According to different Industry. 4.0 visions, the factory of the future is able to both mass-produce customized products and create individual, customized products. This is accomplished in synergic cooperation between automation and people. Quickly, without errors and of course cost-efficiently. In addition, the growing and more time-sensitive growth requirements must be considered while doing so. The goals of the visions, however, are not utopian: There are already a few state-of-the-art factories in Finland, where great advancements have been made in realizing the benefits of digitized manufacturing. A good example of a state-of-the-art factory is the AGCO Power engine plant in Linnavuori.
What does Industry 4.0 do to material flows?
Individually customized or mass-produced custom products require more items to be managed and also leaner material flows. The aforementioned factors increase the complexity of logistics considerably. This results in an even further increase in the significance of material logistics. Today, 35-45 % of manufacturing disruptions are due to problems with materials – wrong or defective part, missing part etc. This is why it is good to consider what happens to the number of manufacturing disruptions if the number of SKUs and receiving activities rapidly increase by 30 %? State-of-the-art factories are preparing for the increase in logistic complexity, which is evident as a boom in warehouse automation and warehouse management systems (WMS). These companies know that the old methods will not apply in the new situation.
Industry 4.0 and logistic processes
In the future, there will more frequent deliveries and in smaller quantities. This requires more precision and efficiency in receiving. Despite the opposing goals, increasing amounts of materials are purchased for a specific task. Material flow efficiency from suppliers is improved using ASN messages (advanced ship notices, what item is arriving and in what shipping units) and pre-determined shipping methods. The customer specifies in-advance the packaging for the materials. The idea is that the specified packaging (e.g. pallet, plastic box) serves the customer more comprehensively. There is no need to sort and re-package bulk materials in receiving or picking. In an ideal process, the materials being received are unloaded in plastic boxes to the conveyor and the RFID or bar code scanner on the conveyor reads the ID and sends a message to the ERP system of receipt of the good. The warehousing is handled automatically.
The requirements of the future and the traditional operational model in the warehouse are not compatible. ERP is not sufficient for handling all the necessary processes. The capacity of a warehouse based on fixed warehouse locations is not sufficient as the number of SKUs and materials increase. You often encounter a problem where locations are allocated for items that are not in inventory at all, while reserve pallets for other SKUs are scattered around the warehouse. The situation can be improved by two methods: manage the warehouse space dynamically and start using smaller unit quantities as a result of leaner material flows. For example, the use of plastic boxes in addition to the EUR pallets. The boxes are smaller inventory units. The use of smaller inventory units, in turn, results in additional interest in using warehouse automation.
From warehouse to manufacturing
Moving materials to manufacturing is the most interesting topic when reviewing Industry 4.0. The required flexibility, efficiency and speed and the increased number of SKUs makes the traditional ‘installer picks’ approach impossible or at least inefficient. Assembly is moving toward 100 % picking. Supermarket picking may be one step on the way, but the increased use of warehouse automation and number of SKUs is pushing toward warehouse to manufacturing picking. Picking for manufacturing has clear advantages in speed, quality and efficiency.
All predictions and analyses expect a rapid transition toward the Industry 4.0 vision. The expectations are great. When reviewing the studies, one fifth of the manufacturing industry believes that over 30 % cost savings will be realized and half of the respondents believe the efficiency will be improved by over 20 %. At Leanware, we have practical experience of similar and even greater improvements in manufacturing. The following are examples of the improvements we have achieved in different projects: We have improved flow 100 %, reduced costs from errors by 20 % and reduced phase times by 30 %.
Companies take many steps toward digitization on their journey to Industry 4.0 and you have to start somewhere. Could material logistics be the starting point in your company?