Is your shop ready for Industry 4.0?
If you’re still wondering what exactly this term means, you’re not alone. We’ve spoken with hundreds of small manufacturers and machine shop owners, and for many of them, the connection between Industry 4.0 and their day-to-day-reality remains unclear.
Also known as the Fourth Industrial Revolution, Industry 4.0 can be defined as “the digital transformation of manufacturing/production and related industries and value creation processes.” (i-SCOOP). By digitizing and automating operations, manufacturers can increase efficiency, ensure quality, and improve profitability.
Industry 4.0 Has Already Arrived On the Machine Shop Floor
For nearly all manufacturers, digitization and automation have already arrived on the shop floor. Robotic arms, automated feeders, and tooling monitors are a few of the advancements that are now integral to the modern machine shop.
With these capabilities, manufacturers have the potential to run an automated third shift with lights out machining. The reduced need for human intervention helps lower costs for shop owners—and helps bridge gaps caused by ongoing labor shortages in the industry.
But the benefits of digitization and automation don’t end there. In fact, some of the most important applications of an Industry 4.0 approach happen at the administrative level.
Advanced Analytics Help Manufacturers Make Smarter Decisions
Forward-thinking manufacturers have a tremendous opportunity to leverage the vast data collection and computation abilities that come with digitization. Advanced analytics provide the granular information shops need to make key decisions about running the business.
Rather than going on gut instinct, manufacturers need concrete information to answer questions like:
- Which types of jobs are most profitable for us?
- Can we increase our customer lifetime value by winning more repeat work?
- What capabilities should we invest in next?
- Should we double down on a specific industry or niche?
The answers to many of these questions can be found in the data embedded in a machine shop’s quoting process.
The Quoting Process Provides Data for Advanced Analytics
The quoting process is the foundation for the entire manufacturing ecosystem. For a shop to succeed, they need to price work effectively, quote quickly and accurately, and streamline operations to move jobs to the shop floor as soon as the work is won.
At a high level, however, manufacturers need to focus on more than the work they’re winning. They need to examine their overall win rate for jobs: what types of jobs they win—and what types of jobs they lose. Improving quoting processes by increasing speed and accuracy can in and of itself increase win rates, but that’s only one piece of the puzzle.
When a shop understands the data behind metrics like their win rates, they can make smarter decisions, such as prioritizing quotes they are most likely to win. The need for prioritization has increased in recent years because machine shops aren’t the only ones adopting new technologies. Customer buyers now have access to automated tools to help them do their jobs as well. This development has shifted the way buyers source jobs, resulting in greater numbers of RFQs for manufacturers to respond to.
Surface-layer data, as provided by many manufacturing systems, is insufficient for providing the insights that shops need. In addition to tracking win rate by customer, for example, contract manufacturers should have the ability to evaluate their win rates based on criteria such as part geometry, manufacturing process, and material.
Manufacturing Data Collection vs. Data Analysis
It’s important to note that data collection and data analysis are two different capabilities. Even a shop using a paper quoting system may have copious amounts of raw data. What they lack is a means to effectively organize and analyze that data so that it provides meaningful insights. Raw data only becomes valuable with the analytics that help it tell a story.
Once manufacturers understand what their data is telling them, they can take action accordingly. Analytics can provide insight into every area of a machine shop’s business operations. Even marketing efforts benefit from data analysis: A deep dive into the types of work being won tells a manufacturer what they’re known for in the business. Shop owners can then decide whether to lean into that identity or forge a new one.
With the Right Data Analytics, Manufacturers Can Embrace Industry 4.0
With the right analytics in place, machine shops can assess their performance in near real time, evaluate historical performance, and continue to make improvements to streamline operations and increase efficiency.
Industry 4.0 may seem like a business buzzword, but the concept has great relevance for all machine shop owners. With the right tools in place to support them, contract manufacturers can leverage digitization and automation to be relevant, competitive, and successful, both in the short term and for years to come.
How to Analyze Quote Data to Drive Strategy in Your Shop