Manufacturers and others working through the COVID-19 crisis and planning to regain their competitiveness will rely on data analytics more than ever. But they’ll need a smarter, more strategic approach to prevent the most common cause of failure. Fortunately, the problem is more human than technical in nature, and it’s fixable.
The Fourth Industrial Revolution or Industry 4.0 brings among other things IoT data visibility, fueling more and better data modeling, machine learning, deep learning and Big Data. For purposes of this discussion, I’m committing a transgression here, lumping these together as “analytics” despite the technical distinctions. In reality, things just keep converging so that instead of plain-old IoT, more attention is going to the newly-coined AIoT, or artificial intelligence of things.
When deployed in tandem, artificial intelligence (AI) and the internet of things (IoT) can bring powerful new capabilities and competitive advantages—a net effect that’s greater than the sum of its constituent parts. How much more powerful AIoT is than vanilla IoT at tackling organizational improvements? Take a look at the percentages inside the little orange circles:
Those surveyed said that among the benefits sought for their IoT efforts, increased revenue topped the list, regardless of geography, industry or company size. AI turbocharges that effort. (More details in the full article.)
AI, analytics: old news
Since my early-1990s coverage of early analytics and AI in such applications as statistical process control and machine vision, solutions have evolved with compute power and cloud services. The practice can now reach data anywhere, including networks bridging sites within single sites, across multiple sites or throughout enterprises and supply chains.
In seeking improvements, top officers of the company need to instill a pervasive culture of improvement. True, improvements can be made in the silos of R&D, engineering, production, sales, finance or other functions, but still should be guided by market signals and customer demand, not just the blind pursuit of efficiency or cost-cutting. Without that holistic approach, line managers down can fall victim to the parable of the vision-impaired persons and the elephant. In short, things aren’t always as they seem.
If such talk seems a generality, it’s also very real. Plant managers, for instance, can achieve operational excellence, but so can their counterparts in competing organizations — the technology is a known commodity available to all. This diagram from ARC Advisory Group analytics specialist and VP Mike Guilfoyle helps illustrate the scenario — which gets more play in a Smart Industry story (hitting print and online channels at month’s end):
Where are the gaps in your apps?
The market’s flooded with analytic sellers and solutions. Here are for deceptively simple considerations that might help uncover how to find growth opportunities; where to find the greatest needs; how to approach solutions and who will support a cycle and culture of improvement:
Imagining I were in your shoes, I came up with a thought exercise with four very basic questions that might be a good first step closing the opportunity gap in your application of analytics:
1. In every sector and at every level, organizations generate massive amounts of presumably (or potentially) visible IoT data — sowhere are most data generated throughout your entire digital universe that you can, or should be measuring?
2. For every area that can be measured, analytics solutions (or platforms) can be bought, adapted or created to yield greater insight — so where are there gaps in your management and automation systems across your value chain(s) that if filled, will yield the greatest visibility for tracking and potential improvement/innovation?
3. Every business and operational system in the IT/automation marketplace must include some provision for the use of analytics — so how capable are your systems to perform analytics via native functions, third-party partnerships or via a suitable level of standard integration capability?)
4. Every application of analytics requires a sustainable ecosystem of training and support for better decision-making and ongoing innovation — so do you have a sustainable culture of improvement, with suitable lifecycle support structures in place via in-house and/or reliable external resources?
How are you approaching analytics?
Can you help me support the cause of progress? Share your thoughts and anything allowable…I’ll work with you and your organization to see how we can get the word out.
Discussing digital transformation with a brilliant mind in the field of digital transformation recently, I asked: “What emerging technology do you believe will be most transformational in the industrial sector?” His answer: Video.
His focus on video stems from the growth in IT bandwidth and the ability to support video with AI-powered analytics to more effectively discern patterns when data is deployed across IoT networks. AI and the Internet of things (IoT), or the combined AIoT, is deemed critically important to digital transformation initiatives, industry leaders say. Where AI analytics are deployed depends upon the challenge to be addressed.
As an AI-focused executive with a leading firm connected to these converging technologies, the gentleman I was speaking with was fascinated by a demo he saw at a recent trade show. It depicted a factory with thousands of cameras installed, one above each employee workstation. The goal, he said, was “to effectively use a camera to ‘sensorize’ a person [and] figure out if folks are deviating from the agreed processes.”
