Industry 4.0 - it all starts with consumers!

Industry 4.0 is the conjuntion of demand and supply forces. First and foremost, it is caused by the consumer demands
customize (PresseBox) (Porto, ) In our last article we saw how Industry 4.0 is truly upon us and why it is more than just an evolutionary extension of the third industrial revolution. How this revolution will completely disrupt the current manufacturing practices and bring about drastic changes in all industries worldwide. We also briefly visited the factors driving the new era of manufacturing ranging from mass customization to the internet of things and everything in between.

Today we will focus on the most important factor creating the need for manufacturers to modify the way they work completely and how this factor allows for massive restructuring of complex processes to make sense - The Market and The Demand!

Modern consumers both industrial and individual are changing in the way they perceive and procure materials. There is a certain degree of individuality desired in each and every product used. Consumers are now the focus and they are demanding customization! Every item used by the modern, educated and well informed consumer, be it a piece of apparel or a mobile phone case, is being transformed in a way that the consumer draws some intrinsic value from it, thinking rather believing that the product was manufactured specifically for him/her.

This increased individuality in products then projects a massive challenge for manufacturers as their operations are only geared to mass produce a certain range of products. Adding the desired individuality means adding huge overhead expenditure to the current, which then reduces profitability. And, at times, it can be completely prohibitive if the production process fails to adapt via the use of Industry 4.0 enabled tools.

Most manufacturers who currently mass customize products tend to delay customization to the very last operation or part of the process, so that the major portion of the production process remains unaffected. This way of mass customization gives users the perspective of individuality while helping manufacturers draw the economies needed to sustain profitable operations.

However, true mass customization goes beyond last minute aesthetic/functional modifications, where individual needs are analyzed and then the product manufactured reflects the fulfillment of the said needs through its quality, functionality and aesthetics. The manufacturers who thrive in the future will definitely be the ones who adapt to this paradigm shift in consumer needs and market demand.

This need for individuality or uniqueness in all goods produced becomes the key driver for Industry 4.0, which then allows for new technologies such as 3-D printing, augmented reality, big data analytics and cloud computing, further amalgamated with high end internet enabled process equipment and IT applications like the ERP and MES, to truly make sense and add value.

For example, consumers of today want more than just their name engraved on the dial of a Swiss made watch. Instead, they want the watch manufacturer to incorporate features which reflect their life-style. Similarly, the watch manufacturer would want the supply chain to provide customized parts at minimal costs and this chain continues to the very last supplier/manufacturer.

Continuing with the example, imagine a manufacturer of watches who procures components from 2-3 suppliers and assembles the watch at their premises. All watches need to be customized in the way the customer wants, which means customization can range from simple color change in dial to complex specifications for meters and gauges which work at specific depths and heights, even straps and quality of material within the watch, be it application of gem-stones to mother of pearl inlays, everything is made exactly how the customer wants it.

The challenge here is how to sustain profitability while meeting such diverse needs and how to retain value in the high customization-high cost scenario. The answer lies within the challenge. Manufacturing operations would need to be driven by this need for customization, where a combination of push and pull manufacturing would work together to increase cost effectiveness and customers would be charged based on where value is added and how much value is added to a certain customized product. Imagine that the watch maker receives multiple orders for watches say up to 100 watches a day, all watches ordered are slightly different from the other, either in functionality or aesthetics.

This is where industry 4.0 kicks in… read more on our next Industry 4.0 post.

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Tom Bednarz
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