The Key Investments Driving Manufacturing Digital

October 10, 2017 at 11:11 AMChad Moulder

 In this week's blog, we look at the four most popular sectors for manufacturing investment as projected by Erich Hoch, Executive VP and CEO of Jabil Digital Solutions. In it, we look at the potential transformation one might hope for in manufacturing.

Whether one wants to admit it or not, the Digital Age is upon us. With seemingly daily breakthroughs, the pace of technology is quickly replacing many facets of the average person's life, mostly without them even noticing it. Not long ago (2014, to be semi-exact), the manufacturing community was certainly snickering (if not laughing outright) as the German government predicted that the 4th Industrial Revolution was upon us. Well in just the three short years since that proclamation, the truth of it can no longer be denied.

The explosion and confluence of virtual/augmented reality, machine learning, and the Internet of Things has fundamentally changed the perception that the hay day of manufacturing is long since past. So what are some of the key areas that are seeing an increase in attention and funding within the next few years?

Business Intelligence

These terms may seem like buzzwords at first glance, but they are the true drivers of the digital transformation. The only proprietary information you have in your arsenal that’s unique to your organization is data. But data is only valuable if it’s put to use, which means it’s important to:

    • Convert your raw data into actionable information that will allow you to move quickly
    • Use it to deliver better results, better solutions and better experiences.

It is easy to get lost in all the data your business collects. But once you determine clear goals and objectives, it is easier to locate what is useful to you. Investments in your business intelligence will no doubt bring the benefits of agility, which can’t be replicated.

Transforming Manufacturing Operations

Here’s the conundrum: Manufacturers need to become more agile in how they respond to changing customer demands in a complex, global supply chain. To do just that, they must embrace new technologies that will vastly improve their operations.

With thousands of sensors monitoring every aspect of every process in real-time and communicating with self-optimized deep learning robots, product volume and customization can soar to altogether new heights.

Changes in the landscape are causing manufacturers to seek more visibility into their supply chains so they can cope with demands for tighter production cycles, and deliver high quality products that are growing smaller and more technically challenging while doing it all at a competitive cost.

Integrating New and Existing Systems

Information Technology is the backbone that allows the connectivity that you need to connect customers, suppliers, devices and employees and allow them to communicate, collaborate and work effectively. It’s the network and central nervous system of what’s going on. The IoT has opened the flood gates with information and data that can be used to help companies in their decision making.

The reality is – no digital transformation can occur without this foundation. You may have been able to get by with disparate systems all this time, but you can’t rely on yesterday’s integration approaches to go through a digital transformation.

To reinvent your business for today’s world, your business platform is key.

Internet of Things and Product Connectivity

The IoT is drastically changing the way products and services are developed, sold and consumed. Connected solutions are capturing the attention of a C-Suite wanting to differentiate offerings and value-add in new ways.

IoT enables companies to capture and analyze new tapes of data, fast. With the market in growth mode, it’s the right time for companies to understand how more data can provide more value.

The potential for new revenue streams are available thanks to IoT – through high-volume data storage, real-time analytics and cloud computing. IoT analytics are redefining how companies develop and manufacture products and interact with their customers. But once again, this is all possible only if you’re able to collect useful data and make sense out of it.

The truth is, IoT will touch multiple areas of your business. Here are just a few considerations to help you consider the impact:

    • How you gather data and analyze customer-generated information
    • How you revamp business processes
    • How products are developed
    • How you interact with customers
    • How products are purchased
    • How data will direct new product development
    • How products are manufactured
    • How products are serviced

When investments are made and transformative technologies are adopted, we’ll have dynamic, new business models and digital enterprises where companies are empowered through agility.

It is concerning, however, that only 23 percent of manufacturing companies have a corporate-wide strategy for their digital transformation, per the Jabil survey. It’s an important reminder that digital transformation takes a village. A single individual or department alone can’t accomplish it.

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For GE Artificial Intelligence is the Future of Innovation

September 25, 2017 at 4:10 PMChad Moulder

Power Line Sunrise

This week, the blog takes a look at recent developments in the world of artificial intelligence, specifically as it applies to the aging infrastructure of the United States and how General Electric Co. plans to tackle it.

For General Electric, Artificial Intelligence is the Future of Innovation

General Electric Co. (GE) is betting big that artificial intelligence will be the key to unlocking future profits. GE has been betting big in recent months on the flexibility and power of machine learning to tackle a number of different projects from healthcare to computing and it looks like that bet may have just paid off.

