The Factory of the Future is Dead

It seems like everything is getting more complicated these days, no matter what industry you’re in. Global affairs, economies, and the climate are sorting out in ways we never thought possible. Here in the U.S., the outcome of this year’s presidential election is wildly unknown.

All this makes it nearly impossible to predict, or prepare for, what’s ahead in the coming years, let alone in the next few months.

In manufacturing, we’ve been talking about the “factory of the future” for a while now. But so far there is no clear definition of what such a factory actually looks like. Some see it as a form of lights-out manufacturing – basically, autonomous production with zero human intervention onsite. Others see it as a place where humans and robots work in perfect harmony to achieve optimum output.

But, perhaps more importantly, when will these factories be here … if ever at all?

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The truth is, with the foreseeable future so much in limbo, we need to think in terms of the “factory of now.” We must pay greater attention to what has real, tangible value today, rather than solely banking on what might be possible in the – likely far-off, most certainly unpredictable – future.

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Reimagining manufacturing: A risky proposition

For a long time, the industry has been preoccupied with reimagining manufacturing from the ground up. I understand why. Possibilities are exciting, even more so when parts of them come true as prototypes or lighthouse factories.

But as a whole, this approach is overly ambitious and, frankly, impractical, especially when it comes to technology and its adoption across the supply chain. There’s a reason why we’re all too familiar with the term, “pilot purgatory.” (Deloitte reports that 74% of IoT projects fail to scale.)

YES, technology is an essential and enormous part of tackling manufacturing’s most urgent challenges, like optimizing operations, reducing waste, and attracting younger workers.

NO, pilot purgatory doesn’t have to be the norm.

Instead of trying to reconfigure existing processes and workflows around new technology, we should focus on configuring technology to fit the processes and best practices that currently exist. Let me explain.

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Tech for the non-technical

A big learning in the tech world is that successful adoption usually happens from the bottom up, not top down. Think about how Slack transformed workplace communication: by winning over individuals and small groups first, who then convinced bigger teams, and then entire companies (and IT departments).

Says Gartner, “the democratization of technology empowers non-IT workers to seek out, select, implement and custom fit their own technology. This trend offers opportunities to meet the needs of a new set of citizen developers and business technologists.”

The same approach is needed in manufacturing. Instead of imposing sweeping changes from the executive suite, companies need to focus on tools and technologies that individual workers and managers find valuable and easy to adapt to their own existing ways. This could mean investing in software that improves workflows or tools that enhance real-time decision-making on the factory floor – solutions that are grounded in reality and offer fast, clear benefits to the people using it every day.

“In a decade of looking at industrial tech, C-981 is the first company with such rapid early growth. The satisfaction of users with the automations they’ve created themselves is quite powerful and infectious!

C-981 brings software with extremely modern features like GenAI and no-code customization to the factory operators of large manufacturing groups, and actually solves a set of core and urgent business problems doing so.”

– Benjamin Zeitoun, Partner, Starburst Ventures

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Current areas of opportunity

Right now, the biggest areas of growth are those within the manufacturing ecosystem where technology can deliver the most immediate, clear-cut impact. Research shows that the appetite for such technology is certainly there:

• Gartner predicts that by next year, 55% of all successful emerging technology solutions will be delivered to “nontraditional” buyers – for example, outside IT – within enterprises, enabling vendors to expand into new markets and forge new customer relationships.
• According to PwC, more than two-thirds of industrial companies plan to invest in new technologies into the year 2025 (with about 40% of those saying they plan to invest in GenAI).

There is also an obvious business reason for not waiting: Lost profits. Lots of lost profits. Case in point: aero.

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Why we’re focusing on aerospace

Here at C-981, we’re starting with the industrial sector with the clearest need and potential: aerospace. In the airline industry, demand is now above pre-pandemic levels and it’s expected to grow 5-10% annually through 2026. Too bad the open-order backlog for new aircraft is taking 13 years to address, assuming 2023 delivery rates:

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Let that sink in. Thirteen years of lost profits.

No wonder suppliers are actively trying to change this trajectory. In fact, we’re currently finalizing agreements with several major manufacturers in the aerospace sector to digitize and optimize their operations; more details to come in my next newsletter.

The longer we wait to act, the more we risk missing the window of opportunity to make meaningful improvements on crucial issues like sustainability, resource efficiency, and building up our workforce. (Not to mention making money.) By investing in targeted manufacturing solutions, venture capital can play a pivotal role in driving the next wave of industrial innovation – not by dreaming up the factory of the future, but by investing in the factory of now.

Our CEO, Florent François, shares over 25 years of manufacturing experience and insights on the urgent need for industry innovation. In this issue he offers together with, Benjamin Zeitoun, partner at Starburst Ventures, his perspective on VC opportunities in manufacturing.

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