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Manufacturing 2015: 7 Thought Leaders Share TheirPredictionsPatricia MoodyWed, 20150107 03:15

It was the year 2000, and we three manufacturing geeks we called ourselves the "White Socks Guys were the skunks at the garden party, an Aspen futurist gathering of experts drawn from politics, the mediaand technology assembled to talk about trends and, in particular, the U.S.’s New Economy.

Madeleine Albright was there, and Bill Clinton flew in to deliver a highticket speech. The hot topic wasglobalization and how the U.S. was going to move to a singular focus on innovation within the new serviceeconomy toward designing the stuff that boats and planes would bring back to us, produced and neatlypackaged by unknown and faceless lowwage Mill Girls in some foggy offshore factory.

Michael Marks, then president of Flextronics, spoke about what it took to be in the electronics business inthe U.S., and the Gartner guy offered some statistics, but the pressure to accept the globalization vision ofan outsourced U.S. economy sans basic production capabilities was overwhelming. We were outnumbered.

Collateral Damage

Fourteen years later, however, the numbers and the challenges have clearly emerged from the fog. We’rehappily seeing renewed interest in making, not just designing, product in the U.S. It’s enough to make a MillGirl stand up at her machine and cheer!

We three whitesocks guys knew back then what would happen to cities and towns all over the U.S. when thefactories shut down – that not everyone would find a new service economy job. Even the call centers wereoutsourced! And there was the collateral human damage – longer commutes to outof town jobs andfamilies dislocated by bad real estate deals.

We’re happily seeing renewed interest in making, notjust designing, product in the U.S.

But the biggest loss the unlearning of what it takes to build and run a healthy production operation –remains with us. According a spring 2013 report by Josh Bivens at the Economic Policy Institute, in 2011international trade depressed wages for noncollege educated workers by 5.5%, costing the average worker$1,800.

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Bivens found that as laborintensive industries moved to developing nations, the demand for labor in theU.S. decreased. The result? Reduced wages for noncollege educated workers, increased demand in the U.S.

"Those who fail toready their supplychain for the era ofAdditiveManufacturing willbe at a significantcompetitivedisadvantage."

for professionals, skilled labor and capital, and a bigger gap between the rich and poor, as incomes forcollegeeducated workers rose.

So much for the working middleclass…

But the tide rolls in, and the tide rolls out, and the white socks guys are feeling the pull, the positive shiftaway from bemoaning the loss of U.S. factories and workers, to the more immediate challenge of rediscovering our manufacturing intelligence. That’s a very positive challenge, one that my CEO friendswelcome.

Let’s look ahead!

Read on for the 2015 predictions of seven manufacturing thought leaders. Then let’s crank up the machinesand build something!

2015 Will Not be 'The Year of Additive Manufacturing'Mike Opal, Sr. Evangelist Global Cloud AlliancesMicrosoft Corp.

2015 will not be "The Year of Additive Manufacturing" – that's still five to ten years off. However, 2015 willbe the year manufacturers wake up to the impact 3D printing will have on their supply chain and businessmodel.

Pushing "print" and having a product built somewhere across the globe remains science fiction, butmanufacturers who do not examine their supply chain through the lens of 3D printing do so at their peril.

Manufacturers that can find a way to begin inserting or replacing a pieceor product in their supply chain with an Additive Manufacturing processwill be well positioned to realize pricing and timetomarket advantageas the technology advances over the next three to five years. Those whofail to examine with open eyes and then ready their supply chain for theera of Additive Manufacturing will be at a significant competitivedisadvantage.

This shift is equally true for the new manufacturing business model,which will allow a consumer or business to conduct an online search fora product (or more likely a piece of a product), then purchase the designand print locally. Additive manufacturing flips on its head the wellestablished business of creating a product, building a way to produce it,and finding a way to sell and ship this product.

Those companies who understand the new model and who haveplanned for it and created a unique value proposition for their brandswill benefit from a tremendously efficient and streamlined process.Those companies who don't will lose.

More Predictions About 3D Manufacturing

What's Next for 3D Printing?

