Rebirth of manufacturing in the digitalized world

Manufacturers need to change rapidly because digital technologies are disrupting not only the way to do business and to collaborate with customers but also the manufacturing supply chains and manufacturing operations. If manufacturing truly adopts the next ware of digital technologies, productivity will explode.

According to IDC FutureScape Worldwide Manufacturing Predictions 2018, already by 2020, 60% of manufacturers will rely on digital platforms, which will support as much as 30% of their overall revenue. By 2021, 20% of the top manufacturers will depend on a secure backbone of embedded intelligence to automate large-scale processes and speed execution times by up to 25%. The main innovation accelerators are:

* IoT
* cognitive computing
* next-generation security
* 3D printing
* robotics, and
* augmented and virtual reality.

Furthermore, cognitive technologies will drive towards highly automated supply chains with optimized asset utilization.

Productivity explodes

The speed of the change predicted is huge. Can we understand what this actually means for industry? For quite some time, productivity has been stagnated or only slowly increased. One of the reasons is that the current digitalization development has reached a mature level, where most of our practical operations work well even when using slightly outdated computers, smart phones, software and connections. Advances in such technologies do not necessarily add much to effectiveness or disrupt current operations.

The next, already ongoing, wave of digitalization (IoT, big data, digital platforms etc.) is different. We are witnessing the convergence of digital and physical worlds where decision-making is based on full situation awareness and where actions are optimally automatized. As traditional sectors, such as manufacturing, truly adopt the next ware of digital technologies, productivity will explode.

Customers and ecosystems are central

This is a great opportunity for agile actors to make manufacturing in high-cost countries profitable again. It also enables true customer-centricity where consumers’ and users’ individual needs are followed and future desires anticipated.

As a result of the increased overall efficiency due to the adoption of digital technologies, automation and material and manufacturing innovations, unique products can be produced with mass production efficiency. Cognitive technologies support fast product introductions and delivery, which in turn increase customer satisfaction and profitability.

Those companies that want to belong to the 60% share of manufacturers that adopt digital platforms by 2020 to support their business, need to act. The change is hardly carried out alone but in ecosystem with other companies and partners.

At VTT, we study and develop digital platforms, cognitive methods, robotics and many other enabling technologies in manufacturing context. A VTT-funded strategic project on Cognitive Factories has been started and companies are welcome to join. We also continue to define digitalization pathways for manufacturing companies in a European project Connected Factories where input from Finnish companies is gathered. Would you like to know more? Please contact us. We step forward to support the manufacturing companies in the rapid and profound change.

Read more: VTT Lighthouses – Industrial Renewal
Riikka Virkkunen
Manager, Digitalising industries

Now is the right time


State Secretary Martti Hetemäki recently commented the situation in Finland with the words “Either we fix the employment situation or make some new adjustment actions or give up the idea of cutting debts.” I think we all agree that improving employment situation is the only sensible alternative that we should promote. One has to wonder why this has been so difficult in Finland. Did we forget employment as our target for several years because we had other concerns after the finance crisis? We can create new employment opportunities either by creating new competitive products and services or by being better in sales and marketing. It was easy to cut marketing and R&D costs when the economy was declining – but did we get stuck in this mode? I think we did.

The economic growth that is necessary for increased employment doesn’t just happen on its own and the new products don’t just pop up from nowhere. And they certainly don’t sell themselves without any marketing efforts. We have lot of know-how and knowledge in Finland, lot of positive examples and great success stories of brave entrepreneurship. The situation is by no means gloomy even if we have a national tendency to see negative sides of the situation. We need bold decisions both from the state and the companies to invest in R&D and we need it now. In marketing, we have to be able to gain visibility and create something fresh. In R&D we need new, even radical concepts that help us to find ambitious product and service innovations. These have to be concrete, we have to have the courage to be different and visionary even if this means that we are taking the risk of being challenged. Far too often we end up being too general and too cautious.

At VTT, we want to create opportunities, suggestions of new businesses, and develop them together with our business and university partners. Our company also has to  change so that we get more speed and impact in our activities. We are now in the acceleration phase and on the right path in our change process.

Antti Vasara

President & CEO

Twitter: @ahavasara