The Impact of Industrial Resilience

Ramachandran S: Hello, everyone. My name is Ramachandran. I'm the lead for engineering and manufacturing domains in Infosys Knowledge Institute, our thought leadership Team. Today we have with us Dr. Mukesh Kumar from the University of Cambridge. Today, we are going to talk to him about his research on areas like supply chain management and sustainability. We are very happy to have you with us, Dr. Mukesh. Thank you so much for stopping by.

Dr. Mukesh Kumar: Thank you for having me, Ram.

Ramachandran S: It's a pleasure. So let's get into some of the research areas, Dr. Mukesh. So, let's start with industrial resilience. If you could talk to us about what you do in this area in your group, that'll be of great learning for us.

Dr. Mukesh Kumar: Thank you very much. Industrial resilience is one of the newest research group in shoot for manufacturing. What we look at in industrial resilience is what are the different types of events that is happening around industrial systems and how that it interacts, or how those events interacts with the vulnerabilities of the system that creates risk. And what are the key investment or capabilities that are needed in order to respond to those risks in order to create resilience? Now, when we talk about industrial resilience, it's a quite huge word taking a system thinking point of view.

But here, we are talking basically about a factory and factories connected with various other factories. It's a factory network. And if you start adding all the logistics, different geographical location, it becomes supply chains. And beyond the supply chain as well, because supply chain also works in a kind of ecosystem, an environment where the universities are there, governments are there, regulators are there, financial bodies are there. So all these things create an industry ecosystem as well. So in short, Industrial Resilience Group studies factory supply chain, industrial ecosystem and especially within the context of resilience.

Ramachandran S: Sure. So like you said, industrial resilience is a wide topic. Let's pick up a specific topic under that. Supply chain resilience, for example. So traditionally, supply chain managers have focused on producing products faster, cheaper, better. Maybe sustainability is an area focus. We'll come to that later. But the COVID pandemic opened up a lot of talk about resilience to spring back from unexpected events like a pandemic. So talk to us about supply chain resilience specifically. What are some of the recent trends? What research do you do in that area? What do you see industry participants doing in supply chain resilience specifically?

Dr. Mukesh Kumar: Yeah, so supply chain resilience, initially, we started looking at from climate change point of view and how climate change will give impact on supply chains. It was not very clear in 2011 and '10. But we had a collaboration with British Antarctic Survey and we worked together in order to understand how it'll give impact in terms of product level, processes level and specific location levels. It just opened our eyes at that time, that many of the companies, their value, around more than 70% of their values are exposed to climate change, and climate change related risks that companies were not aware at that time. So that's one of the examples that I would say is quite interesting. But let's look at the nature of events have also started changing. We had pandemic recently. Suddenly, we found out that there are things that we never given any attention to that is important, such as gloves, PPT. It became such a huge important ... So when we talk in manufacturing in terms of high value manufacturing, during pandemic, the definition of high value manufacturing also got transformed.

The low value but high societal value product become quite important. So how you manage those non-critical products, which at certain point of time became very critical.

Ramachandran S: From a health perspective.

Dr. Mukesh Kumar: Yes, it's quite important, but take a different look. We studied automotive supply chain in 2010, '11, '12. In that supply chain, we never came across semiconductor is one of the key critical part. So you look at all the processes, all the suppliers, there's no one talking about semiconductors. Now, talking to big sports car company or big high value car manufacturers, what we found out that in a car, there are more than 8,000 semiconductor chips and they're still counting. It means the counting is not stopped.

That has become so important, that because of that small low value chip, if the shortages happen, they can't even produce a single car. So what I'm trying to say is parts and how supply chain evolves over the time period, becomes very important. At the same time, events such as trade wars, such as even local geographical war, has a huge impact. I know you will come on ... You will be interested to know more about Ukraine, but those have created a big issue for supply chain and supply chain that traditionally designed in a certain point of time, at several vulnerabilities in the future context. And that's makes it quite interesting to study but also good to observe how it's evolving.

Ramachandran S: Thank you. Thank you, professor. So let's talk about digital technology. So you spoke about study and research on vulnerabilities in supply chain, the supply chain itself. So supply chain transparency and visibility becomes very important there. So what are some of the key digital technologies that help you in this study, that help organizations right now?

