Future manufacturing moves from global to hyperlocal
Economies of scale are diminishing and the threshold for manufacturing products are getting lower. In the future we might end up with small production facilities producing limited batches of products for highly specified markets. These are some of the thoughts of Risto Linturi, Executive Catalyst and Chairman of the Board at Sovelto, who believes that the ways in which we manufacture will change drastically in the future.
How to come up with new ideas on serving the customer better and developing your business? For Risto Linturi it is of utmost importance to be creative. It is also key to find the right metrics to help you focus on the right things. In the 1990’s Linturi lead a company specializing in IT-coaching where this approach was implemented in practice.
“Back then we felt we didn’t need a process-based quality handbook on how the business should be run. Instead, we based our metrics on customer satisfaction. Through applying a satisfaction guarantee, the instructors became increasingly motivated. This was because the end result of their hard work depended ultimately on the customer’s experience and not on superimposed quality indicators”, Linturi says.
This, Linturi says, is a prime example of gaining value through seeing things from a different perspective.
Automotive industry’s leap towards services
According to Linturi, one of the industries, which is facing the need for these kinds of perspective shifts is the automotive industry. Uber announced in 2016 that they were planning on purchasing a total of 100.000 S-Class cars from the automotive company Mercedes-Benz in 2020.
“When Uber is ordering cars from a manufacturer in the range of hundreds of thousands of cars, the market situation for the manufacturer changes radically”, Linturi says. “The total number of clients the manufacturers have might decrease radically, and it may end up being just a couple in the end. This is a very challenging market position to be in.”
“In the context of car manufacturers, instead of building their business solely around their traditional product, they must now begin viewing themselves as companies that offer transportation services.”
Some companies have decided to move more into the direction of cooperation with the companies disrupting the traditional manufacturing model. Instead of jeopardizing their business, the manufacturer must see the disruptors as an opportunity to find new ways to create value. According to Linturi, companies must change the way they see themselves. In the context of car manufacturers, instead of building their business solely around their traditional product, they must now begin viewing themselves as companies that offer transportation services.
“This has a notable effect on how the industry works. On top of the vehicle manufacturing, the companies now have to think about insurance policies, for example”, Linturi says.
3D printing allows customization for customers
The change in the types of services companies offer can also be seen in how they are starting to utilize emerging technologies, such as 3D printing. Manufacturers can simplify their actual deliverables to include just the bare necessities, such as electronics, motors and maintenance services.
“The rest is up to the customer. The companies can deliver kits, which also include a set of instructions for customizing the product to the parameters that the customer sees fit”, Linturi says.
Linturi mentions that car bodies are a good example of the things that anyone can print for themselves in the future. The more the customers are left with the final customization of products, the more the manufacturing ends up moving to local manufacturing sites. The global material flows will also begin to consist increasingly of raw materials instead of semi-manufactured products.
“What it also means is that these small manufacturing plants can begin making small batches of custom-made products for highly specified markets instead of utilizing huge production plants, where millions of identical products are manufactured and then shipped all over the world.”
Scanners and improved ways to operate
The lowered costs and the mobility of the solutions present manufacturers with new sources of revenue and brand new opportunities for outside-of-the-box thinking. But to be able to reap the benefits from them, you have to be able to see things differently. Linturi brings up one more example of upcoming technology, which has the potential to change the way we see things – material scanners.
“If you were to clean a storage room in the days before these tools, you’d have a certain set of procedures that you would follow, after which the room would be deemed clean. But in the future with these new scanners, you’re able to see exactly where the room is dirty, clean it there and thus save time”, Linturi says.
The other benefit of utilizing these scanners is that the number of sensors needed decreases.
“When we can measure the straightness of a pipeline optically, there’s no need to place sensors along the whole length of the pipe. Eventually almost all of the previously chemically or mechanically performed quality control can be done optically.”
According to Linturi, even with the data we gather with these devices and the opportunities they give us to improve efficiency, the change is still a slow process, and it will take time until we start to fully realize the effects. But even if the change takes time, it will nonetheless be game changing.
“Competition becomes easier, potentially landing us in a situation where everything is manufactured on the spot. Through the advances in manufacturing, the smaller units needed for fabrication and the dropping prices the threshold for people to become manufacturers themselves will lower, making the world a more equal place.”
Risto Linturi is a Finnish futurologist, who works as Executive Catalyst and Chairman of the Board at Sovelto.
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