TPT July 2019

G LOBA L MARKE T P L AC E

If service giants drive upheaval in today’s global marketplace, manufacturers must leverage the changes to ensure it is also an industrial revolution.

One way the Amazon effect is altering business strategies: roughly half of the manufacturers in a JDA Software survey last year stated they were focusing on better “internal and external collaboration across the supply chain,” and another four out of ten said they were prioritising inventory optimisation. In other words, manufacturers are trying to gain full control of their supply chains. They’re also trying to get better control of their distribution channels. As economist Michael Mandel observed in a 2018 MAPI report, Amazon’s transformation in distribution incorporated robotics and machine learning to improve the productivity of order fulfilment, picking and packing of individual items and the best allocation of items across fulfilment centres. Thus, a digital future for manufacturing, one centred around what Mr Mandel calls the “Internet of Goods”, includes the rise of e-commerce fulfilment centres and the localisation of distribution. Along with the Amazon effect, there’s the “Uberisation” of manufacturing. Generally, the term describes converting services into discrete tasks that can be requested on-demand, particularly via an app, but it also refers to the globalisation of supply points, stimulating both supply and demand. Leveraging this could be as simple as on-demand manufacturing – companies connecting those who need machine time with manufacturers that have it. In addition, manufacturers are adopting the use of mobile devices to design, build, sell and service products – in effect, orchestrating production and sales in real-time. Uberisation can also translate into managing a shop floor as a demand centre. The “drivers” are multi-skilled technicians who can respond to on-demand service needs. Once a company runs a diagnostics test of its various shop floors, it can direct technicians to the machines that need servicing and even aggregate the feedback on service quality. Finally, there is the “Googlisation” of the factory sector, referring to the expansion in, and impact of, search technologies that incorporate the mass collection of data for commercial and industrial use. Can manufacturers leverage this technology? They already do. When properly utilised, the data that manufacturers collect provides increasingly valuable information on the needs of their customers. Google tracks consumers’ virtual and physical meanderings and provides that data to third-party marketers as well as keeping a database of its own. Manufacturers are beginning to track data on customers’ products, to enhance their ability to serve those customers’ needs. As an example, Caterpillar’s worldwide dealer network allows it to aggregate data from all its machines and develop analytics that provide solutions. 

Automot i ve Volkswagen venture with JAC

Reuters reports that Germany-based automotive manufacturer Volkswagen is set on a joint venture with Anhui Jianghuai Automobile (JAC), investing $752mn in a new electric car factory in eastern Hefei city, China. In late April, Volkswagen and JAC obtained approval from environmental authorities to develop a plant capable of producing 100,000 all-electric battery cars per year. According to a spokesperson for the joint venture, the approval represented an “orderly advancement of the project”, and the venture’s first electric model, the E20X, is expected to be launched later this year. Volkswagen has confirmed plans to produce over 22 million electric cars during the next ten years, with over half of them built in China. Jaguar Land Rover (JLR) will build the new version of its Land Rover Defender in Slovakia, at the Nitra plant that opened last October. Writing in The Guardian on 1 May, Gwyn Topham confirmed that a prototype of the new model has been in testing and is due to be unveiled later this year, probably at the Frankfurt Motor Show. Although the move to Slovakia from the UK had been widely expected, it comes amid gloom over the prospects for British car manufacturing and follows last year’s decision to relocate production of the Discovery. After the boom of the first half this decade, British car manufacturing dropped 14 per cent year-on-year in March. The Society of Motor Manufacturers and Traders has warned that a no-deal Brexit could see it recede “even further, amid fears of a repeat of the dark days of the mid-1980s.” Mike Hawes, chief executive of the industry body, said the continuing uncertainty around Britain’s EU departure date is wreaking “havoc with investment”, adding: “Just a few years ago, industry was on track to produce two million cars by 2020; a target now impossible with Britain’s reputation as [a] stable and attractive business environment undermined.” New Land Rover Defender to be built in Slovakia

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JULY 2019