Developing nations are integrating more into the world economy, but lack certain advantages, like Internet of Things (IoT) infrastructure, to compete at a global level. Western, Japanese and South Korean companies may seem impossibly advantaged, but new findings suggest multinationals are actually struggling to adapt to local markets. Here is how big players can learn from local businesses, using the IoT to their advantage.
Harvard Business Review reports that multinational companies are finding it difficult to optimize their products, services and culture to local markets. The article says that big players are finding international growth costly and cumbersome, especially in countries where they don’t have staff who are familiar with local cultures and customers or reliable local supply chain partners.
Local companies understand the culture, language and compliance issues, of course, which raises the question: is there a better and more cost-effective way for large manufacturers to integrate local businesses and workers into their networks? Let’s look at some steps big manufacturers can take, and why the IoT will prove essential.
Three quarters of German manufacturers surveyed in Pricewaterhouse Cooper (PwC)’s Digital Factories 2020 report named regionalization as their main driver for investing in digital factories. The interviewees cited several benefits of Industry 4.0, including better customer proximity and more individualized, flexible production.
One way large manufacturers can achieve better regionalization, or localization, is by integrating Manufacturing Execution Systems (MESs) into Enterprise Resource Planning (ERP) infrastructure. Not only can companies plan and control production in real-time, processes can also be digitized and communicated across the entire value chain — including between headquarters and local facilities.
One example, also cited in PwC’s report, is the electronics giant Philips that has increasingly integrated robots, 3D printing, big data analytics and digital twin capabilities into its manufacturing site at Drachten, Netherlands. Not only does the site itself employ 2000 workers of 35 different nationalities, with an understanding of the culture and languages of those countries, the plant itself is also within a large network of 16 high-tech manufacturing companies across Northern Europe.
According to Philips, the IoT systems facilitate better communication and worker collaboration throughout the network. In addition, they also support better localization of Philip’s products including vacuum cleaners, coffee machines and hair stylers that now have first time right designs for local markets.
By expanding into local markets, manufacturers gain access to a new pool of potential workers with unique skills. However, there are obstacles too, including differences in business culture, operations and languages. While companies like Philips use IoT systems to help their multinational employees network with one another, how can manufacturers guarantee that all workers feel included or brought into the fold?
Some answers can be found in the 2021 paper by Masood Rangraz and Lena Pareto published in the International Journal of Lifelong Education, “Workplace work-integrated learning: supporting industry 4.0 transformation for small manufacturing plants by reskilling staff”. Rangraz and Pareto studied a small manufacturing plant transitioning from a manual assembly line to one that operates 24 hours a day with automated robotic systems. Crucially, its shopfloor employees had no experience of working with robots or automation. Instead, the small manufacturing plant invested in reskilling its workers, giving them new competences to work with IoT systems.
Rangraz and Pareto write of how automation is “transforming the duties, work arrangements, distribution of roles and division of labour to accommodate the needs of the automated assembly process.” The study adds: “Although the manual assembly required more human physical labour, the automated assembly process required more human monitoring labour for additional shifts.”
In this case, we see how automation can provide learning and working opportunities for employees, both new and existing and low- and high-skilled, or even unskilled. This is where IoT systems with easy-to-use human machine interfaces (HMIs) can play a vital role in getting everyone in an organization onboard and directly involved with more accessible data share through customized reports. That includes onboarding staff from local markets and local cultures.
We’ve looked at how large global manufacturers can bring local talent into the fold. But what about establishing reliable supply chain partnerships? Tata Steel is setting an example by establishing better networks with suppliers with the IoT and big data.
Serkan Sarioglu, customer engagement manager for Tata Steel, writes: “There is immense amount of data which could be used for improvements in supply planning, steel manufacturing, steel forming and many other fields. Even relatively simple solutions like material traceability could unlock a wide range of applications from quality management to circular business models.”
Sarioglu gives the example of a global manufacturer using feedback from OEMs or suppliers in local markets to fine-tune its supply and products. Tata Steel has turned to blockchain, the IoT, virtual reality (VR), machine learning and more. That includes a recent partnership with World Economic Forum with view to developing a blockchain platform that will address transparency issues in the mining and metal industries. With its capability to store encrypted blocks of data in chains, shared securely and chronologically along a peer-to-peer networks, blockchain could play a vital role in tracking and tracing materials.
Sarioglu believes that the system could also help with product localization and even win the reporting of carbon emissions as part of a sustainability strategy. He writes: “It is exciting times to be involved in this digital transformation.”
To make this transformation work, however, manufacturers should seek to apply the latest Industry 4.0 technologies. But this needn’t be costly, and an industrial automation parts supplier like EU Automation can help manufacturers embrace data-driven systems as part of a low-cost digital retrofitting strategy. But, as Rangraz and Pareto write, “The organizations then need to pay equal attention to the change in the competence as they do to the change in the technology.”
Fortunately, IoT systems can play a crucial role in bringing local manufacturing facilities and workers into the fold. With the IoT, it can be easier for large manufacturers to optimize their products, services and culture into local markets.
About EU Automation: Claudia Jewett is the U.S. Country Manager at EU Automation. They stock and sell new, used, refurbished and obsolete industrial automation spares. Its global network of preferred partner warehouses, and wholly owned distribution centers, enables it to offer a unique service within the automation industry, spanning the entire globe. It provides worldwide express delivery on all products meaning it can supply any part, to any destination, at very short notice. www.euautomation.com/us