Four Strategies for Assuring Your

Company’s Manufacturing Competitiveness

Emerging Trends and Strategies That Will Create New Market
Opportunities
Introduction
It’s not surprising that business today is complicated for
industrial manufacturers.

The shifts taking place globally in technology, advanced manufacturing and government policy changes (ie.
Brexit!) have created a moving target for manufacturers.

The good news? The ongoing focus by manufacturers on research and innovation is paying off for those who
apply it strategically.

For instance, the cheap labor of the 1990s is giving way to automation technology as the more important
factor for manufacturing efficiency. This is playing out for China in particular; as that country’s manufacturing
employment is falling, its recent advantage in cheap labor is diminishing as IP and advanced manufacturing
capabilities become more important.

In fact, in contrast to what many economists thought could never So what’s an industrial
take place again, the U.S. is predicted to overtake China by 20201 as
the most competitive manufacturing nation. manufacturer to do?
Whoever is at the top of the manufacturing food chain, advanced
manufacturers will be well positioned to reap the benefits of a fully The following trends
emerged global consuming class in Russia, India, China and Asia’s and strategies in the
emerging economies. Demand in established markets will also
be strong as customers look for greater variation and new types of areas of advanced
after-sales service. What’s more, new innovations in materials and manufacturing,
processes – from nanomaterials and 3-D printing to exciting robotic
developments – will drive yet another cycle of future productivity process optimization,
gains. cost reduction and
The not-so-good news? These opportunities are counterbalanced by skills training will
a global manufacturing environment that is beyond challenging. provide a possible
Predicted global growth is low – just 3.4% in 2017; advanced playbook for those
economies are forecast to grow at just 1.9%2. Political uncertainties wanting to grow and
threaten the free flow of goods, creating more growth constraints.
Fluctuating resource prices, a shortage of tech-savvy talent and succeed in today’s
growing supply-chain and regulatory risks add to manufacturers’ highly competitive
unease, causing them to grow cautious when boldness is required to
assure competitiveness. world.
Advanced Manufacturing:
Prepare for the Connected Factory of the Future

There’s a technological
renaissance that is transforming
the look, systems and processes
of the modern factory, and it’s
wide ranging.
From the Internet of Things and
its 4th Industrial Revolution
to additive manufacturing,
industrial manufacturing is
shedding its skin to become an
entirely different entity. Here
are a few of the life-changing
advances happening now.
The Internet of Things (IoT) is
well on its way to creating the
connected factory of the future.
With the adoption and
deployment of smaller, less
costly sensors, the development
of advanced analytics and the
commodity storage options
provided by the cloud,
manufacturers can have wireless/
mobile access to data globally provide enhanced security during
- as well as anywhere on the all phases of manufacturing from
plant floor – facilitating new design to distribution – even
levels of information monitoring, after purchase.
collection, processing and
analysis.
By expanding the power of the Don’t think Industry
web to link machines, sensors, 4.0 won’t affect
computers and humans, IoT
enables the data-driven insights you – it must if you
and digital connectivity needed to are to maintain
adapt, add to or reinvent business
models with the end goal of your competitive
delivering higher-quality, more edge. This fourth
reliable products.
industrial revolution
Yet there are risks to IoT adoption. will transform
Prime among them is the threat
of cyber attacks by hackers development,
determined to steal trade secrets production and the
and intellectual property. To
create an inviolable factory of entire logistics chain.
the future, manufacturers must
rethink security standards and

For example, it will create:

• The vertical networking of smart production systems, smart logistics, marketing, sales and
smart services, enabling a customer-centric, needs-based operation
• Horizontal integration through a network of business partners and customers
• Through-engineering of the entire product life cycle
• Acceleration with the application of technologies such as sensors now capable of mass-market
application
Advanced Manufacturing:
Prepare for the Connected Factory of the Future

How quickly must preparations
be made for the connected
factory of the future?
Quickly. Of course, it’s one
thing to invest in transformative
technologies when business is
good – it’s another when business
is off.
Still, IoT factories are predicted
to be commonplace within five
or ten years. Companies that
want to maintain competitiveness
must start now to transform their
cultures and their capabilities
despite any worries about short
term financial payoff.
Begin to plan now for the Next on its evolution?
operational impact of additive
manufacturing, also referred to Specialized, low-volume parts
as 3D printing. This technology that function as stand-alone
produces solid objects in components, subassemblies of
precise shapes from digital finished products, or casting,
designs through the buildup of
multiple layers of plastic, resin,
or other materials. Right now,
3D printing can spur innovation
and reduce time-to-market
through application to the
product development/prototyping
process.

