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2015 Manufacturing Industry Predictions

Dec, 23, 2014 Hi-network.com

What's new and trending for the industry? Well, predictions for the upcoming year as a motif is certainly not new but is definitely trending, considering the deluge of pundits concentrating their well-informed thoughts about which industry happenings will emerge through hyperbole and into reality. Amongst go-to industry resources I find myself perusing isLNS Research, who has chosen to break down their Top Three 2015 predictions by industry trend/topic: Industrial IoT; Industrial Energy Management; Environmental Health and Safety; and Asset Performance Management.

Another annual favorite that I've blogged about in the past-including commentary on Cisco relevance-isIDC Manufacturing Insights, who this year took on a refreshing, new format entitled IDC Futurescape: Worldwide Manufacturing 2015 Predictions. The team of IDC manufacturing practice analysts quantify and qualify their ten most critical imperatives to be addressed by global manufacturers in 2015 and beyond-based on the coalescence of technology and line of business interests-including a few that are very pertinent to Cisco's Internet of Everything (IoE) initiatives:

  • In 2015, customer centricity requires higher standards for customer service excellence, efficient innovation, and responsive manufacturing, which motivates 75% of manufacturers to invest in customer-facing technologies.
  • By 2016, 70% of global discrete manufacturers will offer connected products, driving increased software content and the need for systems engineering and a product innovation platform.
  • By 2018, 40% of Top 100 discrete manufacturers and 20% of Top 100 process manufacturers will provide Product-as-a-Service platforms.
  • In 2015, 65% of companies with more than 10 plants will enable the factory floor to make better decisions through investments in operational intelligence.
https://www.youtube.com/watch?v=ggXUaHqdqzs&list=PLAAF67A702C266F9E&index=14

Before the analyst predictions pushed their way onto my laptop screen, I was asked by Cisco's press relations team to put forward my top 3 for the industry. So on All Saints Day, before heading out on weeks of travel to China, India, and several of the United States outside my home residence, I produced three ideas that didn't make it to our PR megaphone. As part of this blog, I've decided to share these three predictions, with some relevant observations from my Nov-Dec travels and customer interactions ...

#1: Advancements and Adoption of Industrial Robotics Will Rapidly Accelerate Across Many Segments in 2015: in a reverse phenomenon to consumerization of business environments, such as BYOD, the use of industrial robots-particularly along the trend of bio-mimicry and human-machine cooperative work flows-will bleed into retail and consumer segments, and the worldwide industrial utilization of robotic automation including new consumer/retail oriented demand will continue to drive very strong double-digit growth in robotic machine sales globally.

My trips last month commenced in Shanghai at the International Industrial Fair (IIF), where I had the privilege to present to an audience of 500+ industrial automation and controls engineering managers, alongside execs from Siemens, ABB, Phoenix Contact, GE and others as part of the 2014 Future Oriented Manufacturing Summit there.

I would characterize the showcasing of advanced automation technologies and solutions at the IIF fair itself-attended by more than 120,000 visitors-as "invasion of the intelligent robots." The variety and depth of domestic and overseas robotic innovations on display demonstrated applications across all types of discrete and hybrid industries, from Automotive to High Tech to Pharma and CPG. And even though the China manufacturing activity gauge(PMI) continues to fall, the showing at IIF makes very clear that labor for both existing and new factory capacities in Greater China will be more-and-more supplanted by robots and automation, in order to improve on manufacturing throughput and productivity, cost competitiveness, and quality.

At the summit where I spoke, the topic of the day of presentations and Q&A was focused around Industry 4.0, what we also refer as the Industrial Internet of Things and Cisco Connected Factory. My cohorts and I dissected the topic across a wide variety of dimensions inclusive of the robotic "machine-as-a-service" that is an integral part of Industry 4.0 and the factory of the future. The robots are coming!

#2: The U.S. Manufacturing Renaissance and Reshoring Will Begin to Decelerate in 2015: deflationary pressures in Europe and Asia carrying over from global consumption hiccups will continue to strengthen the U.S. dollar and impede demand for exports. Along with record-low oil pricing globally and consequently lowered economic incentives for hydraulic fracturing et al, the economic fundamentals and incentives to reshore will start to diminish. Another drag on the renaissance is our aging workforce. With baby boomers retiring in record numbers over the next decade, younger workers in the U.S. are not getting educated to fill the gap in knowledge and experience on how to make things.

