<img src="https://secure.leadforensics.com/133892.png" alt="" style="display:none;">

Microsoft recently released a white paper discussing key trends in the manufacturing industry, titled the 2019 Manufacturing Trends Report.

Microsoft is deeply engaged with many different manufacturers in a host of industries globally, giving them a unique perspective on these firms and the new initiatives designed to enhance competitiveness and performance.

As such, Microsoft is in a unique position to gather information about trends in manufacturing and interpret them through the lens of technology that Microsoft provides to these manufacturers. This article offers a review of the information presented in Microsoft's report.

Here are the 6 key takeaways:

1. Convergence of Information and Operational Technologies (IT/OT)

Advances in connectivity, big data, and the expansion of the Internet of Things (IoT) have opened the door for a new breed of intelligent manufacturing technology that's impacting both IT and OT. Industries such as healthcare, transportation, defense and utilities that rely on significant investments in capital equipment and specialized labor forces have been at the forefront of this trend.

However, the convergence of IT and OT poses new security risks as historically isolated OT systems merge into enterprise-wide IT communication and data sharing networks. More companies are expected to embrace a hybrid data center model where on-premises legacy systems are devoted to data and records functions and the storage of information that requires greater control. The facets of a company’s operations that require continuous adaptation will be deployed in the cloud. Driven by new business imperatives that add impetus to existing social pressures, “green” practices and enabling technologies will become more prevalent in the manufacturing environment.

2. The rise of XaaS

XaaS is the abbreviation for Anything as a Service. Relative to manufacturing, Microsoft discusses future expansions in the XaaS related business models. Using Manufacturing as a Service, businesses leverage a shared network of manufacturing infrastructure, from machines and maintenance to software and networking, to produce goods.

Another aspect is Product as a Service, where physical products, software, and support are delivered as a service or virtualized experience, and the buyer no longer takes ownership of a physical product. While this business model (also commonly referred to as Product Servitization) has existed for years, expansion of this trend will be driven by multiple factors such as cheaper and more capable sensor technologies, data systems interconnectivity and intelligent products.

Other XaaS models mentioned include Design as a Service (DaaS), Experimentation as a Service (EXPaaS), Equipment as a Service (EaaS), Simulation as a Service (SIMaaS), Management as a Service (MaaS), Maintenance as a Service (MAaaS) and Integration as a Service (INTaaS).

While Microsoft foresees growth in these XaaS business models within the manufacturing industry, they also recognize that moving toward these models does not come without its own set of challenges.

Challenges that Microsoft cite include an increased need for operational flexibility. In this area Microsoft notes that organizations that have moved heavily toward Lean Manufacturing and its reliance on standardization of processes and methods may see conflicts arise between Lean and XaaS initiatives.

As consumers become even more brand conscious, manufacturers will move to take greater control of both inbound and outbound supply chains. Ramifications of this trend are broad and take multiple forms, from increasing verticalization within a manufacturer to greater dependence on the MaaS models noted earlier.

3. Intelligent manufacturing

Speaking to what many in manufacturing are referring to as Industry 4.0, Microsoft foresees a new model for manufacturing where AI (artificial intelligence) enhanced computers will detect and report on physical processes happening in the real world and make human-like predictions and decisions in real time, sometimes referred to as a “cyber-physical” production system. Key enablers of this next generation of manufacturing will be cloud computing, cognitive computing, and the internet of things (IoT).

Speaking to artificially intelligent computers, Microsoft notes that they're extremely effective in performing four categories of tasks: detection, classification, probability, and optimization.

Intelligent systems can be used to analyze large amounts of data and detect various conditions of either compliance or non-compliance. In manufacturing, this may be used to help identify faulty products, to predict when a machine will need maintenance, or to detect potential safety issues in and around a factory.

5G networks will be a huge boost to intelligent manufacturing, accelerating businesses ability to gather and process massive amounts of real-time data quickly and from virtually anywhere. The increase in speed and capacity enabled in future 5G based networks will significantly enable the XaaS based business models discussed earlier.

Multiple use case models will drive increased usage of block chain technologies throughout the manufacturing industry such as data sharing across extended supply chains, product tracking, and anti-counterfeiting applications.

4. Manufacturing technology evolves

Microsoft highlights several key emerging technologies that are becoming more important to manufacturers as they press forward toward the vision of Industry 4.0.

The use of digital twinning (utilization of a digital replica that mimics a real-world system) is increasing. IDC predicts that by 2020, 30% of Global 2000 companies will use digital twins and IoT-connected products to improve product innovation and organizational productivity, achieving up to 25% gains.

Connectivity to the real-world via IoT connected sensors feed digital twins with data, supporting remote visualizations of what is happening in that real-world environment and decisions to be made regarding same.

Additive manufacturing (commonly associated with 3D printing) still has not penetrated mainstream manufacturing and is unlikely to do so in the near future as costs associated with it remain higher than traditional subtractive manufacturing methods. However, hybrids of the two are surfacing that blend the benefits of both techniques – especially in producing custom designed parts at a lower total cost.

