Regardless of whether you view Brexit as an opportunity or a threat, any economic hit must be taken into context when compared to the transformative effect that digital disruption is having.
Despite what you may have heard, British manufacturers are in good health. According to recent statistics from EEF, the UK is the world’s ninth largest manufacturing nation, responsible for 10% of total British output. Manufacturing also makes up 45% of UK exports, totalling £275bn.
Manufacturing provides huge value to the UK economy, and has the potential to solve many of our future challenges – economic, societal and environmental. Our businesses have the potential to provide solutions to wide-ranging long-term challenges and reap the commercial benefits of that.
However, this positive outlook has been muddied in recent years by various economic, political and social challenges at home and abroad. Brexit has been front of mind for many UK manufacturers since the public voted in favour of leaving the EU in 2016.
British manufacturers are understandably worried about a potential end to tariff-free trade, although others see opportunity to do more business in other markets in the US and China, for example.
However, any economic hit from Brexit must be taken into context when compared to the effect that digital disruption is having on the manufacturing world.
Technology and innovation through digital transformation must be our main focus as it’s the way British manufacturers can remain internationally competitive and relevant in a market which is rapidly being reshaped.
We must look at creating new value with their customers, whether that’s through new products, services or revenue streams. The benefits can be huge – whether through increases in productivity and efficiency, or the provision of better experiences.
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A strong digital foundation allows a business to accelerate without wholesale disruption, as well as provide the ability to respond to new opportunities and threats, whatever they may be. It unlocks new opportunities for investment, and even drives job creation.
We’re living in a time where constant connectivity is the norm, where major innovations in technologies are coming into maturity at the same time. Powered by the cloud, British manufacturers can integrate both the physical and virtual worlds to bring forth powerful new ways of working.
Big data & advanced analytics – it has always been important to manufacturers that they remove waste and variability in processes, increasing efficiency and productivity and in turn increasing the quality of products. Advanced analytics allows manufacturers to look at historic data, identify patterns and relationships, and optimise processes.
The Internet of Things (IoT) – sensors and real-time analytics has revolutionised the consumer world, but it’s in heavy industries like manufacturing where networked sensors and intelligence devices have already made a deep impact in transforming traditional supply chains into dynamic connected systems.
Artificial intelligence (AI) & automation – automation is already widely used in manufacturing – many businesses already incorporate industrial robots to assemble, test and package products. However, advances in AI may revolutionise the way manufacturers do business, enhancing and extending the capabilities of humans.
Blockchain – manufacturers already see blockchain as a technology which can create smarter and more secure supply chains, tracking the journey of products through clear and solid audit trails and real-time visibility. This can help ease compliance, traceability and safety pressures, as well as address efficiency and customer service issues.
What should British manufacturers do?
There are four specific areas British manufacturers need to focus on:
People – Although many news headlines focus on the effect Brexit may have on the numbers of EU workers coming to the UK for work, the bigger long-term issue is what digital manufacturing might do to the types of job that are needed in the future, particularly with an eye on automation and AI. Traditional manufacturing will certainly need to be augmented with programming and analytical skills, for example.
Software – The creation of software applications will drive digital manufacturing. This includes the use of modern ERP systems which can integrate all areas of a manufacturing business, such as inventory, sales and finance. With a single database, manufacturers can interpret data and provide insight in real time. This market is increasing, with cloud-based systems recognised as making manufacturers of all sizes agile, efficient and productive.
Hardware – Software is nothing without hardware, particularly in manufacturing where the physical and virtual worlds must integrate to create products. In digital manufacturing, there are numerous examples of hardware and software working in harmony, but 3D printing is a particularly interesting example of how materials can be joined or solidified to create objects under computer control.
Connectivity – Without connectivity through the cloud, digital manufacturing as it’s understood is simply not possible. There would be no Internet of Things, no interaction of devices, and no power source to drive innovation like steam and electricity did in the past. It offers manufacturers benefits such as short lead-times, on-demand production and mass customisation. It can make all manufacturers global players.
British manufacturers must not ‘wait and see’. They need to reach out and grab the opportunities that are there. The global competition won’t stay still – they’ll be forging their own path towards digital transformation and a new business landscape. We must prioritise our biggest challenges – and explore how technology fits into our own strategies.
Ted Mellor, Senior Manager – Manufacturing, Sage Enterprise Management