IFS CEO, Alastair Sorbie, explains the role technology will have in the continued growth of the UK manufacturing industry.
This June’s Markit/CIPS UK manufacturing PMI survey found that British manufacturers enjoyed a stronger than expected rebound in business in May, fuelling hopes that the sector will boost overall economic growth this quarter. Manufacturing activity grew at its fastest for more than a year as both new orders and output picked up pace.
This is in large part due to the fact that more businesses are bringing their manufacturing operations back to the UK – or Nearshoring – as oil and freight costs, combined with dramatic wage inflation, make the Far East a less attractive option for companies looking to save money.
We started to witness this trend in 2012, with a number of companies becoming disenchanted with off-shore operations and looking locally for manufacturing and other supply-chain partners. The UK’s large pool of labour and low wage inflation was a big attraction.
The reshaping of the UK manufacturing industry
However, the nearshoring movement does not herald a revival of the traditional manufacturing model in the UK. The industry has long been associated with rigid terms like ‘assemble to order’, ‘make to order’ and ‘configure to order’, which is reflective of the high volume production involved. However, when it comes down to pure production, western manufacturers just cannot compete with the Far East on cost.
To retain relevance, the UK manufacturing sector must instead target the many businesses that are looking to capitalise on cloud computing and the internet of things, creating a new generation of intelligent objects. This will require lower volume runs of bespoke products, meaning that ‘individualise to order’ is a term that will gain prominence in the sector. This new approach is being referred to by the somewhat portentous term of ‘Industry 4.0’ – placing it on a par with the steam, electrical and computer revolutions in industry. While we’ll have to see whether or not this breathless buzzword gains common currency, it cannot be denied that this trend will force manufactures to rethink their business models and the technology that underpins them.
While this new model of manufacturing will reduce profit margins on manufacturing runs, it brings with it new revenue opportunities in the service layer. This will be one of the major trends shaping the manufacturing industry in the coming years, with service management and after-sales support adding new revenue streams to manufacturing businesses.
The trend towards ‘intelligent items’ is all about managing the end-to-end lifecycle of a product using sensor data to manage maintenance and upgrades once the product has gone into the field. Additionally, this data will feed into future product design as well as helping to optimise production processes. Rigid production lines will be transformed into modular, efficient systems where the entire lifecycle of a product is documented in full.
Agile technology will be the enabler
The smart use of technology will underpin this reshaping of the UK manufacturing industry. Greater controls will be required to manage costs, build bespoke solutions and handle multiple configurations. Agile IT systems will be fundamental in enabling this new project-based and tailored approach to manufacturing.
Enterprise applications that have been developed to support business agility will enable transition to this project-based mentality. For example, applications that can be deployed quickly, offered “as-a-service” and provide real-time feedback help support this customisable form of manufacturing. Applications that run on mobile devices will also be critical, giving speedy access to IT systems and related business functions anywhere, anytime.
Of course, for this new manufacturing model to be embraced effectively, project management is crucial. Flexible IT systems must be in place to support this approach so that the product that is being manufactured, along with the relevant supply chain, can be seamlessly tracked and managed in real-time.
As a result we will see more businesses building collaborative networks and developing specialist skills, supported by smart factories and intelligent machines, helping the UK to continue its revival as a manufacturing base.