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Remaking Industry Podcast: A forecasting discussion with Deloitte’s Jason Bergstrom

Feb. 1, 2022
"We are calling 2022 the year of the smart factory, as manufacturers go all-in on technology adoption."

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Chris: All right. Thanks for joining us today on the "Remaking Industry" podcast. My name is Chris McNamara, editor in chief with Smart Industry. Today, the podcast is connected to our 2022 Crystal Ball report where we, each year, collect insight from industry experts on what's coming down the road in the coming year in all things industry, manufacturing, digital manufacturing, IIoT, smart manufacturing, all that good stuff. One of the contributors to that report is Jason Bergstrom, who is principal and smart factory leader with Deloitte. Before I introduce Jason, I'm gonna read his full quote from the Crystal Ball report just to kind of frame our discussion.

Here is Jason talking about what's coming down the road. "We are calling 2022 the year of the smart factory, as manufacturers go all-in on technology adoption. Organizations are poised to make the shift from having a couple of smart factory components to whole production environments becoming intelligent as they realize the urgent need for digital transformation, not only increasing their competitiveness, but also in ensuring their survival. From vision systems to autonomous mobile robots, we'll see technologies playing a much bigger role in production lines and factory floors. The year of the smart factory will usher in positive changes for manufacturers that will help them address big challenges like supply chain issues and labor shortages. Becoming smart will be the secret to their success." That is, again, Jason Bergstrom, principle and smart factory leader at Deloitte, who joins us on the podcast now to dive a little bit deeper. Jason, how are you?

Jason: I'm great, Chris. Thanks a lot for having me.

Find more predictions in our 2022 Crystal Ball Report. Click the cover to get your copy.

Chris: Yeah. Thanks for joining us here. Jason is calling in from Atlanta, and we're based outside of Chicago here as we record for Smart Industry. So, let's talk, Jason, here. You refer to 2022 as the year of the smart factory. I just read your quote there. Extrapolate a little bit. What do you mean by that? And what specific developments are gonna influence these trends that we can label the year of the smart factory?

Jason: Yeah. We've seen, really, a transition happening over the last three or four years, Chris, as organizations have started to move from analog to digital, and the manufacturing environment is no different. So, even going back three or four years ago, we started to see a transition, but the transition pace wasn't quite as fast as we're seeing today. And I think there's a number of reasons for that. Certainly, the global pandemic has played a very big role in really shining a magnifying glass on supply chains end-to-end, and manufacturing is not escaping that.

So, the ability to drive more flexibility into what you do, becoming more agile, being able to drive more resilience into your manufacturing operations are all things that clients and customers are expecting in the world today. And the pandemic really shined a light on that and the need to start to make that transition. And so you started to see more and more organizations really make this shift from, "Man, that would be nice to have, and we could be on the thin edge of the wedge," to, "We really have to engage in digitizing our operations in order to survive and to compete." And so we've seen that transition, and it's really happening in earnest. We saw it at the end of 2021, and that's what drove the prediction for 2022 to really see the pace of that change escalate quite a bit.

Chris: Yeah, I would echo your statements there. We've seen that from everybody in our universe, you know, automation efforts and digitalization initiative is changing from nice to have to need to have. And you hate to consider anything is silver lining in a pandemic that has caused so much pain throughout the world, but it really has prompted a lot of these automation efforts, if not, because of kind of a change in mindset, but because of a need. My staff can't come into my building, so how are we gonna automate processes to survive? And so as we emerge from this at some point, you know, those positives and those lessons learned will continue on, which is a good thing coming out of a tough period. Let's talk kind of more broader, more strategically. How does this larger comprehensive strategic approach to smart manufacturing change how we do things, you know, in terms of, you know, taking a wider approach to some of these piecemeal digitalization components and then kind of the day-to-day approach? How are things gonna look differently in the coming year, in the coming 5 years, in the coming 10 years?

Jason: Yeah, Chris. To reflect a little bit, again, if you go back a couple of years and you looked at solutions and technologies, they really started to emerge as they often do in pockets. And so what you would see is a manufacturing issue on part of their line and someone would come up with a technology that was sort of a bespoke solution that allowed you to address that issue. And it hasn't been until recently where the combination of all those technologies, the rise of new entrants in the tech space, the ease of being able to run these solutions with the cloud, having access to the speed you need to call off data off of assets, all that coming together in the last 12 to 18 months has now moved us from, well, that's kind of a neat technology for a bespoke issue to how do we think about our manufacturing operation holistically end-to-end in a way where we start to digitize everything and connect all the dots. And as we've seen in the past, when you do things in pockets, that unlocks value, but actually, the real value comes from stitching together all of the different technologies to start to see literally a digital twin of your entire operation. That starts to unlock value that's exponentially higher than what you could do in pockets. And that's really the transformation that we're starting to see. And obviously, it's an awfully large carrot for organizations, and they're starting to recognize there's a lot of value that can be unlocked and they're going after it.