Microsoft reflected its belief that the use of robotics in manufacturing will continue to increase, albeit at a slow pace. They note that only 9% of manufacturers currently use semi-autonomous or fully autonomous robotic devices within their operations, with an additional 11% expected to do so in the next three years. The primary factor impeding this growth is the cost to acquire, deploy, and maintain these machines.

One area supporting this modest growth will be in the utilization of cobots (collaborative by design robots). Another will be the combination of AI with robotics, an emerging technology that will lead to a new generation of industrial robots, allowing them to operate with little or no human interaction. More advanced robotics models leveraging AI will be able to learn from their surroundings and make decisions independently, greatly increasing their potential uses.

Advanced materials and nanotechnologies will see increasing use in manufacturing in the future, partially influenced by improved compute technologies and scale which allow these materials to be explored and commercialized at a lower total cost.

Augmented Reality (AR) and Virtual Reality (VR) are finding their way into more use cases within manufacturing. Microsoft cites a Gartner statistic which predicts that 20% of large businesses will be using AR, VR, or mixed reality in some way this year. Some of those use cases include field services, quality control, and training enablement.

5. Businesses adapt to an evolving workforce

With older workers of the boomer generation hitting retirement age and younger workers with different expectations, motivations, and skill sets replacing them, manufacturers will need to make significant changes in how they organize, support, and compensate their workforce.

Microsoft cites a survey conducted by the Society for Human Resource Management that found a majority of manufacturing HR professionals characterized the impending retirement of aging employees over the next two decades as either potentially or definitely problematic for their organization. Consequently, a growing number of manufacturing firms are investing efforts to increase training and cross-training, develop succession plans, increase recruiting efforts, and develop processes to capture institutional knowledge to ensure that the next generation of workers can take the reins when their predecessors step down.

As part of working through this transition, manufacturers will have to find ways to adapt to significant skills gaps between outgoing senior employees and their younger and less experienced replacements. In many cases this gap may not be overcome, resulting in considerable shortages of human resources in the future manufacturing workforce.

To some extent, robotic process automation, artificial intelligence, and machine learning may offset some of these workforce challenges for manufacturers. Offsetting that will be governmental policies that are limiting the ability of domestic US manufacturers in achieving their workforce transitioning efforts. Examples cited include immigration and taxation policies as well as trade tariffs.

Advances in advances in AI, computer vision, IoT, and facial recognition will help manufacturing businesses to become safer in the future.

6. Living in an age of uncertainty

Microsoft discusses a series of factors that have brought a new wave of uncertainty into the business management and decision-making process for manufacturers.

Recent initiatives and changes in US regulatory laws and policies have added new complexities that manufacturers must navigate as they move forward. While not a comprehensive list, Microsoft mentions the following such as GDPR, tariffs, net neutrality, subsidies, labor, immigration, and Brexit.

Changing customer expectations of manufacturers and their brands are forcing manufacturers to engage on these issues in the social and public forum in unprecedented ways. In a more significant way, Microsoft foresees new competitive challenges that manufacturers will face in the future brought about by a convergence of all businesses into ones that are essentially information and technology companies. Supporting this postulate, Microsoft cites am IBM Global study in which business leaders saw industry convergence as the biggest trend that would be affecting their business landscape in the future. Specifically, 47% were preparing their companies for an influx of competitors from other sectors – a 27% increase from 2013.

Microsoft’s role in the future of manufacturing

To summarize in Microsoft’s own words, “To compete in today’s fast pace environment, manufacturers must work faster and smarter. At Microsoft, we are empowering manufacturers to do more with tools that streamline processes, provide greater visibility into operations, and deliver actionable insights.” This includes streamlining operations, achieving greater visibility and adapting a more proactive business model to meet rising customer demands and emerging trends. 

Learn how Columbus is addressing the latest trends in manufacturing.

Manufacturing 2020 - Columbus report on 2020 manufacturing trends

Discuss this post

Recommended posts

If you're a Chief Information Officer, the data says you already get it. You understand the value, rewards and competitive necessity of digital transformation — and the transition to a modern cloud-based ERP. 
Sometimes laying the right foundation is everything. That's why when the time comes to choose and implement an ERP solution for your business, the difference between whether you realize its full benefits or not often comes down to a single crucial word: preparation.
For enterprise CFOs, there's no shortage of stressors these days. The list of headwinds includes:
Legacy ERP systems are just not cutting ice anymore. From process and document duplication to standalone, disjointed applications that are disconnected from the ERP — the list of cons is long. Suffice to say that on-premises ERPs just can’t match the pace of a world that’s increasingly becoming data driven and digital.
right-arrow share search phone phone-filled menu filter envelope envelope-filled close checkmark caret-down arrow-up arrow-right arrow-left arrow-down