Manufacturing in China: Smart factories everywhere or still extended workbenches?


Smart factories with Internet of things and Industry 4.0 technologies, with self-controlling, self-learning and self-optimizing machines, need high investment in monitoring equipment, software, machines and people, which should bring fast ROI, if orders from customers are constant and high and have low variance. But like everything, it has advantage and disadvantages. What about starting with MES (manufacturing execution system), which most plants in China don’t have? Or to change from Push- to Pull-principle in workflow. Or to install supermarkets. Then you learn to improve your data storage and digitization process, data quality, machine to machine communication, inhouse workflows, and management reporting and employee’s speed to react quickly.

As you know, 70-80% of product costs are defined in R&D, whereas material share is at least about 50%-60%, production can influence only a small part of total product cost. Therefore, before starting thinking of a smart factory to increase your profit, why not starting with Frontloading (to bring purchasing and supplier to early development and design phases), 3D modelling, standardization and modularization?

 In China, there is a high risk of IP infringement, which prevents to relocate or reinforce engineering staff. As a company owner, why to bring more risks in your company and put all eggs in the China-basket? All makes sense, only if you will stay in China for a long time due to local Asian market opportunities. As employee costs increases year by year, CIP (continuous improvement process), poka-yoke stations, identification, monitoring are not enough to create quality which your customer requires, automation is the only answer to stay competitive in quality, timing and price. For example, to use ATS (Autonomous Transport System) instead of shipping parts through your plant by blue-colour-workers, but this process change requires bar codes or RFID, which your suppliers as well need to understand and need to be paid.

So, ROI (return of investment) and MOB (make or buy) calculations, and Value-Benefit-Analysis are very important to make best management decisions. But changes from a physical factory to a digital factory can only be done together with all employees, who likes to keep their jobs to feed their families. They fight hard for it, often under table and you wonder, why some changes in efficiency are not working or even getting worser. Therefore, good old daily shop floor meetings with a proper Asaichi board are a must in China, even it can be digitized and MES, ATS and RFID are already working.

Definitely, there are lot of other things to tell for this controversy topic. Before we go on, but what do you think?