Chris: Yeah. And talk to me about the challenge in that. Early wins in a pocket, I suppose, validate wider efforts and lessons learned help scale things out. But how great of a challenge is it from digitizing one component of your enterprise or one machine in your factory to broadening that out to be a holistic, you know, effort? Is it as daunting as it may seem or is the tougher challenge taking that first pocketed step with doing things smartly? Which part is more challenging and what are your thoughts on that?

Jason: Yeah. We have a saying that we have it delayed as well is what we're using with clients in the space. And we always say, you know, think big, start small, and scale fast. And so as I think about your question, what I would say is this, we rarely see organizations just like with ERP and large scale, technical implementations go big bang. What you will see is this notion of, maybe I start with an asset, if I can show value on the asset, I'll expand that to a production line. If I can show value on the production line, I'll expand that to a network within a site. And if I can show that works, I'll expand across my network across sites. And that is a standard evolution. And so even though we now have technology that allows us to think big, that doesn't mean that these initiatives and efforts start with, "Wow, I've got a turn... I've got to light up my entire network." That is often very difficult to do, and we encourage folks to think strategically about that, but then execute it in pockets and stitch it together such that the organization can go through the change imperative in a way that allows them to be successful over a couple of years.

Chris: Yeah. And, you know, while we're talking strategy and bigger picture here, let's get a little bit more granular. What technologies specifically are we talking about that feed into these broader changes in terms of digitizing a larger enterprise? We're talking, you know, sensors and HMIs. Let's get specific here in terms of the kind of the nuts and bolts of what we're talking. What technologies are in play?

Jason: Well, so there's lots, dozens and dozens, but what I will maybe share is three that I think are particularly interesting and starting to really move the needle in terms of impacting our clients and how they manufacture products. So, the first one that's just really hot right now and I love that I think it's one of the coolest things we've seen in a while is the use of vision systems to address quality problems. So, if you think about cell-based manufacturing today, you've got operators that have to go through dozens, if not hundreds of steps. If they go out of sequence or do something wrong, they learn about it with a recall, right, six months later. Vision systems are coming into place around quality that allow those same operators in real-time using camera technology and software to be able to alert them if they do something out of sequence or do something incorrectly. And it allows them to fix the error right there at the time they're producing that particular sub-assembly.

So, really exciting stuff, completely changes the game in terms of how you build the product. So, that's something emerging. The other one that comes to mind, and we're using them at our smart factory in Wichita, is the use of autonomous mobile robots. So, long gone are the days where you have a whole bunch of supply leaders that are moving product from warehouses to different parts on a production line. That is all being automated today such that the materials are being brought by moving robots directly to the cells where they're needed, exactly when they're needed, in the right quantities. And that allows you to keep your kind of 5S and lean capabilities in place. It brings it to you without having any delays or issues. And, again, having the right products every time, the right parts is critical to eliminating errors and having quality issues.

And then I would say the last one that comes to mind, and this is really consistent with the discussion we've been having as sort of an evolution, is the rise of the command center. So, for the last two or three years, we've had a lot of clients that ask us about, "How do I build the control tower or a way to look at data in a different way so that I can identify issues?" And we've seen that escalate in the last 12 to 18 months where, all of a sudden, sort of the rise of the command center is something we've seen a lot of clients start to wrap their arms around, which is think of it just like you would a command center, a room or an area where you're bringing data from all over the business together to look at it in different ways. And again, it's been difficult to do that up until the last couple of years just given the limitations of the tech. But now that is a very reasonable thing to be able to pull together and really fundamentally change how you run the business by bringing data from all different functions together, inclusive of manufacturing, to try to deliver more value to the end customer. And so the rise of command center concept is one that we've seen come up in earnest.

Chris: Interesting. And tell me, who... Whether it's a physical location or it's kind of more a concept, who accesses the command center in the ideal situation? Is it relegated to the C suite or do people who had their hands on machines on the floor contribute to and glean insights from the command center as well as managers and the full team? What's the approach there?

