The MTC (The Manufacturing Technology Centre) recently hosted a roundtable to examine how the UK manufacturing industry needs to work as one and come together to overcome inflation, the cost of living crisis and recession.
Hosted in partnership with iBASEt, the event brought together senior manufacturing leaders in aerospace, defence and space technology, to discuss how UK manufacturers can collaborate to advance digitalisation, improve productivity and build a competitive advantage as we head towards 2050.
Drawing on insights from MTC and iBASEt’s Manufacturing Productivity Report, the event discussed:
- What role can innovation and collaboration play in helping UK manufacturing overcome current challenges?
- How is the industry performing ten years since the launch of the government’s Future of Manufacturing 2050 initiative?
- What digital technologies will help drive a productivity advantage and generate new growth? What skills are required to be future-fit?
- How can the industry can collaborate to accelerate innovation and drive a competitive advantage for UK manufacturing?
Panellists for the event were:
- Henry Anson, Managing Director, The Manufacturer
- Daniel Flick, VP Global Partner Ecosystems, iBASEt – Chair
- Rashpal Mundi, Senior Partner Manager EMEA, iBASEt
- Professor Ken Young, Technology Director of the MTC
- Tony Newman, Principal Engineer, Parker Aerospace
- Brian Harvey, Managing Director, Simportal
What does digital transformation mean to you?
HA: We speak to vast amounts of UK manufacturers on a regular basis. It’s clear from those conversations that digital transformation is all about increasing productivity and reducing inefficiency. The UK has typically been slow to adopt Industry 4.0 and digital transformation, however, one positive side-effect of COVID is the debate about whether to digitally transform or not has been won.
Every manufacturer that we speak to today is on a digital transformation journey of some kind. That wasn’t the case three years ago. The uptake is taking place at varying speeds but what is encouraging from a holistic perspective is that the UK manufacturing sector is now on the digital journey.
BH: Transformation can be quite scary; bringing in a new ERP system, for example, can be a real shock to the system. Therefore, it’s important to help organisations make that journey without having to take massive leaps or onboard huge amounts of risk. The digital transformation journey we embark on with customers is based around taking small steps and not disrupting that journey; making sure we deal with the biggest pain points first, rather than trying to fix everything at once. Digital transformation is about making sure that we go on the journey together.
KY: If we turn the clock back and look at previous industrial revolutions, they didn’t happen overnight; they all took time. The challenge of transforming manufacturing industries is that you can’t just stop, make all the necessary changes and then start back up again. Manufacturers have to make changes while they’re working, which is akin to changing the oil on a Formula 1 car while it’s lapping at 200mph!
It’s important to remember that technology is never the answer in isolation. People must embrace the technology and use it to gain an advantage. Transformation is as much about changing people as it is about the equipment.
And that’s hard; no one likes change. We’re all slightly resistant and it’s not something that comes naturally. Therefore, we must educate people as to why we need to change, then give them the skills they need and help them as they adapt. Mistakes will be made and too often we see transformation strategies left behind due to a lack of support. We suggest change to organisations which is appropriate to them. We don’t drive them to change for the sake of it.
RM: The impact of COVID has really woken people up. In the UK we’re aware that we’re behind countries like the US in adopting new technologies, and many organisations are still quite comfortable to still use paper-based systems and spreadsheets etc.
However, technology is now at a level where it’s enabling people to consider change, but at a pace that’s comfortable. We like to look at a business and see where it’s going to get the best ROI; moving away from the ‘big bang’ approach.
With MTC in particular, we’re helping to support people to take a risk without taking a risk – trying out proof of concepts. We’re quite keen to see how we, as a collective team, support UK manufacturing companies to navigate this brave new world.
What’s the current state of digital transformation in the UK?
DF: Insights from MTC and iBASEt’s Manufacturing Productivity Report, show that UK manufacturers say there is a lack of investment in digital, and this is impacting productivity and their competitiveness globally.
