ModelYesterday’s Business Model End of Month Summary Reporting Steady Demand Signal Long Lead Times Standard Products Stable Set of Suppliers Lots of Real-time Data, Access Anytime Variable Demand Signal Compressed Lead Times Short Product Lifecycles Reconfigurable, Global Supply Chains
- 18. 18 Cloud Drives Connectivity Critical capabilities delivery by cloud 1. Connectivity to systems, machines, suppliers, customers 2. Continuous innovation 3. Common data model 4. Access to the customer community 5. End-to-end solution 6. Lower cost IT resource requirements
- 19. 19 96% Reduction in inventory discrepancies Green Flash Brewing I don’t have to deal with the headache of having a big IT system in- house. It allows us to focus on what we do best.” Steve Goodger, Chief Financial Officer at Green Flash, Green Flash Brewing Inventory accuracy 99.7%
- 20. 20 FloraCraft – 2014 Walmart Supplier of the Year “We only have two IT folks at FloraCraft so not having to manage additional servers and software is a real bonus for us.” Increase in revenue with 0% increase in labor hours 60% Helping leadership make better and faster decisions about product investment Right-time Data
- 21. 21 The Road Ahead IIoTCloud Big Data Mobility Workforce Evolution Connected Manufacturing
- 22. 22 Access to the Report For more details, download the full report today. 2016 Plex State of Manufacturing Technology Report
Editor's Notes
- The state of manufacturing technology survey is one which Plex administers to capture technology evolution and usage in manufacturing. There is an accompanying report to this webinar on plex.com that we encourage you to check out.
- Nearly 200 companies from all walks of both process and discrete manufacturing participated in the survey across seven primary industries. And since we live in a connected economy where companies big and small are global in one way or another, these companies represent presence in Mexico, Canada, Europe, Asia and the US. 7 include – Automotive, Industrial Equipment, Metalforming, High Tech, F&B, A&D, Plastics Rubber and Packaging
- So then where is manufacturing headed?
- Let’s start with growth. What’s going on in the industry. Over the last five years, manufacturers surveyed have experienced strong growth. 88% have grown with almost 20% growing 50% or more. And when we asked if technology had an effect on that growth, almost 50% responded that it has. We expect that to continue as technology becomes more and more sophisticated and engrained in manufacturing.
- With the growth and reliance on technology, what becomes clear is that the need for connected manufacturing is absolute in order to move forward in modern manufacturing. This means manufacturing is no longer a disconnected ecosystem, at least it won’t be for those that thrive. The data we’ve collected provides a few insights: Technology must align with the workforce – Technology for technology’s sake is a science project, but technology that aligns to and helps the workforce with its objectives is key. IIoT is here and will continue to connect the manufacturing environment. The growth in IP-enabled or Bluetooth-enabled or connectivity enabled devices and equipment coupled with big data and analytics engines will provide both data capture and insight like never before. Manufacturing will become more connected than ever. And with big data, connected manufacturing offers something that has been elusive to many companies, and that is the plant floor driving big data creation. This makes manufacturing bottoms-up rather than top-down to a degree in that the data from actual production is shared and immediate decisions can be made. This also means that coupled with analytics, data can be produced and analyzed by humans or machines in real time vs. hours or days after the fact. Fourth, consumer mobility is influencing industry solutions. Mobility is no longer an afterthought, it’s just part of the ecosystem and the way business is conducted. Increasingly your business systems are fully accessible over mobile devices and, more importantly, your business can be controlled over mobile. The workforce is becoming increasingly untethered and so are your systems. The days of closed systems hidden within four walls is over. And finally, cloud is clearly the catalyst for manufacturers to leverage all of these capabilities – mobility, big data, IIoT. Legacy platforms are too closed and not flexible enough to adapt to modern software needs. Silo’d systems mean that the data accessed may or may not be representative of the entire enterprise, and it’s been proven near impossible to connect disparate systems, particularly when they have bolt-on after bolt-on included. And so with that as a backdrop, we looked next at what areas of technology companies are investing in.
