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VSEC https://vseconsultants.com Management Consultants Mon, 31 Jul 2023 10:25:23 +0000 en-GB hourly 1 https://i0.wp.com/vseconsultants.com/wp-content/uploads/2020/12/cropped-VSEC3-04-Logo_Only-512-x-512-1.jpg?fit=32%2C32&ssl=1 VSEC https://vseconsultants.com 32 32 185437653 Industry 5.0: A Sustainable Approach https://vseconsultants.com/industry-50/?utm_source=rss&utm_medium=rss&utm_campaign=industry-50 https://vseconsultants.com/industry-50/#respond Wed, 01 Mar 2023 06:30:24 +0000 https://vseconsultants.com/?p=9465

Did you know that manufacturers can provide mass customisation of products at low costs and short production cycles using collaborative robots and responsive supply chains?

An engineer programming a robot
Programming robots, i-Scoop

Target audience: Decision makers (CXOs/Directors) of IT consulting, automation, renewable energy, manufacturing & allied firms, Investors (Venture Capitalists, Private Equities, Investment Bankers), management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

The ‘Industry 5.0’ revolution is an extension of Industry 4.0 – framework for technology usage to improve industrial processes. Key aspects of Industry 5.0 are ‘sustainable’, ‘human centric’, and ‘resilient’. The emphasis of this industrial revolution is to empower the workers’ creative skills, use advanced technologies to enhance their lives, and respect the limits of our planet. These aspects facilitate a unique user experience – mass customisation – tailor made products and/or services are offered at moderate prices.

i-Scoop
Researchgate
i-Scoop

History:

Around 1760, the First Industrial Revolution evolved – use of steam power and mechanisation of production. Mechanised spinning mills powered by steam engines achieved about eight times the volume in a similar period (textile industry). Steamships and steam-powered locomotives enabled a faster movement of humans and goods – achieved long distances in few hours.

Around 1840, the Second Industrial Revolution started – use of electrical technology for high volume production and invention of sophisticated machines for manufacturing. Henry Ford discovered the assembly line production which is widely used today for mass production of cars. This manufacturing process was adapted from the slaughterhouses of Chicago. In these slaughterhouses, dead animals were hung from conveyer belts (mostly pigs), while each butcher performed only part of the entire butchering task at any given workstation. This system helped bring efficiency to the entire production process, while each worker developed and mastered a small set of valuable skills.

Around 1970, the Third Industrial Revolution emerged – use of electronics, and IT (Information Technology) to automate production. The use of partial automation (robots) in manufacturing with the help of memory-programmable controls & computers, and digitisation of systems were important milestones of this era.

In 2011, the Fourth Industrial Revolution advanced – use of advanced digital technologies to seamlessly integrate with physical machines (fully automated production). These digital technologies are Internet of Things (IoT), cognitive computing including Artificial Intelligence (AI), robots, drones, autonomous vehicles, 3d printing, cloud computing, and other related technologies. The use of data driven decisions to perform predictive failure analysis, and to facilitate artificial intelligence decisions are significant advancements of this ongoing period.

In 2015, the Fifth Industrial Revolution was unfolded. Industry 5.0 is an incremental advancement of Industry 4.0, the three pillars of Industry 5.0 being Economy (zero waste across the value chain), Ecology (reduce exploitation of natural resources), and Social (efficient cooperation between machines and humans). Use of advanced digital technologies would allow machines to perform fully automated production and interact with humans via ‘cobots’ or collaborative robots. These ‘cobots’ would enable humans to provide creative inputs and other value-added tasks (mass customisation), while they perform the repetitive and physically challenging tasks.

Raconteur

Industry 5.0 vs. Industry 4.0:

In the EU, Industry 5.0 is high on their long-term goals, and it is viewed as a compliment to Industry 4.0. While in Japan, the Industrial Revolution 5.0 is promoted as Society 5.0.

The main challenge with Industry 4.0 was “overwhelming technology infusion into the manufacturing processes.” This could be a crucial reason why many manufacturers avoid Industry 4.0 investments.

Industry 5.0 has clear goals –

  • Workers engage in creative tasks (hyper customisation).
  • Machines work in conjunction with workers (cobots).
  • Respect for our planet’s limitations (distributed & on-demand production, intelligent supply chains).

Advancement towards Industry 5.0 involves a cultural transformation (within organisations) in coordination with implementation of Industry 4.0 technologies.

i-Scoop
Frost & Sullivan
Liebertpub
Cao
Liebertpub
Liebertpub

Current & Future Trends:

The Industry 5.0 Market can be segmented into Internet of Things (IoT), Industrial IoTs (IIoTs), 4D Printing, Safety and Motion Control Devices (industrial robots, human-machine interfaces/HMIs, sensors, motion controllers), Augmented Reality, and Smart Manufacturing segments.

As per Global News Wire, the Global Internet of Things (IoT) Market was valued at $310 billion in 2020. This value is projected to be $1,842 billion by 2028, at a CAGR of 24.5% over this forecast period (2021 – 2028). The largest region is North America (2021), and the fastest growing region is Asia Pacific (2021 – 2028). Most important enterprises include General Electronics, Microsoft Corporation, Amazon Web Services, International Business Machines (IBM) Corporation, Google Inc., Cisco Systems Inc., and others.

As per Mordor Intelligence, the Global 4D Printing Market was valued at $62.02 million in 2020. This value is expected to reach $488.02 million by 2026, at a CAGR of 41.96% over this forecast period (2021 – 2026). The largest region is North America (2021), and the fastest growing region is Asia Pacific (2021 – 2026). Major companies include Autodesk Inc., Stratasys Ltd, Hewlett Packard Enterprise Company, CT CoreTechnologie Group, EnvisionTEC, Inc., and others.

As per Mordor Intelligence, the Global Safety and Motion Control Devices Market was valued at $14.85 billion in 2020. This value is expected to reach $21.99 billion by 2026, at a CAGR of 5.65% over this forecast period (2021 – 2026). The largest region is North America (2021), and the fastest growing region is Asia Pacific (2021 – 2026). Important businesses include Rockwell Automation Inc., ABB Ltd, Schneider Electric SE, Mitsubishi Electric Corporation, General Electric Co., and others.

As per Grand View Research, the Global Augmented Reality Market was valued at $25.33 billion in 2021. This value is expected to reach $597.54 billion by 2026, at a CAGR of 40.9% over this forecast period (2022 – 2030). The largest region is North America (33.9%, 2021), and the fastest growing region is Asia Pacific (2021 – 2026). Leading companies include Microsoft Corporation, Google LLC, Sony Corporation, Blippar Limited, Infinity Augmented Reality Limited, Niantic, Inc., and others.

As per Grand View Research, the Global Smart Manufacturing Market was valued at $254.24 billion in 2022. This value is expected to reach $787.54 billion by 2028, at a CAGR of 14.9% over this forecast period (2023 – 2030). The largest region is Asia Pacific (36.7%, 2022). The fastest growing region is Asia Pacific (2022 – 2030), mainly driven by unexplored opportunities in India and China and an ardent desire to achieve full automation in smart manufacturing. Top firms include ABB Ltd., Siemens, General Electric, Rockwell Automation, Inc., Schneider Electric, Honeywell International, Inc., Emerson Electric Co., Fanuc UK Limited, and others.

Research Nester
Mordor Intelligence
Mordor Intelligence
Mordor Intelligence
Mordor Intelligence
Grand View Research
Grand View Research
Grand View Research
Grand View Research
Grand View Research

Possibilities:

For manufacturing organisations to survive in this disruptive era, they should invest in technologies that would help them lower production and supply chain costs to provide superior products. Industry 4.0 and 5.0 technologies would go hand in hand to offer unique solutions to meet the specific needs of most firms. Today, sustainable approaches are a top priority for any manufacturing company – reduce waste in the form of raw materials, work in process, finished goods, energy consumed, and recycle used products.

  • Cost optimisation: Monitoring inventory along the upstream value chain and matching them to customer’s unique requirements in the downstream value chain would enable manufacturers to build tailormade products desired by consumers and reduce waste (on-demand manufacturing). This would be possible using IIoTs, IoTs & cobots to collect data, cloud computing to sort & store data, and AI technologies to provide meaningful insights.
  • Energy consumption: Saint-Gobain, a glass and materials manufacturer uses Schneider Electric’s services (cloud-based energy management service) to monitor and reduce energy consumption.
  • Resource management: Smart glasses (augmented reality based) can convey instructions and standard operating procedures to operators to increase their efficiency. Raw materials can be tracked across supplier networks, and trucks through IoTs to provide real-time data, enable just-in-time delivery, optimise work schedules, and minimise on-hand inventory.
  • Quality management: An aerospace company uses digital tagging, that is, parts are automatically scanned for any minute differences in surface texture. This exercise minimises any chance of counterfeiting and ensures regulatory compliance.
McKinsey
McKinsey
McKinsey
McKinsey
Researchgate
AI exposure in the US for major occupational sectors, Intechopen
Customised bag, Platforme

Opportunities:

As we advance with innovative technologies like Industry 5.0, a couple of challenges emerge. Each organisation’s management team should address them appropriately on a priority basis. These opportunities for growth are:

  • Job security: As manufacturers invest in cobots and automation, many jobs would be permanently replaced by these machines. The existing workers would most likely be split into high-skilled or low-skilled workers, eliminating the middle-skill employees. A practical solution would be to automate key areas of an organisation where the cost of failures or failure to regulatory compliance may result in huge losses or reputation damage. The workers affected by such advancements should be accommodated/cross-trained to work in other divisions (boost employee morale).
  • Prohibitive costs: Today, the cost of creating an automation ecosystem with numerous sensors, cobots, data collection and analysis systems are unaffordable for many SMEs. This may result in unfair advantages to larger firms over product quality, customisation, and other major differentiators. In such cases, SMEs of a given region/sector can together approach Industry 5.0 integrators to upgrade important parts of their operations (common to each player). This tactic would help them obtain a better service at a lower price (group discounts).
Gartner
Impact of Industry 4.0 on Worldwide Employability by 2030, Intechopen
Collaborative robot (cobot), Platforme
Factory 5.0, SAP

Conclusion:

To conclude, Industry 5.0 would be an enhancement to Industry 4.0. For instance, Industry 4.0 was a huge generational leap in the use of technology to support and improve manufacturing. On the other hand, Industry 5.0 brings clarity – a human centric approach to enrich workers’ lives (provide them creative opportunities), protect the environment (optimise resource utilisation), and to be robust (positively respond to disruptive technologies). Therefore, implementation of Industry 5.0 in incremental steps can provide clarity (long term process efficiency) and reduce ambiguity (lack of awareness of innovative technologies) faced by many manufacturers.

