Throughout the ongoing health crisis, digital solutions such as decentralised manufacturing, safer factories, remote monitoring and localised distribution have contributed to the continued global flow of consumer goods. But far from merely causing logistical disruption on the ground, COVID-19 has shaken up the whole manufacturing industry – and has become a catalyst for firms to take the leap into a new era of digitisation. In recent months, international players have shown how tech-driven processes can offer cost reductions and efficiency gains at a time when businesses are facing extreme cost pressures. As the world prepares for a new normal, FMCG firms are now asking how they can best leverage technologies to build robust operations capable of withstanding another global shock – and where best to base such facilities geographically.
At its core, smart manufacturing leverages digital connectivity to optimise every part of a producer’s value chain. Digital automation, integration and monitoring of different kinds of processes come together to unlock material gains and drive incremental efficiencies across borders and time periods. This in turn allows businesses to acquire better insight into inventory levels, delivery schedules and demand cycles – allowing for adjustments to the production process. Critically, smart manufacturing allows brands to analyse and improve productivity through a series of incremental tweaks rather than sweeping changes to fix what may actually be a small problem. Companies that are failing to carry out a precise analysis of their manufacturing process risk overspending and losing out on productivity, efficiency and sustainability gains. It would be unimaginable, for example, to reinstall an entire plumbing system to fix a leaky pipe – but this is essentially the problem that many legacy manufacturers face.
Since it depends on internet connectivity, smart manufacturing needs world-leading digital infrastructure in addition to the physical attributes of conventional production hubs. Low operating costs, liberal business policies and a supportive operating environment ensure efficient processes. In addition, a robust physical infrastructure with access to easy trade routes helps manufacturers reach international clients quickly and effectively. For manufacturers operating in the Middle East region, Bahrain offers this logical centre of operations. Home to international food production giants such as Arla Foods and Mondelēz International, the Kingdom combines the benefits of conventional production hubs with advanced digital infrastructure – a clear plus for manufacturers looking to revolutionise their operations with the help of new technologies. Bahrain, for example, leads the world in commercial 5G adoption, offering businesses the chance to work at internet speeds up to 20x faster than regular mobile internet. Regulatory relief and a tech-focused operating environment have also been a mainstay of the Kingdom’s appeal for smart manufacturers. Bahrain permits foreign companies 100 per cent ownership in the sector, for example – and 80% of all government activities can be carried out online, meaning licensing and other essential processes happen faster.
Historically, companies have come to the Kingdom while seeking to improve their regional operations, for reasons of cost, innovation or market access. Biscuit and chocolate company Mondelēz International, for example, uses smart manufacturing to customise flavours and package sizes to local tastes across different markets. Among other improvements, the producer of brands such as Oreos and Barni upgraded product distribution with a $10 million automatic storage and retrieval system (ASRS) distribution centre. The 4000 sqm unit is one of the largest automated distribution centres in the Middle East, using fully automated transfer robots instead of forklifts – cutting loading times to one pallet per minute and enabling plans to have a high shipment capacity of 50 trucks per day.
It can do so thanks to the operating environment in Bahrain. Besides unparalleled access to GCC markets, manufacturers in Bahrain enjoy duty-free trade through FTAs with 22 countries, including the United States. Finally, Bahrain offers some of the lowest operating costs. Setting up and operating a smart manufacturing business in Bahrain is between 18-33 % cheaper than in other GCC countries, according to KPMG’s 2019 Cost of Doing Business report. This is thanks to lower costs for visas, employment permits, infrastructure levies and utility bills.
Smart manufacturing has changed the way goods are produced and exported around the world – from speeding up critical processes to analysing the best ways to enable new efficiencies in throughput. In the right operating environment, such as the manufacturer-friendly Kingdom of Bahrain, brands can truly benefit from these technological advances as they step in to the Fourth Industrial Revolution.