Manufacturing Business Is Facing a Paradigm Shift

Nov. 22, 2019 [No.68-2019]

Mr. Yasuo Sando
Senior Chief Researcher
Nippon Steel Research Institute Corporation

What Are Digital Technologies?

The state-of-the-art technologies represented by the IoT and AI are collectively called digital technologies. Digital technologies include a wide variety of examples, such as BD (big data), VR (virtual reality), AR (augmented reality), MR (mixed reality), AM (additive manufacturing, or 3D printing), robotics (co-working robots, wearable robots, controlled robots), drones (flyable drones, boat-type drones, submersible drones, car-type drones), networked cameras, wearable devices (computer devices that can be worn on the body: wrist watch types, wristband types, glasses types, clip types, and head-mounted displays).

The Paradigm Shift in the Manufacturing Business

Through the advancement and diffusion of digital technologies the manufacturing business is facing a challenge to its existing values and ideas radically. This is an implication of "paradigm shift” in the manufacturing business.

The biggest advantage of digital technologies lies in their speed (the ability to reach remote places at once). For instance, we can copy files in a few seconds with digital technologies. These technologies also enable us to process the massive amounts of data that human beings cannot handle. Devices are getting more and more compact, so that we can put them in our palm, or fasten them around our wrist. We can also convert the unstructured data into the visible and audible world. Taking advantage of these abilities would enable us to promote efficiency and productivity in business. We can also develop new types of business that we have never considered before. Actual cases tell us that those changes are already approaching.

The top management of Goldcorp Inc., a Canadian gold mining company, on the brink of mine closure, took the risk of publishing the data on their mines on the Internet, even though those data were supposed to be restricted. They willingly disclosed "confidential data," whereas if they had been stolen by someone, the company would accuse them of industrial espionage. People from more than fifty countries "downloaded the data" to begin their own "virtual exploration." Using their proposals, test drilling was conducted at four points by the company, and veins of gold were found one after another. In other words, the veins were found solely by virtual exploration without people ever visiting the actual place. This is a case in which the power to analyze data outweighed the knowledge and wisdom of mining experts.

A similar example can be found in Japan as well. It used to be common for the maintenance and safety management of railway tracks to require a huge amount of manpower. With respect to these operations, the East Japan Railway Company made a decision to collect knowledge, expertise and techniques as widely as possible from outside the company. The company opened up their data on the distortion of rails that was collected by monitoring devices attached under trains' floors. A competition was held, where the participants competed with each other in building computational models to calculate the amount of distortion in the future. Over 2,000 ideas from 163 teams were collected. The results surprised the executive officers of the company.

SIGNATE Inc., the company which administered this competition, is running a business to match clients that have problems in their own businesses with AI personnel (e.g., data scientists and AI engineers). The wisdom of a great number of people can be gathered by an AI competition which is open about the issues inside the companies. The participants in the competition, as gig workers, are going to support part of the gig economy. This movement is gathering a great deal of attention as a new way of working for people.

From the Principle of Self-sufficiency to the Era of Openness

We can see from the cases above that the key to success is the "network" which has been newly created by "digitalization." Thanks to this network, we can now easily "search widely for knowledge from society," whereas this was impossible before. Up until now the conventional way of thinking was that we should be self-sufficient in most of things. Instead of this, we need to have the attitude of "searching for new knowledge" and collecting wisdom even from completely different fields. This "openness" or "spirit of enjoying challenges" arises as a crucial component. The new value emerges here.

It means that in order to enjoy the full merits of "digitalization," a shift is needed from the traditional ways of valuing, thinking, and generating ideas (and also from the existing structure, climate, and culture of organizations) towards an openness to the world with an emphasis on digital data. This is the reason why the manufacturing business is allegedly facing a paradigm shift. This is exactly what the Fourth Industrial Revolution, or Industry 4.0 means.

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