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Industrial Metaverse: Infinite Possibilities https://vseconsultants.com/industrial-metaverse-infinite-possibilities/?utm_source=rss&utm_medium=rss&utm_campaign=industrial-metaverse-infinite-possibilities https://vseconsultants.com/industrial-metaverse-infinite-possibilities/#comments Tue, 01 Mar 2022 06:30:31 +0000 https://vseconsultants.com/?p=9432

Did you know that immersive technologies like digital twins & metaverse can help manufacturing firms improve productivity and prevent incidents in many ways?

Metaverse, woman, experience
Iberdrola

Target audience: Decision makers (CXOs/Directors) of IT consulting, automation, renewable energy, manufacturing & allied firms; Investors (Venture Capitalists, Private Equities, Investment Bankers), management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

The term ‘Metaverse’ is a combination of two words. ‘Meta’ stands for “beyond” and ‘Verse’ for “universe”. In other words, it describes a possibility in which virtual 3D spaces merge with the real environment.

This technology is closely associated to ‘artificial intelligence’ (AI), ‘augmented reality’ (AR), and ‘virtual reality’ (VR). Augmented reality technology allows a person to embed virtual objects into the physical environment (real world). Virtual reality technology uses 3D computer modelling to create an environment with scenes and objects that appear to be real to the user. A person can use a Virtual Reality headset or helmet to experience this mixed-reality environment.

Homo Digitalis

History:

In 1932, the term “virtual reality” was introduced by a French dramatist Antonin Artaud in his essay, “The Theatre of Cruelty (First Manifesto).”

In 1992, an American fiction novelist Neal Stephenson introduced the term “metaverse” in his science fiction novel, “Snow Crash.”

From 1992—present, emerging technologies to support virtual reality & augmented reality grew as the PC & mobile gaming market expanded from single player (offline) to multi-player online games. The growth of collaboration technologies like Blockchain (including NFTs & Cryptocurrencies), and Cloud & Edge computing technologies partly depend on the evolution of metaverse.

History of Metaverse, Timeline, Text
CNBC TV18

Current & Future Trends:

As per Emergen Research, the Global Metaverse Market was valued at $47.69 billion in 2020. This value is expected to reach $828.95 billion by 2028, at a CAGR of 43.3% over this forecast period (2021—2028). The largest region is North America (2020), and the fastest growing region is Asia Pacific led by China (2021—2028).

The major players include Facebook, Inc. (Meta), Tencent Holdings, Byte Dance Ltd., NetEase Inc., Nvidia Corporation, Epic Games, Inc.

In 2020, the gaming market accounted for the largest revenue share (application), while the hardware segment accounted for the largest revenue (component).

Bar Graph, Pie Chart, Percentages
Emergen Research
World Map, Global Extended Reality Growth Rates
Mordor Intelligence
Bar Graph, Market Concentration
Mordor Intelligence
Bar Graph, Global Metaverse - Potential Total Addressable Market
Vinod Kothari Consultants

As per Grand View Research, the Global Augmented Reality Market was valued at $17.67 billion in 2020. This value is expected to reach $340.16 billion by 2028, at a CAGR of 43.8% over this forecast period (2021—2028). The largest region is North America (35%, 2020) led by Google LLC (Alphabet), Microsoft, and Apple, Inc. The fastest growing regions include Europe (German gaming market), and Asia Pacific (45%, 2021—2028) led by China & Japan (online adoption in many sectors), and India (manufacturing & healthcare sectors).

The demand for digital commodities like NFTs, Cryptocurrencies, and Extended Reality (XR) are expected to drive the Metaverse market. Extended reality segment incorporates immersive technologies—augmented reality, virtual reality, mixed reality, and other possible realities. The use of XR technologies involves use of IoT based hardware like Head-Mount Display (HMD) and smart glass, in conjunction with the associated software. Apart from PC & mobile gaming, these technologies can be easily customised to provide a memorable experience to  the end users (customers) in multiple segments.

Metaverse Market, Bar Graphs, Line Graph, Mind Map
Global Data
Pie Chart, Global Augmented Reality Market
Grand View Research
Bar Graph, U.S. Augmented Reality Market
Grand View Research
Pie Chart, Global Virtual Reality Market
Fortune Business Insights
Bar Graph, N. America Virtual Reality Market
Fortune Business Insights

Possibilities: Metaverse

Given the multiple waves of infection in this pandemic, many B2B and B2C segments can effectively use metaverse technologies to differentiate themselves, to retain existing customers/employees and draw the attention of potential ones. For example:

Text, AR in Manufacturing
Start Us Insights
Man, Metaverse, Virtual Inspection
The Manufacturer
Woman, Metaverse, Medical Sector
Bermix Studio on Unsplash

Opportunities: Metaverse

Every new technology provides some opportunities for growth, along with the numerous possibilities. Below are important opportunities for improvement.

  • Ownership, Inter-Operability Standards: As a consumer, most of us cherish our freedom to change service providers. As of today, most big players in the metaverse market create a closed ecosystem to retain their customers for long periods. Even if a consumer shifts from one platform to another, they cannot seamlessly move and transfer their virtual assets and experiences. Consumers and policy makers should collectively define a set of rules and regulations for metaverse providers to avoid unfavourable situations—Monopoly or Duopoly.
  • Privacy, Data Security, Copyrights Ownership, Cybercrimes: Consumer preferences have become the largest goldmine to service providers, user data helps them provide tailored experiences, and higher revenues per person (ARPUs).
    • Leading metaverse companies with a mass appeal (customer base) can control markets, and user preferences (psychological manipulation). In some cases, such firms can destabilise governments or disrupt fair election processes.
    • In real life, we can easily avoid people if we are not comfortable around them. Blocking such people is also easy in leading social media platforms like Instagram, Facebook, etc. Unfortunately, in the case of metaverse, uninvited individuals can effortlessly enter a person’s virtual space and violate her/his personal boundaries. In an industrial metaverse, such intrusion can lead to industrial espionage or copyrights infringement too.
    • As the case with most emerging technologies, metaverse is also prone to malware & spyware. This can result in spying on organisations and/or exposure of users’ personal information. In the art world, it can lead to forging of NFTs—replicas minted by cybercriminals may be used to dupe art collectors. It is often tough to win a copyright infringement case for digital content owners. For instance, an AI system cannot be named as an inventor on a patent (USA).

Addressing privacy issues requires a consensus by various consumer segments to specify rules on ‘Privacy Invasion’. Policy makers and metaverse developers should work together to develop robust ‘Consumer Redressal Systems’.

  • Virtual Currencies, Harmful Online Activities: A German study suggests that use of social media and video games by children aged 12 to 17 years has increased by 60% in 2020 over 2019. Use of digital currencies for payments in metaverse are not restricted by rules and directives by central banks across the world. This freedom encourages unlawful activities like underage sexual acts or paedophilia. A proactive approach by policy makers and metaverse developers is crucial to develop proper guidelines and rules for activities on metaverse by children/young adults (12 to 17 years).
Man, Metaverse, Production Inspections
IIoT World

Conclusion:

On a concluding note, Metaverse and the associated technologies (AI, VR, AR, Blockchains, NFTs, Cloud & Edge computing) provide limitless possibilities for many sectors. Developers and end users should explore small & iterative projects (agile methodology) and scale up as opportunities arise. Many privacy concerns, safety issues, and legal issues need to be resolved with a sense of urgency. This involves coordination of multiple stakeholders to ensure everyone has a safe and enjoyable experience using these technologies. Given this situation, investors can obtain good Return on Investments (ROI) for their investments in these technologies, even if it fails to serve the intended market segments (pivots).

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Renewable Energy: Steady Power Supply https://vseconsultants.com/renewable-energy/?utm_source=rss&utm_medium=rss&utm_campaign=renewable-energy https://vseconsultants.com/renewable-energy/#comments Sat, 01 Jan 2022 06:30:37 +0000 https://vseconsultants.com/?p=9395

Did you know that analytics and connected products can help renewable energy firms provide steady power supply?

Image, wind mills, energy, sea shore, renewable energy
Insung Yoon on Unsplash

Target audience: Decision makers (CXOs/Directors) of IT consulting, automation, renewable energy, manufacturing & allied firms, Investors (Venture Capitalists, Private Equities, Investment Bankers), management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

Due to many reasons like global warming, high population growth, lifestyle improvement in developing countries, utilities worldwide have been investing in renewable energy sources.

The main renewable energy sources today are hydropower, wind energy (on-shore and off-shore), solar photovoltaic energy (solar PV), and other upcoming sources. Major upcoming ones include concentrated solar-thermal power (CSP), hydrogen fuel-cells, bioenergy, geothermal energy, and ocean energy.

