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The end of mass production?

I came across an old article a couple of weeks back about Toyotas history. The story about the masters of lean management, very efficient automotive production and at the side some figures from their (at that time) last year. Toyota sold 8.5 million cars that year. On average only 5 have been the same – same engine, same doors, same colour, same seats, ect. Now that means that Toyota has produced approx. 1.7 million individual cars that year. Crazy.

I continued my research a bit and stayed in the car manufacturing sector. I just looked up Mercedes. Big German Brand, again very efficient car makers. And here I found similar figures. What do you reckon, how many different covers can you choose for your Mercedes seat? Good guess but not enough – the answer is more than 140 different types. Amazing.

And now lets think about the actual production process. Once a customer decides to get a red car with yellow leather seats the production process gets initiated and a couple of weeks later your customised car gets delivered. How car manufacturers deal with all this special wishes?

The key element is a supply chain which works over several tiers. Basically you have to include your suppliers and of corse your suppliers suppliers and their suppliers. They all have to be informed about the request, than the machinery kicks in and parts / products get delivered. If we stay with our leather example – basically even the farmer should know when the next leather supply is needed from his cows.

The second important element is material flow. In many factories production is based on JIT (just in time) deliveries. For example BMW orders their cockpits from a supplier and allows them two days notice. The BMW supplier then tells his supplier that they’ve just sold model X or Z to BMW and that they now have to restock / reproduce certain elements. The even faster production method is JIS (just in sequence). For example Ford asks its suppliers to deliver doors for a Ford Fiesta with a two hours notice. Of course that means the supplier manufactures literately next door and can deliver in short sequences.

Now we discussed customised cars and their supply chain but does it work in other sectors as well? Certainly, because if you think of any furniture like a couch or kitchen, quite often you can choose fabric, colour and design. So those products are customised for you. Delivery takes longer but you’ll get your blue sofa as you like it. Customers requesting more and more individual styles. They want to decide which parts go to their car, how the new flat / house should look like and what colour the fridge will have. In that sense we lose the classical mass production.

Manufacturers do face a main problem: they have to be very flexible with their production. In the industry one of the flying phrases at the moment is “one batch production”.  It just means that companies don’t produce millions of products cheap in Asia and ship them around the world. They have to focus on their main clients and produce near the area where the demand occurs. So areas like Birmingham, UK or Dusseldorf, Germany will become very interesting because lots of people / demand are around.

The companies will lose out on the economy of scale compared to mass production and the labour costs are much higher in Europe than in Asia but you could compensate this with automotive production. Robots, integrated supply chains, RFID technology all the nice things industry 4.0 is aiming at. The second big benefit is a new way of logistics. So far businesses mainly focused on the suppliers but now they even have to improve the demand side of the business. This allows them to change delivery strategies and reduce empty trucks after delivery.

In one of our next blogs we’ll talk about the effects of 3d printing and recycling schemes for future manufacturing.



RFID & Industry 4.0

We talked a lot of industry 4.0 theory in our recent blogs. Now we found a video (in english) which shows you industry 4.0 in action. The video explains unique codes, shows RFID steered logistics and mentions benefits of collaboration along supply chains.

You can’t show the overall complexity in just 5 minutes but we believe it is a good start to understand the challenges and opportunities. Enjoy.

The video is provided by the German Television Station DW-TV


industry 4.0 – the big picture

In the past weeks we talked a bit about industry 4.0, cyber physical systems, smart manufacturing which all are part of the fourth industrial revolution.

Generally speaking the “internet of things” will be created. Every machine, products and humans get connected. It still is a vision and experts think it will take the next 20 years to materialise. The following video is provided by SiemensTV. Siemens is showing their competitive advantage (and quite rightly so) but the video shows also the possibilities and the big picture behind industry 4.0.

If you have special questions about industry 4.0 feel free to post a comment and start a discussion.

cyber-physical systems

Today I’d like to continue to talk about the future of manufacturing. In recent blogs we described what industry 4.0 means and how smart factories work. In both articles I mentioned a lot technical expressions and talked about computer chips which are responsible for the workflow or the organisation of entire supply chains.

