COVID19 Pandemic to Jumpstart Spending on Data Tools at Manufacturers
COVID19 Pandemic to Jumpstart Spending on Data Tools at Manufacturers
Industry Insights
COVID19 Pandemic to Jumpstart Spending on Data Tools at Manufacturers
The pandemic has made a huge impact on manufacturing operations, now we're seeing how more investment is data is preventive action to weather the storm for future disruptions.
June 6, 2020

Manufacturers will be spending far more on data management and analytics tools in the aftermath of the coronavirus outbreak, and will be using those tools for deeper insight into operations, sales and supply chain disruptions, chief information officers and observers say.

Jo De Vliegher, CIO at aluminium giant Norsk Hydro AS A in Oslo, said the company is building its data capabilities to enhance its ability to remotely monitor plant equipment, which engineers had limited access to during the pandemic.

“While we expect more employees to return to work on-site when authorities allow so, this data availability is a clear game-changer,” Mr. De Vliegher said in an email.

He said the company uses data—produced by shop-floor scanners and other hardware tools—to more accurately measure and improve the performance of production-line machinery. That machinery includes hydraulics systems, compressed air and power transformers.

“The coronavirus measures have, as we believe, been a catalyst that has kick-started a revolution in unlocking value hidden in our data,” Mr. De Vliegher said.

Before coronavirus, the company had discussed using data more widely throughout its factories, he said. But with the push to access more data remotely, “we now have both the experience and the capabilities to make objective and effective investments,” Mr. De Vliegher said.

These and other benefits are expected to spur annual spending by global manufacturers on data management, analytics and other advanced capabilities to nearly $20 billion by 2026, up from roughly $5 billion this year, according to a report by information-technology research company ABI Research.

Expenditures will be focused on software licenses, cloud services, connectivity and professional services geared toward data and analytics, the report said, as well as scanners and other interconnected hardware devices.

Advanced data tools will give factories a clearer view of operations and equipment performance, allowing them to speed up production, reduce waste, improve their product quality and avoid downtime by more quickly identifying maintenance issues, among other things, ABI said.

Factories will also be able to identify and extract relevant data sets to feed into artificial intelligence software designed to predict production and supply chain problems, said Michael Larner, a principal analyst at ABI.

Evolution of data in manufacturing. | Download Scientific Diagram

“It’s a case of going from reactive analytics, reporting on what happened, to proactively analyzing what might happen and the suggested actions to take,” Mr. Larner said.

The U.S. economy contracted 5% in the first quarter of 2020. With the coronavirus crisis continuing into the summer, economists are expecting an even steeper contraction in the second quarter. WSJ's Carter McCall explains how GDP is calculated and how the coronavirus is impacting the equation. Photo Illustration: Jacob Reynolds/WSJ

The pandemic has made manufacturers aware of the need for more sophisticated ways to monitor operations, he said, especially when plants are accessible to only a handful of workers.

“From a data analytics perspective, it is a realization that they cannot rely on guesswork,” Mr. Larner said.

Barry Shurkey, CIO of manufacturing-technology vendor NTT Data Services, said its customers are more quickly adopting new software and hardware, with many rolling out new tech projects in a matter of months, rather than years.

“We’re working with clients on taking unprecedented amounts of data and deriving insights that can shift decision-making,” Mr. Shurkey said, referring to streams coming from shop-floor sensors, machinery, supply-chain fleets and other systems. Most manufacturers are using that data to get a better view of equipment performance and maintenance needs, quality control and workplace safety.

Beyond the factory floor, some manufacturers are also leaning on data to better understand the post-pandemic marketplace.

“Consumers are cooking more, which means that their oven is getting used more often,” said Patrick Palacio, head of digital transition, business development and innovation at BSH Home Appliances Corp.’s North American unit.

Data-driven smart manufacturing - ScienceDirect

By increasing spending on analytics built into connected home appliances, Mr. Palacio said the company is able to stay on top of changes in consumer behavior brought about by the outbreak.

Transformative global events like the pandemic create openings to leverage data and improve products and services, he said. “The coronavirus outbreak has quickly led to new changes and habits,” he said, “and we will continue to use data to help us evaluate consumer needs.”

Originally Posted by Angus Loten on Wall Street Journal.

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