Image, solar modules, energy, landscape, renewable energy
Andreas Gücklhorn on Unsplash

Important non-renewable energy sources in use today are coal-fired thermoelectric plants, nuclear power plants, and natural-gas fired power plants.

Of these energy sources, natural gas is widely used as a backup alongside renewable energy sources. For instance, if bad weather stalls energy generation through renewable energy sources, utilities switch to natural gas-fired power plants. The main reason is that this energy source can have a flexible ramp rate. That is, rapid ramp-up and ramp-down cycles can be set as per the client’s power requirements, like renewable energy sources (solar & wind energy). Unfortunately, this energy source causes high pollution (internal combustion or gas turbine engine), due to generation of nitrogen oxides (NOx).

History:

Investments in renewable energy (solar) as a reliable source of electricity began in the 1980s. These experiments (solar modules) were done for remote areas, as it was too expensive to connect these townships with the nearest grid network.

Line graph
Our World in Data
Line graph
Our World in Data

Since 2010, the cost of solar modules has drastically reduced, which enabled low cost of electricity from this energy source. This has led to a large-scale growth of solar power plants in the world in the past decade (2010—2020), including India. Today, India has about 40 GW of installed solar powerplants, while the Ministry of New and Renewable Energy (MNRE) has set a massive target of 450 GW of renewable energy by 2030.

Line graph
Our World in Data
Line graph
Our World in Data

Current & Future Trends:

As per Allied Market Research, the Global Renewable Energy Market was valued at $881.7 billion in 2020. This value is expected to reach $1,977.6 billion by 2030, at a CAGR of 8.4% over this forecast period (2021—2030). The largest and the fastest growing region is Asia Pacific, led by India and China.

The major players include First Solar Inc., Vestas Wind Systems A/S, Canadian Solar Inc., Jinko Solar Holding Co. Ltd, and General Electric Company.

The renewable energy market would be led by the hydropower segment which had over 48% market share in 2019. Governments prefer investments in hydropower sector, due to factors like climate change, reduction of fresh water sources (water security), and multiple uses of stored water (agricultural, residential, industrial). Other reasons include “water battery”, that is, energy storage in the form of Pumped Storage Hydropower (PSH). PSH accounts for about 95% of global energy storage capacity, much higher than other forms of energy storage systems (Li-ion batteries, etc.).

The growth of solar and wind power systems would depend largely on a complete solution for 24×7 energy generation (steady power supply). This includes integration of on-site energy storage systems like Li-ion batteries, PSH, hydrogen generation, etc.

Text, solar power, wind power
Allied Market Research
World map
Mordor Intelligence
Bar graph
Mordor Intelligence
Bar graph
Mordor Intelligence

As per Grand View Research, the Global Energy Storage as a Service Market was valued at $1.2 billion in 2020. This value is expected to reach $2.7 billion by 2028, at a CAGR of 10.7% over this forecast period (2021—2028). The largest and the fastest growing region is North America (32%, 2020).

The key growth drivers are accountability (avoid black outs) by utility firms irrespective of external factors like low sunlight or windspeeds. Utilities are keen to adopt analytics solutions to ensure steady energy generation (proactive approach to sudden changes in weather). There is a high demand for services like peak load (assessment), energy arbitrage, black start, and demand charge management. Most customer segments like industrial, commercial, and residential sectors strongly prefer to use such services (incentives and subsidies).

Pie chart
Grand View Research
Bar graph
Grand View Research

Challenges: Utilities Sector

For many years, the impact of renewable energy sources was not visible, as it comprised a small percentage of the overall portfolio of utility firms. In the recent past, many governments have offered subsidies to help firms transition to clean energy. The year 2021 has not been an excellent one for utility firms, especially in Europe.

  • Firstly, due to low wind speeds (summer & fall of 2021) in the United Kingdom and the surrounding areas, many utility firms experienced a huge crisis (offshore wind turbines).
  • Secondly, most of the utility firms in UK chose to use natural gas power plants as a backup, in case of the failure of renewable energy sources. The rapid demand for natural gas shot up the prices drastically (seller’s market).
  • Thirdly, this situation worsened due to other factors—UK’s lower than usual natural gas reserves after the winter of 2020 (slow recovery expectations post pandemic).
  • Fourthly, China’s economy recovered faster than the world (post pandemic), partly due to a strong demand for products in North America and Europe. To support their economy, Chinese utilities and factories suddenly increased their consumption of natural gas.
  • Fifthly, for decades UK has been using gas powered heating systems for residential and commercial buildings. As a result, gas supplies had to be diverted to both energy generation, and commercial & residential heating systems.
  • Finally, these mutually exclusive global events led to 30+ bankruptcies in the energy sector in UK, a rise in inflation, and left many people with no power and heat (high energy & gas costs).
Wind mills, energy, sunset, landscape
Karsten Würth (➡ @karsten.wuerth) on Unsplash
Gas turbines, power generation, pollution
American Public Power Association on Unsplash

Opportunities: How can we avoid such situations (blackouts, high energy costs) in the future?

  • Firstly, it is important for utility firms to invest in multiple energy sources, both in renewable and non-renewable sources. This would help them hedge against high rates of one type of fuel or energy source. They should also consider investments in new type of nuclear energy plants like small modular reactors (SMR).
  • Secondly, use of emerging technologies can solve issues like machine breakdowns and grid failures, through predictive analysis and early warnings. This involves use of—existing technologies in hardware (sensors, IoTs, etc.), products (robots, GPS monitoring, etc.), and emerging software technologies (AI, ML, SaaS, PaaS, cloud computing, block chains, etc.).
  • Thirdly, these technologies can help utility firms obtain real-time tracking of key factors that affect energy generation from renewable energy sources. For example, use of smart batteries and advanced weather stations can help utilities deliver energy during peak hours with a high level of confidence.
  • Finally, other examples include use of AI/ML technologies to study historical data of solar insolation, or wind speeds to obtain an accurate analysis of current and future energy generation. This can help utility firms plan and generate energy from other sources (renewable or non-renewable) to meet their scheduled energy delivery commitments.
Bar graphs, pie charts, calculator, analysis
Vlada Karpovich from Pexels

Conclusion:

To conclude, the use of renewable energy in the utilities sector would continue to witness a huge growth globally. This opens new opportunities for data analytics, integration services (decentralised storage), and the use of innovative products like smart batteries and advanced weather stations, to support utility firms (operations teams).

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Global vs. Regional Supply Chains https://vseconsultants.com/global-vs-regional-supply-chains/?utm_source=rss&utm_medium=rss&utm_campaign=global-vs-regional-supply-chains https://vseconsultants.com/global-vs-regional-supply-chains/#comments Wed, 01 Dec 2021 06:30:22 +0000 https://vseconsultants.com/?p=9357

Did you know that electronic products like smartphones can involve components sourced from many countries across the world?

Port, containers, shipping, freight
Photo by CHUTTERSNAP on Unsplash

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

A global supply chain can be defined as a worldwide system used by an organisation to produce products and services. The focus of this system is to lower the direct costs (labour, raw materials, etc.) and indirect costs (administration, rents, utilities, etc.), and to develop hubs of specialists through ‘economies of scale’. For instance, a few such hubs developed in Asia are India—IT & BPM, Taiwan—semiconductors, China—manufacturing, Vietnam—footwear, and Bangladesh—apparel.

History:

The supply chains across the world before 1900 were predominantly local and regional. Agriculture contributed to a major part of most economies in the world—employed many people, and provided necessities of life (food, clothing). Trade between countries and regions involved products that have a long shelf life (tea, spices) or strong intrinsic value (silk, cotton).

 

Technological advancements after World War II led to the development of efficient logistics and transportation systems. For example, standardisation (pallets, containers), fuel-efficient engines (trains, ships, trucks), refrigerated containers, long-haul trucks, expressways, computerised ERP systems, barcode scanning systems, etc.

Text, timeline, supply chains
GlobalTranz

Current & Future Trends:

As per Markets and Markets, the global Supply Chain Management Market was valued at $23.2 billion in 2020. This value is expected to reach $41.7 billion by 2026, at a CAGR of 10.3% over this forecast period (2021—2026). The largest and the fastest growing region is North America.

The key drivers for growth are policies by most nations (post-COVID world) that specify a greater visibility and transparency in the supply chain processes. This involves use of—existing technologies in hardware (sensors, IoTs, etc.), products (3D printing, robots, GPS monitoring), software (ERP, purchase & inventory management), and emerging technologies (AI, ML, SaaS, PaaS, cloud computing, block chains). These technologies help a person accurately verify the source of raw materials, production batches, and obtain real-time tracking for high-value goods.

SCM, CAGR, text
Markets and Markets

As per Grand View Research, the global Supply Chain Analytics Market was valued at $4.55 billion in 2020. This value is expected to reach $16.07 billion by 2028, at a CAGR of 17.3% over this forecast period (2021—2028). The largest and the fastest growing region is North America (39.3%, 2020).

The key growth drivers are swift rise of business data collection across industries (low cost of data collection and storage). Businesses are keen to adopt analytics solutions to obtain meaningful insights from this raw data (proactive approach to SCM shocks). The manufacturing sector has the highest market share (above 20%, 2020) of supply chain analytics usage. This is driven by a strong requirement to ensure timely delivery of products, to avoid shortages (unabated surge demand in North America, Europe), while retaining their profit margins.

Other reasons for growth are expansion of e-commerce industry in India and China (shopping via smartphones), enhanced use of big data in retail sector in the U.S. (high competition, need for differentiation).

