If you build it
How is the manufacturing sector embracing tech in South Africa?
Manufacturing is, by its very nature, at the heart of the Fourth Industrial Revolution. Nationally, there is much excitement about the potential for new technologies to increase manufacturing output.
Behind the hype, the sector is struggling and innovation doesn’t seem to be high on business leaders’ list of priorities. In June, the South African Reserve Bank warned that contraction in the sector had wiped out 1.1% from GDP growth. South African Market Insights, an economics website, estimates that there’s around 19% excess capacity.
What’s the real story on the ground? How do manufacturers view how IT and related technologies will impact their businesses? Brainstorm convened a special roundtable of experts to find out.
Beyond the POC
Our participants suggested that local manufacturers are definitely aware of the kinds of technology available to them through Internet of Things (IoT) solutions and the digitalisation of manufacturing processes. But they’re taking a cautious approach to adoption.
“It’s a very heated subject,” says Lerato Mathabatha, manufacturing and industry resources lead for Microsoft. “But what I see is a lot of testing systems, and not many in production yet. There’s a lot of thinking through particular use cases for technology, but not many deployments.”
“That’s a frustration,” says Johan Alberts, vertical executive for mining at IoT.nxt. “We call it ‘the 4IR’, but many of these technologies have been around for 10 years. Sometimes adoption is slow for good reason – businesses need to see proof of value and ROI before they invest. But they’re still running proof of concepts when these concepts are already proven.”
There are still challenges with understanding where the value of high-tech investments lies, and despite the talk of 4IR, it’s not where government incentives lie.
“There’s a will to change,” says Clive Govender, MD at Rolfes Chemicals. “But with manufacturing figures down and what’s happening in the overall environment, capex is being spent on other areas. The big government drive is to create jobs, not efficiencies. There’s a reluctance on behalf of the big manufacturers to invest when they don’t fully understand the technologies. Everyone is watching their pockets.”
“Not everyone understands industry 4.0,” agrees Kevin Subramani, senior project manager, Royal HaskoningDHV. “It’s not about the ‘what’ ‒ the technology that’s available ‒ it’s the ‘why’. What is it that creates the need to shift? Most manufacturers around the world are still in the 3IR. People are looking to 4IR for efficiencies, but it’s about more than that. It’s about sustainability, flexibility and speed, coupled with efficiency. Balancing those four things is key, and most of my clients have difficulty finding that balance, so they focus on the technology.”
One challenge, points out Alberts, is that manufacturers rarely have the same approach to strategy that, say, banks have.
Sometimes adoption is slow for good reason – businesses need to see proof of value and ROI before they invest.Johan Alberts, IoT.nxt
The pressing problems
One thing holding back adoption of technologies such as IoT, Alberts continues, is the lack of industry-wide standards and interoperability. It’s a problem that is widespread in the world of operational technology (OT) when it comes to trying to digitalise factory floors.
“Everyone is still locked in by OEMs and suppliers,” he says. “Each supplier has its own tech and subsystems, and if you have five different vendors, there’s nothing that can bring all the data together.”
There’s a lot of thinking through particular use cases for technology, but not so many deployments.Lerato Mathabatha, Microsoft
One thing that drives digitalisation overseas, points out Royal HaskoningDHV’s Subramani, is that it enables new business models that ‘bring the customer into the supply chain’. Automating the connection between end-consumers and manufacturing leads to opportunities for customisation and manufacturing to meet demand, but in South Africa, the market for e-commerce, which enables this, is very small.
“Today, you can order a cup or a garment with your name on it from a website,” Subramani says. “But the decoupling point comes after the manufacturing process. The question is, how can you get deeper into the supply chain, as automakers have been doing for years. When you order a car, you can fully customise it before it leaves the factory floor.”
Rolfe’s Govender says that some countries, like China, are building these opportunities into long-term plans.
“There are very few industries where we are tech leaders,” he says. “We’re not innovating and coming up with the new equipment and technologies. It’s a long-term thing. In China, there are Oliver Tambo-sized airports in the middle of nowhere, in anticipation of the manufacturing centres being built up around them.”
“The question is, ‘who’s driving the agenda?,” says Subramani. “Everyone has an idea of what 4IR is, but once you start unpacking it, clients get very scared. We need to be sitting down and explaining that you don’t have to do everything. You don’t need fully automated factories, you just need the bits that help you to meet customer demand.”
To survive and thrive in the long term, you have to be innovative.Kevin Subramani, Royal HaskoningDHV
One element that’s perhaps missing in manufacturing is the approach taken to culture change and skills used in sectors that have embraced digital transformation. Banks, for example, have invested time and money into incubating innovations both from within their organisations and from without.
“It’s not just about teaching people coding,” says Microsoft’s Mathabatha. “It’s about curiosity. Today, we drill the labour force to think about machinery, not about change and how things could be done differently. People don’t realise that they’re empowered to drive change from the ground up, the curiosity that drives it always sits with the people doing the work.”
One area that’s maturing, the panel agrees, is around cyber security. The digitalisation of previously offline OT systems, and integration between OT and IT, has tended to happen without due thought about the security implications. But things are changing.
People are talking about it, says Mathabatha. “It’s becoming a hot topic, but the mindset hasn’t quite changed yet. The solution for the future can’t be to protect systems the way we have been doing. A lot of customers don’t think of manufacturing as a high data environment where they need to protect their identity and brand as well as technology.”
In China, there are Oliver Tambo-sized airports in the middle of nowhere, in anticipation of the manufacturing centres being built up around them.Clive Govender, Rolfes Chemicals
“Many clients will end up taking the easy way out and acquiring security through SLAs,” says IoT.nxt’s Alberts. “That’s the only way they can govern it, as it’s expensive to do in-house.”
There’s also a lack of where vulnerabilities can come from, adds Mathabatha. “We’ve seen companies attacked via an internet-connected coffee machine in the past.”
All the same, the panel agrees, if embracing digitalisation is tough, the benefits for manufacturers are worth it. Even the argument that now is a difficult time to invest doesn’t stand up to scrutiny.
“At the end of the day,” says Subramani, “the economy will be what it will be. You’re only in control of your own business, and you need to survive. To survive and thrive in the long term, you have to be innovative.”
It’s a clear challenge to take back to the industry.