Today more than ever, manufacturers are having to find ways to do more with less, in order to stay relevant and build enough resilience in order to brace the ever changing macroeconomic, geopolitical and market conditions that they are facing. This article comes at an opportune time as it brings up examples of how others have walked this path, while highlighting some of the challenges manufacturers are facing in the present time. It also suggests a path forward towards achieving excellence. It builds upon precious findings that came to light from a recent CGI survey with business leaders and proposes possible steps for business leaders to take their organization to the next level, with a Unified Manufacturing approach.

To set the tone of this article, I would like to quote a few real-world examples of manufacturing excellence that say a lot about how business leaders have led their manufacturing organizations.

  • Toyota, renowned for implementing Lean Manufacturing principles, has achieved high efficiency, quality and customer satisfaction due to its focus on eliminating waste and continuous improvement (Kaizen).
  • General Electric (GE), a pioneer in adopting Six Sigma methodologies, has significantly enhanced operational efficiency and product reliability by improving quality and reducing defects in its manufacturing processes.
  • Motorola has significantly reduced manufacturing defects and set new standards for quality and efficiency by leveraging advanced statistical tools and technology to monitor and control manufacturing processes.
  • Siemens has integrated digitalization and automation into its manufacturing processes, leading to the concept of the Digital Factory. This approach has improved flexibility, efficiency and product customization.

The list goes on with P&G, Intel, Nestle, Unilever and Ford Motor Company, amongst others.

The leadership team of these companies has had to take several bold initiatives and try multiple options, against all odds, before finding the right ones that delivered the expected outcomes. This begs the question: what can our manufacturing leaders do to ensure they lead the change and drive their organization to success in today’s context?

The challenge

Many leaders find it challenging to step up from the traditional manufacturing approach and prepare to embrace Industry 5.0 and be more data-driven, connected, and unified. While Industry 4.0 was focused on connectivity between devices and systems to achieve optimum performance and improve efficiencies and productivity, Industry 5.0 complements this endeavor by bringing both humans and the environment at the intersection of technology, process and design.

The 3 pillars of Industry 5.0 and what they mean for manufacturers

A typical manufacturing value chain starts with knowing what needs to be produced, in what quantity, with what specs, in what timeline and for which location (which comes from the sales organization or the ecommerce portal). Based on the predefined bill of materials (BOM), the raw materials are sourced, and if it's a custom order, the product research and design teams ideate, design, and build the specs and BOM. This is sent to the production floor, triggering the required production planning, scheduling and management, MES systems, waste management, inventory management, and QA processes. Field maintenance, repair and operations (MRO) are essential activities that are key to ensuring a well-oiled production floor. Supply chain and distribution activities are an integral part of the manufacturing value chain as they ensure the right parts are delivered to the right location at the right time through the most optimum and cost-effective route, while keeping customers informed of any deviations and delivery status at all times.

The key to excellence is ensuring seamless and flawless execution of the various processes across the manufacturing value chain while providing business leaders with complete visibility on how well this is happening, so they can course correct in case of any deviations along the way.

Manufacturers today are at varying maturity levels when it comes to adopting technology to enable a smooth manufacturing value chain. Terms like cloud computing, wireless networks, IoT, advanced robotics, drones, mobile devices, augmented reality, big data analytics, cybersecurity, 3D printing, and automated guided vehicles (AGVs) have become common. In fact, they are expected when speaking about a fully modern, connected, data-driven, and digital factory. Depending on the manufacturing sector, whether aerospace, automotive, high tech & electronics, industrial products, chemicals, pulp & paper, metals, mining, or agriculture, the extent of adoption of each would vary.

It can be overwhelming for manufacturing leaders to understand how each technology mentioned above would add value to their manufacturing value chain. There is certainly no one-size-fits-all approach. Instead, it requires a holistic view, supported by an incremental approach to adding value one step and one process at a time until the desired outcomes are achieved at the departmental and eventually at the enterprise level.

CGI Voice of Our Clients research reveals trends and priorities

Current macro and industry trends are prompting manufacturing leaders to define, redefine, adjust, and course-correct their business & IT priorities for them to help their companies stay relevant and to be able to deliver on client commitments. As part of the 2024 CGI Voice of Our Clients research, CGI interviewed more than 1,800 executives, of which 80% were C-level. This included 202 manufacturing executives. These strategic conversations revealed that 73% of manufacturing executives cite technology and digital acceleration as the most impactful macro trend, followed by changing social demographics (52%), the fight against climate change (50%) and reconfiguration of supply chains (33%).

While climate change and sustainability remain a key industry trend, increased digitization of business processes, cybersecurity, data privacy protection, AI & data-driven approaches were notable trends.

One of the top five business priorities is to drive revenue growth and optimization through digitization, AI and automation. Executives also mention the continuing need to drive revenue growth, innovation, customer centricity and cost optimization.

The pace of digital acceleration (the YoY growth of organizations producing expected results from their digital strategies) varies based on the industry. The automotive industry is at 34%, and the industrial & commercial goods industry is at 21% compared to the global average at 30%.

How manufacturers can succeed and lead in today’s environment

What does this all mean for the manufacturing leader? How can they lead the change? What do they need to do, and where can they start?

  • Go back to basics - Review your shop floor, technology stack, operations and processes and aim to build resilience, agility and speed to market. Focus on cost reduction at all times and on an iterative basis until your organization becomes lean. This requires assessing how things are run today so you can take stock of where you stand and determine where you could realistically be within a defined timeframe. Then, work on a plan to move from your current state to the to-be state.
  • Get your data ready - The manufacturer of tomorrow is data-driven. So much data is generated by the various operations systems, including IoT devices, sensors, and supply chains. However, most of this data is often unused, leading to lost opportunities to generate valuable insights. Leveraging this data can help identify trends, predict outcomes, and optimize processes, leading to more strategic and effective decision-making. This, in turn, will lead to reduced costs, faster delivery times, and better customer satisfaction. This is also an opportunity to implement more sustainable practices and reduce your environmental impact through available, consumable and actionable data.
  • Build flexible supply chains that can quickly adapt to changes and disruptions – Flexible supply chains allow you to respond to changes in demand, supply and market conditions, while maintaining service levels and customer satisfaction even during unexpected events. IoT, AI and blockchain technologies can provide real-time visibility into supply chains. The right inventory levels also help to meet demand without overstocking, which ties up capital. It also helps to scale operations based on demand fluctuations. Some manufacturers are localizing parts of the supply chain, such as production or warehousing, to reduce dependency on global supply chains and shorten lead times.
  • Be open to collaboration – Working closely with suppliers, partners, and customers enhances communication and coordination, which helps in addressing issues quickly. Collaboration also helps to build customer-centricity and paves the way for a more interconnected supply chain ecosystem that provides visibility for all parties involved.
  • Stay focused on both IT and OT security – Data is everywhere and more accessible as integration with external systems and partners grows. A security breach in OT systems can easily disrupt manufacturing processes, leading to significant downtime and financial losses. It can even compromise employee and equipment safety. Data integrity is key for decision-making, quality control and compliance. Safeguarding customer data also builds customer trust and confidence. Keeping IT and OT security high on the agenda is critical to protecting sensitive, confidential and financial data.

The concept of unified manufacturing is gathering steam. With an industry-wide adoption of the -2591 CFX industry standard, some manufacturers have renewed their SLAs to mandate suppliers, vendors, and manufacturers to qualify for IPC-2591 CFX.

Want to know more about the topics covered in this article? Feel free to contact Aumesh.