Why Advanced Manufacturing Will Increase Productivity ?

In the past industry, the process of competing for the competitive advantage of the manufacturing industry mainly relied on finding new and abundant sources of cheap labor. However, with the rapid rise in wages in China and other emerging markets, global manufacturers are under increasing pressure to obtain old-fashioned advantages through increased productivity.

​Technology development may be the catalyst for the next wave of manufacturing productivity growth. This development (sometimes referred to as “Industry 4.0”) is characterized by cyber-physical systems (CPS) and dynamic data processes that use large amounts of data to drive intelligent machines. The declining price, the continuous improvement of hardware and software enabling performance, the digitalization of the industry, the enhancement of connectivity, and the increasing flexibility of manufacturers, the pressure of more environmental protection, and the confluence of multiple forces may accelerate the adoption of next-generation advanced manufacturing technology technologies. Soon, they may change the global production economics of many industries.

The term “advanced manufacturing” has been around for decades and means many things to many people. We define advanced manufacturing technology as a set of highly flexible, data-enabled, and cost-effective manufacturing processes. These tools provide a range of benefits that, taken together, can redefine the economics of global manufacturing competitiveness in many industries. Leading manufacturers such as Ford and General Electric are already using some of the most advanced tools to manufacture high-precision parts.

Our research found that the vast majority of US manufacturing executives are beginning to explore advanced maanufacturing. In our third annual survey of U.S. manufacturing executives of companies with sales of at least $1 billion, 72% of respondents said they will invest in more automation or advanced manufacturing technologies in the next five years. Only 10% said they were unlikely to do so. Among the executives surveyed, about three-quarters said they hope advanced manufacturing will increase productivity and create more localized production. 56% of respondents predict that lower automation costs will increase the competitiveness of products produced in low-cost countries.

Advanced manufacturing technology can increase productivity in many ways. They enable manufacturers in certain industries to provide customers with the option to “act in their way”, thereby greatly increasing flexibility. Manufacturers can also produce products in small batches for specific customers, adjust production lines based on design changes, and even accelerate time to market by quickly generating prototypes.

Advanced manufacturing technology can also promote innovation by allowing manufacturers to create new products that conventional methods cannot produce cost-effectively. They also allow manufacturers to produce high-quality goods that meet the buyer’s exact specifications. Moreover, these processes are environmentally friendly because they generally consume less raw materials and produce less waste. By exposing workers to fewer hazardous substances, they also increase safety.

As of now, we believe that the following five technical tools have the greatest potential in the coming years to influence the manufacturing landscape and increase productivity.

Autonomous robot. A new generation of automation systems connects industrial robots with control systems through information technology. New robots and automation systems equipped with sensors and standardized interfaces have begun to supplement labor in many processes. This allows manufacturers to cost-effectively produce smaller-scale products and improve their ability to improve quality.

Integrated computational materials engineering. By creating a computer model of a product and simulating its performance before the product is manufactured, instead of building and testing multiple physical prototypes, engineers and designers can develop products better, faster, and cheaper.

Digital manufacturing. Virtualization technology can be used to generate a complete digital factory that simulates the entire production process. Among other things, digital simulation can help engineers save time and money by optimizing factory layout, identifying and automatically correcting defects in each step of the production process, and modeling product quality and output. The entire assembly line can be copied to different locations at a relatively low cost.

Industrial Internet and flexible automation. Manufacturing hardware can be linked together so that machines can communicate with each other and automatically adjust production based on data generated by sensors. They can “see” the supply chain.

Additive manufacturing. The additive manufacturing process is commonly referred to as 3D printing, which creates three-dimensional objects based on digital models by continuously depositing thin layers of material. Such processes have already been used for prototyping in certain industries, including aerospace, automotive parts, and basic consumer products. In the future, it is expected that these processes will be used to manufacture small batches of a product made of solid material, such as hollow balls without seams.

These technologies have not been widely deployed today and will not have a major impact in the short term. In the next five to ten years, they are also unlikely to replace labor as the most important cost factor in many industries. For example, the science of 3D printing materials is still evolving, and for it to be feasible and cost-effective on many substrates, major improvements are needed. However, leading manufacturers have used these advanced manufacturing tools to varying degrees and achieved impressive results. It is expected that they will eventually become an important factor in the industry.