Businesses of all types — from small machinery suppliers to large manufacturers (like Foxconn) have for decades used cameras and machine vision software for applications such as quality assurance, to recognize patterns and detect and reject off-spec products. It’s really no surprise, but a logical extension of what Henry Ford did in automaking; what W. Edwards Deming did in post-WWII Japan; and what Ray “McDonald’s” Kroc did in fast food.
What may be surprising how real-time video analytics can transcend the mechanistic aspects of how people act to discern how they feel. In video and audio applications, machine learning has already been applied to customer service call centers and doctor-patient telemedicine apps to identify such things as anger and frustration. The data inputs for A/V analytics include voice analysis, facial expressions, movements, and posture. Industrial applications are no doubt coming, if not already here.
The edge of progress
As market demand fuels technical capability, video analytics solutions will continue raining down from longer-term remote cloud applications to people-watching applications based in real-time edge computing networks on or near the production floor. Intel’s Chet Hullum and his team improved semiconductor manufacturing at the edge because addressing cloud latency issues “would be far too expensive,” as I reported for SmartIndustry. (Intel Tweet and LinkedIn post (below) give more background:
With advances in connectivity and pervasive analytics, the eye in the sky really isn’t the limit anymore.
AI disruption seems to have thinned the workforce for good. Now what?
Where would we be if wheels were still square? If the Luddites kept machines out of textile mills? If the cotton gin didn’t decimate the pre-war Confederate workforce? Today, one has to wonder how many truck drivers will be able to find new work once driverless rigs rule the roads.
With regard to the the long-term impact of automation general, I’ve been ambivalent for decades; gung-ho for progress but concerned about a gutting of the workforce. In the mid ’90s, I spent a day with an engineering leader who gave me a tour of his workplace, a refinery that stretched for miles. He showed:
Pride in his control network, which bore early AI enhancements
Sorrow for the loss of most employees at the plant and industry-wide due to automation, and
Resentment of the coming “corpocracy” in which individuals lose their humanity.
I shared my ambivalence in a column I wrote for Control magazine at about that time after a conversation with a senior engineer at another Big Petro firm folding 17 subsidiaries into one. I started the column ranting about corporate “destructuring” and “dumb sizing,” and ended with: “It’s hard to argue with the bottom line.”
Likewise, I’m mixed about the impact of industrial robots, worth about $40 billion and pegged to top $71.72 billion by 2023. Companies choose to replace people when the technology is available because they’re a better-faster-cheaper way to go. I was saddened at the demise of ReThink Robotics, maker of Baxter and Sawyer, the industry’s friendliest collaborative robots, or cobots. (collaborative robots). And I was glad the company was quickly bought-up by Germany’s Hahn Group. Rethink, a small player compared to leaders such as FANUC, ABB and Yaskawa, failed not for lack of demand, but in large part due to technical issues, if this RobotReport postmortem is accurate.
In better times (2016), I spoke with ReThink’s Jim Lawton, chief product and marketing officer, who extolled his bots’ rapid ROI (as low as 1.5 years) and quick installation time (under a month) as well as speed and flexibility. For instance, he told me of a Tier One automotive supplier that replaced 20 hours of manual labor day: “$25,000 for the robot, and a little bit for the grippers, and we’ve saved them $180,000 a year.”
Robots don’t call in sick, need healthcare, come in late or take days off. They do work when workers don’t want to, or can’t be found. And companies are bound by the need for competitive advantage and higher profits to use them if they’ll keep the shareholders happy. But again, the industrial workforce, once an engine of the middle class, is shrinking.
The U.S. middle class: Doomed?
Technology both eliminates and creates =jobs, but the former appears to be winning in the U.S. marketplace.
As one Clorox exec said during a panel discussion a couple of years back, “every” manufacturing company is busy automating and “leaning-out” its lines. A Kraft Foods alum added that it’s commonplace for companies to replace upward of “100 people on a Lunchables line [with robots] picking up stacks of pre-sliced meat and pre-sliced cheese.”
What to do? Thought leaders across business, politics and industry have since given credence to the movement for Universal Basic Income, a flat payment to every citizen, to address poverty and job losses largely incurred by technological advancement.
