Historically, the manufacturing industry and Micro, Small, and Medium Enterprises (MSMEs) have played important roles in the economic development of major economies of the world and in job creation. The report “Growing the global economy through small to medium enterprise: The G20 SME conference” highlights that MSMEs “are the most common businesses found across most of the world’s economies. Such firms comprise around 99 per cent of all businesses in most economies and between half and three quarters of the value added. They also make a significant contribution to employment and are of interest to governments, primarily for their potential to create more jobs.”

A manufacturing company, while producing goods that meet the customers’ needs strives, on one hand, to delight them by ensuring that they get the best quality products at affordable prices and on time and, on the other, create value to its shareholders. Wanting to remain competitive, it aims to deploy most productively and efficiently all its physical, financial and human resources by becoming real-time information driven.

What exists

For achieving this goal, manufacturing companies leverage manufacturing information technology solutions. The current practice is to use automation systems to control production processes, often referred to as Operational Technology (OT), and enterprise solutions, such as Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Supplier Relationship Management (SRM), Customer Relationship Management (CRM), and others. The enterprise solutions have come to be called as Information Technology (IT) systems.

Driven by the business needs and available technology, these systems and solutions evolved independently over a period of time and were deployed to address various transactional issues, such as production and material planning, sourcing, scheduling and capacity planning, and others.

Due to globalization, the manufacturing industry, that for many years remained vertically integrated, has become a conglomerate of value-add partners working collaboratively, with many of them being MSMEs spread across the globe. The case of the automobile industry, which is one of the largest and vibrant industries globally, illustrates this point well.

An automotive company, such as Maruti Suzuki or General Motors, essentially owns the brand and the assembly lines. These original equipment manufacturers (OEMs) procure most of the parts, which go into a vehicle, from value-add partners. A vehicle has more than 1,000 major parts or subassemblies made of various materials, such as aluminum, steel, and rubber, and through different manufacturing processes, such as castings, forgings, machining, and moldings.

The robust presence of numerous automotive component manufacturers along the value chain has contributed significantly to the emergence of India as a global automotive hub. According to industry information, the India’s auto-components’ industry accounts for almost 7% of the country’s Gross Domestic Product (GDP) and employs as many as 19 million people with MSMEs playing a dominant role in it.

The next stage

While spurring the rapid growth of the MSME sector, this trend also made the production processes more complex. This mandated the integration of OT and IT systems so that all information is coalesced to facilitate all corporate and operational management decision are real-time actionable. Silos of information are no longer acceptable and Internet technology, which is an excellent platform to connect almost all sources of information, is emerging as a transformative force and its adoption is heralding a new manufacturing era.

The new manufacturing industry, often described as Industry 4.0, has resulted in the deconstruction of vertically integrated manufacturing into horizontally integrated chain of collaborative value-added partners, is all set to gain further momentum in future. Potentially, Industry 4.0 era offers excellent growth opportunities for MSMEs.

Industry 4.0 is a symbolic reference to the transformation taking place in the manufacturing industry, often referred to as the fourth industrial revolution. While, mechanization, electricity, and IT characterized the first three industrial revolutions, the introduction of the Industrial Internet of Things (IIoT) and Services into the manufacturing environment signals its next avatar.

Enter IIoT

Germany, whose economy depends on a robust manufacturing industry, understandably has taken major initiatives to get the country future ready to embark on the next generation of production technologies. The Industrial Advisory Group of the European Commission and Smart Manufacturing Leadership Council of the US are also working on similar initiatives.

The key drivers ushering the new industrial era are the convergence of the information and operational technologies due to the developments taking place in the computer, communication and information technology domains and the emerging business imperatives to make the manufacturing operations more productive, efficient in the use of all resources, and more responsive to customer needs.

The production facilities of the future will have machines fitted with embedded computing processors, memory storage units, sensors, and transmitters that generate data. They will be Internet connected and, hence become IIoT or Cyber-physical systems (CPS) capable of exchanging information with each other.

With the help of big data analytics and cloud computing, the connected production machines, equipment, materials, products, and such other entities along the value chain will have the power to autonomously trigger activities to achieve tightly coupled production operations. The distributed and connected intelligence along the value chain would empower production systems to self-configure and interact with operators more contextually and thereby facilitate fundamental improvements to the industrial processes involved in manufacturing, engineering, material usage, supply chain, and life cycle management. Industry 4.0 and IIoT trends have extensive implications for value creation, business models, downstream services, and work organization.

According to a report, Varroc, a leading auto component manufacturer, under its Industry 4.0 / IIOT initiative has connected all its disparate machines seamlessly to create a single data tunnel that collected various parameters in real time, The initiative has helped the company maximize operational efficiencies, productivity, reduce the energy footprints and maximize capacity utilization.

An article “How Smart, Connected Products Are Transforming Competition” in Harvard Business Review highlights how GE aviation is now able to provide more services to end users directly. “Information gathered from hundreds of engine sensors, for example, allows GE and airlines to optimize engine performance by identifying discrepancies between expected and actual performance.”

Anecdotally, countries and business entities which leveraged the evolving trends have emerged successful. Such breakthrough opportunities come infrequently and the emerging Industry 4.0 era with the extensive deployment of IIoT along with cloud computing and big data analytics provide immense growth impetus for MSMEs in India. Making of the IIoT devices by itself must be quite alluring for MSMEs.

Source: The Economic Times