Predictions about the leap in new technologies in manufacturing have been circulating for some time, but for several reasons, this move is now getting closer to reality. The trend that BCG has followed in the past three years is the transformation of the global manufacturing economy. For example, when China’s labor costs were about one-twentieth of the US labor costs ten years ago, it’s not difficult to shift production to China instead of investing in expensive states. Today, productivity, logistics, and other costs are considered. Since then, the advanced production capacity in the United States has made the cost gap between many products almost disappear. Similarly, several economies in Eastern Europe have lost a lot of cost competitiveness compared to the United Kingdom. It is estimated that Brazil is now more expensive than in many countries in Western Europe. The German BCG publication will discuss strategies for improving competitiveness through Industry 4.0.

Many other trends are also having an impact. The rapid development of information technology, sensors, and nanomaterials has greatly reduced the cost of leading manufacturing processes and improved their performance. From digitization to engineering design, supply chain management to factory workshop, digitization has gradually but surely penetrated all aspects of the production process, thereby making the production system more intelligent and highly networked. At the same time, the company is under increasing pressure to increase productivity and better adapt to changing customer needs.

Advanced manufacturing technology can potentially help meet many of these needs. The new process allows manufacturers to quickly and easily modify designs and reconfigure production lines according to customer needs, thereby increasing productivity and responsiveness to the market. As a result, manufacturers can use a similar set of processes to produce a wider variety of products. The factory of the future will combine the efficiency of mass production with customized manufacturing: each machine will be able to produce a variety of customized products tailored specifically to customer needs-it is difficult to use and often expensive conventional manufacturing processes. They can even propose goals at once without increasing capital expenditure.

Because information technology can enable robot networks to communicate with each other, the entire production system and supply chain can also become more efficient. Robots can pass the problem data in one part of the production line to the robots in other parts of the production line so that they can make adjustments. Besides, by accessing the supplier network through the industrial Internet, the robot can automatically adjust the production process according to the updated delivery schedule of parts and materials, thereby reducing waste and inventory costs.

Several leading manufacturers are already demonstrating the potential of some of these advanced processes. For example, Ford Motor Company is using ICME to reduce the time and cost of developing aluminum castings for engines. The conventional method is to design an engine module on a computer, build a physical prototype, test it, then redesign, rebuild the prototype, and then test again until the product is ready for production. Using the ICME process, a virtual test of the digital model of the casting is performed, and only after engineers are confident that they have created the best design can they build a prototype. Ford invested $15 million in the ICME experiment within five years, including 15 of its engineers and 10 university researchers. to date,

GE has successfully used additive manufacturing processes to manufacture fuel nozzles for LEAP turbofan engines, which are being developed for the next generation of single-aisle aircraft. In the additive manufacturing process, the nozzle is built by the computer-guided laser based on the metal powder layer. GE said: “The new nozzle is 25% lighter than mechanical parts, and the durability is five times that of the nozzle currently made from 20 different parts.” According to the company’s press release, GE will spend $32 million to build a new nozzle in Pennsylvania ‘S research and education center, focusing on additive technology.

As advanced manufacturing processes improve, become more practical, and spread through the supply chain, more manufacturers will realize considerable benefits in cost and productivity. According to BCG analysis, the combination of these tools can help reduce production costs (excluding raw materials) by 20% to 40%.

The next technological revolution in manufacturing will take time to fully unfold, but the early stages have already begun. Next year, we at BCG will begin to share with you in-depth insights on some of these technologies and discuss their possible impact on manufacturing. Given the rapid changes in costs such as labor and energy, manufacturers need to reassess their global production network, so advanced manufacturing technology must be adopted. It is too early to grasp the full impact of these tools and processes or understand how they will evolve. But they will fundamentally redefine the dynamics of global competition in many industries. Advanced manufacturing technology will enable the company to manufacture goods faster, better and cheaper, and bring a leap in productivity.