We interviewed Sean Culey, Business Transformation Expert, APICS Supply Chain Council after his presentation at MLF16 on the fourth industrial revolution and the future of manufacturing. He discusses the latest developments across the value chain, the challenges manufacturers face and how to respond to a connected consumer.
1. We really enjoyed your session on Industry 4.0, can you give us a short recap?
My session was a snapshot of some of the research I have been doing over the last four years for my forthcoming book called ‘Transition Point’ and presented an overview of how we are approaching a new wave of exponentially advancing technology that is advancing across every area of the supply chain – from sourcing raw materials to the final mile delivery to the consumer. It highlighted robotics, autonomous vehicles, 3D and 4D printing, Artificial Intelligence and how connected devices – the Internet of Things – is going to create a business world where the focus is on personalisation, automation and localisation. Then I started to discuss the social and economic impacts that automating entire industries is going to have – especially those high volume employers such as driving, construction and manufacturing.
2. What are the most innovative developments impacting manufacturing at the moment?
Robotics and Industrial scale 3D printing – this is leading to a world of manufacturing where the cost of production reduces to a point where off-shoring becomes more expensive than local production. This will create a challenge for emerging nations, for what use is low cost labour if you don’t need labour? How cheap does labour have to be if the competition works for the cost of electricity? What happens when we print what we need, when we need it – at zero marginal cost?
3. What do you consider to be today’s biggest challenge in the manufacturing sector?
I think existing in a world whereby OEM’s become more vertically integrated once more, relying less on an extended supply chain that contains hundreds of different suppliers but instead only require the schematic and print off what they need when they need it. It’s a huge bonus for the world if we can reduce the waste associated with subtractive manufacturing, but currently that model does create a lot of jobs that simply will not be required in the same number moving forwards. I haven’t yet seen an industry arising that will replace these jobs in anything like the same volume.
4. Where do you see opportunities opening up for manufacturing?
There are some massive challenges ahead but it’s not all doom and gloom. However, it does require companies to adopt a different mindset and truly understand what their value propositions are and how they can use these new technologies to stay relevant and differentiate themselves. This should be no different than normal, but unfortunately many companies have become locked into an efficiency focused, short term, cost reduction mindset.
5. Can you give us an example of a success story?
I would look at how Amazon is orchestrating the entire end-to-end value chain in order to deliver value to its customers, and in doing so changing the entire business environment and disrupting business models across multiple industries. The reason I use this rather than a client is I have just completed an article for The European Business Review on this topic. I urge business leaders to read this as a wake-up call as to how fast companies like Amazon can mobilise their innovative forces and make change happen. If their focus moves to your industry – and if there is profit to be made there they will – then if you don’t have your own house in order and a clear customer value differentiator established, then the end is nigh.
6. What are your top tips for success in business?
Segment your business into clearly defined value chains, and understand exactly how you can delight your customers in each of these areas. Then determine the right strategy for delivering that value both from a commercial and a supply chain perspective, and align your activities and metrics so that there is line of sight from each process and related role to that delivery of value.
You can’t control what you don’t understand, and you cannot improve or innovate what you are unable to control – so ensure you fully understand what customers you value, what they value and how you need to operate in order to deliver that value. Then look at ways you can improve every process involved in the delivery of that value as a team.