It’s been a big year for manufacturing in Australia. Activity surged to its highest level in 15 years during 2017. Then began to slow down again. We met robots such as Sophia and AMY. We said goodbye to 457 visas, and hello to Amazon.
As the new year rapidly approaches, we can’t help but wonder… what does 2018 hold?
We asked the experts for their thoughts on the big changes ahead and where manufacturers’ priorities should be in the coming year.
Meet the experts
- David Chuter, Managing Director and CEO, Innovative Manufacturing CRC Limited (Follow David)
- Chris Henderson, Industry Fellow, UQ Business School
- Travis Meade, General Manager, CMTP
- Brett Wiskar, R&D and Innovation Director, Wiley (Follow Brett)
- Mark Dingley, Managing Director – Matthews Australasia, Chairman – APPMA (Follow Mark)
And now read on to find out what our industry experts predict for 2018:
Digitisation, automation and the cloud
Will manufacturers be investing in automation and digitisation systems and technologies in 2018? The answer was a resounding “yes” from the experts.
According to IMCRC’s David Chuter, manufacturers need to continuously create and exploit digital technologies to deliver new products of customer value and increase their operational agility. “Digital technology has transformed the market context for every business, and the pace of change is accelerating. By utilising these enabling technologies effectively, Australian manufacturers are able to meet the challenges and opportunities of the global economy.”
Brett Wiskar predicts that 2018 will see more manufacturers look to automation for bottom line returns. “Increasingly powerful automated solutions are allowing reduction in human muscle. Autonomous systems from AGVs to the ASRS category and a range of other mechanised solutions are now able to provide irrefutable business cases for bottom line returns,” he says. “The era of humans performing the heavy lifting is gone and increasingly we see specific capital investment in an efficient future of fully mechanised product movement – regardless of where the manufacturer sits in the adoption curve.”
Data will also play a growing role in this story, according to industry expert Chris Henderson. “Opportunities in procurement, more flexible access to skills and knowledge and real-time inventory control have been apparent over recent years. Competition for customers is growing as international supply chains deepen. But SMEs in particular need to consider how data can be used to accelerate product and service development, reach new customers and offer high quality service to existing customers.”
Mark Dingley says the need to build the foundations for sustainable growth will prompt some manufacturers to shift towards the cloud. “We see industry clouds emerging and manufacturers connecting with other supply chain players for better collaboration. Manufacturers that manage data-intensive production and supply chain processes will leverage cloud-based execution models.”
Manufacturers will harness Augmented Reality (AR) and Artificial Intelligence (AI)
Apple CEO Tim Cook isn’t the only one predicting big things for Augmented Reality in 2018; our experts say industrial applications for AR are set to grow. “Many manufacturers will harness AR for streamlined product development and testing,” says Dingley. “New applications will also include assembly line setup and design, inventory tracking and worker training.”
Wiskar predicts big changes ahead for Artificial Intelligence too. “Artificial Intelligence (AI) and the narrower focus of deep learning and machine learning will start to become significantly more common in the next 12 months. With broader understanding in the market place that these techniques and tools can drive outcomes, we’ll see growth in their accessibility.”
“AI powered bots will be some of the most visible representations but with cost-effective AI offerings from the likes of Google and Amazon Web Services [AWS] we’re going to see significant strides in the democratisation of these powerful tools. The new format will allow business of all shapes and sizes, and the vendors that service them, to leverage AI and provide a supercharged version of the core offering powered by Artificial Intelligence.”
Is augmented reality the new reality for manufacturing? Find out here.
Chinese demand set to grow
The Asian market was a hot topic for our panel, with Dingley and Henderson agreeing that there will be continued Chinese demand for Australian-made products in the coming year. Dingley points to trends such as the explosive growth of daigou personal shoppers seen in 2017 and says “they will continue strongly, placing further pressure on Australian manufacturers”.
Delving deeper into this trend, Henderson predicts that complexity will rise in international trade during 2018. “The impact for manufacturers will be more diverse procurement relationships as Chinese suppliers deal with rising costs and environmental concerns. There is no single alternative destination, and as free trade agreements increasingly move to deals directly between two countries, manufacturers will find building international supply chains more complex.”
Australian produce has been favoured by China particularly for several years, with pointers for small business to get ready for Asian export growth plus how Australian food manufacturers can become Asia’s deli.
Say goodbye to high power bills
Australia’s access to cheap electricity and gas in the past has led to an industrial manufacturing sector that hasn’t invested in energy efficient equipment and processes. However, with retail energy costs soaring, that could all be about to change.
Wiskar says, “The 2018 priority list for every manufacturer is to find ways to drive efficiency in energy usage and to finally mount that long overdue business case for energy generation and storage. Photovoltaic [solar] systems and substantial batteries now enable peak shaving and time-shifting to mitigate the operation’s growing costs – and there’s not a moment to lose.”
Travis Meade says CMTP has already begun. “We installed two solar panel systems on existing factories mid-2017, from which we’ve already seen a financial improvement. In 2018, we are opening a new factory in Adelaide, built with energy efficiency in mind, including a solar panel system.”
Are services playing a bigger role in the business model of manufacturing companies? While “servitisation” has traditionally been much less developed in Australia than elsewhere in the world, David Chuter says that could all change in 2018.
“More and more manufacturers invest and develop the capabilities they need to provide services and solutions that supplement their traditional manufacturing offerings. They are moving away from asset utilisation to sharing rather than ownership model,” explains Chuter.
“Australian manufacturers need to find their niche and operate a unique, distinct way – embracing new technologies, business models – that prospects high value.”
Food waste strategy will impact labelling standards
The Federal Government recently unveiled its National Food Waste Strategy with the aim of halving Australian food waste by 2030. So, what does this mean for manufacturers in 2018?
Mark Dingley predicts that leading food manufacturers will look at designing and implementing voluntary industry standards on food labelling to help meet this target. “New labelling technologies are emerging that may help accelerate progress – for example, providing colour or tactile changes to indicate food is close to use by date,” he says.
What will manufacturers’ priorities be in 2018?
Mark Chuter: Innovation
“As industry disruption has become a norm, organisations, particularly manufacturers, need to focus on building and maintaining their capacity to innovate. To remain competitive, they must seek to create commercial value through the development of innovative business models, process improvements, and products and services.”
Chris Henderson: Operational excellence and adaptability
“With increasingly diverse customers, new channels to market and more complex procurement and supply chain, the priority is to keep workforce skills current and engage high-value employees to contribute more to a firm’s intellectual property. Australian products and services are viewed favourably internationally but our small market scale means manufacturers can find it hard to compete. By protecting intellectual property and considering the best way to reach customers in overseas markets, manufacturers can build success on strong foundations.”
Travis Meade: Materials, innovation and relationships
“I see the priorities for manufacturers like CMTP being three-fold. There’s a drive to secure adequate supplies of raw materials, an emphasis on launching innovative products, and the need to deepen close, personalised relationships with our clients.”
Brett Wiskar: Energy efficiency
“Find ways to drive efficiency in energy usage and to finally mount that long-overdue business case for energy generation and storage.”
Mark Dingley: Build sustainable business foundations
“Manufacturers need to focus on digitisation and intelligent process automation in 2018. They need to start harnessing the power of Big Data, cloud computing and the connected factory to find actionable insights to improve competitiveness and efficiencies. It’s also important to prioritise improved business to business collaboration, with the goal to form new synergistic partnerships. Finally, never take your eye off the risk of counterfeits: focus on traceability and anti-counterfeit systems.”
What are your predictions for manufacturing in 2018? What will your priorities be in the year ahead? Share your thoughts in the comments below.
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