How data is setting manufacturing on the smart path to digitalisation

In 2022, the smart money’s on digital transformation projects that aim to fortify fragile supply chains.

It seems there will be little let-up in supply chain disruption in 2022 for UK manufacturers – and many are focusing their investments on digital transformation accordingly.

The year began well enough for the industry, with domestic demand rising, raw material shortages falling and delivery delays in abatement.

But Russia’s invasion of Ukraine in March has already brought with it additional headwinds – a surge in energy costs is the most obvious for heavy-industry companies, but Russia is also a large exporter of crude oil, as well as commodities such as wheat and metals used in the aerospace, automotive and electronics industries, among others.

Sanctions and export restrictions are a valid, justifiable and necessary response to the devastating loss of human life and vast displacement of people that the conflict has triggered – but these penalties will also send additional shockwaves through the global supply network.

Are UK manufacturers prepared? Certainly, they’ve had plenty of practice in recent years, which have seen them wrestle with parts and materials shortages, sudden factory shutdowns and transportation difficulties.

On the positive side, these challenges have done much to focus manufacturing minds on how best to use technology to make supply chains more resilient to shocks, according to a recent survey from Digital Catapult, the British government innovation agency for advanced digital technologies.

At the tail end of 2021, researchers from Digital Catapult spoke to over 100 UK manufacturing leaders at director level or above; almost two-thirds of them (64 per cent) confirmed that, in terms of 2022 digital innovation initiatives, strengthening supply chains was their top priority. That’s comfortably ahead of other objectives such as reducing operational costs (57 per cent), growing their businesses (54 per cent) and becoming more competitive (51 per cent).

“From empty shelves to petrol queues and driver shortages, bosses from across all industries are taking note that our brittle supply chains are no longer fit for purpose. It’s hardly surprising, therefore, that UK industrial pros have highlighted overhauling supply chains as a top strategic priority in 2022,” said Digital Catapult’s director of digital supply chains, Tim Lawrence.

So where might manufacturers start? The first goal must be visibility; in other words, manufacturers need greater insight into operations, in order to be able to identify risks and potential breaks in the supply chain before they hit. And, having identified those risks, they need agility, so that, when disruption strikes, they can change plans quickly, whether that’s switching to another supplier, using another part or component in a product, or reconfiguring that product in light of a constraint.

A lot of this is down to internet-of-things data from sensors on the factory floor and warehouse shelves, and from vehicle telemetry systems, mixed with data from back-end inventory management and supply-chain applications. The cloud typically provides the location in which all this data can be stored and managed; and advanced analytical technologies, including artificial intelligence and machine learning, are the way that insights are drawn from that data, in the form of alerts, notifications, predictions and so on.

Most manufacturers are already at least some way down that road in terms of investment and implementation. Many made their start during the Covid pandemic, when staff shortages, factory closures and remote working forced them to take a fresh look at visibility and agility. And most still have some way to go, as illustrated by Digital Catapult’s list of the top ten digital investment priorities for its respondents in 2022:

Cloud – 67 per cent

Internet of things – 61 per cent

Predictive analytics – 61 per cent

Robotics – 56 per cent

AI – 54 per cent

5G – 54 per cent

Blockchain – 51 per cent

Digital twins – 48 per cent

Additive manufacturing – 46 per cent

Virtual/augmented reality – 44 per cent

At PTC, we saw a huge uptick in interest in these technologies over the course of the pandemic. And we continue to see manufacturing companies wanting to move in the direction of establishing what we call a ‘digital thread’, where software is used to create a seamless strand of data that connects each stage of a product’s lifecycle, from its initial design and the sourcing of parts, through to manufacture, and onwards to modification, maintenance and repair.

This idea of a digital thread has big implications for more resilient supply chains, because it captures all the information a manufacturer needs to build a product, including data on its parts and their suppliers – along with other options on similar parts from alternative suppliers.

It’s this kind of information, contained in the digital thread, that helps manufacturers change their plans quickly when disruption hits. They might choose to close one factory temporarily, for example, and divert the supply of certain components to a different factory making higher-margin products.

It simply makes good business sense – but you can’t make these kinds of decisions with any kind of assurance unless you have the evidence, in the form of data, that this is the smartest path to steer in a crisis. It’s time to take the lessons of recent years and put them to work for the long term, with resilient supply chains that enable manufacturers to work not only on the basis of ‘just in time’, but also ‘just in case’.

Paul Haimes is European vice-president solutions consulting at PTC.

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