Against the backdrop of the Fourth Industrial Revolution, companies of all shapes and sizes are seeking ways to leverage the latest technology into everyday operations and processes to create greater efficiency. Witnessing this first-hand is Mark Hermans, Managing Director at PwC, United States. Hermans has spent more than 20 years consulting the biggest organisations on transforming their operations, with a focus on digital enablement. Within PwC’s digital operations practice, Hermans leads the Connected Supply Chain team, helping companies leverage emerging technologies to transform their supply chain operations. He has served clients across a variety of industries with a primary focus on industrial products and aerospace.
Here, Manufacturing Global speaks with Hermans about how the manufacturing and supply chain space has transformed over the years and its current role in the industry.
As a way of introducing yourself, can you start off by telling us a bit about your career and your journey to finding yourself with PwC?
Mark Hermans: I was exposed to global supply chains at an early age. My father was a mariner on large cargo ships travelling the world. Growing up, I would visit my dad’s vessel when it was in port in the Netherlands. I also had the opportunity to join him on board on a trip from Rotterdam to Japan. I experienced the magnitude of global supply chains first hand pulling into a port, watching containers being offloaded and then quickly moving on to the next port of call. I was hooked! I studied Systems Engineering with a focus on supply chain operations and logistics. In my first job, I implemented factory scheduling systems and developed operations simulation models. I then transitioned into operations consulting advising clients on supply chain and manufacturing transformations leveraging technologies. Even now I am still fascinated when visiting a factory or warehouse seeing the movement of people, parts and equipment and I can’t help myself and look for ways to make things run better.
In your own words, how would you describe PwC? What gives it an edge over competitors?
Mark Hermans: At PwC, we help our clients solve complex problems. Our edge is that we have deep core operations and industry expertise in combination with innovative digital tools and analytics. We work throughout the entire transformation journey from the initial strategy and solution development through the execution of leveraging digital and analytics tools. Complex problems typically require multi-threaded solutions, working across supply chain, manufacturing, technology, sales, finance, tax, tariffs and so on. We have experts across all those areas, and we work side by side with our clients to develop and implement practical solutions in an integrated manner. We use advanced digital solutions to get better insights and to get to results faster. For example, I am implementing our Factory Intelligence tool to help a manufacturer “win the hour” by reducing defects using sensors and smart analytics. On another project for an aerospace manufacturer, we implemented a critical chain simulator to proactively identify vulnerabilities and parts shortages in the end-to-end supply chain.
What does digital transformation currently look like in the supply chain and manufacturing industry today?
Mark Hermans: Supply chains are becoming more agile, faster and smarter. There is more visibility across the supply chain, starting with understanding consumer and consumer behaviour, e.g. using demand sensing to proactively identify shifts in consumer preferences and using supply chain control towers to understand the potential supply disruptions. Supply chains are also becoming more integrated with closer collaboration between customers, manufacturers and suppliers. Digital twin simulation capabilities enable decision-makers to quickly re-assess and evaluate alternatives and adjustments. Automation is supplementing and replacing repetitive human tasks. Ultimately we see supply chains evolve to autonomous, connected and self-learning ecosystems.
There has been a step-change in digital transformation within the supply chain and manufacturing industry over the past few years. Companies typically rely on bulky standalone “modern” systems such as Manufacturing Execution Systems (MES) or Transportation Management Systems (TMS) in combination with their Enterprise Resource Planning (ERP) systems. This gives companies “base” functionality and capability in a specific operational area such as planning, manufacturing or transportation.
What we are now seeing is that with Industry 4.0/IoT concepts, companies are now looking to solve problems or use cases that require a combination of data from a number of these modern systems, as well as new data sources, requiring “base plus” capabilities to connect and analyse these diverse data feeds. For example, “base plus” capabilities require environmental data from the shop floor such as temperature, vibration or images in combination with external sources like social media, traffic or news reports.
Companies can harness all that data from various sources and use custom apps to address key challenges and constraints in operations. For example, an app can check if production lines are operating at rate. An app can identify where a particular forklift is. An app can identify if a CNC machine is about to fail and needs maintenance. An app can identify bottlenecks. This library of apps enables supply chain and plant operators to improve quality, reduce shortages and improve the overall agility of their operations leveraging existing “base” technology infrastructure.
How has automation and machine learning transformed manufacturing and supply chains?