Last week, GE announced that with the help of artificial intelligence, they have discovered a new approach to managing electricity in a power grid. General Electric Co. expects the new technology to save the global economy more than $200 billion dollars with implementation and adoption. The tech works by optimizing and managing the flow of electricity into and out of storage devices such as batteries and consumption access points in real time, a feat that has eluded researchers for decades. The hope from GE is that this tech will help aging electrical infrastructure which has always been plagued with inefficiencies (this scene from Chris Nolan's The Prestige always comes to mind).

The announcement marks the beginning of a new age for manufacturers. Researchers from around the world are confident that the way forward will be with artificial intelligence. "We're also putting a lot into the machine learning side, a lot. We have a lot of people working on this." says GE chief digital officer Steven Martin. Martin goes further to suggest that General Electric is looking at applying this technology to a variety of services and industries.

There are still many hurdles to overcome before artificial intelligence can be thought of as a legitimate development or management tool. One of the largest and most glaring is the the basic need for AI to be platform agnostic. One needs only to look to the differences between iOS and Android applications to see why this would be an important barrier to breach. Standardization will very likely become a necessity in the coming years, but questions abound. 

General Electric's electrical grid project offers a tantalizing glimpse into the future and is inspiring new and old companies alike to jump headfirst into autonomous solutions within their market, so it is safe to say that the future looks bright for AI. By conservative accounts, we could see the first major financial impact of artificial intelligence on the US economy by 2020. And the most interesting thing is that it is not a given what that will take the form of, but with autonomous cars and AI driven analytics alone expected to comprise more than $153 billion dollars, the sky seems to be the limit for earning and innovation.

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Is It Time to Subsidize Manufacturing?

September 18, 2017 at 8:53 AMChad Moulder

Manufacturing Plant

In 2009, the government of the United States bailed out two of America's largest automakers with a loan of around $80 billion dollars and avoided negatively impacting more than one and a half million manufacturing jobs. With more than $70.5 billion repaid already, that works out to be an incredibly efficient sixty-two hundred dollars per worker a fraction of the amount given to Wall Street (roughly $700 million). 

In August, billionaire head of Foxconn Electronics, Tony Gou announced that his company would build a $10 billion dollar manufacturing facility in Wisconsin. Promising more than three thousand employees when if it opens and another ten thousand at full operation, the deal seemed like a dream come true for many looking for evidence that manufacturing in America can return to it's pre-automation roots. Unfortunately, this deal seems (at best) a temporary solution to something that the public has been largely reticent to admit: robots and automation are killing traditional manufacturing jobs. It is unlikely that this plant will ever get to the thirteen thousand employees it has promised to bring to the state of Wisconsin and even if it manages to hire the majority of those people, most analysts agree that with the speed at which robots are replacing line workers, it is more likely that this deal will end up costing the state (and the federal government that brokered the deal) a great deal in the long run.

PHOTO CREDIT: The Cap Times

“...because Wisconsin already waives almost all taxes on manufacturing profits in the state, these incentives represent not a lost opportunity at collecting revenue but an obligation to pay cash.” - Milwaukee Journal Sentinel

With the ink on the agreement barely dry, many have begun to try to discern the true cost of deal. At a little over $3 billion dollars in incentives, subsidies, and grants many have likened it to a corporate welfare package. The deal would conservatively cost already cash-strapped Wisconsin an additional $200 million a year for the next fifteen and would require local and state governments to borrow an additional $252 million just to cover the cost to rebuild a highway and more than $150 million to subsidize building materials for the new facility. So what happens if Foxconn pulls out of the deal or only partially lives up to some of the promises it has made? 

The reason for the suspicion grows from Foxconn's record in the US. In 2013, they announced a $30 million dollar high-tech plant in Pennsylvania that has yet to materialize. And in 2014, Gou had promised to invest a billion dollars in tech manufacturing in Indonesia which that company still has not received. If one looks at these past failings in addition to the fact that the company had already replaced more than 60,000 worker with robots in its manufacturers with plans to replace more in the future. 

And this deal isn't exactly unique. As more and more politicians look for a quick feather to put in their cap before the 2018 election season really heats up, many communities are finding themselves actively pursuing manufacturing companies like Foxconn in the hopes that a quick deal will buy them time enough to pursue other industries. The problem is that administrations, policies and politics can change from day to day leaving a worrying mess for the "next guy."

