Manufacturing a technology revolution

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Juan Pablo Madiedo is an MBA Student at Durham University

What prevents manufacturing companies from investing in and innovating through technology? Juan Pablo Madiedo, who recently completed an MBA research placement with Digital Catapult Centre North East & Tees Valley, discusses the appetite for innovation amongst the sector, the common challenges they face and what role organisations like Digital Catapult play in helping the sector utilise emerging technologies.

Manufacturers today are facing many challenges derived from fluctuating customer needs, suppliers, competitors, governments and other different stakeholders. The world is undergoing a digital transformation in response to the increasing connectivity between business, machines and people.

As part of my research placement at Digital Catapult Centre North East & Tees Valley, I wanted to find out what competitive challenges manufacturing companies were facing and what barriers prevented them from innovating through technology.

One of the immediate learnings from talking to manufacturers is that the issues facing business in the North East of England are typical of the sector in general. Among the consulted organisations there were a variety of issues discussed; however two main barriers and one challenge were common throughout.

The main challenge is related with the fourth industrial revolution and the Internet of Things; how companies can be competitive and profitable within an environment, where information has to flow smoothly through the supply chain when it is coming from a vast array of sources. From the very first supplier to the final customer, manufacturing organisations need to react quickly to any change in variables that affect their businesses.

These variables could be a strong fluctuation of customer demand, a shortage of a raw materials, new government regulations, the launching of a new product by their competitors or other factors that affect not only the company but any of its stakeholders. The challenge lies in being able to collect the data from anywhere in the supply chain, analyse it and then use it to inform decision making.

Once the whole supply chain is connected, all stakeholders are going to be able to identify factors, the flow of inventory (raw materials, parts and finished goods) and cycle times as it happens. As a result, real-time monitoring will help manufacturing companies reduce inventory costs, identify and resolve issues even before they happen; enabling them to react quickly to a variation in demand. Additionally, suppliers will replenish stock more accurately because of the acquired visibility of demand. Best of all is that this is just one example of the derived benefits.

Manufacturing companies need to build strong but flexible supply chains that are easily adaptable and capable of reacting to fluctuation and change. This is where innovation plays an important role. Through innovation, organisations can implement new ideas and generate value through its supply chain. This may lead to the creation of a new service, system or process.

However, for many manufacturers, this is when barriers appear.

First of all, the limited amount of financial and human resources restrict the interest organisations may have in undertaking technology-based innovation projects. It is more common for companies to invest their efforts in everyday activities, rather than trying to create new ways of doing things without being certain of the outcomes.

Once companies overcome this fear of change and are willing to improve processes, a second barrier appears – the lack of understanding of the technology’s potential. Most people inside the organisations simply may not know of or understand what tools are available, or are able to be created, to improve their processes. Companies may only able to see what their knowledge allows them to see, and as a result they are unaware of all the tools, uses and benefits technological innovation could bring to them and their companies. A very simplified analogy is how some people keep doing their shopping list using a pen and paper – just because they are unaware of the countless mobile apps that help them carry out the task more easily.

Here is where organisations like Digital Catapult and other change initiators could make a big difference to not only individual companies, but the productivity and competitiveness of the sector as a whole in the UK.

Digital Catapult Centre NE&TV is currently focusing on how they can help manufacturing companies to overcome these barriers and innovate through new technology. They do this by understanding businesses’ current challenges and engaging with innovative tech companies to educate and demonstrate how new and emerging technologies can be utilised across the sector.

In the case of the challenge area discussed, there is a big opportunity to educate manufacturing companies in how they can enter into the fourth industrial revolution; interconnecting their supply chains through IoT and gathering information to inform processes and decision making.

What do you think? In what ways can organisations such as Digital Catapult support the manufacturing sector and help utilise technological innovation?

Juan Pablo Madiedo recently completed an MBA research placement with Digital Catapult Centre North East & Tees Valley. For more news, you can follow them on Twitter @DigiCatNETV. Don’t forget to follow us too @DigiCatapult

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