Manufacturing Company Management and Innovation in the Age of Digital Transition ()
1. Introduction
The advancement of information technology and e-business drives the digital economy. Through strategic transformation, optimization, technological innovation, service upgrading, and service level improvement, the digital economy has improved industries’ production and operation efficiency through e-commerce, automated production, etc. Digital economy is an important economic form after agricultural economy and industrial economy. It is a new economic form that takes data resources as the key element and promotes a more unified fairness and efficiency. The progress of science and technology has greatly promoted the transformation and upgrading of the economy. The development of new generation information technologies such as artificial intelligence, cloud computing, big data and 5G has become an important starting point for the development of digital economy.
In recent years, the Industrial Age 4.0 has changed the way we live and produce and has brought about profound changes in the manufacturing and information technology fields. Industrial robots and 3D printing have achieved breakthrough development in the manufacturing field, and manufacturing has also become a service-oriented trend. Emerging industries such as big data, cloud computing, and the Internet of Things continue to revolutionalise traditional industries in information technology. From the perspective of industrial economics, an essential feature of intelligent manufacturing is to make the manufacturing industry a service. This means that the manufacturing industry is no longer limited to making traditional products but includes everything from the design and production of the products to the service and maintenance of the products. In other words, machines that can make things automatically have taken over for machines that make things manually.
In the 1990s, China began to study intelligent manufacturing, but mainly from the perspective of mechanical engineering. According to studies, companies should use robots to replace workers, use intelligent technology to build smart factories, set up a big data platform, and build an open value ecological chain to deal with the new opportunities and problems of Industry 4.0 (Du & Yang, 2015; Sun, 2017; Zhong et al., 2017; Lan & Huang, 2018). In the face of the rise of intelligent manufacturing, innovation also plays an important role, enabling businesses to be relevant in a competitive market (Li & Huang, 2017). The research on innovation began with Schumpeter (1912). In his study, Schumpeter (1912) proposed that innovation introduces new and better production methods into the production system. Innovation includes companies developing new products, implementing new production methods, and opening new markets. Innovation is a series of interconnected processes, such as acquiring new materials and establishing new organizations (Porter, 1990; Sun et al., 2019). It may be measured in various ways and is critical to economic development and progress (Sun et al., 2021).
2. Enterprise Management Innovation Goals and Prospects
The following are the goal and prospects of the enterprise management innovation.
2.1. The Purpose of Managing Innovation
Enterprise management innovation aims to improve production and operation efficiency, save energy, reduce consumption, continuously improve market competitiveness, and achieve sustainable development. Therefore, enterprise management has revolutionized with Internet technology, allowing them to improve their management processes over time, keep pace with trends, and ensure long-term growth. Intelligent manufacturing is an advanced production mode based on the deep integration of new generation information technology and advanced manufacturing technology, which runs through all links of manufacturing activities such as R&D, design, production, and service management, and aims to improve the quality, efficiency and core competitiveness of the manufacturing industry. The practice mode of management innovation needs to respond to the latest development trend of intelligent manufacturing.
2.2. The Prospect of Managing Innovation
The application of information technology in business management has continuously improved the automation level of business management. The rise of online shopping has made e-commerce an unprecedented development; the development of various numerical control technologies in the production field has promoted the industrial ecological civilization construction. These new approaches challenge traditional enterprise management, causing many businesses to transform and improve to stay competitive continually. They also set up a modernization path for Chinese enterprises to achieve enterprise management innovation in the current information age. Table 1 shows the current development of enterprise management, which is a good illustration of changes in business management.
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Table 1. Current development of enterprise management.
Source: authors’ calculation.
3. Changes Brought by Digital Transition to Intelligent Manufacturing Companies
In recent years, profound changes have taken place in the manufacturing and information technology fields. The networking intelligence has developed rapidly based on informationization, diversification and decentralization. In the manufacturing field, industrial robots and 3D printing have achieved breakthrough development, and manufacturing has also become a service-oriented trend. In the field of information technology, emerging industries such as big data, cloud computing, and Internet business continue to penetrate into traditional industries. The advent of the era of intelligent manufacturing has also brought new shocks to manufacturing companies, mainly bringing the following changes to the manufacturing industry, and we can see them in Figure 1.