UBI has been advocated by the Brookings Institution, given credence by Fortune (no leftist-socialist totem), and promoted by Elon Musk, Richard Branson, and many in Silicon Valley, including Mark Zuckerberg. More recently, UBI generated headlines in 2018 in Chicago with a petition by city Alderman Ameya Pawar (@Ameya_Pawar_IL) to take the city Universal:
There ain’t no “i” in TEAM
Henry Ford did it, McDonald’s did it, and now the collective, global technology hive mind is doing it: Standardizing business processes to advance the competitive mandate for greater productivity and profitability. I love to hear stories of happy employees, but below photo mesmerized me to the point of distraction. So I’m using it to illustrate a point:
The point — no offense intended to the editor who penned the caption! — is that companies can’t afford for their employees to be “themselves” in that we can’t have guitar players, poets or sewing circle meetings on the factory floor. The employees pictured are essentially identical, down to their garb (as required by sanitary food handling rules). Their jobs are the same, too: to comply with uniform standards procedures.
But if there’s no ‘i’ in TEAM,” there’s still something of a “we.” The ranks will thin, but there will remain a critical need for creative human minds to solve problems, even at the line level.
Almost a decade ago I helped a manufacturing exec, Greg Flickinger, document a cultural transformation at food firm Snyder’s-Lance in Charlotte, N.C. His team reduced scrap 40 percent; reduced customer complaints 41 percent; and, among other good stuff, slashed production changeover time to save more than $300,000 annually.
The human-machine interface, writ large over time, points to great gains and equally daunting challenges. Let’s face it: As a species, we’ve got a troubling historic myopia, and an immediate need to reconcile longstanding issues relating to our technology and economy, or techonomy.
How many brands do you know that you thought were “cool,” then fell victim to investors’ growth demands, and cheapened themselves by falling into the AFAB (anything for a buck) trap? As Gibson, like other leading guitar-makers watered down their brands, they’ve become a bit like Playboy. You know, Playboy, the erstwhile aspirational lifestyle brand that’s now arguably best known the bunny air fresheners hanging on pegboards in dollar stores and car washes?
Alas, poor Gibson, the “entertainment lifestyle” brand hat couldn’t. Following years of expansion and brand extensions, the company filed for bankruptcy on May 1. And it may spell a better future for the only thing the company ever did that mattered: making great musical instruments.
Founded in 1902 and once-again privately held since 1986, Gibson lost its focus, found itself $500 million in debt, and is on the cusp of taking a $135 million loan from a new conglomeration of fund managers and bond holders. It’s a deal that’ll likely hand ownership to people who don’t know much about Gibson’s “120 Years of Innovation.” (As documented in Gibson’s timeline.)
As musical friends reacted (no doubt worldwide) on social media, I found my own gut vacillating between two sentiments expressed by two musician friends in my hometown, Chicago:
“…if you are looking for Gibson, there are 20,000 hanging on music store walls as we speak. And that doesn’t include Europe.” —James Chrzan, Paradise Waits
Doug’s got a point; today’s guitars are something of an automated, high-tech echo of the design and handiwork of Les Paul and other greats, and company ownership has shifted to a conglomeration of investors. But James is also right. Those who want and can afford a Gibson can find a huge selection at music stores both brick and mortar and online. If they’re made well and play well, great. If not, there are many other companies large and small making guitars the old fashioned way.
Headlines like the one Rolling Stone ran on May 1 — “Iconic Guitar Brand Gibson Files For Bankruptcy” — were perfect for causing hand-wringing by Gibson aficionados. But the deck (subhead under the headline) immediately followed: “Company will refocus on its musical instruments, shedding its audio and home entertainment business.“
Part of me — and many others — resent pure financial plays by investors whose moral fiber has no any steel strings attached. Other headlines similarly told a more cheerful story, such as Bloomberg’s “Gibson Files for Bankruptcy in Deal to Renew Guitar Business.” That’s the sentiment that led me to opine that the Gibson filing might be good news:
“If they shed stupid businesses like the boom-box business it bought from Philips, AND if all the good people don’t quit or get fired (or escape to Heritage Guitars!)— Gibson can restructure and get back to making guitars.” (More on Heritage below.)
Yeah, just one idiot’s opinion. But by “stupid” I refer to Gibson’s 2014 acquisition of Philips’ the audio, video, multimedia and accessories business, which turned out to be a financial albatross. At the same time, companies need to make money to stay in business, and the guitar business, with sales of $5.6 billion in 2017, has been relatively flat for years. It’s just not that exciting to investors. (Gibson’s lucky a few care enough to step in with loans.) As for firings, Gibson in March planned a pre-filing workforce reduction of 12-15%, following layoffs already made to its Custom Shop, Digital Music News wrote last month. That is NOT how a company seeking to shed non-core businesses treats the braintrust of its core business. It smells more like a move by execs who are about to pack their golden parachutes and bail out before the axe falls.
