'Factory of the future' will put innovation, customers first, IDC says

The 'factory of the future' will be all about customer satisfaction and special-order fulfillment, according to an IDC study.

Today's consumers are big fans of customization. From personalized phone apps to special-order fashions, customers are coming to expect their purchases to be as unique as they are. As a result, manufacturers are moving away from filling warehouses with huge batch orders, instead sending out smaller, make-to-order shipments, according to IDC Manufacturing Insights.

The Framingham, Mass.-based research firm explored the trend in a recent webcast titled "The journey toward the factory of the future."

The webcast detailed a report for which IDC interviewed around 90 discrete and process manufacturers from the U.S. and Western Europe, with the companies evenly distributed between large and small and medium-sized manufacturers, according to IDC analyst Pierfrancesco Manenti, head of the firm's Europe, Middle East and Africa research branch and lead speaker of the webcast.

"One of the reasons why we decided to focus on the 'factory of the future' is that, in recent years, we've seen a rise in the importance of the manufacturing industry," Manenti said. "This five-year-long [economic] crisis has been a turnaround point."

Just a decade ago, most developed nations did not see manufacturing as an industry worth investing in, he explained. Now, governments are starting to understand that an economy that hinges solely on service industries cannot survive in the long term. As a result, manufacturers are going back to basics, once again putting a premium on production knowledge rather than focusing all efforts on the supply chain, Manenti explained.

Innovation opening the door to the factory of the future

When asked what they believe is the most important factor in competitive differentiation today, 58% of the manufacturers surveyed chose "product leadership and innovation," with "customer service leadership" taking the silver medal at 46%. Manenti predicted that the gap between the two factors will be much smaller in five years. He also noted that the survey results suggest that in five years, price leadership and competitive prices will also be major factors in competitive differentiation.

IDC also asked its survey takers what stage they are in when it comes to perfecting their factory of the future. "The key question was, 'Are you thinking about your factory of the future?' and the majority said yes," Manenti said. "More than 43% of companies said that a formal analysis and planning strategy -- with top management backing, involvement and funding -- is under way."

The shift in production models is another significant takeaway from the survey, Manenti noted. Today, only 21% of companies are using a make-to-stock model, with the vast majority using some variety of make-to-order, engineer-to-order or build-to-order. When asked what their models might look like in five years, only 9% of companies planned to still be using a make-to-stock model.

"This is a journey toward what we call make-to-individual," Manenti said. "Companies are trying to have unique customers for specific customers as a means of differentiation."

Factory of the future going global

Another shift shown in the survey is a trend toward a global-plant floor, Manenti added. More manufacturers are moving their supply chain into a transnational model: Instead of focusing production on large plants in one area, they are positioning smaller plants in high-demand areas across the globe. Besides being closer to their customer bases, these smaller plants also give manufacturers the ability to more easily customize production to meet the needs of consumers in a specific area, Manenti explained.

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"There is a call for the ability to harmonize, supervise and coordinate execution activities across companies' and suppliers' manufacturing operations -- with a greater level of real-time visibility," he said. "Centers of operational excellence and plant floor IT are essential to this transformation."

When asked what they anticipate their companies will consider the most important success metrics for their factories of the future, the majority of respondents chose "perfect-order, on-time and in-fill delivery to customers" and "flexibility/capability of fulfilling customer needs, rather than making sure product capacities are fulfilled."

"We are seeing more manufacturers today who understand that the new guiding principal is fulfillment," Manenti said. "Of course, efficiency, quality control and high volume are also still important -- but not most important."

Manufacturers are adopting a people-intensive model for their factories of the future, he said. This means focusing on technologies that connect people, whether they are employees inside the organization or customers outside of it. Such technologies include cloud platforms, mobile computing, social networks, big data analysis tools, multiplant manufacturing operations management and enterprise manufacturing intelligence, automation technologies, 3-D printing, and virtual reality equipment.

"The factory of the future will be measured by how well [manufacturers] are able to serve their clients," Manenti said. "There will be a direct connection between the plant floor and the customer."

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