SCM, CAGR, text
Global Market Insights
Bar graph
Grand View Research
Pie chart
Grand View Research

Post-pandemic Challenges: Global Supply Chains

The macroeconomic shocks caused by the COVID-19 pandemic—sudden scarcity of products—forced policymakers and businesses to re-evaluate the robustness of Global Supply Chain systems. In the pre-pandemic world, low cost of goods, and availability of large volumes were the main drivers to choose global supply chains.

In the post-pandemic world, global supply chains are under scrutiny due to:

  • A lack of transparency (forced labour, child labour, unhealthy work conditions).
  • Large carbon footprints (coal-based power, untreated effluents).
  • Financial risks (pandemic induced shutdowns, trade wars, climate changes like droughts & floods).

Other factors that impact today’s global supply chains are:

  • Rise of environmental consciousness (consumer behaviour).
  • Mass customisation as a key differentiator (user experience).
  • Lifestyle changes (work from home, change in vacation preferences).
Bar graph, SCM
Scatter graph, SCM
McKinsey
Bar graph, SCM
McKinsey
Bar graph, SCM
McKinsey
Scatter graph, SCM
HBR

Key Advantages of Regional Supply Chains:

  • Visibility & Sustainability: In the past decade (2010-2020), many incidents and reports have thrown light on the horrible work conditions in Asian factories. This has led to policy changes by many developed countries to ensure a clear transparency mechanism is in place for all public companies. These firms must confirm (due diligence, annual reports) that their supply chain network (including subcontractors) provide reasonable work conditions (as per local laws). The recent supply chain shocks (container shortage, chip shortage, China floods, Delta Variant) have exposed the vulnerabilities of global supply chains. Apart from this, many governments, and citizens prefer a lower carbon footprint by large corporations (COP26). In this regard, regional supply chains would be a sensible option to meet consumer expectations of clear traceability and sustainable practices.
  • Agility: Disruptive solutions have been a challenge for many firms in the recent past—sustainable solutions—plant-based textiles or recycled footwear. To understand consumer preferences better, it would be wise to have factories or assembly units near the destination, rather than to manufacture large batches in Asia. This solution (hybrid supply chain) would help firms be agile. That is, source key components (high volume) from Asia, and manufacture (destination countries/regions) in medium batches as per the market pull (low inventory). By employing workers in the destination countries or regions, these firms would clearly meet or exceed statutory requirements too.
  • Customisation: A challenge faced by many firms today is ‘mass customisation’. That is, many customers prefer to make a product his or her own by adding a bit of individuality to it. They would be willing to pay a small premium to obtain this service too. This service has become popular in the footwear and apparel markets. To enter this sub-premium market, a practical solution would be to have the final production tasks (or assembly of products) near the destination. Such hybrid supply chains would reduce shipping time and costs when compared to a fully global or regional supply chain system.
Mind map, SCM analysis
Accenture
Flowchart, SCM
Accenture
Table, text, SCM
McKinsey
Table, SCM
McKinsey
Table, SCM
McKinsey

Potential Challenges for Regional Supply Chains:

  • Increased Costs & Lower Volumes: One of the biggest challenges to manufacture in the western countries (North America, Europe) is the high labour costs, and associated overheads (health insurance, litigation expenses). This implies, having a factory near the destination would increase the product price by 10-20% or more. Apart from that, many firms would prefer to reduce inventory (compensate for high costs), and manufacture in small batches (adjust for seasonality). These practices could increase the lead time for many products. Use of industrial robots, and emerging technologies (AI, ML, RPA, cloud computing, data analytics) can help these firms reduce labour costs and increase efficiencies. Regional supply chains could also be a key differentiator (marketing strategy), given the customers’ desire for sustainable practices, supply chain traceability, and local employment.
  • Increased Investments (R&D, Factories, Specialised Labour, Resources): In the U.S., the automotive industry (3% of GDP), and aviation industry (2% of GDP) employ millions of people (direct & indirect labour). In comparison, the electronics industry (1.6% of GDP) also employs a significant number of people (5.3 million, direct and indirect labour). However, the effect of ‘chip crunch’ which has caused havoc for automobile industry worldwide could not be alleviated within a few quarters. Reason being production of electronic components is a long-term project. Chip manufacturing (semiconductor fabs) requires huge investments ($4 billion), time to build factories (2 years), and about 2-3 years to obtain production efficiencies (90% yield). Another major challenge is to obtain a set of skilled labour (engineers, technicians) who have industry expertise (10-15 years). The R&D investments (percentage of worldwide industry sales) for the semiconductor industry is about 14.2% (2020). Apart from this, these factories consume huge amounts of water (60 litres per layer), which adds a lot of stress to the local ecosystems. Therefore, many factors need to be evaluated with a long-term view, to set up a regional supply chain of critical components.
Table, flowchart, SCM
McKinsey
Flow chart, value chain, SCM
McKinsey

Conclusion:

On a concluding note, the choice of a regional, global, or hybrid supply chain system depends on the type of products manufactured and the key market segments they cater to. Firstly, B2C products like apparel (fast fashion) and footwear could benefit from hybrid supply chain systems to reduce costs, increase market response (agility), and provide ‘mass customisation’. Secondly, for critical components like automobile chips, regional supply chains would be a good choice to avoid situations like ‘chip crunch’ in the future. Finally, for high volume B2C and B2B products which require low customisation and/or long lead time (electronic gadgets, durable goods, industrial and machined components) global supply chains would be a good option.

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Design Collaboration: Manufacturing Sector https://vseconsultants.com/design-collaboration/?utm_source=rss&utm_medium=rss&utm_campaign=design-collaboration https://vseconsultants.com/design-collaboration/#comments Thu, 18 Nov 2021 06:30:20 +0000 https://vseconsultants.com/?p=9327

Did you know that today a product can be designed with real-time inputs from designers across the globe, reducing product design time to a few days?

Car, image, Ferrari
Speed-Modeling from Pixabay

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

A new product design begins with a sketch or draft on paper in multiple viewpoints, then the development of this product is further explored within the team/company through discussions.

Today, computer aided design (CAD) software helps engineers build 3D models of new products much faster than paper drafting, while providing many possibilities to simulate real world conditions.

Drawing, CAD
Thgoiter
3D model, turbine
Speed-Modeling from Pixabay

History:

The term CAD (computer-aided design) was coined by Douglas T. Ross. He is also known as the father of Automatically Programmed Tools (APT). APT is a high-level programming language developed in the 1950’s, used to drive numerical control machines or CNC machines—drills, lathes, mills, and 3D printers. The process of using a computer program to run a machine is also known as Computer Aided Manufacturing (CAM).

The title “Father of CAD/CAM”—computer-aided design and computer-aided manufacturing usually refers to Patrick J. Hanratty. As per a study by the University of California in 2012, most industry analysts think—”About 70 percent of today’s 3-D mechanical CAD/CAM systems worldwide trace their roots back to Hanratty’s original code”. This was developed in the late 1950’s. Hanratty’s team also developed the magnetic ink character recognition (MICR) code and E-13B font during the mid-1950’s. It was adopted by the American Bankers Association in 1958 and became industry standard worldwide.

The technological advances (2000—present) that led to creation of reliable remote workspaces (high speed internet, cloud computing, SaaS, PaaS, web meetings), also helped collaborative product design become a reality.

Timeline, text, history of CAD
PART Solutions

Current & Future Trends:

As per Grand View Research, the global 3D CAD software market was valued at $9.46 billion in 2020. This value is expected to reach $15.77 billion by 2028, at a CAGR of 6.6% over this forecast period (2021—2028). The largest market is North America, while the fastest growing market is Asia Pacific (APAC). As per McKinsey, the SaaS based CAD software market would grow 35% annually (base year 2020), and would represent about 20% of the total market within five years (2025).

Pie chart, 3D CAD market
Grand View Research
Bar graph, USA 3D CAD market
Grand View Research
Cloud services, images
3D CAD World
Images, text, Global CAD software market
P&S Market Research
Bar chart, 3D CAD software market forecast
Research & Markets

Collaborative Future: Cloud-based CAD

Today’s CAD systems (local device based) can simulate most real-world conditions of incidents and failures (mechanical, electrical, thermal, etc.). This can help designers and engineers take a proactive approach to manufacture failproof products. These simulations require a lot of computing power—high-end workstations or laptops (powerful microprocessors and graphics engines). New technology trends like cloud computing and Broadband or 4G internet connections enable a smooth transition to CAD systems based on SaaS, PaaS, or Hybrid services.

Image, text, timeline
SMLease Design
Mind map, text, 3D software market
Verified Market Research
Br graph, Global 3D software market
Verified Market Research
Bar graph, Global 3D software market
Verified Market Research

Key Advantages of Cloud-based CAD Systems:

  • Flexibility: Cloud based CAD systems are device agnostic. Such apps can be programmed to work on any operating system or computing devices—phones, tablets, laptops, and workstations. Designers and engineers can avoid huge upfront investments on high-end workstations or laptops to use CAD software.
  • Price: These CAD systems can be offered with multiple subscription models to make advanced design software accessible to everyone. Pricing models can include—monthly subscriptions, floating licenses, modular pricing (pay for required modules), etc. This approach would reduce chances of piracy and democratize the CAD software market too.
  • Collaboration: A big problem with workstation or laptop-based CAD systems (standalone license) and multiple project members is—‘being on the same page’. That is, all engineers and designers should access the same version of a given CAD model to ensure they resolve design issues in a timely manner. A cloud-based CAD system can easily resolve such communication issues with a superior file management system.

