A third industrial revolution is underway, according to a 14-page special report in the April 21 issue of The Economist. It is a must-read. The series of articles explore how manufacturing is going digital, and how a number of technologies are converging – software, new materials, robotics, three-dimensional printing and web-based services.
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The outcome will be a factory in the future based on mass customization, where customers can really have it their way, not the way that traditional production models and economics dictate. Factories have been in transition, and this report paints a future with very different labor requirements, skill sets and priorities. From a distribution and manufacturing perspective in North America, there is much to like in this report.
Where factories used to move to low-wage countries, this report tells of how production is moving back to rich countries to be more responsive to the rapid shifts in customer demand. It quotes a Boston Consulting Group estimate that in certain industries, 10 percent-30 percent of the products America now imports from China could be made here by 2020, with an impact on U.S. output of $20 billion-$55 billion per year.
There are many takeaways from this report. With newly developed materials and production processes, manufacturing customers will be changing their consumption patterns of both direct and indirect materials. As the report indicates, some automotive plants are producing twice as many vehicles per employee as they did only 10 years ago. Distributors and their suppliers are responding to this revolution. This should trigger some interesting conversations in your management team on what your company is seeing today in the field, and where you need to invest to stay relevant to your customer’s changing needs for specific products and services. Access the special report from The Economist here.
