How Smart Manufacturing Creates Profits and Jobs

It’s quickly being proven that “smart” manufacturers who embrace the Internet of Things (IoT) and Industry 4.0 improve profits and create jobs. Integration of technologies such as machine-to-machine communication, sensors, advanced software, data analysis, modeling and simulation, automation, robotics and artificial intelligence results in “smartness” across all segments of the manufacturing process, including the supply chain.

“For example, smart sensors can perform tasks such as converting data into different units of measurement, communicating with other machines, recording statistics and feedback and shutting off devices if a safety or performance issue arises,” says François Barbier, president of global operations and components for Flex, a design, engineering and manufacturing firm. “IoT functionality can track and analyze production quotas, consolidate control rooms and create models of predictive maintenance.”

Advanced tools, he adds, enable companies to create and test situations in the virtual world—such as simulating an assembly line before an actual product is created. “Simulating the product-creation phase helps cut down on manufacturing time and ensure the manufacturing process delivers what companies intended to create,” notes Barbier.

Increasing Profits

Smart manufacturers boost profits through improved quality, faster throughput, less maintenance and downtime, reduced material waste and faster decision-making. Their smart processes also enhance worker safety, reducing insurance and medical costs. Governments also offer grants and tax breaks to companies that become “smart,” which help offset the cost of deployment and implementation. Combined, these advantages make U.S. manufacturers more competitive with lower-cost countries around the world.

Automation and robotics are a big reason for improved efficiency and quality. Robots are getting more sophisticated and adept at performing complex tasks. “The cost differential with humans is narrowing, to the advantage of robots,” says Darrell West, founding director for the Center for Technology Innovation. “Estimates for labor cost savings in various countries through automation and robotics now average around 16 percent in industrialized nations. But places such as South Korea have seen 33 percent cost savings, and Japan has seen a 25 percent savings.”

A good example is the Toyota transmissions plant in Durham, North Carolina, which makes more than 600,000 automatic transmissions per year. Toyota teamed up with Cisco to convert the plant into a smart factory. “After spending $1.2 million on the upgrades, the company recouped $1 million of that in the first nine months, thanks to maintenance savings alone,” writes Brian Buntz, content director for the IoT Institute.

Creating Good Jobs

To be clear, some jobs that humans formerly performed are now being conducted by robots; however, these jobs tended to be the dangerous, mundane jobs that humans don’t like to do anyway. Displaced employees are often retrained to take on more challenging tasks in the smart factory environment.

Higher profits that result from smart manufacturing technologies also give companies more capital to finance improvements and expansions, which require hiring more workers. For example, the efficiency gains from the Toyota plant overhaul have spurred a wave of hiring. “Overall headcount is still going up,” says John Peterson, general manager of IT for the plant. “Because we have increased our productivity in terms of yields and throughput, we have been able to bring in a fourth transmission. Typically, we have only been able to build three products at any given time.”

Also, as the plant continues to get smarter, workers with expertise in fields such as electronics, engineering and IT (including cybersecurity) are needed. “Our IT team has more than doubled in the past year,” Peterson adds. “The potentially crippling power of cyberattacks has become an inescapable reality for industrial organizations; more manufacturing companies are waking up to this fact.”

Barbier emphasizes that the addition of robots will still require skilled workers who can manage and operate these robotic solutions. “This includes people who can build hardware, software and firmware, design automation and robotics and adapt and maintain new equipment,” he says. “Close to 15 million new jobs will be created in the U.S. over the next decade as a direct result of automation and artificial intelligence, according to estimates from Forrester Research.”

Moving Forward

A shift to smart manufacturing makes companies more competitive and increases revenues. As more manufacturers embrace high-tech solutions, their workers must have more high-tech skills, including knowledge of analytics, data science and software engineering.

Fortunately, says Buntz, “current job skillsets may just need an upgrade rather than a complete overhaul. For instance, augmented reality technology means that we will have a layer of computer technology over our current work environment, so the focus could be on integrating the interface into your job versus starting from scratch.”

Industry 4.0 isn’t about destroying what manufacturers already have—it is about adapting current tools, infrastructure and skills to take full advantage of the Internet of Things in order to be a truly lean and efficient operation.

“The question shouldn’t be what will be lost as we enter Industry 4.0, as there is little to be gained from lamenting the inevitable,” concludes Buntz. “Instead, we should be asking how we can upgrade what we already have, in both staff skills and manufacturing processes, to make the most of our newly connected world.”