3.1. The Intelligence of Manufacturing
Smart factories and intelligent production are the two major themes of Industry 4.0. Smart factories use Internet technology to realize data exchange and sharing between decentralized factories. Intelligent production focuses on the automation of production and improves production efficiency by promoting and applying human-computer interaction and intelligent management. For example, Zhejiang Province has actively promoted and implemented the “machine substitution” strategy, which has achieved good results. This aligns with intelligent production and provides technical support for industrial transformation and upgrading.
3.2. Networking of Manufacturing
Traditional manufacturing enterprises are isolated from each other. Although they are relatively independent in the same value chain, Industry 4.0 will realize the horizontal integration of different enterprises in the same value chain through Internet technology, resource sharing and mutual integration. The network of the manufacturing industry mainly includes three aspects: 1) the horizontal integration of different enterprises in the value chain, 2) the vertical integration of manufacturing system network and 3) the end-to-end integration in the enterprise production process.
3.3. Diversification of Manufacturing
With the promotion and application of intelligent technologies, the personalization and diversification of manufacturing industries are becoming more and more popular. First, it is reflected in the diversification of manufacturing technologies and processes; second, it is reflected in the diversification of products, and smart products are becoming more and more popular. Third, the diversification of customer needs, personalized and niche product demand is growing; personalized, private customized products are more popular.
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Figure 1. Changes brought by intelligent manufacturing to manufacturing companies.
3.4. Decentralization of Manufacturing
3D printing technology is a cutting-edge technology that allows for product decentralization and personalization. Customers will be able to participate in the production process and meet customization requirements due to individualized demand and decentralized production. Small-scale and professional chemical production will become a new way to develop manufacturing businesses in the future.
3.5. Informatization of Manufacturing
Internet technology is embedded in all aspects of production, greatly increasing manufacturing’s level of informatization. Manufacturing companies have used information technology to improve the functionality of their products, resulting in value added and increased competitiveness. As shown in the framework diagram, the dawn of the intelligent manufacturing era has brought about changes that will eventually result in a manufacturing industry upgrade. Manufacturing companies, regardless of whether they are in management or production, must constantly change and innovate in order to adapt to the changing times, resulting in more convenient production conditions and higher profits for businesses.
4. Case Study of Upgrading of Intelligent Manufacturing Enterprises—Changchun FAW Group
The first automobile manufacturing plant, China First Automobile Group Co., Ltd., referred to as FAW Group, is headquartered in Changchun City, Jilin Province, and was formerly the first automobile manufacturing plant.
FAW Group Co., Ltd. (formerly China First Automobile Works) is a Chinese state-owned automobile manufacturer headquartered in Changchun, Jilin Province. Founded in 1953, it is currently the second largest state-owned car manufacturers in China after six decades of car manufacturing. In 1958, it built its first Dongfeng brand sedan and the first red flag limousine. In January 2018, it was selected as the first batch of China Industrial Heritage Protection List.
Changchun FAW has had a bumpy road to development. In the face of Industry 4.0, the value of its output fell drastically during the period 2013-2015, and its competitiveness weakened. However, due to its usual innovation and the strong support from the Jilin Province, Changchun FAW Group quickly adjusted to the ongoing development by smoothly adopting intelligent manufacturing and upgrading its industrial production. This is a good reference case for other manufacturing companies in China.
Changchun FAW Group’s implementation of intelligent manufacturing is inextricably linked to the ongoing activities in both the international and domestic environment. Internationally, in 2014, Sino-German signed the “Sino-German Cooperation Program Outline” document on Industry 4.0, emphasizing the importance of both sides strengthening cooperation in Industry 4.0 and jointly exploring the new opportunities of Industry 4.0.