Next steps:
1. Decide what level of IoT is right for you. If you are just getting started, start small.
2. Do your due dilignece. Read books on IoT implementation and talk to some experts. Not every
recommendation you read about makes sense for your facility!
3. Begin exploring what IoT infrastructure you need. Talk to IoT vendors selling the hardware, software
and comprehensive solutions needed, including cloud service providers and analytics and infrastructure
software vendors.
4. Explore how you can network production with logistics and marketing.
5. Start thinking partnership. Are there benefits to be had by partnering with other businesses or
customers? What are they? Explore the idea by talking with potential partners.
6. Investigate additive manufacturing by taking an AM master class or workshop. Get familiar with specific
additive techniques such as Fused Deposition Modeling (FDM) and Laser Sintering (LS).
Process Optimization:
Rethink How to Reduce Waste While Adding Value

Streamline: The proven strategies below are streamlining operations

and have already started many manufacturers down the process
optimization path. While technologies
They include: that advance
manufacturing are
• The applications of lean manufacturing principles and Six
Sigma concepts to align floor layouts and shorten process steps, important to
improving plant operations competitiveness, most
• Product simplification - including the use of subassemblies - to
speed both manufacturing and time to market manufacturers identify
• Zero defect programs to implement a process of continuous process improvement
improvement that can work to reduce costs, satisfy customers
and gain market share as key to
company success
Automate: The impact of automation on global manufacturing,
particularly in the area of robotics, cannot be underestimated. during the next five
years.
Robots are getting faster and smaller, and are increasingly being
utilized on the production line as well as in postprocessing
operations. New robots can see more materials, handling metals, That means reducing
nonmetallic materials and organics – a capability that makes them
suitable for any kind of industry or machine shop. production
time, achieving more
China is taking advantage of these robotic innovations and
has emerged as an automated manufacturing powerhouse, operational flexibility,
with shipments of multipurpose industrial robots to China and improving their
forecast to reach 160,000 by 2019.3
equipment and
While in some plants, robots are being used to replace workers, its layout.
elsewhere robots are being asked to work collaboratively with
workers. Referred to a “cobotics,” the practice combines workers and
machines to make complex, ergonomically challenging assemblies To achieve these
faster, easier and safer. Cobotics is gaining momentum, particularly
in the aerospace and automotive industries. But these applications goals and meet
will expand with the introduction of more sophisticated sensors and evolving opportunities,
adaptable, highly functional robots.
companies
This will accelerate the use of robots in all industries, including small need to automate,
and medium-sized companies. It is estimated that between 2015 and
2018, 1.3 million new industrial robots will be installed in upgrade and
factories globally.4 streamline.
Process Optimization:
Rethink How to Reduce Waste While Adding Value

Upgrade: Augmented reality is an area that will allow manufacturers to

upgrade how they deliver real-time information and guidance at point
of use. Advances in computer vision, computer science, information The impact of
technology and engineering account for this exciting new field.
automation on global
With augmented reality, users can follow text, graphics, audio and manufacturing,
other information superimposed onto goggles or real assemblies as
they undertake complicated jobs on the factory floor. The process can particularly in the area
evaluate the accuracy and timing of tasks and notify the worker of of robotics, cannot be
quality risks.
underestimated.

Next steps:
1. Get Six Sigma certified.
2. Implement a continuous improvement program.
3. Identify the business case for investing in a robotic solution. Are you currently employing a person to
do a job that is dull, dangerous or demanding? Do you need to improve quality control or increase
throughput? Start talking to robotics companies about whether an automated solution makes sound
business sense7.
4. Explore how augmented reality can improve employee skills training by talking to potential suppliers.
Cost Reduction:
Search Out Innovations That Will Affect the Bottom Line

Yet innovations cost money. Companies looking to protect their bottom line are pursuing aggressive and
proactive cost containment programs that embrace improvements in energy consumption, advances in
logistics technology and new materials.

Energy Consumption: The world is expected to increase its energy consumption by almost 48% by 20405, and
with it its energy bills. No surprise, then, that companies are actively monitoring and assessing facility-level
energy consumption to understand a facility’s energy demand, optimize its usage and minimize its long-term
environmental impact. Key to the undertaking? Diagnostics based on real-time energy data running to,
through and from equipment on the factory floor.
Armed with that intelligence, companies can lower energy usage
through predictive maintenance to keep equipment running at
peak efficiency; draw on alternative energy sources when natural
gas spikes in cost; and leverage technologies to reduce the energy Propelled by advanced
needed to power their processes. Variable frequency drives, power-
control devices, energy-efficient components and advanced
technologies and the
motion-control solutions can help companies avoid peak demand increasing reliability
charges, optimize power in relation to load, regenerate energy for
reuse and be networked together to optimize performance, increase
and availability of
productivity and reduce energy usage. data, manufacturing
Logistics Efficiency: Technology applied to such areas as
competitiveness
procurement and purchasing, warehousing and logistics will is upending the
optimize the coordination and digital transformation of everything,
from design and supply chain to lifecycle management. To increase
factory status quo
competitiveness, manufacturers will need a more efficient and and creating a highly
streamlined factory floor to expedite product delivery. In addition,
more efficient warehouses will combine with web-based tools such
responsive and
as transportation management systems to add visibility and innovative global
control in the supply chain. Track and trace capabilities will help
manufacturers establish closer customer relationships and a
manufacturing
better understanding of customers’ needs, allowing them to create landscape.
specialized, industry-specific solutions that will increase retention
and loyalty.
Cost Reduction:
Search Out Innovations That Will Affect the Bottom Line