Potential Risks and Threats:

  • Internet Access: The biggest challenge to use a cloud-based CAD software is internet connectivity. To have a seamless access to these SaaS based programs, the user should have a high-speed internet connection (broadband or 4G). Today’s CAD files are many MBs (megabytes) or GBs (gigabytes)—depending on the complexity of designs. To ensure work continuity, and minimize the impact of internet disruptions, a good option would be redundancies in high-speed internet connections.
  • Security: Another major challenge that hinders widespread adoption of cloud-based CAD is security threats. Industrial espionage and ransomware attacks are a huge problem for firms in any sector. Storing confidential data and information about new projects on an offsite and 3rd party server (CAD service provider) is a huge risk. Due to security breaches at the servers of the CAD service provider, a client may miss out on launching a breakthrough product on time and capturing its associated market share. Such security breaches could also result in huge losses for the CAD service provider—reputation (bad press), litigations and liabilities, and revenues (potential business from clients). To avoid such a situation, a collaborative effort would be required by clients and cloud-based CAD software providers. For instance, all stakeholders (clients, vendors, service providers along the value chain) should ensure their networks and systems meet or exceed ISO/IEC 27001 Standards, with appropriate redundancies.
  • Ecosystem: In general, when a firm decides to purchase a standalone CAD software, they map out their criteria for vendor selection based on their usage over the next few years (3-5 years). In case of the cloud-based CAD software, the market is still at a niche stage. That is, the vendors in this market may not have most features desired by a subset of clients (electrical products, mechanical products, etc.). This may also be coupled by appropriate recognition and referrals—market leader in the domains/segments required by clients. A design/manufacturing firm can protect themselves from such ecosystem issues by performing a thorough market research—available options of cloud-based CAD systems and their current design requirements (3-5 years).
Table, CAD and Cloud options
Cadalyst
Table, CAD trends, survey
Cadalyst
Bar graph, Industry 4.0 trends
Cadalyst
Pyramid graph, CAD trends
Cadalyst
Images, Cloud computing
Cadalyst

Conclusion:

To conclude, cloud-based CAD systems could add significant value to firms in their transition towards Industry 4.0. There are a few challenges in the mid-term (3-5 years), as this market is in a nascent stage—experiments and options are high but proven (robust) solutions are low. Another issue is the impact of security breaches (industrial espionage, ransomware attacks). Such problems can significantly impact the revenues of all players in the value chain. The biggest positive impact is democratization of CAD software—elimination of upfront costs—a high-end laptop/workstation and a leading CAD software (standalone license). Therefore, given the positive and negative factors, design and manufacturing firms should take a step-by-step approach towards cloud-based CAD systems. They can start with small/low-value design projects and slowly migrate towards these new systems.

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Data Analytics in Manufacturing: Unlocking Opportunities https://vseconsultants.com/data-analytics/?utm_source=rss&utm_medium=rss&utm_campaign=data-analytics https://vseconsultants.com/data-analytics/#comments Mon, 25 Oct 2021 06:30:50 +0000 https://vseconsultants.com/?p=9298

Did you know that data analytics can help manufacturers address most shopfloor problems proactively (remotely), and enhance their delivery schedules?

Factory, Pollution
Robin Sommer on Unsplash

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

Manufacturing analytics is the use of data collected from operations and incidents to improve quality, enhance worker performance, increase throughput, reduce overall costs, and optimize supply chains.

Generally, required data is collected via sensors and Industrial Internet of Things (IIoTs) linked to machines and industrial robots, and operator inputs like computers or Human Machine Interfaces (HMIs). This data is centrally stored on local hard drives or cloud servers for analysis.

Images, machine, human, cloud computing
Sensrtrx
Industry 4.0, connectivity, analytics, human-machine interaction, advanced engineering
Soft Web Solutions

Product Quality:

Production efficiency depends on the quality of each batch manufactured in a factory. Some important tools widely used to monitor the quality of each batch are Statistical Process Control (SPC), and Six Sigma.

Manufacturing, technology, history, timeline
Research Gate

Control charts are one of the most important SPC tools among the seven quality control (7-QC) tools. These charts can be created with sample data from multiple batches to monitor process changes over time. An investigation into the production processes can be initiated when any of the “Out-of-Control Signals” are flagged.

Line Graph
ASQ

Generally, “Six Sigma Quality” is defined as a production process which is controlled in between ±3s (3 sigma) from the centre line in a control chart, though the tolerance limits may be set to ±6s. In mathematical terms, Six Sigma can be defined as 3.4 defects per million parts produced. One of the widely used Six Sigma methodologies to solve problems is DMAIC: define, measure, analyse, improve, and control.

Graph, bell curve, six sigma
ASQ

Use of automated data collection systems across the factory would help a plant’s quality manager respond to an ‘out-of-control’ production process in real-time. A Supervisory Control and Data Acquisition (SCADA) system can be used to collect data and assist manufacturing analytics systems. In most cases, reliability of this data (automated collection) is higher than physically collected data.

Sensors, PLCs, HMI, SCADA
Inductive Automation

Is there a need for Data Analytics?

In the past decade (2010—2020), there has been an emphasis on regional growth, nationalism, and reduced dependence on a single supplier/country/region for products and services. The COVID-19 pandemic has increased the level of urgency towards smart manufacturing systems. Since late 2020, there has been a trend of high demand (consumer products) and rise in multiple supply shocks. These include—chip crunch, container shortage, truck driver and other labour shortage, natural calamities (Texas freeze, flash floods), and electricity shortage.

MSR Cosmos

Reasons to incorporate Technology in Manufacturing:

  • Availability of customised industrial automation systems for SMEs which are moderately priced (electronics, software systems, programmers).
  • Challenges of global supply chains (delays, surge prices, acute shortages) over regional supply chains.
  • Rise of stringent regulatory compliances—better worker conditions, component traceability,  and product quality.
MSR Cosmos

Current & Future Trends:

As per Markets and Markets, the global product analytics market size is poised to grow exponentially. This market is expected to grow from USD 9.6 billion in 2021 to about USD 25.3 billion in 2026, at a CAGR of about 21.3%. North America would have the largest market share over this period, led by Canada. Manufacturers are the leading end users (2021), while the top three sectors include—Retail and Consumer Goods, and Manufacturing.

Markets and Markets
Bar graph, top three sectors, product analytics market
Markets and Markets
Grand View Research
Market Research Future

In today’s highly competitive manufacturing era, a plant manager’s response time is shrunk down significantly. For instance, failures in a production batch may require a thorough investigation within a few hours to ensure orders are not delayed. Use of Lean manufacturing and Just-In-Time manufacturing (JIT) systems require a high level of synchrony along the entire manufacturing ecosystem (value chains). This is in part due to low inventory levels at each manufacturer in these chains.

Productivity improvements through manufacturing analytics:

  • Real-time Inventory Management
    • Manufacturing plants
    • Suppliers
    • Transported parts (IIoTs, sensors, 4G and 5G networks)
    • Reduced operational costs (production delays)
    • Enhanced delivery schedules (accurate forecasting)
  • Preventive and Predictive Maintenance of machines across production floors (IIoTs, sensors) to improve their lifespans, and to improve production efficiencies (reduce breakdowns and bottlenecks).
  • Increased Visibility of production timelines across value chains (networked ERP systems), and to accurately schedule raw materials.
  • Improved Demand Forecasting to ensure production goals are achieved and customers receive their products on time.
McKinsey
Mind map, smart manufacturing
Latent View
List, big data analytics, manufacturing
MSR Cosmos

Potential Risks and Threats:

Critical challenges to rapidly deploy analytical tools in manufacturing:

  • Data and Scope Issues—Costs involved in reliable data collection (HMIs, sensors, IoTs) and storage (HDDs, servers, cloud services) have reduced significantly in the past few years. In many cases, these changes along with a lack of clarity (business advisors) have led to collection of large volumes of unusable and poor-quality data. It is important to appropriately understand business problems and choose incremental projects for a high chance of success. Coordination of multiple stakeholders for project selection (scope) is also essential for its successful implementation.
  • Skills Shortage—Today, there is an acute shortage of reliable data scientists. Many young graduates can create a pool of models from a data set, which may not provide useful insights. A skilled data scientist should have a combination of required technical skills, business expertise, and domain knowledge. Ideally, such workers would require years of industry experience and management expertise, along with formal education in data science, and engineering.
  • Actionable Results—A well-known adage “Garbage In Garbage Out” (GIGO) is applicable to data analytics too. Choosing a wrong project or collecting unreliable data can result in huge losses (time and money). To avoid such situations, project leaders should choose actionable and agile projects. These projects should be reviewed periodically to ensure data collection is accurate, and insights obtained are aligned to business priorities.
Mind map, big data analysis
Tech Target
Bar graph, survey
Bi-Survey
Line graph, survey
Bi-Survey
Kampus Production from Pexels

Conclusion:

To sum up, data analytics is a double-edged sword which requires a good strategy (long-term vision), and an agile approach (incremental projects).

Often, business leaders choose a large project over multiple small ones—it would require less hands-on monitoring and be supported by multiple department heads. Unfortunately, disruptive changes in present markets could make new technologies (hardware and applications) obsolete in a few years after their launch.

For example, today’s advanced  artificial intelligence and machine learning systems can provide game-changing solutions to business problems in a matter of months. Therefore, it would be wise to use multiple small projects (sprints) to address today’s issues, and be prepared (proactive approach) to face new manufacturing challenges.

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Intelligent Travellers: Analytics in Manufacturing https://vseconsultants.com/analytics-in-manufacturing/?utm_source=rss&utm_medium=rss&utm_campaign=analytics-in-manufacturing https://vseconsultants.com/analytics-in-manufacturing/#comments Tue, 05 Oct 2021 06:30:12 +0000 https://vseconsultants.com/?p=9259

Did you know that workshop travellers used by suppliers in hi-tech sectors (aviation and aerospace) require retention by them for up to 25-30 years?

