In 2015, it was observed that the markets within the AP region had evolved away from low-skill, low-cost production. The manufacturing climate has seen several contractions across countries such as China, Korea and Singapore – and it is forecasted that the situation will not improve anytime soon.
Implementing high technology systems to run effective and intelligent operations will aid in enabling success in the manufacturing sector, the region is moving ahead with capitalising on the ASEAN Economic Community (AEC) that enables greater access to markets and freer flow of goods, services and labour. With ASEAN’s efforts to lower barriers for organisations to regionalise, it is timely for businesses to upgrade their capabilities by investing in smart technology or contemplate on plans for regionalisation. Asia Pacific is moving ahead to forge a strong regional supplier ecosystem and adopting disruptive technologies that will change the way people live and create products.
Manufacturing in India
India’s ‘Make in India’ campaign, introduced in September 2014 aimed at facilitating investments, encouraging innovation and building high-class manufacturing infrastructure is expected to boost manufacturing activities in key sectors including automobile, auto components, electronics & electricals, capital goods, railways, aerospace and defence.
E-auctioning of coal blocks, curtailment of the discretionary powers of labour inspectors and implementation of a single-window compliance process on labour related issues and implementation of the Goods and Services Tax (GST), as promised by the current government will go some way in accelerating growth in the manufacturing sector and improving the likelihood of their achieving the National Manufacturing Policy (NMP) targets. Coupled with 3D printing technologies that could help overcome shortcomings of geometry, digital manufacturing and Smart Cities projects can boost the ‘Make in India’ initiative significantly.
Asia Pacific region
The AP region as a whole remained attractive as it offers a diverse demographic base and favourable business conditions – a growing labour supply, improved productivity, increasing affluence, more attention to education and training, and with the implementation of AEC, the region holds the strongest potential for growth. If it were a single country, AP would be the seventh-largest economy in the world with a combined gross domestic product of US$ 2.4 trillion. It’s already the world’s fourth-largest exporting region, accounting for 7% of global exports – Thailand is a leading vehicle and auto-parts exporter, Philippines enjoys a thriving business-process outsourcing industry, while Vietnam is strong in apparel and textiles.
With AP’s unique manufacturing industry – dynamic countries such as Australia & Singapore positioned as advanced design hubs, and Vietnam and Thailand as production hubs – the cross-collaboration divide is a result of Australia and Singapore having better infrastructure, and more advanced design capabilities and resources, while the emerging countries having lower labour costs. However, the labour crunch in Singapore remains bleak due to the tepid global business conditions that have contributed to the decline in the sector. In order to overcome this hurdle and the sluggish growth rate, the government needs to show increased recognition to smaller SME firms by giving them a shot at contributing to government projects.
2016 market outlook and trends
The realisation of innovation – smart innovation that enables a model-based enterprise in which smart product development will have additional dimensions of connectedness and cognitive capability – is the realisation of automation and production in the Digital Enterprise for which digitisation is an approach to innovation. Through realising innovation only manufacturing organisations of today can better confront complex business risks and disruptors of tomorrow.
Customers will benefit in this environment by harvesting data/information in the connected world – a generation of products and services that support the Industrial Internet of Everything (IIoE), and more specific in which the factory and production systems reach new levels of intelligence and autonomy. Manufacturing centres in the region are facing increased levels of competition, and many are looking for ways to optimise productivity and innovation to gain a competitive advantage. Emerging Southeast Asian markets such as Vietnam and Thailand continue to offer high-quality and more cost-competitive alternatives, affecting regional competition across the manufacturing landscape.
Towards digital transformation
Digital business transformation for manufacturers will continue to evolve, with the supply chain and logistics as one of the core value drivers. Organisations will build towards the ‘second pillar’, becoming entirely digitalised, spurring on competiveness from countries such as China and India with their ‘Make in India’ and ‘Make in China 2025’ initiatives. Predictive modelling is expected to gain momentum amongst manufacturing sectors. Predictive analytics – the area of data mining concerned with forecasting probabilities and trends – will be utilised create a statistical model to determine future behaviour.
With China’s ‘Internet Plus’ initiative announced in March 2015 as a driving force, many conventional businesses will connect to the internet initially, followed by digitalisation of IT systems, to increase their competitiveness. With digitalisation increasingly taking hold of the manufacturing sector brings forth a new wave of security concerns and issues. Increasingly, manufacturers are beginning to view data security, mobile device management and cloud computing risks top barriers to realising the value of the Internet of Everything (IoE).
Internet of Everything (IoE): IoT (Internet of Things) has evolved into IoE over the past year, due to involvement from cars to wearables. IoE is gaining traction and becoming more personalised, not just affecting devices. A clear value in connecting products to the internet – manage the connection of the [product] operations world and production world to optimise innovation. A report forecasts that the Global IoE market will grow up to 15.3% throughout 2015-2020. This growth is attributed to the rising demand for mobile applications from enables. Manufacturing, consumer electronic and retail verticals are major contributors to the IoE growth.