Writer Tom Teodorczuk added that “cheapening an iconic brand while at the same time raising prices through the roof is no way to engender loyalty by a new generation of musicians.”
Today, if I want a Gibson electric, my gut tells me to turn to Heritage Guitar, a spinoff formed in 1985 by employees who bought Gibson’s original Kalamazoo factory when Gibson moved to Nashville. Heritage has done only one thing: makehigh-end American electric guitars. Surely THEY are heart and soul of the old Gibson we love, right?
Heritage Guitars: following in Gibson’s footsteps?
Heritage was 0ff to a great start, but in the 1990s it stopped advertising, lost sales and nearly shuttered the 90-plus year-old factory in 2007 — until, according to a Michigan news report, a local lawyer turned co-owner became a “guitar hero” and saved the company.
The company changed hands again in 2016, and in the fall of 2017, the new management team inked a partnership with Rolling Stone and a real estate developer to create at tourist shrine at the factory aimed at “incorporating a wealth of music and pop culture into a multimillion-dollar renovation” to possibly include a live entertainment venue, instrument store, museum, recording studio, restaurant and rooftop bar,” according to a news report.
My opinion is that we don’t need another Hard Rock Cafe, we need companies that make amazing guitars. Well, actually, we need people who make amazing guitars.
Early this year, Heritage — which I thought was the soul of Gibson —fired 10 craftsmen and more quit in protest as the company automated with multi-axis CNC and PLEX machines. I love automation, it’s a tough call to bash it categorically but man, is nothing sacred? Maybe it’s okay, maybe not. But increasingly, artisans are being left out, as expressed in the March 1 headline, “Firings of craftsmen take heart out of Heritage Guitar, workers say.”If Heritage was the heart of Gibson, and some of the best people have left, I hope they keep making guitars, either by banding together or working as sole artisans…for those deep-pocketed musicians who can afford to support them.
The grass isn’t greener at Fender, others
Roughly analogous to the Heritage/Gibson relationship is that of that other iconic guitar company, Fender and spinoff G+L (The “L” being Leo Fender. Like Gibson and now Heritage, Fender and G+L use CNC and PLEX technologies.
Back in 1965 when Fender sold out to CBS, purists decried the change. They were right to in some cases, including the devaluation of classic amps like the Twin Reverb amplifier and others whose circuitry was “enhanced” to be cleaner, changing the nature of the amps’ trademark growl. In 1985, employees purchased the company back and today, a holding company of multiple partners runs Fender. And like Gibson, Fender has made many acquisitions. One I see as particularly ugly is the 2011 partnership with Volkswagen to put “Fender Premium Audio” into cars. You don’t play it like a guitar, you play it like a car stereo.
So many brands have turned themselves into crap over the years just to make a Faustian buck. Of course, expansion and globalization has had various merits, business-wise for years (though my focus isn’t on them at the moment). In the 1970s, Japanese then-upstart Ibanez made a mint making cheaper knockoffs of Gibson’s Les Paul guitars, and over the years leading brands offshore their own knockoffs to Asian factories, even G+L. Rather than going into that tangled knot, help yourself to two good if aging articles I found, one from Acoustic Guitar (2014) and another on USA vs. Chinese guitars from Guitar Player (2013). If they ask me to write, I’ll update them!
The cycle of innovation
As old brands face shaky prospects for rebirth, new startups should emerge to take their place. New growth in the form if small startups that succeed will always end up changing hands in the natural course of their lives. Retirement, death and other drivers of succession are just part of the corporate, and human, nature.
But it doesn’t have to be that way if companies can be innovative without losing their souls and core consumer/user proponents.
Any number of papers, presentations and tutorials are available to leaders who want to stay leaders. Just search “innovation management” or “cycle of innovation” and you’ll find links such as the American Society for Quality’s Innovation Management Cycle and the “3 Key Principles for Maintaining a Cycle of Continuous Innovation” from Chief Executive magazine. In the latter, the first principle is: “Start at the top,” with the CEO leading by example. That doesn’t mean there’ll be greater handmade content in the products coming out of guitar factories. A case in point: Gibson’s G Force “robotic” (self-tuning) guitars. But it does mean, at least, that the Gibsons, Fenders of the world will have a better idea how to balance the need for profits against the effects of innovation on brand loyalists.