Production, machinery, factory
Unsplash

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

A traveller is a physical document used to track a specific batch of parts through its required production flow. This involves tasks completed, and the next steps for this production flow, and important details for each task:

  • Operator’s name and machine information.
  • Shift number and date completed.
  • Number of parts passed and failed.
  • Work instructions and additional remarks.
  • Physical dimensions (samples).

These documents may include the order information (customer details), standard times (average time) for each task, and additional remarks (client’s specifications).

An electronic or intelligent traveller is an electronic version of this document, which is generally accessed using apps for laptops, PCs, tablets, etc. to edit/store information, and to collect data for analysis.

Table, Excel workbook
Eazy Works

History:

Scientific Management (A): The Taylor Studies (Time and Motion Studies)

Frederick Winslow Taylor (March 20, 1856 – March 21, 1915) is also titled the “Father of Scientific Management”, for his contributions to the manufacturing sector on production processes and efficiencies, worker productivity, and metal cutting techniques. He is also known for his book “The Principles of Scientific Management” published in 1909, and for his productivity experiments “Time and Motion Studies”.

Photo, Adult human, male
Wikipedia

The concepts described in his book “The Principles of Scientific Management” are widely used today in manufacturing industries, modern militaries, and professional sports. These principles are also known as “Scientific Management” and “Taylorism”:

  1. Use a scientific standard (repeatable and replicable) for task completion and quality assessment (analytical basis), not a “rule of thumb”, or simple habit and common sense.
  2. Operator work assignments should be based on their aptitudes (capabilities and motivation), rather than a random assignment of tasks. Each worker should be provided on-job training to reach his/her peak performance.
  3. Monitor worker performance. Provide clear and simple work instructions, and supervision to ensure they (operators) are working productively.
  4. Allocate workload between managers and workers judiciously. Managers should spend their time to plan and train operators, while workers should perform their assigned tasks efficiently.

Worker Productivity (B): The Hawthorne Effect

In the 1920s and 1930s, Elton Mayo and Fritz Roethlisberger conducted socio-psychological experiments on workers at Hawthorne Works, a manufacturing unit of Western Electric in Cicero, IL. The goal of these studies was to understand the major factors that impact worker productivity, the results of these studies were known as The Hawthorne Effect. Some of the experiments included changes of ambient light on the shop floor, change in rest periods and length of day, and change in supervision by staff.

ACM

Later, such experiments were periodically conducted by many researchers to increase worker productivity. To reward productive workers and motivate other workers, travellers could serve as a good benchmark. Travellers also help management understand issues with machines—some of which have regular breakdowns and/or reduce operational efficiency (high defects).

Current & Future Trends:

As per Grand View Research, the global smart manufacturing market was valued at $236.12 billion in 2020. This value is expected to reach $601.54 billion by 2028, at a CAGR of 12.4% over this forecast period (2021 — 2028). The largest market is North America, while the fastest growing market is Asia Pacific, led by China.

Bar graph
Grand View Research

Key advantages of intelligent travellers:

  • Smart Manufacturing technologies like IoTs and electronic travellers can collect data from machines to perform preventive maintenance (instead of breakdown maintenance). This can help maintenance teams order replacement parts in advance and minimise machine down time. These advances would increase operational efficiency, help managers prepare accurate production plans (scheduling), and mitigate unforeseen shutdowns on shopfloors.
World map
Mordor Intelligence
  • Intelligent travellers can help managers gather real-time data on quality and operations, worker, and machine productivity, and to expedite process instruction revisions (electronically). Adoption of paperless travellers also ensures effective use of emerging technologies such as Industry 4.0, Cloud Computing, IIoTs, Data Analytics, Smart Factories, Robotics, AI and ML, CAD systems, and Digital Twins.
  • The industry leaders in Smart Manufacturing are Automotive with a market share of 23% (2020), followed by Aerospace and Defence. These industries employ a lot of labour and have many interactions between firms for components and sub-assemblies (client firms and tier 1, tier 2, and tier 3 suppliers). A small savings of production time in one part of these industries can have a compounding effect in reducing overall production costs (through intelligent replication).
  • Supply Chain Teams of client firms can assess inventory levels (and traceability) at suppliers faster through integration of intelligent traveller software with ERP systems (like SAP). This helps them monitor and plan delivery schedules, use alternate suppliers’ inventories (if necessary) to ensure deadlines are met. Supplier evaluations too can be done based on production efficiencies (worker & machine data from intelligent travellers), and new orders can be based on expected delivery efficiencies.
Image, text, manufacturing information
Wipro
Pie chart
Grand View Research
Pie chart
Fortune Business Insights

Potential Risks and Threats:

Important challenges to adopt Intelligent Travellers widely across the industry are:

  • Cybersecurity Threats—Today’s interconnected systems are heavily reliant on IoTs for communication between machines, which unfortunately have weak encryption systems. To have a robust digital factory (resistant to cyberthreats), additional security layers are necessary, which require higher budget allocations for cybersecurity investments.
Images, industrial goods
i-Scoop
Pie chart
Forbes
Table, text
Jabil
  • Employee Resistance—Introduction of digital travellers would make the machine operators more accountable. The number of parts passed at each operation (and time for each task) are recorded automatically (real-time). Most changes would require supervisor intervention. Additional fears due to automated data collection could be related to employee privacy and appraisals (increments, bonuses). These issues can be resolved through regular departmental meetings (address fears) and to offer multiple training sessions (digital travellers).
  • Technology Investments—Firms in manufacturing sector invest heavily on machinery, and additionally on key raw materials. Historically, technology investments have been a small part of annual budget allocations. Preparing for Industry 4.0 involves additional technology investments throughout each manufacturing plant. To realise the investments on electronic traveller systems, additional investments would be necessary to make factories smart (IoTs, sensors, cybersecurity). This may also involve investments on intelligent ERP systems that can communicate better with clients and suppliers across the value chain (real-time).
Table, revenue percentages
Computer Economics
Bar graph
Forbes
Pie chart
Forbes
Images, text, sequence of tasks
McKinsey

Conclusion:

To conclude, Industry 4.0 involves a massive transformation for the manufacturing sector. This would involve huge technology investments, hiring and training smart workers, in addition to regular manufacturing investments. An Intelligent Traveller system is one such transformative technology which is important to manage supply chains (global and regional) efficiently, especially in today’s post-COVID world. Additionally, this technology can reduce repetitive tasks for operators and staff, thereby increasing productivity and retention rates—employees spend more time on tasks they enjoy at work.

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3D Printing in Manufacturing Sector https://vseconsultants.com/3d-printing/?utm_source=rss&utm_medium=rss&utm_campaign=3d-printing https://vseconsultants.com/3d-printing/#comments Sun, 19 Sep 2021 06:30:14 +0000 https://vseconsultants.com/?p=9223

Did you know that complex plastic or metal parts can be built in a few hours using 3D printers for manufacturing sector, and military purposes?

laptop, 3d printer, machine parts
Unsplash.com

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

3D printing is also known as additive manufacturing. This technology uses a digital/CAD design to create three dimensional objects. The manufacturing process generally involves adding up of multiple thinly sliced cross-sections of the object (additive process). This ‘additive manufacturing’ process is an exact opposite of regular/subtractive manufacturing, where parts are created by drilling/boring out excess material from a block of metal or plastic.

mechanical gears
3dsourced.com

History:

In 1967, the first patent for a 3D printer was filed by Wyn Kelly Swainson of Denmark, called “method of producing a three-dimensional figure by holography”. He also filed two relevant patents on 3D printing in 1971 and 1977.

In 1981, Dr Hideo Kodama from Nagoya Municipal Industrial Research Institute, Japan developed a rapid prototyping system. This process involves printing (deposition) of a photosensitive resin layer-by-layer to manufacture a part. This resin was hardened or polymerised by UV light. This manufacturing process evolved into today’s SLA (stereolithography). Due to lack of funds, he was unable to file the patent application for this technology within the stipulated time frame.

In 1984, three French scientists Jean Claude Andre, Oliver de Witte, and Alain Mehaute filed for a 3D printing patent involving the use of a laser to cure monomers (instead of UV light). The project was abandoned due to lack of funding by the French Centre for Scientific Research (CNRS).

In 1986, Charles “Chuck” Hall filed for a patent in 3D printing for an SLA (stereolithography apparatus) machine. He also co-founded 3D systems corporation, which is the world leader in 3D printing technologies today.

Chuck Hull, SLA-1, 3D Printer
Chuck Hull (Extreme Right) with the first 3D printer—the SLA-1

Between 1988-1992 rapid innovations took place in this field. These involved SLS (Selective Laser Sintering) and FDM (Fused Deposition Modelling). SLS technology uses a powerful laser to sinter 3D printing material (powder form) into 3D models designed using a CAD software (STL file) . FDM technology uses thermoplastic filaments, which are melted and injected via nozzles, building a part layer-by-layer from a CAD file. The component cools down and solidifies to form the final 3D object. FDM is a popular 3D printing technology due to its ease of use for hobbyists and small businesses.

Between 1993-1995, ZCorp released their first 3D printer—the ZCorp Z402. The technology used was initially known as Zprinting, today it is also called ‘Color Jet’ or Binder Jetting. Binder Jetting technology also uses a powder bin, like SLS. Multiple parts can be printed in a single batch, and dimensional accuracies of 100 microns can be easily achieved. Parts can be made from sand, ceramics, and metals like stainless steel, Inconel, copper, titanium, and tungsten carbide.

Other important 3D printing technologies are Direct Metal Laser Sintering (DMLS), Electron Beam Melting (EBM), Direct Metal Deposition (DMD), Polyjet, Digital Light Processing (DLP), and Liquid Crystal Display (LCD).