Big Data: In this new world of intelligent, connected products, data collected about a product’s operating environment and about how customers use the product (utilisation) can be tapped by product designers as they consider improvements for the next generation (ideation). But the value of that information is only optimised when designers apply intelligence and action to this data to improve product automation and production (realisation). IDC recently forecasted that the Big Data technology and services market will grow at a 26.4% compound annual growth rate to $41.5 billion through 2018, or about six times the growth rate of the overall information technology market. Additionally, by 2020 IDC believes that line of business buyers will help drive analytics beyond its historical sweet spot of relational (performance management) to the double-digit growth rates of real-time intelligence and exploration/discovery of the unstructured worlds.
Digital manufacturing: A key point of integration between PLM and various shopfloor applications and equipment, enabling the exchange of product-related information between design and manufacturing groups. Manufacturers can utilise data analytics to optimise factory operations that maximises equipment utilisation and product quality. With these new supply-network management tools, organisations have a clearer picture of raw materials and manufactured parts that flow through the network that could aid departments in improvising factory operations and product deliveries to enhance efficiency.
Through digital manufacturing, smart connected products are also able to share real-time customer experience to product managers that allows them to anticipate or manage demand and maintenance needs. Furthermore, through mining data engineers can gain new insights into why certain equipment modes fail and move onto making continuous improvements in its reliability. For example, McKinsey suggests that a major metal plant could expect to use condition monitoring and predictive maintenance, in conjunction with process controls and automated material tracking that is made possible with Big Data analysis. This could drive up to a 30% increase in production without having to chalk up substantial operational costs.
3D Printing: The past year has seen improved resolution in 3D printing and the ability to print in new materials. It is expected that there will be increased affordability in the upcoming year, addressing complex issues within the healthcare sector particularly. This disruptive technology is quickly is displacing automation equipment, including machine vision, motion control and robotics. In a report conducted by Wohlers Associates, the worldwide 3D printing industry is now expected to grow from $3.07 bn in revenue in 2013 to $12.8 bn by 2018, and exceed $21 bn in worldwide revenue by 2020.
3D printing enables manufacturers to shrink their supply chains by saving product development time in areas such as developing prototypes to the mass production of final products. This disruptive technology allows increased customisation offerings to consumers with varying expectations and preferences. 3D printing also wields potential for organisations to rethink on their approach to keeping inventory, especially in the case for low-volume, obsolete parts that are still required to be made available to consumers. Printed parts that are currently warehoused could potentially save manufacturers—especially those with globally diverse distribution systems—logistics costs and get products to customers faster.
Next-shoring: The rise of an technical labour force in order to manage supply chain operations — combined with rising wages in Asia, higher shipping costs and the need to accelerate time to market to meet retailer and consumer demands has led to more companies shifting their manufacturing strategies from outsourcing overseas to developing products closer to where they will be sold. Thanks to heightened communicative technology and efficient transport systems, the next-shoring business model is becoming increasingly viable for manufacturing firms. It is now possible for organisations to develop multiple, collaborative innovative centres while maintaining production centres in close proximity to specific markets. This provides a flexible solution to the varying cultural and market trends – ultimately increasing accuracy and reducing lead times.
Through marrying supply and demand, next-shoring allows emerging markets to exploit proximity in order to reach their stakeholders. In the case of China with its recently implemented minimum wage laws, businesses realise that they need to take a more flexible approach in their supply chain management to accommodate a more global customer base precipitated by rises in purchasing power. By incorporating ASEAN Economic Community (AEC) and next-shoring, regional policies will help promote free movement of goods and services across the area.
Mobility manufacturing: The power and potential of cloud computing, properly leveraged and deployed, can have a significant impact on the PLM industry. In AP, mobility is gaining traction due to high mobile device penetration rates and is expected to achieve 33% of growth by 2017. This will certainly have a strong impact on the manufacturing sector in the region. Mobility in manufacturing has tremendous potential for streamlining production processes and delivering significant time and cost savings for the industry. Shopfloor management, supply chain management and business intelligence are but a few of the avenues that are seeing increased adoption. It can be employed to processes along the entire design and production cycle for bringing greater accuracy, speed and efficiency to manufacturing outcomes.
To industrial manufacturing CEOs, the top three technology priorities are mobility (73%), cybersecurity (72%) and data mining analysis (70%). However, there are challenges that may hinder the growth in Asia Pacific. Costs and security risks remain the top challenges the region faces in mobility adoption. Despite this, mobility in manufacturing has tremendous potential for streamlining production processes and delivering significant time and cost savings for the industry. Shopfloor management, supply chain management and business intelligence are but a few of the avenues that are seeing increased adoption.
Robotics: PwC observes that robots are now equipped to handle a wider variety of jobs in multiple industries. They can help companies complete tasks that previously required precision that only human beings could offer. This would impact the manufacturing industry in markets where skill deficit and ageing population pose major challenges for the sector. According to recent reports, APAC is emerging as a leader in robotics adoption due to the economic progress in the region fuelling manufacturing. The rise of mobile adoption has spurred users to take up robotics due to the ubiquity of smartphones and tablets that has made it easier to develop robots thanks to consumer and office applications.
For example, mobile devices could offer manufacturing design departments the opportunity to ‘outsource’ computing tasks to companion devices, which allows software developers to produce app-controlled robots at more accessible price points. Because of their enhanced precision, fewer errors are made during the manufacturing process that results in less wastage and is capable of producing higher quality products that comes with fresh variations assisting organisations in disrupting the market.