The manufacturing sector is on the cusp of the fourth industrial revolution, ushering in new technologies and techniques that will change the products, processes and relationships involved in every aspect of industry.
While the sector has hit a period of uncertainty following the outcome of the European Union referendum, faced with this pace of change happening globally, it cannot afford to stand still if it is going to deliver greater value to customers, improve productivity and remain competitive on the world stage. In Europe, Germany (Industrie 4.0), France (Industrie du Futur), Sweden (Produktion 2030) and Italy (Fabbrica Intelligente) are all actively taking an interest. The EU is also spearheading a series of work streams with the aim of incentivising bottom-up activities under the guise of its Digitising European Industry programme.
But what do manufacturers in the UK make of this transformation? Transformation is crucial for the sector. More than four fifths say they will have to invest in new technology to meet customer expectations, while three quarters say it will fundamentally change the expectations their customers will have from them. Both of these will have a major impact on the skills we will need from our current and future workforce.
Manufacturers view the core to all this as being about connectivity, using real-time information flow to discover new insights from data and acting upon those insights quickly to create value through new products and processes.
In the real world this is impacting on everything from the ability to analyse data on the performance of individual jet engine blades to improve performance, automotive manufacturing cells in car plants talking directly to their suppliers to order components, to the ability of domestic boilers to call automatically for service in the event of a malfunction.
According to manufacturers, the pace of change to produce these outcomes will be a three step process, through conceptualising the realm of possibility from a unique business context, to optimising or evolving existing processes before a revolution is ushered in with business models changing fundamentally.
There are many different benefits to this transformation. In the short term, the focus will be improved operational efficiency through better use of capital, workers and resources. Over the medium term, the transformation will unlock new products, services and business models that will allow value to be added and captured in different ways.
Debates rage about what the benefits in the future may be, but they will include a move towards an autonomous, pull economy with end-to-end autonomous decision- making by machines, continuous demand-sensing and more optimised use of resources. This does not mean, however, that robots and autonomous machines will replace people as some fear.
But as always there is a global race to get ahead. Government has a role to enable this transformation to take place and the recent Made Smarter Review, which works as a partnership with industry, was a major step forward. It identifies policy interventions and support mechanisms that will encourage advanced manufacturing and broader industry in the UK to invest more in digital technologies, and drive faster innovation and automation of industrial processes.
At the same time there is a wider economic and societal imperative for doing this. It isn’t just about numbers, processes and investment strategies. If we get this right, there is a massive prize in creating a key lever and cure for the UK economy, with opportunities for many new, highly skilled and well-paid jobs, giving more people in our economy the chance to feel less like they are being left behind.
Stephen Phipson's column was featured in the Times Raconteur supplement on 7th March 2018.