Why manufacturing could become a commodity

Digital and connected smart factories will be able to transform the auto industry by turning manufacturing itself into a commodity, a leading automotive software supplier said Tuesday at the 2019 CAR Management Briefing Seminars.

By automating factories with processes, machinery and even products that can communicate with each other, plants of the future will be transformed into highly profitable ventures capable of producing multiple products for different customers, predicted Alexander Swoboda, CEO of enterprise product costing software maker Facton.

One smart factory could be like every other smart factory.

By creating a “generic factory, which then can be rented out to whoever needs it … the manufacturing capability itself could actually become commoditized and will produce good products that will no longer be differentiators,” he said.

But that will change the way automakers and suppliers have to think about profitability, Swoboda said.

“If we want to stay on top and run profitable businesses, we need to understand those trends and see how we can deal with them and how we can leverage them.”

Facton, founded in 1998, has locations in Detroit and three German cities, Potsdam, Dresden and Stuttgart. It sells the industry a suite of enterprise product costing software.

Swoboda said fully connected and flexible generic factories — where only the walls, ceiling and floor are permanent — could potentially bring about a sea change in manufacturing, with profitability as the driving force.

“We will replace shop floors as we know them today,” he forecast. In future assembly plants, a product will move down an assembly line, “look for the next assembly station, and move through the shop floor itself until it’s finished,” Swoboda said. “That will allow a great deal of flexibility.”

The advanced computing, shared up and down the supply chain, will drive down costs and increase profitability. But that must begin with data standardization, he said.

“You start to standardize your data and digitize the data. We think that it’s required to work across the supply chain,” Swoboda said. “But getting your costs onto a spread sheet is not digitizing.”