PHOT CREDIT: General Motors

“The false premise that manufacturing is a free-market activity—that subsidies don’t exist or are inconsequential—should finally be put to rest, no one anywhere in the world makes steel or autos or virtually anything else in a factory without subsidies." - Louis Uchitelle, Making It

In recent years, lawmakers have seemingly come together to recognize that American manufacturing may be in need of some help. In 2012, the Obama administration pushed state and federal bodies to increase their support of domestic manufacturing and has been widely hailed by economists for keeping many companies afloat during the worst recession in US history. As globalization increasingly means that almost nothing made in the US can't be manufactured and shipped here from another country (like Mexico, for example), this kind of government involvement plays a huge part in their success.

With those manufacturing jobs goes innovations and processes that can be used to make other discoveries and improvements to design and function. By strengthening American manufacturing with carefully subsidized programs, it's not inconceivable that domestically sourced manufacturing could improve the US' already strong market share and could, with careful planning and strategy even rival Chinese manufacturing for global dominance. The biggest issue is that it has to be a coordinated, national effort. Local communities and states do a great job of wooing businesses to their locales, but nothing speaks quite like the almighty Dollar so it will take an effort by Washington to see this come to pass any time soon. 

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Inconsistent Manufacturing Suspected Cause of Homer-Happy MLB Season

August 15, 2017 at 12:47 PMChad Moulder

Night Game

Inconsistent Manufacturing Suspected Cause of Homer-Happy MLB Season

Without a doubt, the 2017 Major League Baseball season has been one for the record books. Currently, the leagues is poised to shatter the average home runs per game average of 1.17 by almost a tenth of a point (MLB average stands at 1.26 home runs per game at the moment). What this means is that if the league continues this pace, they will effectively destroy the previous single season home run record from 2000 by an impressively mystifying 350 additional homers (roughly 6400 homeruns). And although layman's logic would point towards advances in science or athlete training as the culprit, what many researchers are now finding is almost equally amazing: the baseballs themselves are at least partially responsible for the increase and it's due to inconsistent manufacturing.

Baseball-Reference.com via 538

The baseball wasn't initially expected as the source behind the recent spate of homers in the Major League. Last year, Ben Lindbergh and Rob Arthur began looking at the data to understand the sudden spike in home runs around the league. Beginning in the '09 season, the average runs per game inning to decline, from 4.7 runs per inning in '08 and eventually falling to 3.9 by the end of 2014. Something strange was happening in 2014, however. At the end of the season and into the postseason, teams that were still alive saw their runs spike from 4.06 at the beginning of the season to an average of 4.25 by the end of the season. Then in 2015, things got more interesting.

Pitcher on the Mound

Initially, 2010 was thought to be the "Year of the Pitcher", with many observers and commentators praising the explosion of talent at the mound for producing runs at a much lower rate than they had in any full season prior to 2010. So when the 2010 season kicked off and we witnessed an explosion of home runs that couldn't be attributed to anything like an increased strike zone or increased percentage of contact (at-bats minus strikeouts). What turned out to be the actual cause would take insiders and observers almost four more years to understand.

The culprit, as it turns out, was the ball itself. In June, Mitchel Lichtman and Ben Lindbergh started studying the official game ball in an attempt to understand what may be contributing to the spike in homers. Through experimentation on more than three dozen baseballs, they found what they had begun to suspect: the baseballs from 2015 were "bouncier" than previously. As they continued to look at historically used game balls and evaluate newer game balls, they noticed that the physical makeup of the ball had seemingly changed. The new balls were now smoother and the seams smaller, subjecting the ball to less air resistance. Additionally, the team found that the balls had begun to become "harder" providing for a better energy return when struck with a bat. The "problem" was that there was no announcement of changes being made to the official ball. 

The MLB for their part have denied that any such changes were made to the official game ball and that all materials currently in use are identical to previous generations. They also note that all game balls must fall within the league standard, which may have been left purposely wide so as to retain some unpredictability to the game. Anecdotally, players and coaches also seem to believe that a change has been made to the ball. In a recent interview with the Orange County Register, New York Mets manager Terry Collins said "The seams of the ball are definitely lower...and there is no question that the ball is harder." His voice joins that of Jake Arrieta ("I'll get a ball hit back that is oblong shaped and that never happened until this year"), Andrew McCutchen and pitcher Justin Verlander who have all mentioned changes to the official ball in recent months.

