In Digital Manufacturing, the Product Is Intellectual Property

In the digitized manufacturing world that is being born, the product that a job shop produces is less a piece of machined metal and more a piece of intellectual property, according to Tom Kelly, executive director and CEO of Automation Alley, Troy, Mich.

“What the OEMs really want is to connect the supply chain and have real-time data, not only from their own plants but all the way through the supply chain,” Kelly said. “The productivity potential is enormous, but it also creates a lot of intellectual property issues for the smaller, downstream suppliers that most aren’t really thinking about. They need to understand that they’re going to be in the business of data and services and not necessarily only in the business of making physical products or parts.”

Does this mean that if a shop digitizes all its procedures and shares the data up the supply chain, it may be at risk of revealing what ought to be proprietary information? Is Kelly saying the shop is in danger of inadvertently giving away the store?

Tom Kelly, Automation Alley executive director and CEO, said most of the companies that the nonprofit technology and manufacturing business association works with are small and medium-size ones. Image courtesy of Automation Alley.

“That’s one way to frame it, but there are two sides,” he said. In that view, OEMs are a possible threat, and that is rightly one side of the coin. “But the other side is that this OEM goal is an opportunity for the downstream supplier to make more money and add more value—and become much harder to displace—as it digitizes.

“Both perspectives are true, but if you just look at the situation from a position of fear, you tend to want to say, ‘Please let this cup pass from me.’ And what I’m saying is, for those who understand, this is a land-grab opportunity,” he continued. “If a shop can digitize with a Tier 1 and onto an OEM, it becomes difficult for that shop to be displaced, and it’s actually creating a ton of value. The shop just needs to understand what that value they create actually is. It’s not really tied to the product anymore. It’s tied to the data.”

On the supplier plant-floor level, “the opportunities are enormous for the early movers,” he said. 

—M. Anderson

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