- Where do you plan to make your next investment in technologies for manufacturing operations? In order they are in quality, smart connected tools, production planning, lean manufacturing and inventory management. Also some planned investment in supply chain, sales and operations planning and safety. When you look at the order here though, it creates a pretty good snapshot of what challenges manufacturers and how you’re addressing them. Quality is a differentiator, and so focusing on quality and managing of it is critical – not only in making quality products but in reducing waste and scrap and therefore cost from production, in order to secure margins. Those with engrained quality systems will be ahead of the game. Smart, connected tools and equipment is interesting and really points to the reality of Industrial Internet of Things, or IIoT and the connectivity of modern manufacturing. What IIoT means to manufacturers is the connectivity of devices and systems, really it’s what the industry is calling the 4th industrial revolution. These tools run the gamut from IP-enabled calipers and measurement devices to advanced scanners to plant floor equipment, all having the ability to gather and share data with one another, which forms a system where autonomous machine-to-machine decisions can be made. This results in rapid decisions and massive amounts of data that can be used to determine trends but also better inventory accuracy, and helps with machine maintenance and plant efficiency, eliminating many of the manual process errors that occur. Production planning obviously for aligning inventory and the supply chain to demands for high efficiency Lean manufacturing continues to be a key factor ensuring that waste is eliminated and that processes are created lean from the start And finally inventory management, as mentioned earlier, is crucial. No one wants unnecessary carrying costs or in the case of process manufacturers, expired products. So ensuring that inventory is fully accounted for and aligned to demand is imperative. All of these factors plus things like supply chain management lead to the conclusion that <advance slide>
- There are a number of challenges you’re seeing but this one definitely aligns to what manufacturers tell us. Naturally low-cost competition continues to exist, reinforcing the need for high efficiency, low waste and scrap costs to keep costs contained. Many are concerned about softness particularly in the US. But number one, and we hear this at customer engagements and every conference <advance> - we talk to people struggling to find the right resources. What this skill shortage indicates are two things: First, education systems really aren’t focused on skills training. So there is a shortage of young people entering the workforce with relevant manufacturing skills. That may not change. But second, and more importantly, manufacturing is fundamentally changing. Traditional skills are still important, but what the industry is seeing is an increase in the need for more data-heavy expertise like data analysts, and the need for systems to help with this.
- And so we looked at what skills are most in demand. Traditional engineering continues to represent a big piece of the skillsets needed Manufacturers also need people with lean manufacturing experience – people that have knowledge of and experience with improving quality, eliminating waste, reducing time, reducing total costs. But if we look at the top, manufacturers need plant-level and new IT skills. It’s pretty telling that as many manufacturers are looking for data analyst skills as they are mechanical engineering. And we believe we’re just at the tip of the iceberg. With IIoT and data communications still being at its relative infancy, manufacturing will continue to become a data-driven business.
- Let’s talk about big data. When we look at data, one way to think about what you’ve probably always done in collecting data to generate a report or dashboard is that you see what’s obvious, and maybe you see it a day, a week or a month after the activity occurred, especially in upper management where you get a periodic status report. And one of the problems is the lack of real time data bubbling up to the top. Oftentimes data is collected but not shared immediately. Only after multiple people spend time collating it does it reach decision-makers and by then perhaps you’ve been producing at lower margins because of higher scrap or waste, or perhaps your pricing was too low for what the market was paying. Prospects tell us this all the time. <Advance slide> What true data analysis does is uncover the things that aren’t apparent on the surface in order to quickly, in the best cases immediately, address and course correct. This could be anything from quality analysis to production machine analysis (are your machines functioning at optimal levels) to waste and scrap analysis to sales and customer analysis. What it takes for real analysis is a combination of people focused on it and systems that can drive it. Also, more deeply connected, communicating devices that generate more useful, more real-time and more actionable information.
- And so we go back to the need for data analysts and the growing big data initiatives. Nearly 40% of participants are in some form of active participation in big data initiatives. We expect this number to increase as more and more measurement tools become available and analytics become more powerful, and more user friendly. We also have some data about what are the most hyped terms and technologies, and big data’s hype rating decreased 50% from 2015 to 2016, which just illustrates that big data is just a reality now. We sometimes say “it’s just data now, there is no small data.” A key goal for any data analysis is to increase predictability and decrease risk. Not just understanding what happened, but starting to predict based both on patterns and algorithms what’s going to happen in order to avoid it. What’s interesting is when you look at industry numbers, those IT positions that are commanding the most compensation and therefore are the most in-demand and desirable are data analyst positions, not the traditional database administrator positions. Not at all to say database administration positions aren’t important, but what we see are manufacturers using cloud to manage what their technical resources used to manage – software and hardware maintenance – and pivoting those technical resources to high impact, high value projects for which there had been a gap, and those often require a focus on data analysis. In fact a recent third party survey showed that when customers go live with Plex, 93% of them use their resources that formerly managed ERP infrastructure to manage other key, strategic projects. It’s a win-win: Good new opportunities for people, and the companies themselves benefit as well in using internal resources to address strategic needs that they couldn’t afford to hire for because there is only so much budget for technical headcount. The combination, therefore, of advanced software systems and people using that data more effectively is really powerful. So these needs continue to grow and can provide serious ROI to the business, and we find that cloud provides a great opportunity to address these.
