CSCMP's Supply Chain Quarterly
October 16, 2018
Forward Thinking

Survey: manufacturers seek "smart factories"

The Internet of Things could provide widespread visibility and improved quality by 2022, Zebra says.
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Manufacturing's Five-Year Outlook

Manufacturing's Five-Year Outlook
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Manufacturers are adopting wearable technology and the Internet of Things (IoT) at such a fast pace that the portion of companies operating "smart factories" could reach 64 percent by 2022, compared to just 43 percent today, according to a survey released Monday by mobile technology provider Zebra Technologies Corp.

Businesses are making the investment because they are driven by globalization, competition, and rising customer demand for more options and higher quality products, Lincolnshire, Ill.-based Zebra said.

In response, those businesses are creating fully connected manufacturing plants that could improve operational visibility throughout the supply chain, according to Zebra's "2017 Manufacturing Vision Study."

The San Francisco-based market research firm Peerless Insights conducted the survey for Zebra during the first quarter of 2017, collecting responses from 1,100 manufacturing decision makers in North America, Latin America, Europe, and the Asia Pacific region. Industry segments included in the survey included automotive, high tech, food and beverage, tobacco, and pharmaceuticals.

Connected factories could help companies improve efficiency and avoid errors as they transition from manual to digital work processes, Zebra said. The portion of respondents who said they still use pen and paper to track vital manufacturing steps is expected to drop from 62 percent in 2017 to 20 percent by 2022, the survey showed.

Another benefit of building connected factories could be improved supply chain visibility, as 63 percent of respondents said tracking raw materials and finished goods was a core focus of their effort, said James Hilton, Zebra's global principal for manufacturing, transportation, and logistics, in an interview.

Respondents plan to improve their tracking practices by applying technologies such as barcode scanning, radio frequency identification (RFID), and real-time location systems (RTLS), he said.

"In the push to get closer to the customer, businesses have to get more flexible and agile in their warehouse processes," Hilton said. "In the move to e-commerce, they will deal more directly with the end consumers themselves. Instead of shipping inventory just at the pallet level, they need to break down their orders to the piece count."

For example, consumer packaged goods (CPG) companies are accustomed to shipping pallet-level orders from their distribution centers to get inventory onto retail shelves in chain stores. But to compete with Inc., they now need to open up their websites to customers and start shipping out ones instead of pallets, he said.

That vision is triggering a dramatic transformation of the global manufacturing industry that will profoundly alter plant-floor operations as companies seek to connect every stage of the manufacturing process, including end-to-end supply chain fulfillment, the study found.

Ben Ames is Editor at Large and a Senior Editor at Supply Chain Quarterly’s sister publication, DC Velocity.

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