Mike Opal

"Look for companiesto establish bareproduct fragilitygoals... and watchfor cushioning to beminimized." Kevin Howard

Prepare for Disruption: 3D Printing and the 'Unimaginable ScienceFiction' of the Future

Three Predictions for PackagingKevin Howard, Sr. Packaging Engineer/ConsultantPacknomics, LLC

1. Reducing Packaging's Environmental Footprint

The biggest move in packaging will be further reduction in the environmental impact of packaging materials.We’ve seen introductions of many new materials bamboo molded pulp cushioning, molded myceliumroot cushioning, starch based cushioning, PLA thermoformed plastics (biodegradable and made fromrenewable resources), and the recently announced Air Plastic (Newlight Technologies), where carbon isextracted from the air or smoke stacks and then utilized to form plastic pellets. There will be more!

Still much bigger opportunities exist for companies to reduce theirenvironmental footprint. All these new materials cost more thancurrent conventional materials look at electromechanical productsthat use cushioning, for example. It’s great to replace rarelyrecycledfoam with some groovier material choice, but it doesn't improve theother serious piece of environmental impact: the size of the finalpackage. The best way to minimize the size of the package is to improvethe robustness of the product and ensure that internal laboratory teststruly reflect the actual hazards consistently found in distribution.

Look for companies to establish bare product fragility goals, and watchfor cushioning to be minimized. Whether the cushion material istraditional foam or a new material, box size will continue to shrink andpackaging material will be minimized. Winners will combine the rightmaterials with OutsideIn design methodology to produce lowestlanded cost with the lowest environmental footprint.

2. More and New Testing Will Update Packaging Standards

Testing is about to get better, and packaging standards will changesignificantly. Many standards are based on tests and reports from the1960's, long before overnight shipments and super highvolume, highspeed package processing. Although laboratory testing should reflectactual hazards found within a specific distribution system for a specificproduct, most companies still rely on test standards from variousorganizations. Drop testing, for instance, is problematic because it canlead to excessive packaging. Watch for testing to change as companies test for specific conditions in theirown supply chains.

The winners will collect better information on how products are actually handled and whether or not thereare consistent damages. Good testing will replicate consistent field failures, and not cause damages thatdon't occur in the field. Companies will decrease their dependence on harsh tests that create high shippingand material costs and move to a more “custom” packaging design that fits particular products and supply

chains.

3. Products and packaging will be designed for the regions to which they are bound

Here’s a colorful illustration. Agilent Technologies Inc. (IW 500/160) is the largest producer of $150,000liquid and gas chromatographs. Their fastest growing markets are in developing nations like China, wherethe company realized that products and packaging were insufficient for the conditions presented.

We watched 150pound products strapped onto individual pallets, then handcarried off trucks, acrosscourtyards, and up three flights of concrete stairs. As two guys walked one unit to the bottom of the stairs,the unit fell over onto the concrete landing, a perfect flat drop from 30 inches onto the unit's side. Althoughtesting standards say to never test freefall drops from this height when a pallet is attached because thepackage will be picked up by a forklift, this assumption simply isn't true in places like China.

Plus, the government test lab the unit was headed for was brandnew and filled with millions of dollars ofhightech equipment but the windows were open, a layer of dust coated every surface, and the wiring wasnot grounded. The hightech U.S. engineers who designed these products could never have imagined suchconditions, and one has to wonder how well the units would operate amidst that dust and pollution. If U.S.companies hope to do well in their fastest growing markets, they must design specifically for theircustomers.

"Big Data" Analytics Will Spread to More Operations AreasDr. David SimchiLeviCoDirector, Leaders for Global OperationsMIT

I see the expansion of datadriven decisions to new operations areas. This change is enabled by availabilityof data, new analytics that combine machine learning and optimization, improved computationalcapabilities and access to cloudbased resources. Here are three examples:

1. Revenue management

I recently worked with online retailer Rue La La, an ecommerce retailer that offers extremely limitedtimediscounts (aka “flash sales”) on designer apparel and accessories. The focus was on using internal andexternal data to develop a demand forecasting and price optimization tool utilizing machine learningtechnology. This has changed the way the company prices its products from costplus to analytics, resultingin over 10% increase in revenue. I am currently working with a few other companies on similar applications.