History of 3D Printing Technology
History of 3D Printing Technology

Current & Future Trends:

As per Mordor Intelligence, 3D printing market was valued at $13.7 billion in 2020. This value is expected to reach $63.46 billion by 2026, at a CAGR is 29.48% over this forecast period (2021-2026). The largest market is North America, while the fastest growing market is Asia Pacific, especially China. Use of 3D printing is expected to grow in many industries, such as automotive, aerospace, defence, healthcare, construction, and architecture. A faster adoption of 3D printing is expected to be driven by advanced technologies such as Industry 4.0, Smart Factories, Robotics, AI and ML, CAD systems with simulations.

Bar graph
AMFG.ai
World map
AMFG.ai
Bar graph
GrandViewResearch.com

Major advantages of using 3D printing are:

  • Reduction of manufacturing costs—Low setup time and cycle time.
  • Reduction of dimensional errors—High precision for simple and complex geometries.
  • Low cost of prototypes—No requirement of jigs & fixtures, and low wastage of raw material (after production).
  • Shorter lead-time for prototypes—3D printing of parts takes a few minutes/hours for simple designs or small parts, and up to a few days for complex designs or large parts.
  • Better Inventory Management—Small production batches, less requirement of raw materials (RM) and finished goods (FG), including warehouse space for storage.

Future trends of 3D printing are:

  • Prototyping market share of 3D printing is expected to rise to 50% by 2028. 3D printing of parts reduces the R&D costs and timelines for new projects. Firms can therefore experiment with new designs quickly and launch products with a high probability of success.
  • Manufacturing as a Service (3D printing) has been on the rise in the past few years, especially for prototypes and small volume production. This trend would continue to grow in the post-pandemic world. Firms are faced with a choice to go with a 3D printing service or a traditional manufacturing company for outsourced production. These trends (below) indicate that online 3D printing services across many sectors would rise in the post-COVID world.
Bar graph
MordorIntelligence.com
  • Plastic components produced via injection moulding machines require expensive dies, which have a lead-time of 2-3 months or more. Each production batch size should be high to cover these costs and generate profits. For small volumes and/or complex designs, 3D printing is an excellent option except for mission-critical parts.
  • Metal components produced via regular manufacturing methods involve punch press machines and expensive dies (lead-time of 2-3 months or more). To justify these costs and ensure profitability, each production batch size should be high. Other options are laser cutting, waterjet cutting, and plasma cutting, which are good for small batch sizes and complex 2D designs. These technologies have some limitations like high energy consumption, excess heat induced in the parts, and dimensional errors. CNC machines can be used to build 3D parts with simple to medium designs. This machining process is time consuming and involves significant wastage of raw materials. 3D printers can be a good alternative to produce complex 3D parts (non-mission critical) with higher dimensional accuracy, low wastage of raw materials, and lower post-processing requirements (annealing or heat treatment).
  • Increased R&D investments in 3D printing technology is expected over the next 5-10 years, driven by both governments and private investors. Many sectors would benefit from advanced 3D printing services—manufacturing, automotive, defence, aviation, aerospace, and construction. Therefore, investments in 3D printing technologies linked with emerging technologies like artificial intelligence and cloud computing would have many applications (high profitability).
Bar graph
MordorIntelligence.com

Potential Risks and Threats:

Important challenges faced by 3D printing industry are:

  • Equipment Costs—Industrial 3D printers incorporate latest technologies to solve specific industry problems. They are not widely adopted by manufacturers due to high operating costs. Key issues involve a limited selection of raw materials that cost 3-5x more than on the open market, and high cost of annual maintenance contracts.
Bar graph
StrataSysDirect.com
Bar graph
Jabil.com
Bar graph
Jabil.com
  • Energy Consumption—3D printers consume 50-100 times more electricity for plastics than a similar injection moulding machine, and hundreds of times more for metals than traditional casting or machining. Today’s 3D printers cannot fully replace metal machining or injection moulding (plastic) processes due to high costs, and reliability/service-life or products.
  • Hazardous Vapours—Thermoplastics like ABS (Acrylonitrile Butadiene Styrene) and PLA (Polylactic Acid) are popularly used for 3D printing. They release hazardous vapours known as volatile organic compounds (VOCs), and ultrafine particles (UFPs) or nanoparticles (1-100 nanometres, size 1 x 10-9 m.) during the printing process.
    • VOCs generally include styrene, butanol, cyclohexanone, ethylbenzene, and others. Health effects due to their inhalation include irritation (eye, nose, and throat), nausea, and organ damage.
    • UFPs can be immediately absorbed by living beings. According to experts, these inhaled nanoparticles can reach the blood, liver, and heart. Repeated exposure to these particles (medium to high concentrations) can cause adverse health effects.
    • 3D printers should be placed in highly ventilated rooms, and people operating these machines should follow safety protocols (wear PPEs, respirators, etc.).
  • Part-to-Part Variation—Serious flaws like powder trapped inside a part, microcracks, lack of fusion, presence of impurities/contamination prohibit adoption of 3D printing to safety-critical manufacturing (aircraft parts, medical devices).
  • Lack of Industry-wide Standards— Manufacturing sector is driven by national & international standards for materials, machines, operators and engineers, and processes. Historically, 3D printing has been used only for prototypes or low volume production. As the manufacturing sector has recently recognised the potential of 3D printing, Additive Manufacturing (AM) standards are being developed now.
Text, ASTM/ISO framework for additive manufacturing
ASTM/ISO framework for additive manufacturing
  • Other Noteworthy Risks are—
    • Copyright Infringements—Counterfeit products made with 3D blueprints obtained illegally can be almost impossible to identify. This makes it very tough for law enforcement agencies to track down the criminals and punish them appropriately.
    • Dangerous Weapons—Criminals and terrorists can easily create 3D printed weapons like knives, guns, explosives, etc. Such organizations also use 3D printing technology to create card readers for bank/ATM machines to swindle money.
    • Limited Materials—Only a few types of plastics, metals, alloys, and ceramics can be used for 3D printing. They may be unsuitable for heavy-duty (high-performance) applications. 3D printed plastic and metal parts can vary in density, and tensile strength compared to similar injection moulded and machined parts (punch press machines, CNC machines, etc.) respectively.
A colour sand print using binder jetting.
A colour sand print using binder jetting.

Conclusion:

On a concluding note, 3D printing is a great technology that provides new opportunities to the manufacturing sector, though there are some limitations. If used wisely, this technology can benefit other sectors too, and help countries become self-reliant—reduce shocks from global supply chains and solve labour problems.

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Industrial Robots – A Boon for Manufacturing Sector https://vseconsultants.com/industrial-robots/?utm_source=rss&utm_medium=rss&utm_campaign=industrial-robots https://vseconsultants.com/industrial-robots/#comments Mon, 30 Aug 2021 06:30:25 +0000 https://vseconsultants.com/?p=9176

Did you know that most repetitive tasks in factories can be automated—reduces worker fatigue, health hazards, and improves productivity?

A picture containing person, table, standing, robot, chess game
Photo by Pavel Danilyuk from Pexels

Target audience: Decision makers (CXOs/Directors) of manufacturing & allied firms, management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction:

Robot is derived from the word robota, which literally translates to “hard work” or “forced labour” in many Slavic languages including Czech. An industrial robot is a combination of multiple electro-mechanical components that synergistically work to assist humans in many ways. Today, industrial robots use sensors extensively, and work on principles based on mathematical models. That is, the exact parameters in three-dimensional Cartesian coordinate axes (X, Y, Z) are required to begin tasks (lift & place parts, transport parts, etc.).

In general, six major types of robots are used in factories—Articulated, Cartesian, SCARA, Delta, Polar, and Cylindrical. Designers choose a robot type is based on important decision factors (load, orientation, speed, travel, precision, environment, and duty cycle).

History:

The first known industrial robot meeting the ISO definition was created by Griffith “Bill” P. Taylor in 1937. The machine had a crane like design, powered by a single electric motor, with five axes of movement. It was automated (programmed) through punched paper tapes.

A picture containing robots, indoor, counter, appliance, arranged
IEEE.org

In 1954, George Charles Devol patented the first prototype of a programmable robot (punched paper tapes) that could stack wooden blocks. His firm Unimation (founded in 1956) developed the first robot used by General Motors in the automotive sector in 1961-62.

A picture containing robot, indoor, wall, floor
IEEE.org

In the 1960’s, Japan’s economic growth surpassed West Germany’s, their automobile firms and other factories faced major labour shortages. Kawasaki, in partnership with Unimation launched the first Japanese industrial robot ‘Kawasaki-Unimate 2000’ in 1969.

A picture containing robot, text, green, miller
Kawasaki.com

In the 1970s and 1980’s, rapid development of robotic technologies took place across the world including USA, Germany, Italy, Japan, Sweden, and Switzerland. For example, the use of microprocessors, advanced sensors, and machine vision systems. These developments helped robots perform complex & repetitive tasks—precision manufacturing and hazardous situations.

Current & Future Trends:

As per Mordor Intelligence, the industrial robotics market was valued at US $24.35 billion in 2020. This value is expected to be about US $52.85  billion in 2026, with a CAGR of 14.11% over this forecast period (2021-2026). The fastest growing market and largest market is the Asia Pacific region, led by China. The key drivers of growth are rise of e-commerce, electronics, and the automotive industry.

Among other sectors, industrial robots are extensively used automobile and electronics manufacturing:

  • ‘Time’ is a critical element in automobile manufacturing (assembly line processes), tasks involve—movement of heavy parts, and different types of welding. Robots can reduce workplace accidents and contribute to achieve on-time deliveries.
  • ‘Cleanliness and Quality’ are of utmost importance in electronics manufacturing (cleanrooms). The time involved to build microchips can vary from a few weeks up to a few months—depends on the complexity of the integrated circuits. Robots can help these firms achieve very high production efficiencies (Six Sigma/3.4 PPM).

