Western manufacturing is enjoying a technology-led resurgence that may just swing the economic pendulum away from countries with low cost labour.

That’s the assertion from Sydney-based Frank McLoughlin, vice president of the international business solutions group at Epicor Software.

In the face of the massive growth in manufacturing out of China and South East Asia over the past 20 years, it’s a bold claim.

Why is McLoughlin convinced? The Fourth Industrial Revolution – or Industry 4.0 – and the productivity gains it delivers.

McLoughlin sees inside the doors of a huge range of manufacturing operations across the world. iStart caught up with him to get his perspective on local progress on Industry 4.0 – a term that might, given recent media attention, be misconstrued as #automationwillendtheworld.

We asked what manufacturers are grappling with when it comes to transforming their operations around the digital and data-based initiatives that Industry 4.0 represents.

“The market is confused about just what 4.0 means, ” says McLoughlin. “They don’t understand exactly what it is, whether they should be jumping into it and what the benefits might be”. But McLoughlin is also encouraged as the level of sophistication, particularly in the A/NZ region, is actually quite high.

“The challenge for manufacturing leaders is to extract themselves out of the day-to-day to work on more strategic initiatives. But by its nature anything going into a factory environment must be proven, safe and risk-free. So uptake is not always going to be rapid.”

McLoughlin provides his own definition of 4.0. “In essence it is the automation of data capture and data acquisition, connecting machines, warehouses and robotics to provide digital tracking of every component through any supply chain. In a nutshell, it is about moving from analogue to digital.”

A/NZ manufacturers are, in fact, already well down the path. A good example is an Epicor customer (and not the only customer) with a fully ‘dark’ (or totally automated) warehouse operation. Finished goods are received and stowed automatically to await orders that trigger robotic picking and dispatch. The entire process to the point of deliveries being ready to put on a truck occurs without any manual intervention. Humans in the process deal with aspects that can’t be easily automated or with exceptions that might occur.

McLoughlin advises those embarking on the journey to first make their data mobile, but not only in the sense of putting re-ordering, stock enquiry and reporting systems into the palms of salespeople: “Production managers, operations managers – all factory floor staff – need to have real time access to the system, ” he says.

“Bring the system to the user in their environment. Not at the end of the day. Not when they’re back at the office. Make it real-time and relevant to their role.”

So what of the current attention on robots with artificial intelligence, machine learning, big data and analytics automating operations and so on? Are these concepts far-fetched? “Not at all,” says McLoughlin, “a lot of these tools are in place already where there are repeatable exercises that release workers from the drudgery. They augment people and empower them to make decisions.”

McLoughlin explains that this is a key factor behind manufacturing returning to Western countries. “In the past, the average US worker was 10X more productive than workers in low cost manufacturing centres. But the wage cost differences meant the low wage operations were able to produce goods cheaper. That’s changed with ‘Industry 4.0’ automation now meaning the economics have swung back to favour Western nations.”

While low cost economies have seen wages steadily increase, productivity gains have accelerated to the point of reversing the economics. Modern operations where investment has kept up with technology are now competitive and clawing back market share.

And there’s a lot to keep up with.

“ERP systems that talk directly to users on the factory or warehouse floor, PLC load cells on shelving signalling stock levels, RFID tracking of the exact location of inventory items…the list goes on,” says McLoughlin.

“We have customers who have integrated layers of functionality into their staff ID cards to log on to terminals and bring up in real time tasks relevant to the worker at that moment. The benefits come in efficiency, control and health & safety compliance.

“But there is still a ‘big brother’ reluctance in some organisations. Cultural change is a very important part of introducing changes to ensure staff see the benefits and understand the ‘why’ behind changes. Staff hate being recorded, while also hating the paperwork that being recorded saves them.”

McLoughlin is enthusiastic for the innovative ways manufacturers are using technology. “I’m ready for Industry 5.0!”

He refers interested readers to “The Factory of the Future” a collection of resources Epicor has assembled to help manufacturers understand and leverage 4.0.

Listen to a podcast of the full interview

External article:
http://www.inboundlogistics.com/cms/article/shake-it-up-us-manufacturings-resurgence-disrupts-the-global-supply-chain/

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