January 31, 2023

Volume XIII, Number 31

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January 30, 2023

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Manufacturers Get Smarter on Smart Manufacturing

The concepts of “Smart Manufacturing” have been around for decades, but those concepts are starting to take hold more broadly.   Smart manufacturing is essentially the use of technology to make manufacturing more efficient, reliable and traceable.  Robots were one of the early adoptions, with the accompanying fear that robots would displace humans in the manufacturing process.  We still hear that refrain, but at the same time it is not robots who have taken skilled employees away from the manufacturing line:  almost all of our manufacturing clients cannot find enough skilled manufacturing employees!   More recently, smart manufacturing technology has included broad suites of “Manufacturing Execution Systems” (MES – both cloud-based and on premises solutions) software that enable more efficient and repeatable manufacturing, and broader ability to customize products and deal better with manufacturing quality issues.  Will this intersection of talent shortages and technology capabilities – in the midst of a supply chain crunch – create a new “golden age” of smart manufacturing, including for small and medium-sized enterprises (SMEs) who often do not have the CAPEX budgets to fund large-scale smart manufacturing projects?

At a recent OESA meeting, Ben Stewart, Vice President of Strategy of Plex (part of Rockwell Automation), presented “A Strategic Discussion on Automation & Smart Manufacturing” to an assembled group of automotive finance executives. Stewart noted that smart manufacturing applications can help solve the following common operational issues:

  • Poor visibility and inventory accuracy

  • Manual processes and operator errors

  • Product quality variability; scrap/waste issues

  • Poorly integrated, customized systems and inaccurate data

  • Lacking supply chain adaptability and operational effectiveness; and

  • Resource constraints; not enough skilled people to tackle value-added work.

The impacts of these issues are manifest:  increased cost, high business risk, poor quality – brand reputation, customer delays, lack of competitiveness, wasted resource and inability to scale business, according to Stewart.   On the other hand, Plex customers have experienced an average of 80% faster inventory turns and 18% higher production than APQC industry averages, Stewart added.

Plex operates a cloud-based system, with different modularity depending on the customers’ needs (from systems that help manufacturers run their entire enterprise to systems focused on control panel monitoring of one machine) to dashboards that monitor the overall manufacturing environment, and a bunch of stuff in between. If this has whet your appetite, check out “MES for Dummies” that Plex has published.

80% of the manufacturers that Plex recently surveyed list smart manufacturing as “a key” to their organization’s future success.   Similar sentiments were recently expressed in a survey by LIFT, a leading Manufacturing Innovation Institute based in Detroit.  The LIFT survey confirms that SMEs are looking at both (1) what makes sense for my business?, and (2) what can I afford to do?  Many times that second answer is a limiting factor on the first answer, and more and more SMEs are looking for partnerships and collaborations to move up the y-axis on their smart manufacturing skillset.  With increased partnerships and collaborations come the usual legal issues:  IP ownership, IT and data privacy/security and antitrust, among other issues, in a regulatory environment that is becoming increasingly tricky to navigate.   We will be writing more about LIFT’s survey, in an upcoming post.

© 2023 Foley & Lardner LLPNational Law Review, Volume XI, Number 354
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About this Author

Steven H. Hilfinger, Foley Lardner, Senior Lender Counsel, Global Finance Lawyer
Partner

Steve Hilfinger is a partner and business lawyer with Foley & Lardner LLP. He has more than 25 years of transactional and finance experience, including representing private and public companies, senior lenders, mezzanine lenders and borrowers, venture capital funds and private equity funds, automotive suppliers and other manufacturers. Mr. Hilfinger focuses his practice in corporate and securities law matters, including mergers and acquisitions, corporate restructurings, private equity and venture capital transactions, debt and equity finance transactions, business...

313-234-7123
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