I attended the Digital Factory 2019 event yesterday in Boston organized by Formlabs. The event took place in Boston Cruise Terminal. The venue is casual enough to serve as a good place for manufacturing discussions.
I’m still digesting the information from the event. Nevertheless, the most important point I captured during the event was related to technological momentum in manufacturing. I will explain what I mean. If you ever sold technology to a manufacturing company, you probably familiar with the challenge – a profitable manufacturing company has very little interest to change technology and software used in the company. If the company is hugely profitable and successful, you have even less chance to sell anything to them.
According to Max Lobovsky, CEO and co-founder of Formlabs, if we compare manufacturing business to software development and computing, manufacturing companies are still live in the mainframe era.
At the same time, according to Dayna Grayson of NEA Venture investing in a large number of manufacturing companies, we are near the inflection point of digital transformation in manufacturing.
Dayna is comparing the current status quo and dynamics of digital transformation in manufacturing with some past moments in cloud computing and internet development.
One of my favorite moments captured today was presented by Jeff Immelt, former CEO of GE hosting Digital Factory conference. Look at two images below demonstrating introducing electric motors to factories in the past.
An attempt to replace steam engines by electric motors stuck in the past as a complex problem every single manufacturing company was experiencing. Just by replacing steam engine by electric motors, you won’t transform manufacturing. It took time, but electric motor solved many problems of manufacturing factories – resources, changed the way people organized manufacturing shop-floor, internal processes and how the building actually looks.
The criteria for success is the organization of purely digital workflow.
What is my conclusion? Manufacturing companies will be transformed into new digital entities or will eventually die. The parameters of this process are depended on companies business models new digital workflow. Not all manufacturing companies will make it to the top. Some of them will die reinventing the workflow. A new entity will be created to address the current status quo in manufacturing. Just my thought…
Disclaimer: I’m co-founder and CEO of OpenBOM developing cloud-based bill of materials and inventory management tool for manufacturing companies, hardware startups, and supply chain. My opinion can be unintentionally biased.