Factory of the Future and the Small Manufacturer in Asia

There's no shortage of media coverage concerning Industry 4.0 or the Factory of the Future. While a valid subject for improving manufacturing operations, SMEs should make sure their foundation is set before venturing into the woods enroute to grannie's house, else they might get eaten.

Why should manufacturers not necessarily concern themselves with the hype building around the subject of industry 4.0?  At face value, Industry 4.0 offers some very appealing ideas, such as increased automation through robotics, and increasing visibility and control in the supply chain with IoT and big data analytics.  While appealing ideally, by itself, this technology does not necessarily contribute to an increase of production throughput which should be your ultimate goal.

Instead of robotics and IoT, think first about ensuring your foundation is solid.  You wouldn’t renovate your home on a crumbling foundation, would you?  So then, why do it in your business?  Your first step toward improvement should be through foundational changes such as an ERP system.  An ERP system will act as your central point of intelligence and support your process of ongoing improvement.

I’m reminded of the book The Goal - A Process of Ongoing Improvement by Dr. Eliyahu Goldratt and Jeff Cox.  There's a conversation that takes place between the leading character, a production manager, and an old instructor of his.  

The instructor asks how is business in the factory, to which he is told how things are going great following a recent investment in factory robots.  Now all work centers on the shop floor are running at full capacity and efficiencies are way up.   

The professor responds by saying, ok, but has the increase in production with the robots resulted in an increase in profit?   The answer is no, because they haven’t first looked at the organization to identify flow constraints and and submitt all other processes to the constraint’s capacity. 

Continuous Improvement in manufacturing

Essentially, what they’ve done is add extra production capacity everywhere, therefore likely overloading the constraint, increasing WIP inventories, and decreasing throughput.  The goal of any organization should be to make a profit which is achieved through an increase in throughput.

So the message to a manufacturer is, before you concern yourself too far with the promises of Industry 4.0, give careful calculated consideration to your current modus operandi and ensure you are clear where your constraints exist, and manage them appropriately.  Once you’ve completed that exercise, then you can start looking at what enhancements Industry 4.0 technology can add to your operations.


Todd Abraham

Director Business Development & Marketing,
Monitor ERP System Asia