The factory of the past was a rigid thing, constructed on straight lines with components riveted to the floor: essentially a single giant machine. But the demands on the manufacturing industry are changing, and factories may soon become as flexible and versatile as the robotic arms and digital systems they employ.
A manufacturer, for instance, may be tasked with producing 150,000 phones for one carrier, and 20,000 each for two others, each model slightly different. In a standard factory, retooling the line twice for two short runs would be costly, so those devices would have to be sent to another facility to be finished. A flexible factory, by contrast, could easily and quickly shift its capabilities to finish the shorter runs—improving the productivity of the factory itself, saving time and simplifying the supply chain.
A flexible factory is one that uses assets on its production line that can be reconfigured to produce variant versions of products, or perform a variety of related tasks, with a minimum of downtime and potentially a great reduction in supply-chain complexity.
This flexibility is the result of progress in both hardware and software. Improved sensors and progress in artificial intelligence, in particular, are making robots more fault-tolerant and safer to be around, saving space and allowing integration into tasks formerly performed by humans only. Similarly, on-site 3-D printing reduces reliance on distant suppliers, while industrial Internet solutions enable close monitoring, coordination and predictive maintenance of the different machines involved.
A flexible factory is all the more useful when it is strategically located in the supply chain. GE’s $200m flexible factory in Pune, India, which will produce aviation and transportation products, is a case in point. Located near other factories involved in those industries, it can serve a jack-of-all-trades function, swapping production to suit whatever the greater workflow requires—picking up slack for a slowed production line, for instance, or producing complementary parts that might otherwise have to be brought in from distant locations or third parties. In this “shared” capacity, the factory functions as a cost center, but can greatly improve the overall productivity of a region. Airbus and Nestlé are also building flexible facilities to fill similar roles: the former has built a pilot “factory of the future” in France and Nestlé is shoring up production in Asia and Africa with smaller, more agile plants.
Large, integrated conglomerates won’t be the only ones to benefit from the concept, however. Flexible factories, for instance, could enable “à la carte” manufacturers that primarily produce small runs to serve more clients without increasing their footprint, thus adding revenue and reducing risk profile.
Getting the financial model right is key, however. A flexible factory can and should work at a different pace than a static one, and on different terms. Data-driven manufacturing can better estimate its output, meaning both price and volume can be set up front, for short contracts—a year rather than several, or even less. Front-loading the terms also means factory managers are in a better place to negotiate bulk deals with suppliers, rather than continually resupplying as the factory picks up pace over years, yet another unknown that can be eliminated. The result, says Amit Kumar, Director, Chief Manufacturing & Supply Chain Officer, GE South Asia, is a factory that can operate at full capacity from day one and can pay for itself in half the time of a more traditional one in the same class—four years rather than six or eight.
In the future, factories may become agile enough that the entire business proposition could change, moving from a service-based business to a shared-ownership one, as perhaps dozens of co-owners “time-share” the factory week by week or even day by day.
Give them time, and flexible factories may deliver a flexible industry, too.
This article is published in collaboration with GE Look Ahead. Publication does not imply endorsement of views by the World Economic Forum.
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Author: Devin Coldewey writes for GE Look Ahead.
Image: Automated machines at a car manufacturing plant. REUTERS.