Dr. Mukesh Kumar: One thing is digital transformation. Revolution, I would say industry 4.0 has bring it. We have robotics, we have cloud-based services, we have IoTs. We have analytics that we can use and combine with big data. More recently, we have AI and LLM models that also creating a quite huge impact on supply chains decision-making. Because at the end, why we need digital technology? Why we need digital technology, for control purposes, to get information, to make use of that information in analytics in a way that we can make right decisions, with strategical, tactical or operational decisions. So huge explosion of these technologies are coming up. In terms of supply chain visibility and transparency concepts, it's very important for resilience. Most of these companies are right now thinking about how we can create digital twin, how we can create supply chain tower concepts. How can we see the supply chain?

Seeing supply chain is always challenging. As I said, there could be multiple reasons. So give you example, pharmaceutical. Paracetamol tablets in UK, it may involve three continents and multiple countries to make that simple paracetamol tablets. So it's a huge number of suppliers and it travels huge miles. So how to see supply chain becomes a challenge. So in order to solve these challenges, we are also worrying about it in research, because one of the key challenge that we have is the data. We don't understand, we don't have the right data to make right analysis. So we get proxy data to understand it. Or if we try to do very case-based research, it takes longer time and we can't have multiple companies. So you can't generalize the finding. But one of the area that we are working on is called supply chain observatory. Can we create a simple supply chain observatory where we define these data within the supply chain context, and then make a useful analysis and predictive analysis in order to make right decisions for companies? But we are quite far from that particular area.

Ramachandran S: Is it like a control tower or how different is it from...

Dr. Mukesh Kumar: So control tower is look at within the company context. When you look at supply chain observatory, it looks at a product level concept.

Ramachandran S: Very interesting. Right.

Dr. Mukesh Kumar: So you are talking about company agnostic, but company's part of it, but not taking company sensitive information.

Ramachandran S: Yeah, supply chain observatory is a very interesting phenomenon from somebody like you in academics. Very interesting. So you touched upon climate change earlier and supply chain. So again, very recently, because of awareness on climate countries, companies have published their targets to become net-zero. But most of the focus has been on Scope One and Scope Two emission reduction. But the big elephant in the room is probably the Scope Three emission where the supply is in upstream suppliers, all that comes in. So what efforts do you see happening in direction of Scope Three emission? What do you think organizations should do? What should countries do? What's your point of view on reduction of Scope Three emission?

Dr. Mukesh Kumar: So Scope Three emission is becoming quite important topic. It's not just because company always wanted to handle it. I think each company has this responsibility to do good thing. But from regulatory point of view, European Union is coming up with this regulations, which is actually going to cover Scope Three. Recently, I was talking to one of the oldest engineering company in the UK and he was mentioning, "Mukesh, one of the challenges that we have done analysis that this particular regulation may increase our cost of making goods by 40%." And that's one of the challenges that we need to handle. Scope Three emissions are again linked to supply chain transparency and visibility. When we talk about transparency, it has a various different kind of data architecture. And visibility, we might say that pineapple is coming from Costa Rica. But that doesn't tell you anything. But transparency has multiple dimensions that we need to look at.

The Scope Three has become quite important and again, the concepts such as supply chain observatory ... And again I'm going to emphasize here one point. What is supply chain observatory we are talking about? It's actually a digital infrastructure that gives companies, an ability or capability to do things in the right way. We have roads, we have ports, we have all the physical infrastructure that government provides. But what currently government is not able to help companies with is this kind of digital infrastructure which helps company to see and follow various regulations that many different parts of the world have. And not just comply with them, but actually go beyond the compliance.

Ramachandran S: Very interesting. So again, you touched upon food supply chain. I know that's one of your areas of interest and you mentioned that Ukraine war, so we cannot stop from asking you a question on that. So the Russia-Ukraine war has severely disrupted the food supply chain globally. There is inflation of prices, a lot of short change of supply. So where do you see the world going ahead? What steps are countries and companies taking? What is your point of view on how do we manage this globally? Because today, we are a global village. How can we manage this challenge in food supply chain?