Love the instrument, not the company
I admit it’s painful when something like the Fender Stratocaster name is whored-out to Asia and Mexico to capitalize on the iconic guitar name and shape, but there are still “American Original” Strats for the purists. It’s just the nature of things.
In the late ’80s when I bought my Strat Plus in its debut year, I was choosing between that and a G+L, and chose the Fender because the G+L was heavy as hell…great sustain but heavy as hell. The neck wasn’t lined up with the strings as perfectly I thought it should be, so I went back to the music store where Larry, the guy who sold it to me, gave it a whack it to straighten it out, and said, “They’re all like that.” I wish I paid better attention to G+L but I still have my Plus and pretty much love it.
In 2003 when I bought a Hofner Jazzica archtop hand-crafted in Germany and finished in the company’s violin shop. The label inside the F-hole indicated that it was “No. 1 of 50” of a limited run for the year. That year, the company’s musical instrument division was sold, sold again and a year later, sold again. A few years later Hofner established in 1887 and made famous by Paul McCartney’s “Beatle bass,” was making Jazzicas identical to mine in a factory in China. It bugged me a little to see the Chinese models hanging in a shop, but for me, it’s the feel and sound, not the look (despite its hand-rubbed violin shop finish) that makes my guitar what it is.
Hofner has changed ownership about as often as I change my underwear (well, not quite), and I sleep very well at night knowing that I have a quality instrument. The location of the factory making newer versions doesn’t affect the quality or intrinsic value of my guitar.
There will always be artisans making quality guitars — for that matter, making all manner of good things. I suppose we’ll just have to do our best to have the things we like, and can afford, while doing our best to support the artisans who care about the work they do. As big names rise, fall and regroup, smaller shops will continue to spin-off, emerge, innovate.
I recently reunited with FoodOnline.com to write a story on Big Data analytics in the retail food supply chain. The first bylines I had for that site were in 1999, when I was Editorial Director for that related sites — before the big bursting of the Internet Bubble.
When the Internet was new, there were no iPods, let alone iOS, Android or Bluetooth-powered beacons; Big Data was just a gleam in its young Business Intelligence mother’s eye. And retailers had no idea what to really do with their Business Intelligence systems. Those who finally do, today, see BI as old news as analytics — predictive and now prescriptive — come into their own, powered by Big Data and cloud computing.
Today, as an exec from SAS told me, a shopper who stands in front of a Nescafé display for more than 10 seconds might just get a virtual tap on the shoulder, or rather a bzzzz in the pocket, with a coupon to get that package of coffee off the shelf and in to the cart.
My favorite interview in this story just might have been Nick Hodson, former head of strategy at Safeway Stores and current leader of the North American consumer and retail business practice of Strategy& PwC, who reminded me that the technology isn’t at all the point of progress so much as creative minds who come-up with new things to do with it. Yes, major retail marketers from Walmart and Nestlé may well fave a backlash over privacy concerns if opt-in/out issues aren’t handled correctly, but these times sure are interesting. Read all about it in my story, ” Predictive Analytics Helping CPGs Reach Individual Consumers.”
“That’s the most disgusting thing I’ve ever seen,” the Whole Foods buyer told Nikhil Arora, who opened a big & stanky bag-o-fungus in the buyer’s office. To the young innovator, that bagful was the crown jewel of a new product he’d liken to a “next iPhone” for natural products fans.
He was kinda right, as you’ll find out if you read the story — “Home mushroom farming, fish-gardening and other supply chain collaboration challenges,” — that I wrote when I saw Nikhil in my travels on the packaging beat. Over the next few years he found the right suphttps://www.packworld.com/article/contract-packaging/contract-packaging-news-trends/home-mushroom-farming-fish-gardening-andliers for his DIY mushroom kits and then a cool aquaponic fishtank-meets-herb-garden kit.
New product to bow end-February 2015.
Now he Alejandro Velez, co-founders of Back to the Roots, are at it again; they’ll unveil a new product on February 26th.
What’s it gonna be? I don’t know, but I couldn’t be happier to see these folks start so small and gain national distribution so quickly with such simple, honest ideas.