So what does this have to do with inventory solutions? Well in a nutshell, this is a pretty low-stakes example of the importance of consistency in your products. Small changes can have large impacts and in other cases could open your business up to unwelcome or unexpected attention. Having solid, reliable, and well-documented bills of material and assembly instructions could mean a world of difference and might help as a source of information if you are just now beginning to establish standardization across your products. 

What the moneyball data seems to suggest now is that after years of fluctuation, the performance of game balls is beginning to become consistent. By evaluating the standard of deviation in drag over the last few years, the trend is that the balls used across the league have become much more homogenous in their performance. One could suppose that with the league disavowing any knowledge of changes to the ball or the standards by which they are evaluated, the entire incident could be chalked up to a decade-long trend to bring standardization to baseball with an acceleration within the past two years pointing towards a game ball that would perform predictably game after game. 

And for those that are curious, here's a video from How It's Made detailing the process:

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Interesting Trends in the Food and Beverage Industry

July 13, 2017 at 8:10 AMChad Moulder

Interesting trends in the Food and Beverage Industry

This week, we take a look at some emerging trends that have begun affecting the Food and Beverage industry. Ranging from packaging to promotion, these are some of the most interesting trends in the industry today.

 

1. Targeting Millennials: While Millennials may seem like a broad and amorphous target, numerous studies show there are some commonalities. Millennials like fresh, less processed foods, as demonstrated by their preference for "fast casual restaurants that offer freshly prepared foods, and shopping the perimeter of grocery stores where fresh and non-packaged foods can be found".


2. Smaller Packages are a Big Trend in Packaging: With one- or two-person households representing 61% of all U.S. households, packages sized to serve one or two people have become a big trend in packaging. Such formats include single-serve packaging, meals for two, multi-packs of individual portions, and resealable packaging. The rise in smaller-footprint stores is also influencing this trend.


3. Packaging for Convenience: Convenience is a major selling point for food and beverage packaging. Features such as ease of opening, resealability, portability, lighter weight, and no-mess dispensing are packaging benefits that influence consumers' purchasing decisions positively.


4. See-Thru Packaging Can Boost Sales: More and more marketers are putting their products in packages that are see-thru or have see-thru windows. Transparency in packaging taps into consumer desire for transparency about how food and beverages are produced, both figuratively and literally. Companies that are transparent about their ingredients, sourcing, and business practices are reaping the benefits in consumer goodwill and trust.


Eco Friendly Packaging Illustration5. Eco-Friendly Packaging Growing: In the past few years, single-serve bottled water has come under attack by environmentalists as epitomizing the wasteful nature of modern society. As a result, some marketers of bottled water have stepped up their introductions of more sustainable packaging. Likewise,  Packaged Facts believes that improved recyclability and sustainability will become ever more important to the success of the single-cup brew market—if not a cost of entry—as this business matures. In the past two years, several American and Canadian marketers have introduced more environmentally friendly designs for use in K-Cup brewers

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Five More Surprising Facts About Manufacturing

July 13, 2017 at 8:06 AMChad Moulder

5 Surprising facts about Manufacturing

Last week we looked at some of the impact that the Manufacturing industry had on the US economy, this week we look  at some additional facts that you may not have considered. American manufacturing has long been the backbone of US prosperity, but with the rise in automation and advances in efficiency and practices, some may be wondering if it still deserves that distinction. In this week's blog we look at 5 surprising facts about the state of manufacturing.

 

1.The manufacturing industry employs more than 12.3 million Americans, accounting for about 9% of the total workforce. Since the end of the Great Recession, manufacturers have hired more than 800,000 workers. There are 7.7 million and 4.6 million workers in durable and nondurable goods manufacturing, respectively. (Source: Bureau of Labor Statistics)

2. Manufacturers have become more competitive globally over the past two decades. Overall the manufacturing industry has seen a revolution in efficiencyOutput per hour for all workers in the manufacturing sector has increased by more than 2.5 times since 1987. In contrast, productivity is roughly 1.7 times greater for all nonfarm businesses. Note that durable goods manufacturers have seen even greater growth, almost tripling its labor productivity over that time frame.

