For manufacturers, a new industrial revolution is underway, with advanced technologies and materials fueling impressive productivity gains. As manufacturers embrace advanced technologies, the insurance industry must think about exposures such as property damage and bodily injury in a new way.
Today’s Factory Floor
While manufacturing today involves a number of traditional operations, technology is becoming embedded so deeply throughout the manufacturing process that a new paradigm — “advanced manufacturing” is becoming routine for many manufacturing companies. The result is a factory floor that is increasingly digital and connected with automated processes, sensor data, predictive software and new types of materials that, in turn, require new worker skills and risk management considerations.
For example, advanced production facilities routinely provide real-time data to streamline and automate the ordering of raw materials, align production capacity dynamically with customer demand, and provide real-time, facility-wide insight into manufacturing efficiency, bottlenecks, downtime, raw material needs, required maintenance, and other important production metrics.
In this environment, people are increasingly tasked with monitoring systems, rather than operating machinery. Similarly, advanced raw materials such as carbon fiber, nano materials, and advanced alloy metals are more common.
Some industrial examples include:
Today’s sensor-laden (and potentially self-driving) cars enjoy a wide range of automated performance and safety improvements made possible by advanced manufacturing technology and materials. A few years ago, only 20 percent of the cost to build a car was tied to electronics, while today, almost half of the manufacturing expenses can be attributed to electronic components.
Medical product manufacturers were among the first to embrace technology as an integral part of their manufacturing operations. Today, advanced technologies have enabled customized implantable and wearable medical devices with capabilities difficult to imagine a short time ago.
Avionics companies rely on advanced manufacturing technology to improve quality and reliability, and sensor data to improve operational efficiency and reduce maintenance costs.
The defense industry is also serving as a catalyst to generate more advanced products and manufacturing technologies, with military-grade devices and materials later finding their way to commercial and consumer products.
A number of impressive technologies are combining to transform manufacturing processes, materials and tools, but also altering traditional risks and creating new exposures that must be identified and managed by manufacturers and those who help them manage their risk and obtain insurance. Advanced manufacturers are figuring out how to successfully use new technologies to bolster production, reduce costs, create customized products and remain competitive in a global market. Now it’s up to the insurance industry to identify the products and services that will help support and protect those efforts.
Mark A. Locke is Vice President and North America Manufacturing Segment Manager for Chubb.