2. Supplier risk management

Collaborating with Ford, we developed and implemented a DecisionSupport System for Risk Management using optimization methodsbased on the concept of the Risk Exposure Index (REI) that Iintroduced a few years ago (see a review of the REI method in theHarvard Business Review).

The REI enables companies for the first time to fully quantify theirmaximum risk exposure from natural disasters or any otherunpredictable supply chain disruptions. It specifically assesses for each

"The REI enablescompanies for thefirst time to fullyquantify theirmaximum riskexposure fromnatural disasters orany otherunpredictablesupply chaindisruptions." Dr. David SimchiLevi

"We will continue to

node, or site, in a given supply chain the resulting financial impact, suchas loss of revenue or loss of profit, or operational impact, such as lossof production volume.

3. New business model

RollsRoyce has developed a new business model in which the companycombines engine sensors’ data and advanced analytics to spot engineproblems before breakdowns occur. This allows the company to offercustomers the ability to monitor engines and charge based on usagetime.

The company continuously monitors the performance of more than3,700 jet engines worldwide. Repair, maintenance and replacement areall the responsibility and cost of RollsRoyce. Service revenue nowaccounts for about 70% of the civilaircraft engine division’s annualrevenue.

The combination of big data and advanced analytics, including machinelearning and optimization, will bring opportunities in three areas: 1) customized offerings, as in the case ofRue La La; 2) improved operations, such as the Ford supplier risk mitigation strategies; and 3) new businessmodels such as the one developed by RollsRoyce and others.

Coming in 2015: Big Data Breakthrough in Financials, Better Talent Mapping and DroneDelivery Tests

David J. (Joe) Armstrong, Principal,Inventory Curve, LLC

1. Big Data Breakthroughs

Organizations will make significant breakthroughs in financials as they segue to smart data mining ofprofitability by customers and customer segments, combined with transaction and operational effectivenessand the costs associated with serving different customers and segments.

Many companies routinely look at customer profitability based on sales and revenues, but far fewer look atthe costtoserve by customer based on services delivered, order composition and transactions.

Smart data entails linking topline sales and revenue with costtoserveat the individual customer and customer segment level. Results will leadto better segmentation and management of processes and servicesserving different segments, which will improve overall profitability andreduce rework, an important cost driver.

2. Talent Gap Mapping

Does a supply chain and manufacturing talent or skills gap really exist?Much of what is called a talent or skills gap exists only at a local leveland may be the result of unrealistic expectations.

We will continue to better map labor supply and demand imbalances at

better map laborsupply and demandimbalances at thelocal level andimplement creativesolutions..." David J. (Joe) Armstrong

"It’s not aboutautomating anddoing things faster,but tappingcollective insights

the local level and implement creative solutions that address localconditions. These solutions will include revised wage/salary schedules,training programs and partnerships with local educational institutions.

3. Drone Delivery Testing

The FAA will relax restrictions on drones to provide organizations likeAmazon limited opportunities to evaluate and test delivery operationsand evaluate effectiveness, capacity and related costs. At the same timethat delivery by drones in commercial operations is being evaluated, disaster and emergency responseorganizations such as FEMA and searchandrescue organizations will make significant strides using dronesin disaster situations.

Coming Soon: Virtual Simplicity in Real TimeBill McDermottCEO, SAP

1. The enterprise will become increasingly more virtual

Business is different today. Companies own less infrastructure, inventory and manufacturing equipmentthan ever. They’ve outsourced everything from customer service to supply chain – and a growing portion oftheir workforce isn’t even on their fulltime payroll.

When it comes to manufacturing, they operate on more flexible models that require rapid assembly ofresources on a project basis to address the biggest challenges of the moment. Then – just as quickly –these organizations must disassemble processes to make their businesses more agile and profitable.

Companies will increasingly look externally for innovations. They willtap call centers and thirdparty logistics providers to enable new modelsfor customer engagement; outside design partners and knowledgeworkers for product and service innovations; and contractmanufacturers for assembling products new and more efficient ways.