Ninety-four percent of UK manufacturers think under investment has led to the UK falling behind the US, and more than half of them have said they have lost sales because of digital shortfalls; 93% say this may lead to many UK discrete manufacturers ceasing to exist in ten years’ time. Seventy-three percent of UK manufacturers think that legacy technologies have had more of a negative impact on their business than Brexit (67%).
Spreadsheets are still used for almost half of processes in the UK. And on average, pen and paper is still used for more than a third of manufacturing processes. Additionally, our research shows that almost nine in ten respondents are increasing their investment in cloud technologies over the next 12 months, but only a fifth of those are currently completely transitioned to the cloud. So, it appears that many have begun the journey but few have really adopted a strategy.
Almost three quarters confirmed investments in new technologies and processes related to 4.0 during the pandemic, with 98% confirming that these investments have made their companies more productive.
HA: In terms of whether manufacturers will move away from manual processes, the UK is typically self-effacing when it comes to answering these questions, and I think the perception in the UK is that we are a long way behind stellar manufacturing countries such as the US, Germany, Japan etc. Actually, I don’t think we’re as far behind as we think we are. And we’ve done some research to back that up. There’s definitely a cultural issue where we tend to downplay where we are.
There is a very perceived and marked movement towards the cloud, but a lot of organisations, particularly in the aerospace and defence sector, can’t go fully to the cloud, or even to the cloud at all. So, there will always be an element that will remain on premise. We are, however, seeing more organisations adopting a hybrid model.
There is a very clear movement away from manual processes, but it takes time. Legacy technology is a massive hindrance, and it’s something we hear and see time and again. It’s a slow process and involves looking for those easy, quick wins. The danger with that approach is you can get into silos and pilot purgatory where firms struggle to break new tech out into the wider organisation.
BH: A lot of companies are still using spreadsheets. They are really useful for certain applications, but not to run your entire business. I’m a big believer that if you’re going to make a digital transformation, do it off the back of some sort of stability and make sure that, if you have manual systems, they are actually robust.
Before people make a digital transformation, have a good look at what you’re actually doing from a manual perspective – that won’t be wasted energy. Moving from a position of stability is always the best way of improving. You’ve got to be constantly looking at better ways of doing things. And that includes the way you’re doing it right now, rather than just thinking about throwing money at the problem, because that won’t solve it.
KY: We’re definitely seeing a move towards proper digital systems. Some years ago, we put ERP into this business. It had become clear that running this business from Sage was no longer going to work. So, we had to put ERP in and we learned very valuable lessons from doing that because we made mistakes. We’re currently refreshing our ERP system as the one we were on is now obsolete and unsupported.
We are moving onto the cloud as of next year and we’re most of the way through the implementation of ERP. What’s going to make the difference is rolling that out into the wider business and training people how to use it. We have also taken the opportunity to improve some of our legacy processes.
Transformation is happening, but even at the MTC we find it hard. So, smaller manufacturers that haven’t got the experience, are really going to struggle. So, we need to help.
RM: In our complex, vertical aerospace and defence sectors, there’s always been a challenge, particularly if you’re straddling US and UK military and defence. You can’t actually move to the cloud. We’re finally becoming the glue between PLM and ERP and getting more of a digital thread through that, but the first step is making sure processes are robust.
That’s what our team does – they’ll look at processes, see where the issues are and then try and automate them. And we are seeing, especially in less restrictive sectors, that there is a mixed approach to adopting cloud. That’s really where we’re focused – going from manual to paperless to synchronise and automate that thread the best we can.
What are the challenges to digital transformation?
HA: When talking about the adoption of technology, the current problem is there’s no roadmap, and no two businesses are looking to achieve the same thing; every organisation’s requirements are different. One of the issues that we hear regularly is around having a coherent data strategy, with proper governance.
