Column: Automation, data to revolutionize manufacturing process

Disruption can be defined as a decisive break from the past, a moment in the development of an industry or market in which new methods or technologies give overwhelming advantage to early adopters.

This can rapidly make established methods obsolete, so companies relying on tried and tested methods are at grave risk of being left behind—as seen in industries ranging from IT and entertainment to retail, finance and transport.

In manufacturing, disruptive technology has seen us move from high levels of automation to something potentially more interesting: Full mass-customization, in which even complex products can be built to individual specifications, and in very small batches. Many cars, for example, can now be configured by customers, choosing from thousands of options to build a vehicle customized to their own tastes.

As a direct result of disruption, data now is being talked about as "the oil of the 21st Century" and several of the world's largest companies by capital value did not even exist 20 years ago.

Do not underestimate the power and potential impact of disruption, it's going to affect us all. At times of rapid and potentially high-impact change the only safe strategy is to move fast yourself. If you stick with what you know—as it's the 'safe' thing to do—you are likely to suffer.

Others will undercut you on price and bit-by-bit take market share, while newcomers, perhaps from different industry sectors, will likely redefine your core market and take high-value growth business by deploying new and disruptive ideas.

New entrants may not have the strong brand and long-term trust levels, but they will have agile business structures, lean, low-cost infrastructures and a complete absence of legacy. That means they always will beat traditional companies on cost and usually can move faster.

Moreover, a low-cost base, absence of "digital debt"—as represented by old-world systems—means new players can afford to take more risks, test concepts, fail fast and try again.

Therefore, the safest course now is not to let others disrupt you. Instead, disrupt yourselves.

Previous disruptions

Disruption already has happened in the tire industry. Decades ago, the introduction of radial tires gave huge first-mover advantage to the innovators who developed this approach. Several leading players lost traction and went into decline. Early adopters saw rapid international growth.

We at VMI also have played our part in causing disruption. Automated tire-building, based on our own Maxx technology, changed the game for many. Investment in automated machines has made it possible for smaller, newer companies to reach the highest quality levels and target sales to major industry players at premium prices. That has driven rapid growth for many new entrants and has seen new centers of excellence in tire-building appear across the world. It has permanently changed the market.

In the next two decades, we expect the pace of disruption to increase and, though it is rash to predict the future, we believe that three main drivers for large-scale change will prove especially important.

Changes in buying patterns threaten the existing value-chain by connecting the factory direct to the end-user. This is helping to fuel a growth in mass-customization to order, leading to smaller runs and greater variations. That makes many aspects of traditional tire manufacturing potentially obsolete.

Finally, after a long period of rapid globalization, we are now seeing a potential backlash, with new tariff barriers slowing the apparently unstoppable transition to global trading.

Emerging environmental issues, which are now impacting on public opinion and feeding through into public policy as never before. We see growing demand for lower pollution levels, together with much tougher regulations, driven by fears about air pollution, already causing a collapse in diesel sales across many markets—down 33 percent in the United Kingdom during recent months.

To reduce emissions and use of oil, we are moving to lighter materials, with a strong emphasis on recycling and "zero landfill" waste protocols. The long-awaited move to all-electric vehicles is now in sight, with many regions of Europe and North America reaching critical mass for electric infrastructures in the next decade. That will be a game-changer for tire-use as well as for vehicles.

Autonomous vehicles, however, are the future. They now seem a little further off, following recent test failures in the U.S. This is likely to prove a temporary hitch, however, given the sheer scale of commercial and government investment in this technology.

The rise of autonomous vehicles is one of those changes that may take time, may not happen evenly, but that will have a transformational impact when it does. We may see a massive reduction in car ownership. Vehicles may be developed and managed by new players—using a model more closely related to city-bike schemes than to traditional automotive.

For tire manufacturers, we could see a move to commoditization, with safety and efficiency being the only criteria that matter, and to different production techniques, perhaps focused on "build-to-order" from small, automated factories close to point-of-use.

Future strategies

We can't ignore the likely impact of disruptive change, but we can do something about it. We have four top priorities, right now:

• Connecting islands of automation. Every leading manufacturer already has automated their processes and is looking for ways to automate further. Yet in our industry there remain many points of human intervention.

We believe it is time to talk about machines as platforms. This means continuously updatable machines, with new capabilities retrofitted to safeguard investments while enhancing quality and productivity. In the future, it also implies strategic platforms that bring together multiple machines, progressively eliminating entire process stages, leading to automated, end-to-end manufacturing with no hand over-points.

• Machine intelligence and robotics. Currently, we use robots to remove operators and improve processes. If you employ robots but keep operators, you actually waste money and gain no benefits. Yet operators do a lot of intelligent and important things, so to replace them, you have to make your machines intelligent enough to do what operators do faster and better.

That's why we say machine intelligence is not just about robots. It's about learning, developing autonomy, being able to act independently to improve performance.

• Rich data. Automated machines generate huge amounts of data, but many companies are still wondering how to use this for competitive advantage. We see three main opportunities. First, as audit data, proving that your processes can be trusted and are in control, a key requirement for entering the highest value markets.

Second, data-feedback loops enable you to improve every part of your processes, end-to-end and continuously. This approach also "educates" your machines, enabling them to become more intelligent. Third, rich data enables you to reduce errors and improve efficiency levels, leading to higher uptime, driving operational efficiency.

• Secure connectivity. None of the advantages offered by emerging, disruptive technology can be gained without connectivity. End-to-end processes, machine learning, transformed operational efficiency and external monitoring all require connections from a production center to somewhere in the outside world.

Yet as soon as you link your production equipment to the internet, or to another system that can access the internet, you introduce risk. That simply cannot be avoided. The inescapable requirement for a more efficient, agile, cost-effective manufacturing approach is a completely new, much more rigorous approach to cyber-security.

New ideas

You could say that the tire industry is not exactly at the leading edge when it comes to embracing disruptive ideas. That's inevitable. Lives are at stake for tire builders, and it makes sense to be a little bit conservative.

Yet it is probably time for the industry to start being more responsive to the forces driving change in the wider world. The future of the tire industry is being decided outside the tire industry, In regional and national government, by regulators and increasingly by environmental campaigners. So how do we respond?

We should start by understanding that times of disruptive change are times of great opportunity. By making smart use of emerging technologies, by building intelligent, connected manufacturing platforms, we can potentially transform this industry.

We can replace huge, capital-intensive factories with small, very economical, efficient, clean and low-cost satellite facilities, which are better suited to a world of mass-customized products, environmental concerns and market agility.

The good news also is that you do not have to be big to have a big influence. Innovative specialists can change the market. But not alone. We see the future as a time of collaboration with other imaginative, innovative players. We won't stay ahead on our own but we can be leader in the new marketplace, together.

Voortman is president and CEO of VMI Group, the Epe, Netherlands-based producer of tire manufacturing equipment.