Executive Briefings

Japanese Smart Factory Represents the Future of Manufacturing

The top manufacturing facility of Toyota transmissions isn't based in Japan but in Durham, North Carolina. The AW North Carolina (AWNC) plant - a subsidiary of AW, which is based in Anjo City, Japan - churns out more than 600,000 automatic transmissions per year for models such as the Camry, Tundra, Tacoma, Sequoia and, most recently, the Rav4.

Each day, the smart factory converts cold-rolled steel into more than 3000 transmissions, each of which includes some 700 to 800 parts.

While the output of the Japanese-owned facility is impressive, the plant just might serve as a microcosm for the future of manufacturing, thanks in part to a $1.2m overhaul of its IT network. But the facility also highlights several trends relevant to IoT adoption and the future of work.

1. The cost of downtime can be staggering

When John Peterson, general manager, IT at AWNC, began work at the plant in January 2016, his first order of business was to help make the facility into an Industry 4.0-inspired facility running cutting-edge enterprise resource planning, manufacturing execution system and inventory management systems. But on his first day, he quickly learned just how antiquated the facility’s networks were when the system that supports its phone service collapsed. Later, he realized that, about once per month, the network would shut down, halting manufacturing for an average of two to four hours. 

“In our factory, an hour of downtime equates to about $270,000 in lost revenue,” he says. “When you add in the cost of lost productivity of salaried employees, maintenance activities, the figure goes even higher.”

To transform the facility into a smart factory, Peterson teamed up with Cisco to overhaul its network. Spending $1.2m on the upgrades, the company says it recouped $1m of that in the first nine months thanks to maintenance savings.

2. IoT and network technology can create jobs 

Having already invested in a $1.2m network revamp, AWNC is steadily investing in manufacturing machinery with networking functionality. The efficiency gains from that overhaul have spurred a wave of hiring, Peterson says. “Overall headcount is still going up. Because we have been able to increase our productivity in terms of yields and throughput, we have been able to bring in a fourth transmission. Typically we have only been able to build three products at any given time.”

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Each day, the smart factory converts cold-rolled steel into more than 3000 transmissions, each of which includes some 700 to 800 parts.

While the output of the Japanese-owned facility is impressive, the plant just might serve as a microcosm for the future of manufacturing, thanks in part to a $1.2m overhaul of its IT network. But the facility also highlights several trends relevant to IoT adoption and the future of work.

1. The cost of downtime can be staggering

When John Peterson, general manager, IT at AWNC, began work at the plant in January 2016, his first order of business was to help make the facility into an Industry 4.0-inspired facility running cutting-edge enterprise resource planning, manufacturing execution system and inventory management systems. But on his first day, he quickly learned just how antiquated the facility’s networks were when the system that supports its phone service collapsed. Later, he realized that, about once per month, the network would shut down, halting manufacturing for an average of two to four hours. 

“In our factory, an hour of downtime equates to about $270,000 in lost revenue,” he says. “When you add in the cost of lost productivity of salaried employees, maintenance activities, the figure goes even higher.”

To transform the facility into a smart factory, Peterson teamed up with Cisco to overhaul its network. Spending $1.2m on the upgrades, the company says it recouped $1m of that in the first nine months thanks to maintenance savings.

2. IoT and network technology can create jobs 

Having already invested in a $1.2m network revamp, AWNC is steadily investing in manufacturing machinery with networking functionality. The efficiency gains from that overhaul have spurred a wave of hiring, Peterson says. “Overall headcount is still going up. Because we have been able to increase our productivity in terms of yields and throughput, we have been able to bring in a fourth transmission. Typically we have only been able to build three products at any given time.”

Read Full Article