To make it all happen CYBER-PHYSICAL SYSTEMS (CPS) (wikipedia link) are running in the background. You can find IT systems in all areas of the production process already but now they will become far more connected. Cyber-physical systems are at the heart of it and steer the links between machines, warehouse space, transport ways, sub-systems, processes, internal and external objects. It’s all controlled in realtime and therefor highly efficient and flexible. Production processes can be changed at short notice and downtime can be avoided. Production orders can be changed at short notice and informations will be passed on to the entire supply chain immediately so that they can adjust their processes. As wonderful as it sounds CPS is very complex and I only recommend to integrate it step by step, sector by sector.

A second important ingredient for reliable cyber-physical systems are smart robots. Robots were the big change in the last industrial revolution. Their numbers have increased significantly and the use in European manufacturing has almost doubled in the past ten years. Experts think that robots will become intelligent and will be able to adapt, communicate and interact in future. Equipped with all sorts of chips and electronics you can clearly see their impact on industry 4.0 and the link to cyber-physical systems. Smart robots will replace humans in simple work areas such as production, logistics and handling documents.

Now before I will get lots of complaints about machines taking over human jobs I want to add this important point. Yes robots will take care of all sorts of transport through the factory in future. Yes, computer systems will make the decision on what to produce next in future. BUT humans are the most flexible resource any company / factory can have. Robots can be controlled remotely, if a problem occurs human workers will be informed via mobile devices, make decisions and give instructions to the machines. That means that 24/7 factories don’t need workers all the time. So the time for human night shifts could well be numbered. Humans will play a big part if robots fail. Humans will repair robots. Humans will (re-)program robots. I believe we still need the same amount of manufacturing workers. Instead of welding they will be mechatronic technicians, instead of forklift driving they will be logistics IT developers.

No night shifts and developing the newest robot gadget? Sounds alright to me.



industry 4.0

One of the “new” buzz words around is industry 4.0 – It creates some specific hype in manufacturing because the industry starts talking about smart factories. The term refers to no less then the fourth industrial revolution. As in all previous industrial revolutions experts expect an increased living standard, more efficiency and better productivity.

little history lesson:
  • 1st industrial revolution: around 1760, UK, transformation from hand craft to machinery, increasing use of steam power, coal replaced wood
  • 2nd industrial revolution: around 1860, UK / US / Germany, mass production Ford Model T, Car manufacturing Carl Benz
  • 3rd industrial revolution: around 1970, US, first programmable logic controllers, Automotive
  • 4th industrial revolution: 2012, globally, total interconnection, digital conjunction between all areas involved in the production area


What does industry 4.0 mean?

Roland Berger describe: “industry 4.0 emphasises the idea of consistent digitisation and linking of all productive units in an economy.”

The basic understanding of experts is that machines get connected to the products they make. Yes absolutely the technology involved isn’t new but still offers some charm. It will be like magic if your supplies move through the factory to the next free workplace, if machines discuss amongst them the order of production or if some broken toys return to the factory and the machine knows instantly what to to.

Today we are already moving towards more individual production. For example Mercedes offers way over 100 different types of seat covers. Many products get produced in the wides diversity imaginable. In future we aren’t talking about mass production we will go back to small individual batches. This doesn’t mean that we stop producing in Asia but don’t be surprised if we get a couple more factories in Europe especially in UK or Portugal.

How does it work?

Industry 4.0 is the attempt to make factories more efficient. If you get your entire factory digital than you create a two way communication system. Tools know to which machine they belong, supplies know when and where they are needed and free machine capacity could be used for repair jobs. In the next step you could implement the entire company, sales, logistics, customer service and procurement. The result would be that the machine knows that a broken toy will be returned from Lincoln, they know when it will arrive at the factory and they know how what they need to repair. All in accordance with normal production procedures.


We will continue to bring you more updates on industry 4.0 and how to make smart factories soon.