- We then looked at the tools available or becoming available to manufacturers, specifically smart tools that – for example – are connected to the network and provide IIoT connectivity. What we find is that manufacturers are indeed on the cutting-edge of connected devices that drive high data capture and sharing. Probably not a surprise to see the high number of hand scanners but even those are becoming mini-computers, and in fact some are full browser and app capable which allows users to access the entire ERP system. But look at consumer mobile devices – nearly 80%. Again, mobility is no longer an afterthought. It can’t be. Sensors at 50%, all of which generate data and communications. Even smart thermostats and lighting at almost 25%. We have a customer that uses smart lighting to visually gauge activity in certain parts of their plant, and also to conserve energy when those areas are not in use. Related to energy, we actually have some customers that are “lights out” manufacturers as well, running 24x7x365 capabilities (Polamer Precision), so using smart thermostats and lighting can bring down energy usage and costs. Bluetooth devices at almost 40% - Those include sensors, beacons and traditional headsets and communications, for example. IP-enabled tools and machines – companies using IP-enabled calipers and torque wrenches for immediate tolerance and spec measurements, but also increasing numbers of production machines sharing information at the manufacturing moment. That means stamping machines, vats and tanks all sharing pressure or temperature or other measures. This helps determine maintenance schedules but also action to be taken as the need dictates. It also promotes high automation and machine-to-machine learning and action. So IIoT in the context of these kinds of tools and communications is a very practical, real concept aided by inexpensive technology and real results.
- We looked at additional innovations to see where manufacturers were in their usage. Lots of consumer tablet usage and robotics usage. So high mobility, high automation. Really interesting to see that over a quarter of surveyed manufacturers are now using 3D printers. Looking into the future, our data shows that while only 1% of manufacturers use iBeacons today, 42% say they are likely to employ iBeacons in the future. We see a comparison here. When we look at 3D printers which were a bit of a stretch just a couple of years ago, they’re now being used quite a bit. We expect things like Beacons to follow the same path. As commoditization brings pricing down and availability goes up, these kinds of things become no brainers. Same parallel - Over 30% say they’ll employ smart glasses though only 1% are using them today. Looking at it another way, the “hype” factor – how over-hyped smart glasses are – is down 30% over last year. That means it’s making more sense to consider smart glasses, and manufacturers see more utility in using them. Almost 40% say they’ll employ or use smart watches. And beyond the hard data is the fact that manufacturers are using these technologies to address pragmatic, real needs. That’s really what’s important here – none of this is done just to do it, there have to be tangible results.
- One Plex customer, Polamer Precision, manufacturers in the highly standardized Aerospace & Defense space. Polamer developed several use cases for Microsoft Hololens and was selected as a pilot customer by Microsoft for Hololens in an industrial setting. Hololens if you’re not aware is a mixed-reality or augmented reality headset and set of smart glasses capable of layering instructions or images on top of what a viewer is actually seeing. Their first use case was using augmented reality for manufacturing cell layout – literally laying out a 3D model of where benches go, ensuring forklifts have room to operate, vs. using a 2D model. Polamer is now in the process of its second use case, which is using Hololens for plant managers to derive more information per cell or work area than Andon boards provide. By simply walking through the plant, work cell triggers indicate to the user that more in-depth information is available, and that person can use Hololens to dive down into that information housed in Plex. A third use case will be overlaying work instructions on certain parts so that users can see the required measurements or specs, understand next steps, etc. The idea with all use cases is taking error-prone manual processes out and making any process as efficient and automated as possible.
- We talked about mobility being a key component to modern manufacturing. As we see, Android and Apple devices are being used quite a bit. We highlight them here because those two in particular are showing 20% year over year growth – really significant. What’s important too is that this data surveys devices “provided” to employees – so employers know the value of mobility and creating an untethered workforce. And not just to be able to get a hold of someone, but to give that person system access and power on the go.
- And, again, mobility isn’t limited to phones and tablets. In fact ERP over mobile devices – whether these are laptops or handheld devices – should deliver access to the entire enterprise and enable a seamless work environment, from anywhere, for anyone. Plex customer Caltherm in a recent video pointed to the fact that right from their phone they can look at and move inventory between any facility. You see a photo of their materials manager with his phone in this picture, and you can see the full customer video on our website. What you also see in the market place are more and more vendors touting “mobility first” – meaning they’re thinking mobile applications and utility first before legacy deployment. They know mobility is becoming the norm, and they know they have to provide a fully immersive mobile experience. And so not a big surprise to see consumer mobile device usage growing in industrial settings.