2. Businesses will have to simplify to survive

This “Virtual Enterprise” model may bring a level of agility, but it alsoincreases complexity. Complexity is the most intractable CEO challengeof our time. Business is no longer about executing a process within acompany, but across an entire value chain.

It’s not only about the intelligence within an organization, but theintelligence of entire communities.

It’s not about automating and doing things faster, but tapping collectiveinsights and best practices to do things better – and in entirely newways.

To truly enable the shift, business will look to simplify everything fromroutine tasks to more sophisticated aspects like planning and

and best practices todo things better –and in entirely newways." Bill McDermott

innovating.

3. Realtime business networks will become as popular associal networks.

Networks that connect companies with the applications, intelligenceand partners they need to make things go will help simplify the workenvironment.

Personal networks from Facebook to Uber have made it simple for consumers to shop, share and consumein new and more informed ways. When shopping on Amazon, for instance, you don’t worry aboutconnecting to individual merchants, banks or credit card companies because it’s all done for you within thenetwork.

Business networks provide an equally simple and scalable way for companies to discover, connect andcollaborate with the trading partners and resources they need to operate in today’s dynamic world. Look atSAP’s business network. With a few clicks, companies can shop for goods and services, place and manageorders, and pay for them – all electronically. They can view and manage spend across all major categoriesand manage their entire workforce – temporary and fulltime employees alike. They can engage customersacross multiple channels – all through a single, connected platform.

Just as networkpowered upstarts like Square and Airbnb are creating new models that transform entireindustries, business networks are leveraging the automation, scale and ubiquity of the cloud to furthersimplify the way complex business gets done. Companies that tap into them will enable the agility, speed andefficiency required to manage their operations in a new and dynamic way and stay ahead of the competition.

Robots Get RealJim Lawton, CMORethink Robotics

In the nittygritty world of the factory floor, a different kind of face will step up to the production line. In2015, a new category of smart, collaborative robots will join the manufacturing workforce based on theirability to work as humans do: trained by colleagues on a multitude of jobs; able to accommodate theinherent variability in the environment and ready to get real work done.

That real work lies in an estimated 95% of tasks that have been beyondthe reach of traditional automation—until now. Requiring compliancelike a human arm and the ability to “feel” one’s way into a fixture,examples of these tasks include placing a printed circuit board into anintegrated circuit test machine or tending a wood planer at a cabinetmaker. Robots driven by software, gears, joints and sensors becomesmart machines that are cost effective and able to perform tasks inhumanlike ways. By year end, these robots will add yet another layer of value—playing arole at the intersection of operations and big data. In the abstract,

"By year end, theserobots will add yetanother layer ofvalue—playing a roleat the intersection ofoperations and bigdata."

Jim Lawton

robots are containers of massive amounts of telemetry data that whencombined with other structured and unstructured data can providepowerful historical and predictive insights about making manufacturingbetter. Able to collect, sort and analyze the data, as part of broader dataand analytics platform, the robots will make it possible for humancolleagues to do what they do best: interpret the information andcreate strategies and actions that make the most of it.

IT Heads for the CloudThomas Trappler

"Onehundredpercent of softwaresuppliers will offereither a cloudversion of theirproducts or cloudaddons." Thomas Trappler

Sr. IT Commodity ManagerUniversity of California

In the next five years over 50% of all IT processes and functions thatwere previously run inhouse will have moved to the cloud. This will bethe result of both intentional enterprise transitions, and staffers'turning to easily accessible cloud computing services to more effectivelyand efficiently accomplish their work responsibilities.

Onehundred percent of software suppliers will offer either a cloudversion of their products or cloud addons. Some processes and functions will remain inhouse, however, because of data sensitivity orbusiness criticality. The IT staff will redirect its effort toward processesand functions that will either differentiate the organization fromcompetitors, or protect the organization from catastrophic databreaches or loss.

Source URL: http://www.industryweek.com/leadership/manufacturing20157thoughtleaderssharetheirpredictions