New materials: While carbon fiber was once the be all and end all of material science, carbon nanotube
manufacturing has eclipsed it. Nanotube threads are ten times as strong as steel and as conductive as copper,
making their potential virtually limitless. Atom-thick graphene – a honeycomb lattice of carbon-to-carbon
bonds – is also being explored by manufacturers for its potential applications, including anodes for lithium-
ion batteries, flexible solar cells and membranes for fuel cells. Light and strong, graphene can be bent into any
shape, carry a charge, and it won’t oxidize.

Next Steps
1. Establish a facility-level energy consumption monitoring program.
2. Talk to suppliers about possible technology upgrades to optimize energy usage and avoid peak demand
charges.
3. Investigate transportation management systems to add supply chain visibility and control.
4. Learn more about new materials and their potential application to your business. Contact area scientists
teaching in the field.
5. Talk to plant floor employees to get their view on the benefits of utilizing new materials in your
manufacturing process.
Skills Training:
Act Now to Avoid a Shortage of Tech-savvy Staffers

It’s taking manufacturers longer

and longer to fill skilled positions -
a situation that in many countries
is likely to continue for the next 15
years.
In fact, while it is a worldwide
problem, estimations are that
there will be 2 million unfulfilled
manufacturing jobs by 2025
just in the United States.6 That
means companies will need to
act now in order to offset labor
shortages later. Here are a few
possible ways to alleviate the
problem.
New Technology Training:
As manufacturers embrace the
advanced technologies critical
to competitiveness, they must
upgrade the skill sets of their
current employees. On the job
classes or online tutorials are
two ways to keep skills current
with technology.
Recruitment:
To attract the tech-savvy –
otherwise known as millennials
– manufacturers should create
and publicize its long-range
technology strategy in order
to woo talent. Companies
can also partner with local
community colleges as well
as large universities to bridge
the skills gap by developing
STEM (Science, Technology,
Engineering and Math)
partnerships and scholarships.
A Culture of Quality:
Employees on the factory
floor know the production
process best, spotting parts
abnormalities or inefficiencies
in manufacturing first.
Management should create a
culture where suggestions for
improvements are welcomed,
praised and rewarded.
Open-book management:
This is a management philosophy
that believes a company
performs best when its people
see themselves as partners in
the business rather than as hired
hands. Employees are given all
relevant financial information
about the company – including
revenue, profit, cost of goods,
cash flow and expenses – in
an effort to help them make
better decisions as workers and
improve company performance.
When the company profits
improve, employees share in the
prosperity.

Next steps
1. Explore skills classes offered at local community colleges.
2. Approach a supplier about teaching an on-the-job skills class.
3. Create and publish your technology strategy on your company Facebook page. Invite Facebook “friends”
to share the post with their tech-savvy friends who might be potential recruits.
4. Incorporate monthly update meetings with manufacturing staff to solicit suggestions for improvements.
5. Obtain and study case histories of companies that have embraced open-book management to
determine if such an approach would be good for your business.
Conclusion
The global manufacturing landscape is transforming
against a backdrop of uncertainty. This is causing industrial
manufacturing companies to be cautious.

The global manufacturing landscape is transforming Cited Sources:

against a backdrop of uncertainty. This is causing
industrial manufacturing companies to be cautious.
To maintain competitiveness in this evolving
landscape, industrial manufacturers must act now to
make strategic investments essential for growth. By
learning how to manage and mine data, run supply
chains and operations more efficiently, monetize
digitization and find talent adept at analytics,
industrial manufacturers will not only survive, but
thrive during the 4th industrial revolution.
1 http://fortune.com/2016/03/31/united-states-
manufacturing-china
2 https://www.imf.org/external/pubs/ft/weo/2017/
update/01
3 https://ifr.org/img/uploads/Executive_Summary_
WR_Industrial_Robots_20161.pdf
4 http://www.engineering.com/
AdvancedManufacturing/ArticleID/11207/13-
Million-Industrial-Robots-Could-be-Installed-
Around-the-World-by-2018.aspx

5 https://www.eia.gov/todayinenergy/detail.
php?id=26212

6 http://fortune.com/2016/11/16/how-american-
manufacturers-are-working-to-close-the-skills-gap

7 https://cross-automation.com/blog/
implementing-omron-os32c-safety-scanner-
universal-robots

© 2017 Parker Hannifin Corporation

Parker Hannifin Corporation

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Cleveland, Ohio, USA
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