The 3Cs – code, collaboration and capability – are the keys to separating the winners and losers in global manufacturing.
Code describes the software important in linking networks of products. Collaboration covers the relationships connecting companies with suppliers, developers and users. Capability encompasses employee skills.
The 3Cs grabbed attention at the latest in a series of annual “manufacturing summits” held by the Financial Times. At the latest gathering, held in London in early October, the topics for discussion included autonomous vehicles, artificial intelligence, the internet of things and the challenges of Brexit.
Pictured above is a taxi coming off the production line at a UK factory run by Chinese-owned London Electric Vehicle Company.The plant shows how collaboration between different businesses can lead to useful benefits.
First, consider code – the lines of software that act as the “glue” between interlinked machines. The key resource here is data. Every time a manufacturing process takes place, or a finished product interacts with the outside world, an item of data is created.
In the past, most manufacturers have failed either to collect, store or process the data- in many cases they’ve done none of these things. Now, the position is changing as businesses realise that the data – backed up by the software that keeps track of it and uses the data to make judgements – can help them to improve.
Extracting data from manufacturing processes can help raise revenues and profits
Driverless cars offer examples of where data and products connect. An autonomous car interacting with other vehicles and objects around it is an illustration of the much discussed “internet of things” – where the things happen to be large, expensive and on wheels.
Sarah-Jane Williams, director of smart mobility at the Ford carmaker, says people will have to stop thinking about “user-optimised journeys”, and become accustomed to “system optimised journeys” where software takes charge. Ford aims to generate revenues from the software by teaming up with other businesses – such as public authorities or other entities that may evolve to manage driverless cars – which have a part to play in managing the cities of the future.
More prosaically, software and networks are important for many manufacturers that wish to use their production machines more effectively. For instance, a company operating machine tools can link its machines with software that monitors the equipment to generate maintenance schedules and look for faults. Manish Chawla, general manager for global industrial products at the IBM computer and data company, told the FT event: “A lot of companies are sitting on a goldmine [of data].”
Networks and collaboration are crucial to using data more effectively, says Manish Chawla of IBM (left). Photo: FT
The second of the Cs – collaboration –can help companies to use and share data more effectively. Kone, the Finland-based maker of escalators and lifts, is one of several companies with which IBM has formed a partnership.
Whenever a person steps on or off an escalator, an item of data is generated. If this is collected, the software reveals useful information about travel patterns, perhaps inside a railway station.
If this information is linked to sensors recording associated “people movements” (for instance about people going in and out of doors) then a fuller picture of life within the building structure can be obtained. That helps the operator of the building to manage key aspects such as energy provision and security. Schneider – the French equipment manufacturer which also has a large business offering energy management services – is another partner in the IBM/Kone relationship.
Information is all around us – many manufacturers need to learn to use it better
IBM, in its work on the internet of things, can point to its collaboration with several other firms. Examples are the Swedish capital goods company Sandvik, where the partnership is geared to creating maintenance schedules for mining machines, and Cemex, the Mexico based building materials producer. Here the data harvesting gives Cemex insights into how customers use hardware such as cement mixers, feeding information back that is useful in developing both new machines and materials.
But collaboration goes beyond simply using data more effectively.
Malte Lohan, director-general of Orgalime, a Brussels-based trade body representing Europe’s engineering industry, told the conference: “Invariably you find that innovation can be maximised through partnerships [between companies].”
Sharing ideas and insights leads to better products and solutions, says Malte Lohan of Orgalime. Photo: FT
Steve Fisher, chief executive of Novelis, the US-based aluminium producer owned by the Indian industrial group Hindalco, elaborated on how this can work. He discussed some of the many partnerships his company has with businesses around the world – including many car makers that use aluminium to supplement the steel that most cars are predominantly made from.
A specific example is the link between Novelis and London Electric Vehicle Company, a UK-based company owned by Geely, a Chinese carmaker. LEVC is manufacturing a new generation of electric car in a £325m factory in Coventry, UK. Some of the first models of these cars are seeing service in Britain as the latest iteration of the famous London “black cab” taxi.
Through the link with LEVC, Fisher said Novelis is learning about how the aluminium structure for the new London taxis can be bonded to the plastics-based composite panels from which – in a relatively novel departure for the automotive industry -a large part of the vehicles’ bodies are made. “We are getting some unique insights,” Fisher said.
The final C – the capabilities of employees – stands out as another key theme.
The skills of people working in manufacturing are central to the sector’s progress
Without the correct skills people working in manufacturing – and the firms that employ them – will be unable to capitalise on the opportunities that new technologies have to offer. Making manufacturing as a career more attractive to young people -seen by many as more receptive to taking in new ideas than older ones – is a big preoccupation for many industrial companies. This aim is behind a number of industry and technology initiatives, among them the UK’s Made Here Now project.
Fisher of Novelis gave a specific example of how his business is trying to tackle the issue. This is through a global competition, organised by the US charity FIRST and sponsored by several businesses including the aluminium producer, to encourage students to develop new generations of robots.
“By getting involved with this competition we hope to create a promising talent pool and nurture the next generation of top industry minds,” said Fisher.
While Juergen Maier, chief executive of the UK arm of Siemens, the German engineering group, recognises the importance of such projects, he says that frequently educationalists and politicians divert too many resources into efforts to tempt young people into engineering and manufacturing, and fail to do enough to educate people already working in these fields in new thinking.
Juergen Maier of Siemens makes a point at the FT conference. Photo: FT
“Upskilling [of the existing workforce] is as big a challenge as the problems [in attracting people] at entry level,” Maier told the summit. The goal for many manufacturers must be to tackle all the three Cs simultaneously and so increase their chances of success.
By Peter Marsh
A version of this article can be seen on the website operated by Gideon Franklin, a corporate finance advisory firm specialising in helping Japanese industrial companies to become more global. For a Japanese translation of the story see here.