In 2020, the pandemic rattled global supply chains, with abrupt changes in consumer behaviors forcing businesses to test the resiliency of their operations from end to end.
Consumer buying channels shifted from brick-and-mortar to online, with online sales jumping from $598 billion in 2019 to $861 billion in 2020, an increase of 44 per cent. This required massive scaling of back-end supply chain operations of CPG companies to be able to ship direct to consumers, versus shipping bulk to wholesale and regional DCs. Consumer preference for products also changed (different pack sizes and volumes, more processed foods), and CPG companies shifted focus from introducing new products to catering to new demands.
These changes have impacted supply chains all the way upstream, from sourcing to manufacturing, with residual strains still affecting businesses worldwide. As manufacturers work to recover from the disruptions related to COVID-19, Forrester predicts that “flexibility, resilience, and innovation” will remain priorities.
CPG manufacturers have long seen digitalization in manufacturing as a way to increase supply chain flexibility, operational efficiencies, and automation. With the pandemic, interest in digitalization has increased, as businesses look for ways to enable leaner, more efficient and responsive manufacturing.
The internet of things (IoT) and digital twin technologies have attracted a lot of attention from manufacturers, and the global Industry 4.0 market is expected to reach $219 billion by 2026. Companies have reaped tangible benefits, impacting both top and bottom lines: 30-50 per cent reductions in machine downtime, 15-30 per cent improvements in labor productivity, 10-30 per cent increases in throughput, and 10-20 per cent decreases in the cost of quality.
The factory of the future
Most CPG companies have plants across different geographies. While core production lines are largely automated, core operations are often managed manually and can vary from plant to plant based on each plant’s degree of automation and the solutions available.
The factory of the future uses digitalization to increase connectivity, collaboration, and responsivity among its people, processes, and technologies. This comprehensive approach ensures technology is truly integrated with the business and helps employees harness the full potential of digitalized manufacturing. The key enablers for the factory of the future include:
- Connected Assets
IT-OT integration through connected devices such as IoT and the industrial internet of things (IIoT) is essential. As manufacturers introduce robotics, automation, and other technologies on the asset or equipment level, they need to also enable communication with those devices — both from the human workforce and other devices. These smart devices, or intelligent automation, can dramatically increase accuracy and performance because they collect and communicate operational data, which operators can use to optimize processes.
- Connected People
The workforce is the life blood of shop floor. So, when social distancing guidelines limited the number of employees who could be on the shop floor at once, manufacturers had to find ways to supplement their workforce while maintaining their safety. Process automation and remote support management have become increasingly popular. Remote connectivity and digital platforms have also enhanced stakeholder collaboration among suppliers, co-manufacturers, and customers.
- Connected Digital Content
When demand spikes due to increased customer offtake, will manufacturing be able to meet that demand? Information silos are the single biggest impediment enhancing operations. Real-time insights on key operational performance matrices (e.g. OEE, yield) combined with cognitive analytical capabilities in the decision-making process are key to achieving operational excellence. Technologies like digital twin, which can converge content from virtual and physical spaces, can help simulate numerous what-if scenarios based on real-world insights such as operational performance, capacities, and labor utilization.
- Connected Services
Intra- and inter-plant collaboration have been limited due to technology constraints. Among stakeholders, the sharing of information and leveraging of best practices has been largely manual or offline. But as increased adoption and innovation make powerful technologies more accessible for businesses. Advances in cloud computing, for example, are promoting collaboration and enhanced supply chain performance by making services and information more accessible. Cognitive computing (AI, machine learning) is automating data aggregation and analytics, providing organizations sharper insights and the means to operationalize them.
It is important for manufacturers to strategize digitalization initiatives as a company. Start small and scale is the mantra. Consider the lighthouse approach, where digitalization is initiated in select factories as pilots so the organization can realize business impacts quicker and make any necessary adjustments. When starting the digitalization process, consider the low-hanging fruit, initiatives that address immediate challenges or business goals: increasing transparency/visualization for real-time manufacturing intelligence, digitalizing manual processes such as quality control, monitoring and standardizing assets/process performance with digital twins.
Over the last few years, Wipro has provided strategic support to help clients digitalize their manufacturing operations. For a leading personal care company, we conducted an Industry 4.0 maturity assessment, then developed short-term and long-term transformation roadmaps with clear business cases and anticipated impacts. We developed and implemented intelligence-based manufacturing solutions through a Digital Wall — a large electronic display on the wall that collated key performance metrics across plants for real-time performance management. This enabled operations to monitor KPIs such as OEE, waste, and yield on a shift-by-shift basis for more informed decision-making.
We also leveraged digital twin capabilities to help a leading F&B manufacturer optimize process performance, such as addressing schedule variances due to demand fluctuations. In this case, we implemented Wipro Smart Factory solutions with focus on autonomous maintenance and digital scheduling as a means of synchronous scheduling and execution. By implementing daily direction settings, we enabled the client to track performance in real time, for significantly enhanced decision making.
Digitalizing processes can help manufacturers build more efficient, resilient operations. To make the most of these upgrades, businesses need to approach the transformation process holistically, developing a comprehensive strategy that accounts for the various interactions — both internal and external — of the modern factory.