December 31 2013

The factory of the future – here’s to a successful 2014!

By: Staci Cretu, M.S.
Marketing & Communications Manager

Happy New Year! For most people, January 1 represented a day of remembrance of the passing year and a celebration of the upcoming prosperous year or what some would think of as ‘the future’. The term ‘future’ means so many things for numerous people but will it mean to manufacturers in 2014? What were the first words you thought of when you first read the title of this blog - “factory of the future?”

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IDC Manufacturing Insights and IDS Retail Insights - Manufacturers begin to build 3D Value Chains 2014

The first words that came to my mind when I heard the phrase “factory of the future” were automation, technology, revolutionary, innovative, robots, and machines. Could these terms describe what many manufactures will be moving to in 2014 to align themselves with the speed of the marketplace?

The “factory of the future” isn’t just an ordinary warehouse; it’s a warehouse that employs new ways of doing business utilizing modern technologies and processes to become “dynamically resilient”. This short description is something that IDC Manufacturing Insights analysts refer to as the emergence of the “3D value chain.”

The 3D value chain concept is something commonly discussed among Information Technology (IT) professionals and business strategists however; this theory can be directly aligned with the business strategy for supply chain professionals as well. In fact, this concept is based on Michael Porter’s original value theory (1985):

“The value a company creates is measured by the amount that buyers are willing to pay for a product or service. A business is profitable if the value it creates exceeds the cost of performing the value activities. To gain competitive advantage over its rivals, a company must either perform these activities at a lower cost or perform them in a way that leads to differentiation and a premium price (more value).”

In short, Porter’s theoretical value model focuses on realigning your organization to face the future, directly supporting IDC Manufacturing Insights “factory of the future concept.”

According to Robert Parker, IDC Retail, Energy and Manufacturing Group Vice President and General Manager, the “factory of the future” concept “is being driven by an 'intelligent economy' where customers are more informed, talent is at a premium, and the time to react to changes is compressed."

The “factory of the future” and 3D value chain concepts were uncovered during recent research efforts by analysts with IDC Manufacturing Insights and IDS Retail Insights. This study revealed 10 predictions for consumer goods manufacturers in 2014:

  • Prediction #1: Manufacturers will begin to build 3D value chains.
  • Prediction #2: Operational, information and consumer technology converge to reshape approaches to technology management.
  • Prediction #3: Operational resiliency will be the focus of supply chain strategies in 2014 and beyond.
  • Prediction #4: Supply chain technology investment will involve modernizing existing systems, while also trying new approaches.
  • Prediction #5: The modernization of the underlying B2B commerce backbone becomes an investment priority for IT.
  • Prediction #6: Product lifecycle management (PLM) strategies become increasingly global, multidisciplinary, innovation-based, and customer-focused.
  • Prediction #7: PLM initiatives will focus on value realization.
  • Prediction #8: "Servitization optimization" will be core to future profitable revenue growth and leading manufacturers will make the necessary investments to enable these strategies.
  • Prediction #9: On their way towards the factory of the future, 2014 will set the stage for a new manufacturing renaissance.
  • Prediction #10: Plant floor IT investments will continue to become a higher share of the overall technology investment portfolio.

So what does this mean for consumer goods manufacturers in 2014? According to Parker, manufacturers “should put together a set of business initiatives across critical lines of business areas such as supply chain, factory operations, product management, and customer experience/aftermarket services, and follow a progression toward the principles of the ‘3D’ value chain.”

Realigning your business to face the future and becoming more resilient is something that will become a norm in 2014 according to the above predictions. So let’s welcome 2014 and the “factory of the future.” Will you be ready to become the “factory of the future” in 2014?