Mark Hermans: Automation is changing the clock speed of manufacturing and supply chains. Everything is becoming faster and more autonomous: transactions, analyses, alerts and decisions. It is also enabling things that were never possible before—like the ability to proactively identify trends and deliver a completely different customer experience. Companies that can harness the power of automation and machine learning can leapfrog the competition. Big Data, in combination with advanced analytics, is enabling rapid learning and adjustments through rapid closed-loop solutions.
It is also changing the role of the workforce, and it requires different types of skills in the workforce. Attracting new and different talent, re-skilling, upskilling is critical. Workers need to be digitally and data-savvy. Repetitive tasks and decisions are being automated. New automation tools have transformed the jobs of supply chain analysts and procurement analysts to a more strategic instead of transactional role. Workers are now performing more strategic work assessing options and making trade-off decisions supported by analytics tools as opposed to performing simple transactions.
What are the main differences between the manufacturing industry of today and the one ten years ago?
Mark Hermans: The manufacturing industry of today is a lot different than it was ten years ago. Today, everything is a lot more connected, and with advances in analytics, there is the ability to optimise and adjust as things happen. The underlying principles have not changed—the physics of a factory and supply chain still apply, such as lean, flow, balance, rhythm and so on. Digitisation and automation supplement these principles, but they do not replace them.
With the emergence of digital technologies and supply chains becoming more extended, there have been significant changes. There have been big improvements in safety; there is less paper, more automation, shorter flows, more operator engagement, smaller batch sizes, smarter assembly and less re-work— all using data to rapidly understand and address issues. The opportunity to use advanced tools is so much bigger. Ten years ago, you had to ask a software engineer to develop an analytical tool to optimise equipment throughput. Now, an intern can create that in a week. Analytics are performed faster and with a lot more data. Everything is connected. It is more commonplace to analyse manufacturing data alongside finance data, training data, and quality data in order to holistically understand operations.
How has COVID-19 impacted and changed the way manufacturers work?
Mark Hermans: For many clients, the pandemic has been a rollercoaster in terms of demand swings and supply disruptions. In the immediate aftermath, we have obviously seen measures to protect worker safety, for example, physical spacing, A/B team schedules, use of PPE, etc. COVID-19 has also resulted in greater awareness of the vulnerabilities in today’s complex value chains from a supply base and health perspective and that “stable” demand can quickly change.
On a larger scale, it has also dramatically accelerated digital adoption with things like remote collaboration and customer and supplier interactions. Overall, supply chain leaders are thinking much more about agility and resilience. Companies are rethinking their operations footprints and operating models and supply bases. Companies are re-assessing their supply strategies and determining whether they have sufficient redundancy and diversity in their supply base. Companies are contemplating regionalising, reshoring and nearshoring. As companies consider reshoring, they will have to rely on automation in order to offset higher labour rates. Companies are also investing in smart supply chain control towers to better understand customer buying patterns and proactively identity disruptions and bottlenecks.
What do you believe are any future trends that could play a more influential role in manufacturing over the coming years?
Mark Hermans: The future of manufacturing will likely focus on anything that improves agility, speed, resilience and sustainability—and the name of the game will be to do it at scale. Overarching the continued adoption of digital technologies will be the dominant trend. We are expecting continued learning and adoption of AI and ML to improve learning and drive real-time root cause corrective action. With advancements in analytics and simulation, the idea of a digital twin of a factory can become a reality. Automation will continue, with the use of robots and cobots as well as flexible, small-batch manufacturing technologies. We are already seeing companies rethink what should be done in-house and what should be externally. I envision more distributed manufacturing and networks that can rapidly adjust based on the needs of the customer or changing supplier environments. Continued tighter integration with customers, engineering and suppliers will enable factories to rapidly respond to changes in customer preferences or supply profile.
What’s next for PwC and the manufacturing industry over the coming years?
Mark Hermans: What comes next is all about improving digital IQ and experience. These are exciting times of rapid innovation and change. We are in the middle of a digital transformation, upskilling the entire workforce, developing and using innovative technologies to deliver value for our clients. We continue to evolve our digital operations intelligence tools. We are creating tailored and flexible analytics that are light-weight and sit on top of existing applications. The manufacturing industry needs to evolve quickly, with a lot more emphasis on services and software instead of just physical products. The digital and physical worlds are blending together, and the market is evolving quickly. Winning in the market requires manufacturers to also focus on services and experience, not just products. It is all about the experience for customers, employees, and partners.