Opportunity in Crisis: Now Is the Time for Manufacturers to Digitally Transform

Co-authored by Bryan Jones, CEO, JR Automation

Winston Churchill is credited with uttering the famous phrase: “Never let a good crisis go to waste.” In Churchill’s case, he harnessed the terrible aftermath of war into the formation of the United Nations and the creation of a lasting peace.

Seventy-five years on, Bryan and I also see opportunity for a fundamentally new world order to emerge from the devastating blow that COVID-19 has dealt the manufacturing sector.

Make no mistake. COVID-19 has rocked our industry. From March to April we saw the largest monthly drop in the history of the Federal Reserve’s industrial production index. According to analysis by Kearney, more than 75 percent of the world’s global manufacturing output has been directly impacted by the pandemic. Worst still, major community infections of COVID-19 have gained a foothold in the sector, where employees often work closely to one another for long shifts.

While 80 percent of manufacturers expect the pandemic to have a financial impact on their business, the most progressive are already beginning to seek opportunity amid the changes forced upon them.

Leading manufacturers have implemented structured, semi-permanent solutions that are allowing operations to continue with less disruption, enhanced health and safety measures, and reduced risk of further downtime.

But the most progressive manufacturing leaders are asking: how can the technologies and process improvements I introduce today to address COVID-19 benefit my business for years to come?

Safety First, But Not Only

COVID-19 has changed our industry’s mindset on workplace safety, this includes all of us at Hitachi.

In the wake of a rapid escalation of coronavirus cases in Oklahoma, we felt compelled to do all we could to protect workers at our manufacturing and distribution center in the state.

One of the key steps we took was the implementation of Lidar computer vision technology to help detect and separate employees arriving at the manufacturing and distribution center with elevated body temperatures.

The technology will also help with contact tracing, should we retrospectively need to notify workers who came into contact with a colleague who was later found to be sick.

Such investments might seem beyond the means of a mid-sized manufacturer. Yet this assessment might change when viewed through the lens of the additional value they can create over time – and not only in terms of health and safety.

First, health and safety benefits alone could be substantial. The manufacturing industry has among the highest injury numbers and rates of any industry with almost 400,000 injuries per year. What if a computer vision system designed for social distancing could also alert workers to forklifts coming into their vicinity? What if it could identify patterns of work that lead to repetitive strain injuries? With the National Safety Council putting the average cost of an injury requiring a medical consult at $41,000, the avoided cost could rack up quickly.

Hitachi has implemented video-assisted safety processes such as these at facilities including our award-winning Omika factory in Japan. As a result, Hitachi’s occupational accident rates are 75 percent lower than the manufacturing industry average.

Beyond Health & Safety to Plant-Wide Digital Transformation

The reality of capital constraints means investments in technology must deliver hard cost savings from tangible operational improvements, not just ‘avoided’ costs.

This is where adopting the right ‘big picture’ mindset to evaluating COVID-related digital safety investments is vital.

For example, the same digital infrastructure needed to implement thermal imaging cameras to protect workers could very effectively be leveraged to optimize workflows and streamline movement of materials.

Logan Aluminum, a Hitachi Vantara customer, is a good case in point. Logan deployed digital infrastructure as part of a new sensor and video analytics system designed to help reduce workplace accidents involving trains, forklifts, cranes and other industrial equipment.

However, the company, which supplies nearly half of North American aluminum sheeting for canned beverages, didn’t stop at safety. Logan now uses the same core infrastructure to harness the full value of data captured from more than 2,000 sensors deployed across its 59 plant machines.

Using AI analysis of its video and sensor data Logan Aluminum has identified optimal production line conditions which enable metal flows to be accelerated through its cold mill process, and to trigger real-time alerts when deviations are spotted. The company now also predicts machine failures with data and has adopted a more preventative and proactive approach to maintenance, improving budgeting and forecasting. That’s a perfect example of how a digital technology investment can deliver both health and safety benefits, and improvements to the bottom line.

Deriving Long Term Flexibility from Short-Term Adaptions

Adapting to COVID-19 has required manufacturers to reorganize workplaces and production lines. We also see long-term opportunity in these short-term adaptions.

For example, in the early stages of the pandemic, Hitachi company JR Automation was invited to help General Motors design and establish an end-to-end mask production line in response to the shortage of personal protective equipment for first responders.

Workers and lines which ordinarily produced air bag technology were reassigned to mask production in just six days. JR Automation facilitated a critical short-term shift in GM manufacturing output, but it also provided an insight into how quickly and dynamically major enterprises could respond to the changing needs of customers and markets in future.

If there’s one thing we know about COVID-19, it has certainly changed the habits of consumers. Research by Adobe suggests total online spending levels attained in May would not have been reached for four to six years under normal conditions.

For manufacturers, shifts such as these can seem equal parts exhilarating and terrifying, depending on their ability to adapt. The digitalization of manufacturing provides a key lever to deliver that type of flexibility.

Short term pain. Long term gain.

In the short-to-medium term, our industry’s focus clearly needs to remain on the health and safety of our employees. But even as we focus necessarily on the challenges before us, we need to keep an eye on the horizon.

Churchill saw the end of World War II not as an end in itself, but as an opportunity to create a lasting peace, underwritten by dozens of the world’s leading powers. Our industry’s implementation of digital technologies and processes should also be designed with bigger goals in mind.