Jason: Yeah. Typically, the command center is gonna be used by an operations team, less so the C-suite. But what's interesting is what you can do and what we're starting to do with clients is use the data from the holistic command center. Using personas, we're able to then cut that data up into different views that are applicable to different personas. So, just as your question alluded to, so what does the C-suite wanna see? They're probably not terribly interested in, you know, second by second data from the shop floor. They're gonna be interested in the aggregated level of information and visibility that boils up so you can create a version of it for that persona. Similarly, if you go down a few levels and you think about somebody that's doing maintenance and reliability or working on the line, they're gonna want a much more real-time view into OEE and asset efficiency and quality so you're able to create a persona for them. And so they're all control towers and command center concepts, but who sees them and what data and information they see can vary based on groupings of roles.

Chris: Interesting. Let's shift gears a little bit. Give me your perspective on how drastically supply chains in the manufacturing space have been thrown out of whack in the past 6 months, 12 months, 18 months, and your take on lessons learned from that or positives coming out of having to reconsider how we manage our supply chain.

Jason: So, the big one that comes to mind, Chris, is I've been in the supply chain for 25 years, and I have never had a conversation, a meaningful conversation with a client until the last few years about supply chain resilience. And I bring that up because 99% of the time supply chains are set up to be kind of lowest cost to hit a certain service level to meet a company's needs.

Chris: Right.

Jason: And those service levels and cost bases have been established, you know, without the notion of major externalities completely shaking up their ability to serve their customers. And that has all changed. It's changed, you know, in the last couple of years because of the pandemic. But even if you go back further than that, whether, you know, it was events like tornadoes and earthquakes or droughts, we've actually seen these externalities hit supply chains for some time, but the pandemic really put everybody in that rather than one part of the world. And when that happened, what we've started to see is this notion of, we have to be low cost and we have to be able to meet our customers' needs from a service level perspective, and to do that, we have to start to look at supply chains. And that means operating a little bit differently. That means starting to look at things like perhaps on-shoring or near-shoring manufacturing with them, thinking differently about your supply base. These are the kinds of discussions that in the past we struggled to have meaningful discussions around it because there just wasn't much focus on it. And I would say the big shift we've seen is now there's a tremendous focus on it, and recognizing that they're going to have to do modeling and they're gonna have to look at what-if scenarios around how they supply their products in a way that will allow organizations to navigate some of the bumps that we're seeing through the pandemic.

Chris: Yeah. There was previously not much of a need to think too critically about that, and a crisis has changed that, I suppose. Last question for you, Jason. We've talked about a lot of challenges over the past couple of years. Let's look to the future with some optimism here. What's encouraging? In the coming year of manufacturing, in the coming five years, what do you find most encouraging about what's coming down the road?

Jason: Chris, I think that there's a couple of things. The first one is, for the first time in a long time, we're starting to see organizations think about manufacturing as a source of competitive advantage. And it has been many decades since that was the case. And to me, that is enormously exciting, and it really does start to have a reaction within the industry, you start to see more interest from those coming up through school to wanna participate in this and in getting the opportunity to be part of a bit of a small revolution in the manufacturing space, which is what we're seeing, is really pretty special. And you think about the access to new technology, the ability to be part of a team that's making decisions in real-time, being able to innovate and be more agile and flexible in the future than we've ever been able to be in the past to meet what is a very competitive customer set of expectations. All those things, to me, are enormously exciting. And I think we're starting to see, really, manufacturing become the jewel in the supply chain for the first time in quite some time.

Chris: "The jewel of the supply chain." I love that phrase. And those things that you mentioned there all strike me as very appealing components to lure young, sharp teams into the manufacturing space, which continues to be a challenge as people retire and the appeal of manufacturing isn't what it once was. Elements like that, that you just rattled off are certainly appealing, one would think, to young, technically enabled smart personnel in the future.

Jason: Yeah. And Chris, you know, totally agree. And in fact, as a firm, one of the things that we're doing is we just opened our smart factory at Wichita, which is a 60,000-square-foot facility that brings a lot of the technologies that we've talked about today to life. We're using that as part of the possible hands-on experience center to bring clients through so we can challenge them in this space. And it's all really aligned to this movement that we're seeing in the space. It's a really exciting opportunity for us, and we're looking forward to having a lot of our clients there to experience it.

Chris: Excellent. I gotta come check it out. Wichita, you said.

Jason: Wichita, Kansas on the Wichita State University campus.

Chris: Very cool. Jason Bergstrom with Deloitte, thank you for joining us today on the "Remaking Industry" podcast.

Jason: Thanks, Chris. I appreciate you having me today.

Chris: Yeah. And to our listeners, as always, we remind you to go out and make it a smart day.

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