Heidi Virta
Senior Director, Head of Region Latin America
Business Finland
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Expert Contributor

A Call for Ideas To Tackle Smart Manufacturing in Latin America

By Heidi-Marian Virta | Thu, 08/19/2021 - 08:55

The Fourth Industrial Revolution, which started at the end of the 20th century, brought with it automation, big data analytics, and digitalization. It is now transforming the manufacturing industry all over the world. 

Since February 2020, the COVID-19 pandemic has triggered unprecedented reflections on production vulnerabilities and on the importance of being able to adapt quickly to unexpected world events. Serious thinking concerning supply chain redundancies and new paradigms for automation became mandatory. The manufacturing industry was forced to reflect on how to adopt more self-sufficient, efficient and smoother supply chain and production processes under an unavoidable use of a substantial remote workforce. Since then, many of the smart manufacturing building blocks have reached maturity. The smart manufacturing market is expected to reach a value of US$400 billion by 2025 and over US$514 billion by 2027 (from US$215 billion in 2019). This opportunity is too close to be ignored.

Finland's Contribution

Finnish innovations can improve productivity, decrease the cost of operations, optimize the use of resources, improve and accelerate decision-making and, ultimately, greatly enhance product quality. Factories can, for example, adapt production speed according to big-data analytics by anticipating demand fluctuations or supply bottlenecks. According to PWC, so-called “Digital Supply Chain Champions” companies that have invested vastly in advanced technologies and digital capabilities, achieved operational savings of 6.8 percent in supply chain costs and 7.7 percent in revenue increase during 2019.

Smart manufacturing encompasses the implementation of new technologies such as robotics, (big) data analytics, 3D printing, artificial intelligence, and the Internet of Things (IoT), while using sensor technology and software throughout the value chain. These are all technologies in which Finland has a lot to offer. Looking at it from the right angle, smart manufacturing enhances the entire business value chain beyond manufacturing, from product design to production, logistics, sales, to service and product delivery. Through automation and context-based optimization of production processes, the factory-to-consumer path is greatly streamlined.

Manufacturing uncertainties and costs can be mastered through knowledge-based adaptive manufacturing, where information from several manufacturing companies is collected and analyzed and then used for intelligent decision-making. Heavily intertwined manufacturing centers exist in various parts of the world. It is easy to imagine that Finland can, by integrating some existing technological building blocks, jump more aggressively into the international arena of cloud-based smart manufacturing solutions.

Business Finland's smart manufacturing program has also gathered critical guidelines for sustainable production resilience consisting of 1) prevention 2) protection from disturbances and 3) building trust with key stakeholders. 

Smart manufacturing initiatives have already been implemented in manufacturing hubs in Europe, China and the US. They have resulted in the formation of industry coalition networks, such as Smart Factory EU in Europe and the Smart Manufacturing Leadership Consortium (SMLC) in the US. However, despite the presence of important Latin American manufacturing industries in countries such as Argentina, Mexico, Brazil, Chile and Colombia, this region lacks a regional effort to combine public policies and private sector initiatives to push the development of smart manufacturing intelligence, and we suspect the same applies to many areas across the world.

Latin American Initiatives

In Mexico, public policy proposals introduced in 2016 aimed at placing Mexico among the Top 5 global exporters, double labor productivity and GDP per capita while taking advantage of the opportunities brought by the Fourth Industrial Revolution. In Brazil, a national IoT strategy plan was launched in 2019, focused on manufacturing and smart cities, among other things. In Colombia, a Vice Ministry on Digital Economy was created in 2016 under the ICT Ministry, aimed at reforming production models in the country.

Call for Action

As a nation of problem solvers, we can ensure the improvement and the global competitiveness of manufacturing industries across the world. We can support the implementation of smart manufacturing initiatives in our regions of action. In Latin America, for example, the cost of labor is still attractive compared to the international setting and it is crucial to ensure that specialization in smart manufacturing processes, such as industrial engineering, is encouraged, and that innovation and the creation of local tech hubs is incentivized. Finland, as an educational front-runner, may contribute here. 

Talking about the part of the world I know best, transformation from conventional to smart manufacturing in Latin America requires the availability of necessary skills, such as in robotics and data analytics (this implies a reframing of job roles at all levels, as well as the creation of new jobs and knowledge generation and training); corporate leadership that leads and plans a smart manufacturing strategy; government support for digitalization through public policies for private sector cooperation; investments in innovation, creativity, training and entrepreneurship; and, last but not least, regional cooperation.

The need for the above-mentioned technologies represents opportunities for Finnish companies that provide technological products and related services. The opportunities and the requirements for a transformation to smart manufacturing can be applied to various parts of the world as well, as diverse as Latin America, Africa and Central and Southeast Asia. In my view, orchestrating the dialogue between all relevant stakeholders may place us in pole position in the global quest to reinvent manufacturing.

The data used in this article was sourced from:  
Fuentes: 1 Grand View Research, 2020. Smart Manufacturing Market Analysis and Segment Forecast to 2027. 2020. Sample. ©Grand View Research, Inc., USA
Photo by:   Heidi Virta