In an opinion piece I wrote for The Business Times recently, I spoke about how the caps to foreign worker quotas would impact supply chain management. Retailers, transport and logistics players will have to be nimble to catch the wave of technology. I opined that a big factor in this new dynamic is the millennial consumer. Those born after 1995 pose a radically different demographic for retailers, employers and any enterprise that wants to lure them to part with their money, right through to hiring them.
The millennial consumer wants to be able to differentiate himself from the other consumers. He harbours a preference for customised, personalised products, a mix and match of different components that make up a product, whether it’s in fashion, in jewellery, in food and beverage options, or in automobiles. In the near future, this flexibility and customisation will extend to bespoke drugs and medications and nutritional supplements. That presents tremendous opportunities for disrupting the manufacturing life cycle further and is the genesis of industry 4.0.
The evolution of manufacturing: Industry 4.0
As tenuous as it may seem, there is a link between the changing preferences of the millennial consumer and the evolution of manufacturing and the rise of Industry 4.0. The traditional model of producing goods of the same materials and components on a massive scale is giving way to what manufacturers now call a “high mix, low volume” solution that gives manufacturers the flexibility to produce on demand, at varying quantities, in response to orders that are made at irregular intervals, at varying amounts each time.
Large scale robotics and automation is only scratching the surface of industry transformation. Many firms have embarked on some level of automation but very often, the digitisation of manufacturing processes is limited to robotic tools and digitising Enterprise Resource Planning (ERP) processes to enable machine operators to collect, store, manage and integrate manufacturing processes on a software that is accessible on the go.
Manufacturing clusters such as precision engineering are going beyond robotics and automation and have embarked on a new manufacturing paradigm harnessing cloud computing, Internet of Things (IoT), virtualisation and advanced computing technologies. Manufacturers operate within a smart factory environment, plugged into an alliance of manufacturing resources and services supporting the whole lifecycle of manufacturing. In a highly advanced cloud manufacturing environment, precision engineering companies tap on an alliance of designers, simulators, producers, testers and maintenance resources to find the most cost-effective way to manufacture any kind of goods from aeroplanes to home appliances. Some precision engineering firms even go so far as to provide real-time Artificial Intelligence-enabled tools to auto correct processes in the test environment.
I recently visited a smart precision engineering factory that has successfully automated its ERP, coding the entire production process from cleaning, washing, painting, checking, sorting machine parts, where IoT enables machines to speak to one another, and auto-correct any errors that are detected. This smart factory records production efficiency levels of 300 per cent and is expecting more when it fully transitions to the cloud.
Cloud – manufacturing’s next frontier
Cloud manufacturing supports clean tech, the development of higher value talent and the creation of tech-powered smart factories and should be encouraged. Where the government can step up is in creating a cloud environment that is transparent, where information is shared freely between companies trans-border and in a secure manner to ensure data integrity and transparency.
In its 2019 budget, the Singapore government announced that it will continue to pump money to help SMEs automate and digitise. Up to a point. What would really bring SMEs a notch higher would be to invest in platforms like blockchain technology. Governments can collaborate with each other to create a cloud environment that enables SMEs to form alliances and tap on a range of resources to produce goods faster and more cost effectively.
Automation invariably reduces the need for manpower and Singapore’s supply chain is evolving at a pace that has put traditional factory workers and machine operators at risk. This trend began two decades ago and has seen a shift from labour intensive manufacturing bases out of Singapore to higher-value manufacturing processes. We are witnessing the evolution of nano manufacturing where humans supervise from a remote operations centre in a clean room away from the dirt and dust typical of heavy duty factories, operating from the cloud to control machines that speak to each other in another part of the smart factory.
This business model is taking on increasing importance as manufacturers look to attract the millennial worker and retain older workers. In fact, all the players in the supply chain – manufacturers, distributors, transport and logistics players in the last mile delivery process that traditionally rely on manpower will have to be retrained and reskilled to take on higher value roles. This is particularly relevant to urban city centres where labour is often tight.