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From Techonomy Detroit: In Manufacturing, Speed Trumps Scale

The "Scale Means Nothing" panel at Techonomy Detroit 2015: (l to r) Michael Chui, Mike Whitens, Mark Hatch, Jerry Foster, Raj Batra.

The “Scale Means Nothing” panel at Techonomy Detroit 2015: (l to r) McKinsey & Company’s Michael Chui, Ford’s Mike Whitens, Techshop’s Mark Hatch, Plex System’s Jerry Foster, and Siemens Digital’s Raj Batra.

A tech trifecta is transforming manufacturing: Cloud connectivity, cheaper computing, and easily shared digital information. And in an age when speed-to-market is valued over all else, the businesses that best utilize these new tools for R&D, production, and delivery will win. At least that’s what a panel of experts said at Techonomy Detroit.

“We’re truly at an inflection point,” said Mike Whiten, Director for Advanced Engineering at Ford.

Tech synergies are transforming one-man manufacturing startups as much as giants like Ford. “Everything about innovation has changed,” said Mark Hatch, CEO of TechShop, the industrial DIY workspace where individual makers have created prototypes that led to numerous multimillion-dollar manufacturing businesses.

Whiten and Hatch joined Siemens Digital Factory Division President Raj Batra and Plex Systems CTO Jerry Foster for “Scale Means Nothing in the Internet of Manufacturing,” a discussion moderated by Michael Chui of the McKinsey Global Institute. The premise: Massive production capability is no longer the competitive advantage it once was in manufacturing. Today, speed trumps scale, and connectivity is key.

Integrated systems have long been critical to reduce costs and gain efficiencies in manufacturing. “If you’re a manufacturer, you’ve been connecting things for as long as you can remember,” said Jerry Foster. But now, he said, “just about anything can be connected with the cloud and through the Internet.”

And just about anyone can access the tools of manufacturing. TechShop members pay $150 per month to access a vast array of tools including computer-numerically-controlled mills and lathes that not long ago cost more than $250,000. “You can gain the skills you need to go to market in three months,” said Hatch. “People can build prototypes and launch companies in less time and for less money than it takes at a big company to make a decision.” Square and the DodoCase are two TechShop success stories.

Failure doesn’t cost much either. Hatch said now a startup mistake doesn’t mean you’ve lost a half million dollars or more.

While individual innovators and some enlightened giants benefit from such tech advances, many US factories remain untouched by them. Siemens’ Batra said way too many are old and out of date: “You simply can’t get productivity with a 286 computer, and that’s what it’s akin to. When it’s not in vogue to have your iPhone for more than 6 months, why is it OK to have manufacturing equipment that old?”

The US is slowly coming to see manufacturing as strategic, Batra said. “We’re using it as a competitive weapon rather than a necessary evil,” he said. “We won’t be a country that manufactures cotton shirts, but we will be a country that is known for innovative design and simulation and digitalization… The guys who are really good at [that] will get to market faster.”

Whiten recalled that when he started at Ford, engineers worked apart from their manufacturing counterparts. Today, he said, “we can immerse ourselves in the data–with manufacturing, design, and engineering all in the same room digitally.”

The efficiencies also benefit suppliers, he said. Late design changes from customers cost a lot. “So if we can leverage the cloud, technology, and this data to eliminate downstream changes, then our supply base all the way down can work on efficiency in their facilities,” Whiten continued.

Foster said Plex Systems views the cloud as an innovation delivery platform. “Our customers come to us and have ideas and we can provide it without a lot of setup or infrastructure cost on their side,” he said.

“This is not your grandfather’s industrial revolution,” said Hatch. Manufacturing and innovation have been completely changed by access to cheap, powerful, easy-to-use tools, as well as access to capital and social media. At TechShop, he said, “people come in and learn how to use a CNC tool in a week, and get on a machine and get a product designed and drop-shipped from somewhere else around the world.

Hatch noted another modern advantage for individual inventors seeking capital: “When you can demonstrate a physical prototype, it’s very difficult for even an engineer to say, ‘I don’t think it will work.’”

In major manufacturing businesses, Batra described what he called “cyberphysical” autonomous production factories where machines optimize other machines. One Siemens factory in Amberg is 75 percent controlled by robots and machines connected digitally, he said. It produces 12 million industrial computer control systems a year, in 12,000 variants, with 1,000 workers. While a good employee generates 500 defects per million, Batra said the fully digitized factory generates just 12. “This is where things are going when you’re talking about time to market and efficiency,” he said.

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