To help illustrate the impact to the bottom line of this growth, unit labor costs in the manufacturing sector have fallen 8.4 percent since the end of the Great Recession, with even larger declines for durable goods firms. (Source: Bureau of Labor Statistics, Board of Governors of the Federal Reserve System

3. Over the past 25 years, U.S.-manufactured goods exports have quadrupled. In 1990, for example, U.S. manufacturers exported $329.5 billion in goods. By 2000, that number had more than doubled to $708.0 billion. In 2014, it reached an all-time high, for the fifth consecutive year, of $1.403 trillion, despite slowing global growth. With that said, a number of economic headwinds have dampened export demand since then, with U.S.-manufactured goods exports down 6.1 percent in 2015 to $1.317 trillion. (Source: National Association of Manufacturers

4. For every $1 spent in manufacturing, $1.81 is added to the US economy. This is the greatest multiplier effect of any economic sector. Additionally, for every worker in manufacturing, another four are hired elsewhere. (NAM calculations using economic impact modeling)

5. The cost of federal regulations fall disproportionately on manufacturers, particularly those that are smaller.Manufacturers pay $19,564 per employee on average to comply with federal regulations, or nearly double the $9,991 per employee costs borne by all firms as a whole. In addition, small manufacturers with less than 50 employees spend 2.5 times the amount of large manufacturers. Environmental regulations account for 90 percent of the difference in compliance costs between manufacturers and the average firm. (Source: Crain and Crain (2014))

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It Might Be Time to Get Excited About The Internet of Things

July 10, 2017 at 9:00 AMChad Moulder

The Internet of Things Illustration

The Internet of Things

 

This week, we take a look at the Internet of Things, a buzz-y phrase that is getting more and more attention as the nation and the world move towards a truly digital future.

 

Let’s talk about the future.

 

The most popular definition of the Internet of Things (IoT) is that it is a network of connected devices that operate with a binary connection (on/off) to the Internet. This can include a variety of “things” from cell phones and wearables to the components that comprise them. It can also include other less obvious “things” like virtual items, information or even people. But why should you or your company be thinking about the Internet of Things?

 

Technology research company Gartner recently estimated that by 2020 there will be more than 26 billion devices connected to the Internet. Some analysts even suspect that number to be much closer to 100 billion devices or roughly 12 internet-capable devices per person in just a couple of years. Essentially anything that can be connected to the Internet will be connected very soon. Companies that are looking to improve customer satisfaction, operational efficiencies, and product or service quality should certainly be looking at IoT as a way to address them.

 

Unfortunately, many industries are currently struggling to find a point of access as processing such large amounts of raw data and attempting to create systems that rely upon this connectivity remains one of the most difficult barriers to overcome. Despite these growing pains, I can assure you that it is no longer a question of if but more a question of when large companies begin to integrate IoT into their business models.

 

One of the first industries to adopt IoT on a large scale has been in manufacturing. As many consumers look to curb capital expenses and replace them with operational expenditures, the IoT allows for a more seamless and efficient source of revenue for many businesses. IoT devices also have the benefit of improving the end-user experience which in turn increases customer loyalty and driving sales.

 

In a broader sense, we may begin to see how the IoT might become useful on different scales. Applications and devices could be used on scales large enough to manage traffic or parking. Smaller applications might be to have your refrigerator monitor what foods you have, their expiration dates or the ability to compile shopping lists or recipes based on that information. Although still very early in its current use and adoption, the Internet of Things will most certainly prove itself to be a game changer in ways that aren’t immediately clear.

 

As more consumers begin to move towards cutting capital spending and increasing operational expenditures, businesses may find that early adoption can lead directly to a more seamless and efficient source of revenue. Although it will still take some time to fully realize the potential of IoT, companies that figure out how to collect, process and analyze the vast amounts of information may find themselves at the vanguard of their industry.


Any business can implement IoT, but scale and investment are key to success. Cisco recently conducted a study about the Internet of Things where the discovered that about 70% of IoT campaigns ultimately fail. Why? The top contributing factors from the study revealed that internal expertise, quality of data, protracted implementation, and inconsistent implementation to be among the most challenging obstacles to overcome. The most damning, however was too much emphasis on the technology and not enough on the human element.

 

When trying to define metrics to gauge success, the study went on to suggest that the alacrity with which IoT is implemented and the company’s engagement consistency/commitment were the most important to track. Businesses should be looking at the Internet of Things like they would any traditional implementation. This means competent teams, technology and proper accounting (time and money) all contribute to the success of an IoT rollout. 

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