Digital transformation is about the proliferation of data – what you’re doing with it, who owns it, what are the rules governing it – and a lot of very large and apparently sophisticated UK manufacturing organisations are still grappling with some pretty basic questions around data. It’s all things to all people and therein lies the problem.
That’s why trusted advisors, independent parties and consulting firms are essential. We published a survey around two years ago about the biggest issues facing senior management teams in UK manufacturing. The biggest by far is time.
These organisations run on a very lean basis and so there are huge time constraints. Therefore, having that third-party adviser to help on that journey is key; they have the aggregated knowledge, worked with a number of clients and know where the pitfalls and stumbling blocks are.
KY: Our job is to help companies to become intelligent customers, so that when they approach technology providers, they are equipped to ask the right questions and they know what they need and why. Selecting a technology provider can be a challenge for some, due to lack of knowledge around it.
My next job is to recruit a marketing director. Why do we need a marketing director? Because I know nothing about marketing. I need someone who knows how to do that, but I don’t know what to look for in that person. So, I’m asking them to tell me why I should select them. That’s where most people are in terms of buying technology.
For me, our job is to educate manufacturers to make them better understand what they’re doing and make sure they select a partner that’s going to act collaboratively with them. You don’t want a technology provider who gives you the wrong technology, and goes missing when it doesn’t do what you want. That’s very important and quite often, when people go out to tender, it gets forgotten that it’s important to know how a technology will behave if and when it goes wrong.
Collaboration is everything. You need to have partnerships with people. And in manufacturing, we’ve seen that you don’t compete as an individual company, you compete as an entire supply chain. Optimising something in your own business doesn’t necessarily get you where you want to be; you need to optimise the supply chain. Once that happens, the whole supply chain wins and everyone in it wins. That’s one area where digital tools can help because it can help bring the supply chain together if you do it properly. Conversely, if it’s done badly, it can rip the supply chain apart.
TN: With my collaboration with the MTC, some of my stakeholders are interested in the mobile-based enterprise. Quite recently, I took the initiative and got in touch with my local contacts at MTC and they established two kinds of information and training sessions. I invited the Parker Hannifin Enterprise team to join so there is interest there.
RM: If you don’t understand the process, we can’t actually advise our end customer what they need. Often when people adopt technology, they rely too heavily on a vendor. We are not agnostic but working with system integrators (who generally are), we can make sure that the customer gets the right solution.
We built a central Centre of Excellence whose job it is to create templates for particular verticals which are easy to roll out and outline the key areas to hit etc. We’re not delivering a generic solution but the onus is on us to make sure that we deliver what customers need.
What do you think are the best ways that industry can collaborate around innovation to drive a competitive advantage for UK manufacturing?
HA: One thing we haven’t discussed is the need for a more sustainable manufacturing future, which is a huge driver towards more digital transformation. The whole sustainability piece has been brought into even more sharp focus by the energy crisis, so the greater the collaboration the more effective the drive towards sustainability will be.
Lessons need to be shared, and traditionally competitive organisations have to work together. Collaboration is the way forward and it needs organisations like the HVMC and MTC to bring it all together; using that Ventilator Challenge spirit of goodness that we saw during COVID.
However, it must be said that the biggest long-term threat to UK manufacturing is the skills shortage – 55% of UK discrete manufacturers are finding it difficult to recruit. Other challenges will come and go but if we can’t attract the right kind of young people into manufacturing, then the sector is in real trouble going forward.
DF: We found that 26% of young people are not attracted to come into our industry because there’s something more enticing elsewhere. And looking at the impact of Industry 4.0, 90% of manufacturers are not using data insights from their smart factory technologies. So, the whole notion of collaboration has been limited, not only through the lack of skills, but the ability to harness this data so we can collaborate with efficient, effective and accurate data.
KY: The problems that face the industry currently will not be solved in isolation and we need to collaborate across the supply chain. Also, we need to partner with other sectors who have the same problems. Why spend all the resources on solving the problem yourself if you can spend a 100th of that with 99 other people and solve it for all?