Let me note here that I hope I'm wrong on this prediction! As alluded above, the manufacturing activity and growth in China is on the decline, stimulating government intervention (lowered interest rates), such that we can "continue to expect further monetary and fiscal easing measures to offset downside risks to growth," according to HSBC economist Hongbin Qu. China is going to do everything possible to limit the shift in production from their shores, despite the US administration's "understanding" on a trade deal that could end certain tariffs. Ongoing deflationary pressures in Europe from an economy stagnated by the Great Recession further empower the dollar and impede trade from U.S. shores abroad. So, with the still widely anticipated uptick in overall global production in 2015, where exactly are those capacity expansions going to land?

After Shanghai, my next November flight landed me in Bangalore, where I stayed for a few days of customer and analyst visits, and from there to Mumbai, where I met in a roundtable with executives from major national manufacturers. One consistent topic across both stops revolved around Prime Minister Narendra Modi's MAKE IN INDIA initiative. Announced a day after India's triumphant Mars mission, the 'Make in India' campaign is designed to cut the red tape from the country's infamous bureaucracy, to spur foreign investments (utilizing a backend agency called Invest India), and to transform India into a Manufacturing powerhouse across a wide variety of sub-industries.

Beyond the marketing campaign, there are many real obstacles for India to overcome-most importantly land, transportation and other infrastructure. While I don't believe we'll see U.S. production capacities usurped by India in 2015, based on the passion and plans I heard during my week there, I do believe we will see an inflection on the number of projects shored in the sub-continent next year. And interestingly enough, more than a dozen U.S. and European industry associations recently teamed to urge stronger trade and investment ties with India. From my view, the requests look aligned with the spirit and mutually beneficial mission of 'Make in India', but the devil's in the details. It will be an interesting development to work in 2015.

#3: In 2015, Big Data Analytics in Manufacturing Will Emerge from Hype Cycle to Pragmatic Traction and Scale Across All Elements of the Value Chain: the landscape of existing analytics technologies already being applied across functions to drive manufacturing business performance, according to LNS, include physical process design analysis (e.g., plant/production process simulation); product design analysis (e.g., PLM); work flow/business process analysis (e.g., BPM); offering attributes analysis and traceability (e.g., MES track/trace); quality management (e.g., SPC); and performance management (e.g., historians, EMI, BI, dashboards). New trends enabling scale and greater utilization of Big Data Analytics include cloud delivery and edge (fog) computing capabilities that include PaaS (Platform as a Service) analytics engines like Hadoop, SAP's HANA and IBM's Watson. Finally, IoE adoption is fueling connectivity and more holistic information sources through Connected Product-as-a-Service offers, also accelerating utilization and need for analytics in sales and services functions.

After returning to the U.S. east coast to be with family for Thanksgiving, my next travels took me west, to participate with a customer advisory of senior LoB executives (specifically no IT) from leading manufacturing companies. Our focused topic was Business Analytics, and one of the key learnings from this seasoned group included a recognition of people as critical to Big Data transformation-having the right leadership, accountability, skills and organizational structure-along with culture, policy and process, not just technologies. A culture of curiosity is key and putting priority around asking the right questions and starting with a definition of the business problem to be solved. Beyond these fundamentals and along with some of the other insights gleaned, tools exposed, critical metrics and collaboration capabilities required, what was very clear to me is that all of these dozen+ manufacturing companies ranging in size, scope and industry are in some way honing in on very real and imminent value they are driving with Big Data Analytics, whether it's within production, supply chain, engineering, administration, sales and marketing and/or services. 2015 will be a big year for big data.

Earlier this month, Cisco announced our analytics strategy to help customers access, analyze and act on data. We're moving fast with Cisco Connected Analytics for the Internet of Everything, and we'll be working towards a Connected Analytics for Manufacturing offering to build on this recent portfolio launch, based on what we learn from advisory sessions like above and what we hear from you. Please submit your feedback and thoughts below, and thank you for taking the time to read this blog!


tag-icon Hot Tags : Internet of Things (IoT) Internet of Everything (IOE) IDC Cisco Connected Factory Energy Management #MFG manufacturer connected manufacturing LNS

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