Industry stumbles on skills and scale in race towards factory of the future

Smart technology and changing business models promise to rewrite the rules of traditional vehicle manufacturing. Terms like 'Industry 4.0', 'cobots' and 'smart manufacturing' are peppering the business plans of today's OEMs and suppliers, but what do they mean for the car factory of the future - how it looks, how it operates and who runs it? Timing The timeframe for the emergence of the factory of the future is not exact, but for practical purposes most industry watchers put it at about 2030-2035. "With any disruptive technology there is an innovation curve, showing the diffusion of innovation from early adopters through to the technology laggards. As seen with the rise of Uber and the rise of mobile technology, there is a five- to ten-year period where new technology makes its way to the mainstream," observed Alec McCullie, Associate Director – UK Lead for Industry 4.0, KPMG. "The automotive industry is an interesting case, as it is asset heavy. There have been huge capex investments over the past 20 years just to maintain the current state." He anticipates an incremental shift towards Industry 4.0, but points out that there has already been significant progress: "Remember, we are not starting from zero today. Many new technologies are already in use in pilot phases at the moment." Technology such as collaborative robots, radio-frequency identification (RFID), predictive analytics, augmented reality and cognitive computing are all under investigation, but the real challenge could emerge at transferring these to scale. Kristian Kuhlmann, Principal, Boston Consulting Group, echoed this observation. "Broadly speaking most companies are working on elements of the factory of the future. Considerable developments around analytics and new ways of using robotics are being introduced in pilot stage at many plants. All the companies, though, are currently struggling in bringing it to scale," he observed. Do they have what it takes? To move this to the next level, automotive players will need the right sort of physical capabilities, intellectual know-how and financial assets - and quickly. After all, 2030 or 2035 could be just two and a half model cycles away. "There are challenges," conceded McCullie. "Skills will be a particular one for OEMs going forward. I think the physical capabilities are there, as we see in the pilot programmes, but the role of the human in the factory of the future is critical. The early adopters are recruiting from non-traditional sectors. Rather than looking to the hands-on manufacturing process areas, they are looking to fintech and gaming to meet the data scientists and data analytics roles of the future." Boston Consulting Group recently conducted a study among production managers to gauge satisfaction levels with investment so far. Of the 80 individuals surveyed, just one-quarter said they had achieved their targets on this front. "Most know they are behind schedule. They wanted to do more," Kuhlmann explained. "Why they wanted to do more but have not achieved this is partly due to lack of capability." Two buckets Harald Wimmer, EMEA Auto Leader and Partner, PwC, believes the struggle to attract new talent could lead to a split in the types of manufacturing that takes place moving forward. "We will probably see companies that will handle both the traditional manufacturing of the hardware and on top of that provide mobility services and all the new business model aspects that come alone with that," he said. "This group will therefore maintain large parts of the value chain in-house." The other group will have to be satisfied with providing the hardware, which he sees reduced "to an extent where it's almost base infrastructure for the mobility providers." This leaves the customisation aspects in digital areas to other players. "That would effectively be giving away a large part of the future value chain that's in the industry," Wimmer warned. "It would have a direct impact on the type of factories we see in the future, depending on which bucket a company falls into." Talent is key. "It's a question of having the right talent to cater to the needs of what the change in industry requires. Capabilities in terms of coding, software, analytics, connecting machines to each other, deep machine learning, artificial intelligence (AI) - this is clientele that the auto industry hasn't addressed until recently. It still needs to develop capability by attracting and hiring the right talent," said Wimmer. McCullie envisions a similar dichotomy: "When we talk about the factory of the future we not just talk about traditional manufacturing of components. There is a large software and digital content side to this." However, vehicle manufacturers have spent the last 100 years optimising the mass production of vehicles, which are sold to consumers in a one-off sale. The transition to mobility as a service will entail an expansion of that core competence beyond the production of physical assets. "Transportation will be about a service and a journey, a relationship with the person that uses that product. That will bring the biggest area of change. It's already happening," McCullie observed. "Companies are starting to upskill and acquire the right level of talent and capability to breach that gap between physical assets and more software based content." The end of the assembly line With the rise of importance in software, some watchers have predicted the end of the traditional production line but opinions are varied. "There are certain setups where the end of the manufacturing belt totally makes sense. The belt was introduced 100 years ago. It's the best set up if you have a low variance and just one product to produce. For those kinds of product types, it remains the best setup," said Kuhlmann. However, when different models are built in the same plant, a new arrangement may be preferred. There could come a point where a fully flexible setup is required, with different products run on automatic guided vehicles to work stations where they are assembled. This will hinge on new technology. "When you get rid of the belt and instead have different workstations, with the product moving to a free work station, you need real time data processing. You need the logistics attached to this in a real time way so all the right materials are directly brought to the right station," Kuhlmann explained. "There is much work to be done to accomplish such a setup but there are certain environments where this will make sense in the future. All OEMs are playing with this, trying to understand the impact." Wimmer believes that for those companies that stick to the hardware side of things, the production line could still have a long future. However, for those companies transitioning to the new mobility as a service business model the traditional production line is on its way out. "We will see value creation islands that are addressed by autonomous production scooters that bring the product to the station and make their contribution there," he envisioned. Like Kuhlmann, he highlighted the necessity of real-time data to make this work: "To make that an optimised process will require large amounts of data along with technology that needs to be connected, a great deal of machine learning and AI."

Industry stumbles on skills and scale in race towards factory of the future

From the phasing out of the assembly line to the harnessing of real-time data, the factory of the future could prove unrecognisable by today's standards. By Megan Lampinen

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