Dr. Mukesh Kumar: So food supply chain was always quite important. Initially, food supply chain was designed to tackle the hunger, global hunger. While doing that, it actually almost did it. Still, there are pockets of the world where we have the hunger problem, but mostly try to address that particular challenge. While doing that challenge, it expanded itself geographically so much that we didn't understand where we are producing, what we are producing, how we are producing, and it's coming to our plate. The Ukraine war and Russia war, before that particular war was coming into the picture, but nobody was knowing that okay, we have huge barley production in that region. We have wheat production in that region. And one of the most important, we have biggest fertilizer production in that region. So it started affecting every part of the world. So at one level, we talked about Ukraine war. We thought it just contained till Europe. But we can see that people are getting suffered because of that war across the world, especially in poor and developing world.

Food prices is going up. It's actually quite hurting in the UK as well, food prices. So one of the things that one need to look at is how we can rationalize the location perspective. Making food supply chain much more shorter, more innovative, more localized, but not completely disconnected from the global world. Because if some disruptions happen at the local level, it can be managed through the linkage with the global locations of production. So we were already facing lots of problem in food supply chain from climate change, that you can see like heat waves, flooding. Now, we have the war in a particular specific region, has certain characteristics, which gave impact on food supply chain. So it has completely transformed our understanding. And again, bring back to that same topic that can we see our supply chain? We are not able to see it, what things happen, where it happens and how we actually use it. That part has become more important for government, and that's why the digital infrastructure linked to observatory or visibility, becomes such an important part.

Ramachandran S: Very interesting. So it's not just automotive chip supply chain, but even food industry needs transparency.

Dr. Mukesh Kumar: Yes.

Ramachandran S: So to end the conversation, Professor Mukesh, one question was on one more of your favorite topics, distributed manufacturing. Again, post COVID, what are the recent trends that you see? What is the research that you do on distributed manufacturing? If you could share some insights on that.

Dr. Mukesh Kumar: So distributed manufacturing research almost came at the same time when industry 4.0 came. Industry 4.0 I would say is almost a concept originated in Germany. Distributed manufacturing and redistributed manufacturing, as we say sometimes, is some kind of this concept evolved around UK. And smart manufacturing, we can say it's around the US. But there are similarities there. What we are looking at, we are looking at the two types of technological advancements that are happening. One, it's the production process level. So you can have tabletop CNC machine. You have CD printing machine. So you have miniaturization of production process. So it means you can do production in a very small confined space anywhere. It can be within the city or outside.

Ramachandran S: Micro factories. Again, that might be in the UK.

Dr. Mukesh Kumar: At the same time, there's another development is happening on the digitalization side of it. So now you can connect things. You don't need to have people working at one location. You can actually distribute them as well. So we have new production processes, we have digitalization. That is giving us an ability to do things which we were not able to do before. And what are these things? Personalization of product, localization of production and multi-user for participation, which we call it democratization of manufacturing.

So all these three things are becoming an output of these two advancements that we assume. Now, it can change and it's changing already. Now, we can produce things in smaller, smaller area. We don't need huge capital to open a factory. A house can be a factory. So in that, creating very interesting promises for sustainability, for resilience, because now you can have localized production. You can have even city-based production. Just imagine ... There was a figure of by 2050, I think 70% of the world population, or more than 70% of the world population, will live in the urban area. But factories are generally outside of the urban areas. So it doesn't make sense. Now, these distributed manufacturing can bring factories within the city, within the smart cities and use those opportunities that people didn't have before.

Ramachandran S: I think electric vehicles is one area where the inventories have come down. Micro factories are used to assemble in several clusters instead of one big factory.

Dr. Mukesh Kumar: You are absolutely right and I think it's somehow it's taking back to ... When I was growing up in the state of Bihar, we had the tailor shop at each corner and we were not having ready-made clothes. So you buy a big cloth seat, you go there and very quickly, they make it. That has lots of advantages. Only thing that we had, the problem is that you can't standardize the stitching and the whole shirt. But now we have those technology, that we can do standardization at the various locations. So that's the thing that is quite fascinating, in my opinion.

Ramachandran S: Okay, thank you so much, professor. We had very interesting insights from you on very interesting topics. We really appreciate your taking the time to stop by and sharing these insights with you. We wish you all the best for ongoing research and we'll be very happy to stay in touch with you.

Dr. Mukesh Kumar: Thank you very much, Ram.

Ramachandran S: So that brings us to the end of this session. I hope all of you enjoyed this session. So please do visit the video section of Infosys Knowledge Institute on Infosys.com/iki. Until the next time, keep learning, keep sharing.