An integrated approach between digital and manufacturing sectors can push up productivity norms through the use of AI and analytics.
Industry 4.0 has been heralded as the key driver for the next wave of transformation in the manufacturing sector. While there are several technologies that are impacting the manufacturing processes and organisations are experiencing a tumultuous change leading to significant increase to the topline and the bottom line, artificial intelligence (AI) and analytics have stood out as the ultimate game changers. With the Indian government trying to attract investments in the manufacturing sector and promoting its ‘Make In India’ mission, it is important to recognise the key trends that are impacting the manufacturing sector as a result of digital technologies in both the developed and the developing nations and identify the key levers that could create distinctiveness for the country.
Corporations around the world are recognising that with labour costs continuing to grow in Asian countries too, this would no longer be a major source of arbitrage that it used to be in the past. Even in the context of outsourcing to lower-cost locations, on account of the impact and potential of digital technologies in the manufacturing sector, the choice of destinations for outsourcing is increasingly getting linked to rethinking the manufacturing processes as well. For instance, Nike, which works with contracted factories in 42 countries around the world with approximately 1 million workers, is implementing automation in ways that have the potential to dramatically enhance its productivity in resource-heavy processes.
As a result of innovation introduced by Flex in Mexico, the hitherto manual processes of gluing and cutting at Nike factories are being automated due to which henceforth significantly lesser resources would be required in all their manufacturing facilities. Working with Flex, which is well known for its Fitbit activity trackers, Nike has been able to bring about innovation that is leading to enhanced productivity norms, delivering faster designs to cater to consumer needs, developing a very close connect between its network of stores and the manufacturing plans, resulting in faster supplies all of which analysts predict would lead to dramatic improvements in profitability and further expansion of market share.
With robotics and digital technologies, the opportunity for developed countries to bring back manufacturing to their own countries is also beginning to seem feasible, specially when the resource requirement is of smaller numbers but of high calibre with cutting edge skills. The need of the hour is therefore to build a strategy around lower costs and innovation supported by the right skills with the resources in the manufacturing plants. This also indicates an urgency to train and reskill existing employees to take advantage of their years of experience in specific domains and customer familiarity and thus avoid their displacement in the bargain.
In addition to individual companies taking the lead in Industry 4.0 related skill development and introduction of digital technologies in the manufacturing ecosystem, there is also an urgent need to set up research centres with the active collaboration of industry and the academia. Amazon has recently announced its intent to back the setting up of a research centre in Germany focused on AI led by the Marx Planck Society. The centre is being located at the hub called Cyber Valley close to Stuttgart, which is the headquarters for Daimler, Porsche and Bosch, and Tublingen which is a university town focused on the life sciences. Such coming together of world leaders to create new models of AI that would be applicable to various disciplines is viewed as the bedrock for potential innovation in Europe.
In order to position India as a powerful alternative to other outsourced manufacturing locations, apart from the much needed changes in labour laws, there is an urgent need to showcase stellar digital innovation capability and pick a place like Pune to make it the hub of manufacturing innovation supported by government, industry and the academia. India is yet to demonstrate its capability to leverage the time-tested and well-respected contribution to IT for the application development needs of global giants by Indian companies, in the area of innovation in the manufacturing sector. This would be possible only when an integrated approach between digital and manufacturing sectors is initiated and there is a recognition that we would not be successful as long as we continue with the silo mode to solutioning. In order to realise the promise of Make in India, we need to position India as a willing partner for research and digital innovation in Asia that is capable of fostering Industry 4.0 with the view to creating a lasting competitive edge—both by providing access to a large market base within the country as well as by acting as a springboard for designing transformative offerings to the world.
The writer is CEO of Global Talent Track, a corporate training solutions company