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This article is part of our Essential Guide: IIoT use cases put spotlight on IoT benefits, challenges

Smart manufacturing technology is changing business processes

The future is here: AI enablement and smart manufacturing technologies are transforming business systems today, according to technology futurist Jack Shaw.

Imagine a scenario where a plane in midflight from Paris to Boston gets a signal from an embedded sensor in an engine fuel nozzle that indicates excessive wear. Once the plane lands, it will need to be taken out of service for hours or even days as the airline locates and installs a replacement part.

The entire process is time-consuming, expensive and inconvenient for passengers and crews. But thanks to smart manufacturing technology and AI-enabled business processes and systems, there is a better way, according to technology futurist and consultant Jack Shaw. The digital transformation to an AI-enabled business ecosystem is happening now, Shaw said in a presentation at the Smart Manufacturing Experience conference this month in Boston.

An autonomous self-contained process

Rather than the current costly and time-consuming process, the smart manufacturing technology ecosystem encompasses a self-contained and autonomous parts replacement process.

To start the process, industrial IoT (IIoT) smart sensor circuitry in the engine's nozzle triggers the aircraft's autonomous maintenance system, which then messages the airline's global maintenance system that the part will be needed when the plane lands in Boston, Shaw said.

Jack ShawJack Shaw

The airline's global procurement system is notified. It scours thousands of websites to identify Federal Aviation Administration (FAA)-certified parts suppliers, negotiates the terms with the supplier's AI-enabled order management system and executes a smart contract to procure the part. Once the procurement contract is authorized, a design file of the fuel nozzle part is downloaded to a 3D printer located near the Boston airport. The entire process -- from the identification of a part defect to the design download to the 3D printer -- takes less than four minutes and requires no human intervention, according to Shaw.

These things are all coming. The question is: What is it that will enable this level of innovation in processes, systems and entire ecosystems?
Jack ShawTechnology futurist and consultant

But the smart manufacturing technology and AI-enabled ecosystem is not finished. Automatic procurement processes identify and select technical engineers who are experienced with replacing this particular part and available to do the work. The technical engineer who installs the part then uses augmented reality (AR) goggles that display a 3D video of the entire replacement process directly on the part as the engineer installs it, ensuring the correct process is followed. Video in the goggles records the process for both the airline's and FAA's records, and once installed, the nozzle's IIoT sensors automatically trigger a communications self-test with the aircraft's maintenance system.

The airline's procurement system is notified that the part has been installed, which updates the smart contract to pay the supplier for the part and the engineering service for the installation.

"These things are all coming. The question is: What is it that will enable this level of innovation in processes, systems and entire ecosystems?" Shaw asked. "Clearly, a number of transformational technologies come into play -- IIoT, 3D printing, AI -- as well as other important emerging [smart manufacturing] technologies."

3D printing and new business models

Shaw said 3D printing, as an enabling technology, has advanced from being primarily a technology for prototyping and manufacturing aids, like jigs and fixtures, to one that makes production parts.

"The manufacturing of the part will, in many cases, take place at or near the point of consumption rather than in a single, centralized manufacturing location, which incurs shipping costs to get it to the point where it's used," he said. "That will mean more stockless supply chains, and it won't matter if the airline doesn't keep the part in stock -- all they need is a couple hours, and they'll have 3D printed parts available."

The new technologies will enable entirely new business models as well, along the lines of the Uber or Airbnb sharing economy, which are centered on access rather than ownership. General Electric is working on a "power by the hour" model, Shaw said, in which it maintains and operates jet engines rather than selling them outright to the airlines. After paying an initial cost, an airline pays GE by the hour as the engine operates.

"This shifts a big fixed cost to a variable cost that's aligned with usage that's more in line with the airline's cost management requirements," Shaw said. "It's also now GE's responsibility to make sure that the engine stays running so they can continue to bill it by the hour. So, it's in their financial best interest to carefully monitor each of these engines. As these new technologies continue to evolve, we will increasingly see this kind of shift, especially for major capital items."

The rise of the autonomic enterprise

The implementation of smart manufacturing technology and AI-enabled systems is leading up to an autonomic enterprise, Shaw said. In an autonomic enterprise, he said, certain functions will evolve to think for themselves, using AI combined with sensor data, IIoT and other capabilities, like 3D printing and AR. "The routine activities of manufacturing companies will happen automatically without human intervention but still under the control and guidance of human managers, executives, engineers, technical specialists."

This change will happen first within organizational processes, such as manufacturing, procurement and supply chain management, but will eventually extend across enterprises and transform entire business ecosystems.

"We'll see autonomous supply chains, where parts and materials, products and services, information and money flow between and among organizations and people -- all in accordance with the goals and objectives established by the human owners and managers of these systems and processes," Shaw said.

Some functions, such as processing invoices, will go away when they no longer add value, while others will adapt to the new technologies. The procurement process will never go away because organizations are always going to look for new providers of parts, materials and resources, but Shaw explained that procurement will evolve continuously to be highly automated.

The smart manufacturing technology and AI-enabled business transformation will not happen without organizational effort. Businesses will need to change their mindsets and become enablers to do things better, not just to make changes for the sake of change.

"You have to change your business processes, and you may well have to change your fundamental business model to leverage your core competencies in better ways to add value in the changing business ecosystem that your organization will work with in the near future," Shaw said.

Smart manufacturing initiatives need clear goals

Any implementation of smart manufacturing technology needs careful management and clear expectations and goals, according to Justin Ahmad, principal at The Boston Consulting Group, who also spoke at the Smart Manufacturing Experience conference.

Smart manufacturing efforts must address organizational pain points and solve problems in a cost-effective way that adds value, Ahmad said.

"Overall, in terms of engaging the factories and the folks that are building products and developing cross-functional teams, it's important to make sure that these visions are built and designed to solve real pain points in the business and are not viewed as a silver bullet solution of one or two technologies that are going to be put into place," he said. "If company owners can see business value in the applications that you're offering them, then they will generate funding. But if there's no clear value or it's a bunch of disconnected initiatives, it's hard to get the broader team and momentum in place that's really needed to drive some of this work."

Successful smart manufacturing initiatives need to generate short-term value that, in turn, helps create self-funding programs that lead to the next wave of advancements, and they should take on acceptable risk levels, Ahmad said.

"You don't want to be too conservative, but you also don't want to push too far and waste money," he said. "You need to strike the balance for the organizations that you're in."

This was last published in May 2018

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