Lean Manufacturing Predictions for 2018

2017 was a big year for manufacturing! From adding an average of 16,000 jobs each month to continuing the years-long trend of increasing output and productivity, the US manufacturing industry saw a lot of good.

Here at LeanDNA, we had a great year too! We made major improvements to the way manufacturers leverage collaborative analytics to reduce inventory, manage shortages, and execute their lean projects. For example, we created more automated ways that our system’s AI-based Inventory Actions highlight opportunities for inventory reduction, and brought to light new ways for sites within the same company to collaborate on global inventory initiatives. But what’s next for the world of manufacturing as a whole?

Here are 5 predictions for what we expect to see in 2018:

1. Increasing transparency of supply chains

The emergence of technology in manufacturing is causing a powerful change throughout the industry. We’ve gone from siloed systems to a world where everything can be connected. Supply chain decisions can now be made quicker, with more confidence while delivering faster results.

Your disconnected applications and spreadsheets can now be integrated into a central decision support system. Based on this information, order policies can be optimized, shortages can be predicted, and specific actions can be identified and taken. AI-based systems will not only uncover shortages or excess inventory, but identify the root cause of the problem in order to fix the core process. Problems can be discovered more quickly than ever before. When everything talks to each other, the game changes. And all this is now possible, and rapidly becoming the norm.

Don’t get me wrong – this transition is not an automatic switch that will go off in 2018. It’s a change that’s been in the works over the last few years, and will continue to develop in the years to come.

This is one of the biggest changes to supply chains since the implementation of lean in the 1980s. Is your factory ready?

2. Automation of procurement

Procurement is advancing. Today, buyers spend most of their time on “tasks.” Cutting the PO, getting commitments back from suppliers, managing logistics, etc. – all resulting in many meetings centered around spreadsheets that help provide some level of confidence. More of each buyer’s time is spent simply collecting data, with limited time available to analyze the information or improve processes. Overall, there’s lots of busywork, and not a lot of time for planning, data analysis, or strategy.

In the future, automation will take on a lot of these routine tasks. Instead of tactical PO creation and management, buyers can focus on improvement, asking strategic questions like “are my order policies set up optimally in my ERP?” or “are my POs sequenced to reduce inventory and improve delivery performance?” Now, a buyer can think about optimizing supply chain performance, rather than simply putting out fires.

To accommodate automation in procurement, buyer’s skillsets need to become more analytical. But all this is good for business. The ability to focus on problem-solving and improvement over day-to-day management means that your procurement processes will only improve with automation.

3. Technology plays an even bigger role, especially the cloud and AI

Other industries are embracing AI and the cloud, and manufacturing is no exception. No one wanted to touch these technologies five years ago, but it’s a reality today. Why the change?

Artificial Intelligence (AI) has been around for years but newer technology, big data analytics, and cloud computing making this a powerful weapon to improve manufacturing performance. AI’s first big area to improve manufacturing processes will be to help automate simple, repetitive tasks. For example, AI can highlight inventory reduction strategies for buyers based on the highest opportunity value, as opposed to having buyers sort through the thousands of ERP alerts to determine prioritization themselves. AI can help save teams time while delivering better results for the business!

Companies are starting to see how AI-based lean supply chain analytics linked to collaboration can drive dramatic results in working capital and on-time delivery, but the cloud is the technology that makes AI work. Data integration can now be completed in days versus weeks or months, and the cloud is more affordable and more secure than ever before. It forms the backbone of many of the technology improvements to come in manufacturing and supply chain in 2018. And it’s not just AI – machine learning, connected factories, and IoT certainly depend on the cloud to function! Expect to see more tools and processes run in the cloud than ever before this coming year.

4. Increasingly affordable robotics lead to more automation in the factory

Industrial robots are cheaper than ever. According to this research, the unit cost of an industrial robot has declined from over $130,000 in 2015 to only about $30,000 in 2017. That’s quite the drop! It’s no wonder that the market for industrial robots is expected to grow 175% by 2025.

The radical commoditization of robotics is leading to a revolution in manufacturing automation. The cost of virtualization, embedded systems, and other associated tools are also declining. When things become more automated, the ability to collect and connect data is easier. Automation is simply more cost-effective!

5. Manufacturing and jobs will be driven by politics, but required skillsets are changing regardless

Time (and policy) will tell where manufacturing jobs end up. The fact that manufacturers’ economic optimism is at a 20-year high is a good sign! But however the manufacturing renaissance plays out, the skillsets required for manufacturing are changing.

Instead of adding a screw in an assembly line, a factory floor employee will instead monitor or program a device. Rather than managing parts at a specific site, a buyer or purchaser can become an expert for a small number of parts and manage those company-wide, from any location. Supply chain leaders can have an even better pulse on activities throughout the company, and can use all that data to drive greater improvement.

Get ready for a great 2018!

All in all, we’re looking forward to a year of more factory connectivity and more automation. And that results in better data, letting your team do even more.

From myself and all of us at LeanDNA, we wish you happy holidays and a prosperous 2018!

Richard Lebovitz, CEO