- Cloud helps stabilize modern demand and supply chain management. Products used to be more standardized, have steady demand signals and standard supply chains. We now live in a world were demand is more variable, fickle consumer interests are driving shorter product cycles and an need to get products quicker This is forcing manufactures to have more nimble operations and better insight into what’s actually happening on their plant floors at any given time Customers have been using cloud to smooth out fluctuating customer demands – both in having better planning by centralizing customer demands rather than managing them in pockets, to giving supply chain partners access to the system to derive their plans based on your customers’ needs. In our survey, 64% of respondents say cloud has impacted their ability to address fluctuating customer demands. Many of our customers say they used to guess when it came to demand. With cloud, they have a consolidated view of customer demand and again their supply chain sees that demand as well and can better plan, eliminating inventory overages but also minimizing or eliminating stock-outs. 55% say the cloud has positively impacted their global supply chain management capabilities. So cloud is a better, more adaptable way to manage today’s business demands, having a single database and having full control – from anywhere – over business data, demand planning, enterprise production, and real-time inventory visibility and control.
- What we also see is the significant impact of cloud from a connectivity standpoint. All Plex customers are using the cloud as that is what we deliver – we don’t offer legacy on-premise solutions. In our survey, 93-98% of participants rated these cloud-delivered capabilities as critical to their business. Connectivity – one system with a single point of entry, not having to get the data from different databases. Cloud is the only way – to deliver continuous innovation. In fact Plex does it with versionless software – all customers are always current. Upgrades are eliminated, no one else is built this way. But the cloud is also the way to drive connectivity – using that single data model so that all effort goes toward one line of code; customers therefore sharing best practices and ideas that they’ve implemented through a vibrant customer community. Having a truly end-to-end solution rather than having disparate point solutions in different plants or parts of the business. That mess flattens out with an integrated cloud solution, where all capabilities are available to all users all the time. On a related note, the survey also asked what other cloud systems manufacturers were using and usage of other products like Workday and Dropbox increased and the number of customers not using any other cloud systems dropped by 50%. That demonstrates that once companies begin using cloud systems, and they don’t go back. Finally, cloud provides IT resource relief. It can focus on other projects besides managing SW and HW infrastructure, and can run lean.
- I want to end with a couple of more customer successes to illustrate how they’ve addressed their challenges. To the point of inventory, something very important to every company, Green Flash Brewing is a great example. With cloud they reduced inventory discrepancies by 96% and are now enjoying 99.7% inventory accuracy. And they’re doing that without having to deal with managing the software. The last part of their quote here really encapsulates the benefit of cloud for ERP – allowing you as manufacturers to focus on what you do best.
- In fact a great example of doing more with less and having lean IT is FloraCraft. FloraCraft is a Foam Product Manufacturer which makes products for craft, floral display and special events. They sell to places like Hobby Lobby, Michael’s and WalMart. Challenges FloraCraft had a shift in strategy to focus more on mass-market production, which tripled inventory and product lines They outgrew their technology infrastructure And their lead-times increased because of oversees manufacturing operations With customers like Michael’s, Hobby Lobby and Walmart - In fact in 2014 they were named WalMart’s Supplier of the Year over 60,000 suppliers so with their volumes even small percentage improvements are very meaningful. They stated that costs used to be best guesses, while they now have more accurate costing data, which allows them to do something extraordinary—pin costs down to one tenth of a cent!” Being able to scale efficiently – the ability to grow revenue 60% without increasing labor hours was huge. That saves an enormous amount of cost and keeps the company lean. They also increased fill rates which they attributed to having right-time data to course correct and data delivered from one source of truth. And they’ve done all of this, as the quote in the upper right demonstrates, with only two IT people. That’s incredible. Jim Scatena (left), President and CEO, FloraCraft Bill Hellwarth (right), VP of Sales, FloraCraft
- So what do we see on the road ahead – Manufacturing must become more connected and manufacturer expectations should move rightfully from having to manage disparate, poorly connected capabilities to better integrated capabilities. There will be an evolving workforce, in part because of natural evolution but in part because of new technology needs like data analysis. Those that plan for these resources and skill sets will be well positioned. IIoT and smart tools – Technology evolution is changing like never before, with the difference being the connectivity of everything and anything, plus the addition of intelligence in these connected devices. IIoT opens the reality of having much more information, much more automation and much more efficiency for those prepared to handle it. Mobility is tablestakes. It has to be. As the workforce and tools and equipment goes untethered, mobility will continue to be at the center of how things get done. And cloud. The industry has spoken and cloud has won. Every software vendor worth their salt is scrambling to move to the cloud, and every new service will be available in the cloud. Cloud is the way forward for all of the other things here – It is the best way to connect manufacturing (both users and systems); it is the best way to incorporate IIoT advancements across the enterprise; it is the best way to capture, share and use big data and therefore support the evolving workforce of tomorrow and with a single version of truth rather than a silo’d model, it is the best way to support a fully mobile environment. I want to thank you all for your participation and with that, we’ll take questions.