Todays’ advanced robots can easily perform hazardous and risky situations—nuclear waste clean-up tasks (Fukushima disaster), and to safely dispose bombs—military or civilian operations.

Some of the most popular applications for industrial robots are:

  • Welding (Arc & Spot)
  • Materials Handling
  • Machine Tending
  • Painting
  • Picking, Packing and Palletizing
  • Assembly
  • Mechanical Cutting, Grinding, Deburring and Polishing
  • Other Processes (Inspection, Waterjet Cutting, Soldering, etc.)
A picture containing drone with camera
Image by S. Hermann & F. Richter from Pixabay

The next generation of robots (Industry 4.0) incorporates autonomous robots (factory transportation, drone deliveries, autonomous vehicles) and collaborative robots (operator assistance). These advanced robots also feature a stream of technological advancements—Internet of Things (IoT), Cloud computing, AI and machine learning, Edge computing, Cybersecurity, Digital twin, etc.

A picture containing building, outdoor, street, robotic delivery van
Photo by Kindel Media from Pexels

For general manufacturing in the developing world, if skilled labour is easily available, use of robots could be restricted. This decision is based on multiple factors—lifetime costs of a robot versus skilled/semi-skilled labour, local employment policies, factory size, product type, etc.

The major challenge for today’s manufacturers—high initial costs for advanced robots, which can perform complex and repetitive tasks. These technologically advanced robots can assist or replace operators and repay their costs soon. For instance, in a high-volume factory (two/three shifts per day), robots could pay their costs within a few years. Such investments would help firms reduce operating costs, drive efficiencies, and reduce failure rate of their products. This probably explains the consistent growth of industrial robots used by firms globally.

Chart, bar chart
IFR.Org
Chart, bar chart
IFR.Org

Potential Risks and Threats:

One major threat from robots with artificial intelligence (AI) could be to outsmart humans or cause serious harm to humans. This risk is inevitable with any advanced technology in the world. The chances of such an occurrence can be minimised through enhanced safety features (multiple) built in these machines.

A picture containing robots, a drone, guns, grass
Image by Iván Tamás from Pixabay

Another major risk could be—increase in unemployment and rise of inequality due to the use of robots. Most robots tend to be highly productive and require a few hours of periodic maintenance (weekly). This cannot be compared easily to the skills, performance, creativity, and productivity of humans (technicians, operators). Factory owners and policy makers should make ethical decisions about worker employment.

A picture containing human hand and robotic arm
Photo by cottonbro from Pexels

Conclusion:

The future factories would incorporate robots for many complex tasks, especially in developed countries with limited labour force and/or high costs of labour. The COVID-19 pandemic and global supply chain mishaps have created a sense of urgency to re-shore manufacturing, and to strengthen regional supply chains.

In the developing world, the cost-benefit ratio plays an important role in the adoption of industrial robots. The type of products manufactured, product costs, production volume, and local employment policies also impact these decisions.

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How do you Finance a Project or Start-up? https://vseconsultants.com/finance-a-project-or-start-up/?utm_source=rss&utm_medium=rss&utm_campaign=finance-a-project-or-start-up https://vseconsultants.com/finance-a-project-or-start-up/#comments Thu, 29 Apr 2021 06:30:00 +0000 https://vseconsultants.com/?p=9020

Image credit: Polina Zimmerman from Pexels

Target audience: Decision makers (CXOs/Directors) of firms & start-ups (sector agnostic), management consultants, business strategists, innovators, and curious people.

Reading time: 5-10 min.

Introduction: Given the COVID-19 pandemic’s first and second waves, the economic impact has eroded many businesses (especially hospitality sector) worldwide since early 2020. Many people who were happy with their contributions to their organisations were also laid off, due to reasons beyond their control.

To be successfully self-employed or an effective project manager, it is important to understand some basics about project planning.

 

Key Question: What points should one consider before starting a new project or start-up?

To answer this question, we divide the answer into a few simple discussion points.

Viability

Image credit: JESHOOTS.com from Pexels

Firstly, for any product or service to be successful, it is important to understand the “What”, i.e. ‘What problem are you solving (Improve user experience, Enhance safety features, etc.)?’

At the same time, it is equally important to understand the “Why”, i.e. ‘Why do you plan to solve the problem (Is the problem/opportunity worth your time)?’

For example, you may want to design a web-based meeting service like Zoom/MS Teams/Google Meet which is ‘better and safer’ than these options. You should probably do a few surveys and interviews (Typeform, Qualtrics, etc.) to know the pain points of existing alternatives or Competitors. It would be wise to add weights in your surveys/interviews to help you focus on the key improvements (Pareto Principle). For instance, you should infer if ‘the problem is big enough to be solved or is it a small issue’ that the customer is willing to accept and adjust. An analogy would be – “Is the customer’s pain like a sore foot (heals itself with a few days rest) or is it like a ligament tear (needs immediate medical attention)?”

During your survey, it is imperative to make note of the Market Segment you plan to sell your service. This would help you answer the ‘What’ & ‘Why’ accurately. In other words – “Would firms in the medical sector (another B2B sector/B2C segment) in USA (another country) be willing to pay for your service or they prefer to use the services even with these flaws?”

This would help you provide a service that addresses the important issues (at least 75-80%), which becomes your USP (Unique Selling Point) or Differentiator.

Launch Strategy

Image credit: MyMarketResearchMethods

Secondly, you should create a plan to have a steady growth in your market share over time. For this task, you could consider using the PAM, TAM, SAM, SOM framework. In many cases, the PAM (Potential Addressable Market) may not be considered. The reason being – ‘Is it worth including all people/firms who could become potential customers in the future?’

TAM (Total Addressable Market) would be the total number of firms in the medical sector in the US (from our earlier example). SAM (Serviceable Available Market) would be the actual clients you can reach out to through your networks or distribution channels within the US. SOM (Serviceable & Obtainable Market) would be the percentage of market share you can obtain. This involves a guesstimate of the clients who value your service and would pay for it. There are many organisations that help you obtain secondary analysis at low costs like Statista, Census, OECD, etc.

Financials

Image credit: Pixabay from Pexels

Thirdly, you should clearly identify the types of costs associated with the product/service they create – direct and indirect. To explain this further, let us continue with our previous example – the web meetings app. This can be termed as a  software service, as it is an enabler to help people connect virtually. This is unlike a software product which serves a specific purpose to the user (ERP software, attendance monitoring app, etc.).

The direct costs or COGS includes the materials and labour directly used to create the web meetings app. The time spent by each programmer is directly associated with the app development. Hence, it is included in the COGS calculations. As there are no physical products manufactured, there are no associated raw material costs.

The indirect costs or SG&A include all costs that enable the company to make products & services. These include the tools used to develop software – not exclusively for this meeting app (can be used to develop many apps). These could be – laptops, office supplies, marketing campaigns, accounting costs, employee benefits, insurance costs, utilities, etc. As machines (laptops, servers, etc.) are used to create software products, their depreciation costs can be included.

How should a new player estimate these costs?

A new player should discover a set of suitable public comparable companies (public comps) in the sector they would like to operate. This would help them plan their investments and expenses, with minor deviations (ideally up to ±10%) for each line item. The advantage of public comps over other comparable firms – all financial reports are certified by professional third-party auditors. These reports are available for everyone (for free) on their website. The securities & exchange websites in each country/region host these reports, which must comply to the securities laws – SEC in the US, FCA in the UK, ESMA in EU, SESC in Japan, SEBI in India, and SFC in Hong Kong.

Accounting

Image credit: Tima Miroshnichenko from Pexels

Fourthly, accounting for all the costs and managing expenses wisely in the early stage is key to make a project/start-up successful.

For a high-growth product/service, it would be sensible to treat this project/start-up as a profit centre. In a profit centre, access to capital is given to the executive in charge of this division or branch. This executive has two major goals (KPIs) – reduce costs and increase revenues.

The profits generated are vital to help a firm (multi division) survive in difficult times (economic shocks), and to invest in future projects. In case of a start-up, a profit centre approach would help executives manage their finances better (frugally, if required).

The costs discussed earlier (COGS & SG&A) should be carefully assessed to ensure profitability at early stages. An example would be – increase marketing costs (2x) for a high potential market segment/geographic area to boost sales (5x/10x). Similarly, eliminate some non-value-added tasks to reduce overall product/service costs.

Sustainability

Images credit: BookVideoClub

Finally, every new project/start-up requires courage to be bold and take risks. This involves financial planning, product/service iterations, and to find the right product-market fit.

In the example discussed earlier – the web meeting app, you should be able to project your financials for the first three years. This involves all expenses (direct & indirect) and the expected revenue (sales volume). These financial estimates would help investors and people you want on this project/start-up team to trust you. To accurately assess the growth of the project/start-up, you can re-evaluate these financials later – six months or one year from the start date.

The J-Curve for a project/start-up can involve many dark days when things do not go as planned. It is important to learn from the mistakes and re-iterate with required major/minor changes. An ideal method to re-iterate your product/service – one or two incremental/radical changes. This helps your team evaluate the impact of these changes thoroughly.

Some helpful books on this journey include (but not limited to) – Nail It Then Scale It, Sprint, The Lean Start-up, The Start-Up J Curve, Zero to One, etc.

Image credits (sequential order): Min An from Pexels, Bich Tran from Pexels

Conclusion: To sum up, a new project or start-up is about the vision to create something new & innovative that is not replicable by many people. This journey involves being agile to adapt your product/service to the market needs. It also involves teamwork – a set of believers who share your dream, follow your lead & passion. All the best to embark on a new journey!

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