October 22, 2019

Four Steps to Get Started on the Smart Manufacturing Path

By Jonathan Shoop, Partner, Assurance Services and David Moon, Solutions Consultant, Hitachi Vantara

Four Steps to Get Started on the Smart Manufacturing Path Advisory

If you own or operate a manufacturing business, here are some realities you should consider:

  • Smart manufacturing technologies are byproducts of the fourth wave of the industrial revolution (aka, Industry 4.0), which began recently and now is in full swing.
  • Such technologies, and the broader business strategies that underlie them, can position your manufacturing business for growth and profitability in the short and long term.
  • Not only can these technologies position your business moving forward…they must do so, for you cannot wait to think about or act on implementing smart manufacturing.
  • It’s likely you don’t understand much about smart manufacturing as you read this, and from an implementation standpoint, it’s even likelier you don’t know where to start. Consequently, your most significant business opportunity is also your biggest business challenge.

Don’t fret—you’re not alone. Manufacturers around the globe are struggling to identify and explain the business benefits around smart manufacturing. With thousands of solutions providers, an equal number of solutions and numerous variations in manufacturing, it’s no wonder everyone is confused. Experts can’t even seem to agree on a name (e.g., smart manufacturing, Industrial Internet of Things (IIoT), digital manufacturing, intelligent manufacturing).

One thing that’s beyond dispute is the extent to which today’s manufacturing businesses are investing in this evolving arena. According to the IDC 2019 Worldwide Semiannual Internet of Things Spending Guide, overall smart manufacturing spending reached $197 billion in 2019.

Chances are, competitors around the corner and around the globe are making substantial investments in smart manufacturing. Those investments likely necessitate up-front costs, but they yield operational savings which, in turn, could enable companies to lower their prices and potentially undercut you in the market. More and more, we’re seeing examples of this across the manufacturing spectrum. If your business hasn’t yet gotten on board with smart manufacturing, you’re quite literally running the risk of not surviving into the future.

So where to start? Consider four steps:

  1. Understand the landscape. Generally speaking, smart manufacturing strategies and applications are categorized within three primary silos:
    • Automation (e.g., robotics, augmented reality, virtual reality)
    • The internet of things (IoT)
    • Predictive analytics that leverages vast amounts of data inside and outside your business.

Knowing what sorts of technologies, applications and resources exist in each silo provides a baseline of understanding which, in turn, can help companies strategize and plan.

  1. Approach smart manufacturing from a business mind-set—not a technology mind-set. In our work with manufacturing companies of all sizes and scopes, we encounter several common challenges, including:
    • Quality issues that necessitate writing off scrap or reworking products—any and all of which adversely impact the bottom line
    • Efficiency barriers that inhibit maximum production
    • Safety issues which not only endanger employees but also can lead to insurance claims

Whether your business faces these challenges or others, we recommend identifying them up front, then working with highly qualified people in the smart manufacturing space who can recommend and deploy appropriate technologies and applications.

  1. Put a strategy in place. Manufacturing consultants like us are trained to convene stakeholders with an eye toward soliciting insights and identifying business challenges (as mentioned earlier). Then, we’ll physically walk through the plant from an operational perspective. From there, we analyze the information we collect, prioritize the top use cases based on expected ROI and tie a smart solution to that challenge.
  2. Make investments during good times, not bad. In our 2019 Survey of Northeast Ohio Manufacturing and Distribution, companies reported increased revenues and workforce numbers, which signaled widespread optimism among respondents. Productive and profitable periods like today are ideal times to make necessary investments in smart manufacturing applications and technologies. During down periods, many manufacturing companies simply don’t have the cash resources necessary. As a result, they risk falling further behind, which makes catching up even tougher.

One final note about smart manufacturing investments. Owing to the crowded marketplace and the plethora of smart technologies available to manufacturers, many business owners we speak with are simply overwhelmed and fear that embracing smart manufacturing means taking on large, enterprise-wide projects that could necessitate downtime and expensive retooling. In the case of Hitachi Vantara, our average project duration is a few weeks, and in nearly every case, there’s no downtime incurred. Often, improvements or enhancements to machines are implemented during off hours with minimal impact on productivity. Meanwhile, the average return on investment (ROI) for many projects undertaken by Hitachi Vantara is as little as three to six months.

Whatever your business goals may be, now is the time to take steps down this path of immense opportunity. With opportunity comes risk, however, so the road you travel need not be traveled alone. Do your research up front, and before devising plans or making actual investments, talk to advisors who really understand the smart manufacturing ecosystem and can help you navigate it with strategy and precision.

David Moon is a solutions consultant, Midwest division with Hitachi Vantara. He can be reached at 440-853-0050 or [email protected].

Jon Shoop, CPA, is a partner with Marcum and leads the firm’s Manufacturing and Distribution Group. He can be reached at (216) 242-0820 or [email protected].

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