Blog April 28, 2020

What Will Be the Long-term Implications of Coronavirus on Manufacturing?

Rethinking and planning for the future

The rapid spread of COVID-19 across the world has not produced any heavy impact on suppliers serving the IoT market or the demand for services. So far, the most noticeable impact is a delay in communications and approvals, as more people are working from home. However, like many markets that support the global supply chain, IoT suppliers will be impacted, although it is unclear to what extent. With trade flows restricted either from less manufacturing or less business demand, IoT service providers are likely to experience a bit of downward pressure for their services, at least in the short term. If trade flows are further restricted, the most affected will probably be suppliers for fleet management and asset tracking/monitoring services, but only for the short term.*

Chinese suppliers in the IoT hardware markets, from chips to modules to gateways, have been somewhat mum on the impact of COVID-19 to their businesses. However, COVID-19 may be the trigger for companies to reassess their supply chains and dependence on Chinese products. 

How things looked pre-Covid-19 

Even before Corona companies were eager to be less reliant on China in terms of production dependency. Now we are learning once again that when China shuts down, global production is severely impacted. This reinforces the fact that companies outside of China will need to duplicate productions, meaning they will have production in both China and locally. Corona will accelerate the need to reduce dependency in order to protect businesses from the fallout we’re seeing now.  

Localizing or expanding localized production in the US or Europe, though, means higher costs, specifically when it comes to labor. Automation, though, means less need for manpower on the line. Tackling this shift in production location has already been the long-term plan for most western industries but COVID-19 will probably cause a knee-jerk effect and accelerate the adoption of automation in manufacturing. 

As this crisis has shown us, IoT has not penetrated manufacturing – Industry 4.0 – as much as we’d expect. There’s a lot of talk but it isn’t yet happening on a large scale. Very few production lines are connected, in part due to the way things were designed many years ago: manufacturing plants are not pre-enabled for IoT. And the ones that are connected? They’re mainly using WiFi, RFDI, and even cables.  

Private 5G networks have long been proposed as a solution for enterprise requirements where technologies like Wi-Fi or even 4G/LTE fall short. However, there are many recent developments in the area. 

One of the enablers for automating material flow is the “Autonomous Intelligent Vehicle (AIV)”, which delivers material from the storage to the production line, without any human interference. AIV is initially connected to a separately dedicated Wi-Fi network along a fixed route from storage to production. However, when the AIV is taken into daily use, it soon becomes apparent that network coverage is insufficient along the route and connectivity is lost during handovers. This results in inefficient material feed to the production line and tied up personnel who could be more productively allocated elsewhere.  With private wireless coverage, AIV is no longer restricted to its fixed Wi-Fi network area. Instead, it can now be utilized anywhere on the factory floor without requiring separate network reconfiguration. And in addition to mobile robots, connecting various production testers and sensors and investigating other use cases such as video analytics in the assembly process, wireless manufacturing robotics, and digital twins can optimize production operations.**

What kind of results are possible? 

• Usability (Overall Equipment Effectiveness) increased by 40% 

• Efficiency of material feed operation increased by 30% 

• System maintenance work (Engineering support need) dropped by 98% 

Impact on internal stakeholders 

Such amazing results in efficiency don’t mean, though, that you won’t need human beings to run your business – it simply means that you will need different skills, so instead of people on the line or managing the plant physically, you will need data analysts, people to design the new setup, people to build and maintain IoT capabilities and machine learning, etc. Essentially, you will need different skills in your workforce, which can mean re-training existing staff and/or bringing in outside consultants.

Such investment can sound expensive. For enterprises that don’t necessarily need a dedicated private network, network slicing is an alternative. According to a GSMA survey, 47% of enterprises deem virtual networks/slicing as very important to the success of their future IoT deployments. As of late, vendors have been announcing launches of new end-to-end slicing network functionality for 4G and 5G new radio (NR).  

Digitalization and Futureproofing 

Despite the negativity surrounding COVID-19, the current crisis is becoming an enlightening experience and a great accelerator of digitalization. Enterprises will rely more on video conferencing, online marketing techniques, and online training for empowering their businesses. They will also be more favorable to automating the operation of their business, so they are ready to handle situations similar to COVID-19. This development will greatly benefit greatly several transformative technologies, including IoT, 5G, AI, Machine Learning (ML), AR, VR, location technologies, cloud and entertainment localization, robotics, and many others. 

Various industries, governments, and public organizations will learn a big lesson from the current crisis and should prepare themselves to better deal with large-scale pandemics, minimizing their disruption and any subsequent economic downturn.  

In the longer-term, all enterprise verticals will consider 5G for automating workflows in factories and other industrial environments in order to keep supply chain disruptions at a minimum. However, we will also see 5G applications for life-critical verticals, such as agriculture/food production, to pick up pace, while a growing number of countries will consider enhancing their healthcare sector with 5G-enabled capabilities. 

Conclusion

Of course, we’re all thinking about our bottom line right now and asking ourselves if now is the right time to invest in new technologies and talent. But we’re moving into a new world and a new way of working and doing business, and it’s critical that we are prepared for and protected against any future crisis. With the release of new network technologies, there is always a degree of uncertainty among enterprises, whether to commit now or to hold off. While 5G Stand Alone is not yet commercially available, private LTE is already an option and operators will offer an upgrade path to 5G. 

So, when we say invest in IoT it doesn’t mean just investing in technology, it means investing in your strategy and planning for the future. 

*ABI Search
**GMSA