IFS INDUSTRIES’ PRESIDENT ENLIGHTENS LOCAL MANUFACTURERS ON GLOBAL INDUSTRY TRENDS
IFS Industries President Antony Bourne, on a recent visit to Sri Lanka to deliver his keynote speech at ‘IFS Unplugged: Rethink Manufacturing’, consisting of IFS customers as well as prospective customers in the local manufacturing industry, shared his insights about the changing technology trends in the manufacturing industry – from a global perspective.
Bourne shed light on a few crucial points on how companies can derive greater value and be more profitable by adapting to the digital world with modern technologies and utilise this shift to take advantage of an everevolving customer-centric market.
“Within Sri Lanka at the moment, you have some great chances to differentiate yourselves in an emerging market and I want to give you a couple of examples of what I see from the outside and what you may recognise within the country as well,” Bourne kicked off.
“I want to touch on some different areas where our customers have taken advantage of technology and of what is happening in the world today.”
Local opportunity
First, from a manufacturing point of view, in this country, the opportunities are massive. The first one is, the Sri Lankan economy is growing.
Bourne says that according to reports, revenues have increased specifically in the manufacturing area and particularly, in the food and beverage area.
“We all need to eat and drink but there’s a massive growth in that area for you.”
“There’s also a manufacturing shift from China. What I mean by that is, Chinese wages are increasing and there are at the moment, some difficulties between China and the US, so what companies are doing is saying ‘where else can I source my products from?’ and a lot of them are looking at Sri Lanka and saying ‘that’s where I can actually source it from’,” stated Bourne.
What this means is, there are new companies coming into the country. One example is Mahindra and Mahindra setting up a joint venture just outside Colombo. So there are lots of opportunities for local manufacturers.
Artificial Intelligence
“Artificial Intelligence (AI) is a massive topic but I want to talk on just one area and that is all about ‘demand forecasting’. What if you could have a better forecast of your products? It doesn’t matter which industry you’re in but if you can improve the forecast, it means that you’re going to satisfy more people because you’ll be making more of the right product at the right time and you’ll have less waste or scrap by the end of the process,” explained Bourne.
He further went into detail stating that AI or in particular ‘Machine Learning’, can help local manufacturers do that, because what machine learning can do is look at vast amounts of data and also combine it with external sources. For example, “what is the weather forecast in the next few days or weeks?” and “How will that impact the demand for my products?” What it does is, it supports the manufacturers in the long-term decision-making process.
Servitisation
“The next example is servitisation. What actually is the meaning of the term ‘servitisation’? Well, it’s about the changing of the business model; instead of selling ‘products’, you sell ‘outcomes’.
“Let me give you an example. In our IFS office in Sri Lanka, we no longer buy or rent photocopiers and printers. We just pay per piece of paper printed or photocopied because the technologies in place with the equipment have to record how many, the volume we are doing and Shiraz (IFS South Asia Managing Director and Sales Vice President Shiraz Lye) has to pay for it. So, instead of Shiraz paying thousands of dollars for photocopiers and printers, every time we need a new printer, he actually just pays for it as and when it’s being used,” he elaborated.
“So, if you put your mind into the place of the actual manufacturer, they can actually change the equipment in place at the IFS office, without us worrying about it. We can get upgrades to our equipment and from there they get a steady regular income stream, which they wouldn’t have had before. This procedure can have a big impact on your revenue streams,” he added.
Why are companies doing this? It’s not just on the revenue side of it but actual results from companies that have gone through this change from selling the product to selling the outcome have been optimistic.
An example for this can be taken from the tyre industry, where instead of selling tyres, they sell for the amount of miles travelled on those tyres and that’s what you pay for.
“It’s a different mindset you have to get into but studies show that the revenues do increase and margins are better as well because you get into a closer relationship with those customers,” Bourne said. “You’re given a better understanding as to why they are buying your product. You’re no longer selling features and functions specifically, you’re actually selling your capability, you’re saying, ‘I can help your business, I can de-risk it for you. Come to me, one-stop shop, I want to help you grow.’ and that’s why customer satisfaction increases as well. It gives you a better overall view and a more predictable income stream,” he said.
Sustainability
If you think about the world today, sustainability is changing the way that people are buying products. People want to have that feel-good factor about why they are buying certain products that are being done in an environmental way, in an ethical way and in a good way.
“There’s a lot of legislation already in place that is increasing the amount of standards that you (the manufacturer) have to adhere to, to actually trade with other customers,” he said.
According to Bourne, obtaining certain standard certifications and maintaining ethical practices in the manufacturing process work well with the current generation of millennials, who thoroughly seek the best of the best to show the best.
Autonomous Robotics
“Before I came to IFS, I used to be in manufacturing in automotive, making spark plugs. We had robots back then, on the shop floor putting parts together – but I’m not talking about that. I’m talking about what options robotics can bring you now as well,” said Bourne.
Antony’s point goes in line with the much talked about ‘Industry 4.0’, which refers to the concept of factories in which machines are augmented with wireless connectivity and sensors, connected to a system that can visualise the entire production line and make decisions on its own.
“In instances where manufacturers are unable to source the right skilled labour for the right job in the right area, that’s where robotics comes into play,” he added.