Domestically, in 2015, the “manufacturing of a strong country” strategy was initiated, and the State Council issued “Made in China 2025” to fully implement the manufacturing transformation and upgrading program. In 2016, Jilin Province actively responded to national policies by developing the “China Manufacturing 2025 Jilin Implementation Outline”, whose objectives include: accelerating the integration of the national manufacturing strategic layout, focusing on the development of profitable industries, fostering new industries, revitalizing local manufacturing, and realize the transformation and upgrading of local industries.
Changchun FAW Group itself has also actively made changes. In the light of the growing intelligent manufacturing, its group management and strategy have also made innovations and adjustments. On March 29, 2018, the FAW-Volkswagen Changchun Audi Q plant was officially put into operation. This is one of the most advanced and environmentally friendly factories globally. With the manufacturing industry’s network and informatization, Changchun FAW used the “Internet+” strategy to achieve three-dimensional intelligent warehousing and digital workshops, an intelligent manufacturing industry support service cloud platform and deepened the relationship between different enterprises.
Cooperation and interoperability, realize the vertical development of product orders, and achieve vertical integration of the value chain; due to the diversification of the manufacturing industry, it actively explores customers’ needs, achieves individualized development, and implements diversified development in business management. According to the data of Changchun Municipal Bureau of statistics, Changchun Industry output grew remarkably; the GDP of Changchun was released in 2021, with a year-on-year increase of 6.2%. Automobile manufacturing industry is an important economic pillar of Changchun. In 2021, the output value of the city’s automobile industry reached 614.3 billion Yuan, accounting for 70.3% of the city’s total industrial output value.
In terms of talent management, Changchun FAW fully recognizes the competition in the 21st century. FAW Talent Development Strategy focuses on the cultivation and development of new talents. Through systematic talent development, it creates about 2000 high-level management personnel, high-level technical personnel and a highly-skilled operational team. As a result, FAW Talent Development builds a team of employees with excellent quality, reasonable structure, and efficiency.
The talent development strategy follows the predecessors’standards, i.e. develops employees into experts such as managers and field operators; it follows the combination of training and talent development. The two major talent projects of “801” and “901”, that is, each management team is equipped with one university student who graduated in the 1980s and 1990s; creating a green channel for employees, that is, mobilizing high-level talents who do not hold any executive leadership positions. Encourage them to encourage them to delve into the business, to develop their expertise, to implement the first, second and third grade designers (crafters), managers and operators; and to actively create a good working environment for employees in the incentive mechanism and policy treatment. Encourage employees to innovate and actively attract highly educated talents.
Driven by Industry 4.0, Changchun FAW seized the opportunity and achieved a major turnaround in the manufacturing industry and achieved industrial upgrading. Its management method is worth learning from. In its transformation process, we can also discover the impact of intelligent manufacturing on it and discover its technological innovation and management innovation. This shows that in the face of the development of the times, only by courage to innovate and change the enterprise can we stand up.
5. Management Strategies for Manufacturing Companies
Compared to developed countries, China is lagging behind in developing intelligent manufacturing. There is still a low level of manufacturing industry, insufficient development synergy, a lag in the construction of intelligent manufacturing basic theory and technology system, a weak independent innovation capability, key core technologies that rely too much on foreign talents, and insufficient policy support, etc. As a result of the changes brought about by intelligent manufacturing, China’s manufacturing industry must make management adjustments and fully utilize innovative management ideas to meet these challenges.
5.1. Apply Smart Technology to Build Smart Factories
Standardized, modular and digital product design is an important embodiment of Industry 4.0. To meet customers and market needs, enterprises must achieve this through modularized division of labor and integrated, flexible production methods. The so-called modular division of labor and integration is to first decompose the product and then integrate the decomposed modules according to the needs of different functions to create an integrated product. Therefore, enterprises should pay attention to the intelligent strategy, strengthen the integration of human intelligence and factory intelligence, promote human-computer interaction, improve the level of artificial intelligence, and realize software and hardware integration. It is suggested to speed up the large-scale deployment of new network infrastructure such as industrial Internet, Internet of things, 5G and gigabit optical network, encourage enterprises to carry out internal and external network upgrading and transformation, and improve on-site perception and data transmission capacity.
