Global challenges to Lithuanian industry and possible solutions: what should we prepare for?2020 07 20
A fully autonomous factory that is 100% automated, that is able to learn independently, and where human involvement is necessary only in the design, first configuration, monitoring and the management of exceptional issues. Does this sound like something worth aiming for? It still lies in the future but, as the evolution of such a factory comes closer, each one of us can draw inspiration for our business systems and start to gradually apply the modern processes of business digitisation.
Digitalization is undoubtedly transforming businesses, but it will only have a clear effect on the growth of productivity over the long term, when the new tech starts to be applied on a large scale. A great example of this is the industrial market, which is now facing a serious global challenge.
How will we live in 2035?
To understand where industry is going, we first have to understand how the world is developing. Studies have shown that the Human Development Index (an indicator that summarises the economy, education, quality of life and life expectancy) is increasing all over the world. In other words, human development is currently increasing in almost every country in the world.
Yet at the same time, societies are feeling increasing uncertain and insecure, because human beings are facing ever greater risks as social structures and boundaries are becoming weaker. Before COVID-19 caught us off guard, we could have said that uncertainty was the feature of a post-modern society, but it is now a real, daily challenge for probably every business person in the world.
Let’s look into this issue in more detail. According to research compiled by the United Nations, humanity has never been so rich and at the same time so old as it is at present. Problems will arise in the future, not only due to the aging population, but also due to the growing interrelationship between climate change, competition for energy resources, and the shifting balance of global superpowers.
New core of the industrial and technology transformation: what to prepare for?
In terms of future expectations in the field of the economy, there is uncertainty due to different approaches concerning the role of the state in regulating the market in the largest developing economies – India and China. However, the growth of the Asian economic powerhouses does not seem to be a problem for the EU – the EU’s economy is already adapting to China’s needs, by increasing its exports by 2.6 times during the past 10 years. In addition, the expansion of the middle-class in the growing economies is beneficial to the EU industries that supply products for mass consumption and of high added value.
Changes are also unavoidable in the field of technology. The platformisation of the internet has been a megatrend in the past decade, but it is likely that most of its potential has now been exploited. Therefore, this process will not necessarily continue in the future.
Although new technologies are fundamentally changing the business models and erasing the boundaries between business sectors, a growth in productivity has not been reflected in the statistics, In fact, productivity has been decreasing in both the EU and the US for a period of two decades. According to economic analysts, the reasons for this decrease are a lack of efficiency, energy resources and regulations. Moreover, new technologies are being implemented or introduced to the manufacturing processes gradually, in stages, so that it takes a long time to see their benefits.
Global challenges to industries and possible solutions
Changes in consumer needs and other social trends are forcing the manufacturing sector to change as well. We are seeing evidence that manufacturers can overcome the future challenges by assuming new roles and by turning to digitisation. Therefore, we have several recommendations regarding what industries should be aiming for at the present time.
· Research and development. Industries are trying to reduce their development costs, so the amount of product research is also being reduced.
Recommendation: expand the range of product research, openly share information, and enable interoperability and modularity.
· Logistics. Currently, a key aim for industries is to reduce the transportation costs and increase the transported loads per trip. However, buyers want to know and monitor exactly where their products are at any given moment. They do not want to wait for the products, due to their attitude to consumption and various trends.
Recommendation: reduce the distances to reach the end consumer and enable real-time monitoring.
· Manufacturing. As industries are trying to reduce labour costs, shorten the equipment launch times, and increase the capacities and batch sizes, the customer requirements for added value, sustainability and eco-friendliness are only growing.
Recommendation: optimise the supply and manufacturing throughput by adapting to the varying demand, and reduce the use of resources.
· Sales. Currently, there are efforts being made to increase sales quantities and shorten warehousing times, but the consumers want to maintain their ability to choose how to buy a product.
Recommendation: encourage consumer engagement, improve the consumer experience, and carry out personalised marketing and sales activities.
· Customer service. Since industries are trying to reduce their customer-facing time to reduce the servicing costs, customer loyalty is also decreasing.
Recommendation: prolong and expand the consumer interaction with the product, and personalise customer services and support.
Nonetheless, these recommendations will be of little use if no concrete action is taken. Nowadays, the market already offers plenty of different products that, for instance, help a company to plan, design and build manufacturing buildings, create an infrastructure, or monitor its processes, or which are capable of conducting logistics operations without human involvement.
Current technologies cover not only the operations inside a factory, but can also help to involve the external partners: suppliers and clients. Moreover, integrated planning enables a company to rapidly react to changing demands or the availability of resources, while flexible modular solutions may be tailored to the manufacturing process of a specific product. Such innovative connections improve the collaborations between humans and machines, and help to achieve a better manufacturing performance.
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