5.2. Build a Big Data Platform and a Cloud Computing Center
New technologies such as big data, cloud computing, and 3D printing are important representatives of the industry 4.0 era. Data in the Internet era will become the most valuable resource for mining. In the lead, the US industrial Internet strategy is a model for building industrial big data. Because big data technology can help enterprises grasp and predict customer-centric market conditions and trends, it is an important strategy for building enterprise data centers, improving informationization, and promoting enterprise development with information technology. Whoever has data resources can grasp the market trend Encourage enterprises to actively mine the strategic value of data, so as to take a leading position in the highly competitive market. We should encourage the national manufacturing transformation and upgrading fund, the advanced manufacturing industry investment fund, the national small and medium-sized enterprise development fund and all kinds of social capital to increase investment in the field of intelligent manufacturing.
5.3. Building an Open Value Ecosystem
In the era of Industry 4.0, enterprises and users are at a distance from each other. Enterprises guide users to carry out the process of value creation in the whole process. “Networking”, “platformization” and “openness” have become important directions for enterprise production, which will lead to a complete refactoring of the organizational structure and generation process established in the era of mass production. Enterprises need to build an open ecosystem that integrates internal and external, guides external resources to access, and truly promotes the reconstruction of the enterprise value chain. It is suggested to formulate the specification of intelligent manufacturing public service platform and build a service network with complementary advantages and coordinated development. Relying on the international one, such as “B&R” initiative, BRICs and regional comprehensive economic partnership agreement (RCEP), we will encourage intelligent manufacturing equipment, software, standards and solutions to “go out”.
5.4. Establish an Efficient Workforce Management System
An organization with an overstaffed increases costs and wastes resources; on the contrary, when the organizational structure is lean, the staff is fast and efficient in their work, reducing the cost. The wide application of information technology will expose the coordination ability of traditional enterprise organizational structure, which will plague the drawbacks of enterprises. The application of these new technologies is conducive to the establishment of capable and efficient business organization, innovative structure, reward and punishment assessment methods and incentive mechanism, and the formation of a new corporate culture. It is suggested to regularly prepare the demand forecast report of intelligent manufacturing talents and the demand catalogue of scarce talents, and issue industry standards such as the ability requirements of intelligent manufacturing employees.
6. Conclusion and Future Research
A successful and advanced management theory has almost always evolved from a specific practical application level to a thought or method level and is fixed by language, equipment or system, and it has become a new management theory that can be widely applied. Intelligent management is replaced by human intelligence and mental work. In the era of big data, if enterprises want to make great progress and development, they must grasp the development trend of management theory to guide the practical activities of enterprises. At present, the industrial revolution centered on the digital revolution of manufacturing is on the way.
Whoever seizes the leading industry of intelligent manufacturing can become the leader and leader of the new industrial revolution. For a newly industrialized country like China, it is necessary to seize the opportunity window of the new industrial revolution and realize the “overtaking of the curve.” In the field of intelligent manufacturing, we must break through the innovation of core technology fields, attach great importance to the management innovation thinking of enterprises, improve the added value and competitive advantages of the industry, build the institutional mechanisms and industry development standards that are conducive to the development of intelligent manufacturing, and introduce a reasonable industrial supporting policy system and cultivate multi-disciplinary and high-skilled talents to provide comprehensive support for the sustainable development of smart manufacturing.
The accelerated integration of advanced manufacturing technologies provides a historical opportunity for the development of high-end, intelligent and green manufacturing industry. The development level of intelligent manufacturing is related to the global status of China’s manufacturing industry in the digital future. It plays an important role in accelerating the development of modern industrial system, consolidating and expanding the foundation of real economy, building a new development pattern and building a digital China. At present, China has turned to the stage of high-quality development and is in the key period of transforming the development mode, optimizing the economic structure and transforming the growth power. However, the adaptability between manufacturing supply and market demand is not high, the stability of industrial chain supply chain is facing challenges, and the constraints of resources and environmental factors are becoming tighter. In the future, we will combine more field research and case analysis to promote relevant theoretical research and empirical testing.