The Innovation Trend Hits: Growing tech adoption in Midwest is boosting efficiency

From food to culture to fashion, certain trends can be slow to reach the Midwest from the East or West coasts.

Michael Eaton, executive director of the Missouri Association of Manufacturers, said the same is true for innovations in technology.

“When it comes to advancements in manufacturing, Industry 4.0 starts on the coast and kind of moves in,” he said. “Large, Boeing-sized manufacturers have the resources and the connections to adopt advancements a lot earlier than the majority of manufacturers out here.”

Industry 4.0 is the so-called fourth industrial revolution, or the next phase in the digitization of the manufacturing sector.

Matthew Hudson, executive dean for career, technical and community development at Ozarks Technical Community College, concurs.

“In general, this part of the country is not the first to adopt a new technology,” he said. “We’re the Show Me State for a reason – but we are finally getting there.”

Especially since the COVID-19 pandemic and recovery, people are finding that capital investment equals labor savings, Hudson said.

“We have seen that shift here locally,” he said. “We’re always just a little bit behind where the first markets are to adopt them.”

Some research shows there is an advantage to embracing a spirit of innovation. A December 2023 global survey on digital strategy by McKinsey & Co. cited risk aversion, siloed mindsets and a general aversion to technology as barriers to getting results from digital investments.

Yet McKinsey notes organizations with a strong innovation culture lap other organizations with digital transformation with double the rate of adoption – and more than half of innovation-focused companies had increased their digital investments in the past two years, compared with a third of their less innovative counterparts.

“They also direct their technology spending to where it will have the biggest business impact: accelerating competitive differentiation and embedding a sustainable operating model,” the report states.

A Show Me mindset may be at odds with innovation, in other words.

Eaton said he often hears from companies who are facing workforce challenges. In such a climate, tech innovation finds an opening.

In its 2024 research, tech consultancy Bain & Co. found that automation leaders, defined as those companies investing at least 20% of their IT budget in automation – reduced the cost of the processes the automation addressed by 22%. Laggards – those investing less than 5% of their IT budget in automation – achieved just under an 8% reduction in costs.

“Innovation in automation and robotics becomes a viable solution,” Eaton said. “It’s actually more cost-effective to dip your toes into that than a lot of manufacturers previously thought.”

Innovation has landed
Bob Graham, director of IT at ammunition manufacturer Fiocchi of America LLC, said a challenge in manufacturing is to get information from the machines that are in use to help refine operations.

One solution in use at Fiocchi is an Internet of Things solution – that is, a smart device solution – manufactured by Amper. The solution works with existing manufacturing equipment to trasmit key information.

“Everyone always thinks the high-tech way, but there are still a lot of things that are low-tech,” Graham said. “This is an automation that helps us so we can drive quality around it.”

When a machine is slow or idle, the Amper tool detects a change in electricity use and sets off an alarm while also providing a reason on an associated website. Issues might be a need for machine maintenance or a problem with tolerance in a raw material – perhaps one that is too thick and causing a failure.

Installing Amper was an investment that topped $100,000, but Graham said it was a worthy investment. The technology measures overall effectiveness in equipment that previously had no means of generating that data.

“If we’ve got 20 different lines it doesn’t matter what you’re producing, we have a percentage based off that,” he said. “It’s a great way to measure effectiveness.”

He noted there is not yet quantifiable data on savings realized through the tool, and new technology is significantly impacting efficiency.

“It’s important to note that this enhancement isn’t about reducing our workforce,” he said. “Instead, it’s about optimizing maintenance and fostering better communication among employees regarding how each machine operates. This, in turn, helps us streamline our processes an improvements.”

Springfield Business Journal regularly reports on new technology popping up in local business and industry settings. A report this month on rail product manufacturer L&W Industries LLC moving to a new home in the Southwest Missouri Rail and Business Park highlighted the company’s tech investments, with CEO and President Jenny Carr noting automation has helped to supplement workforce needs.

“When you’re doing automation, you don’t need to add many more employees,” she said at the time.

But it’s not only manufacturing where tech adoption is visible. August reporting in SBJ introduced readers to Rice & Dumpling, a downtown restaurant with a dumpling-making robot capable of crafting 20,000 dumplings in an hour.

More recently, an article about Omo Japanese Soul Food highlighted a robot that takes drinks to tables. A recent visit to Omo showed the robot – with blinking eyes and cat ears – in action.

Innovation is also in the works at Pinegar Honda, which is currently undergoing what IT Director Wade Passey calls a complete digital and physical transformation. While Passey declined to disclose the total cost of the transformation, he noted that GM Tad Pinegar, a member of the Pinegar family ownership group, is willing to make a significant investment to create a better experience for the customer.

As the main building at 3553 S. Campbell Ave. is transformed, the digital infrastructure is getting a massive upgrade, too, Passey said.

“When you think of technology, you don’t really think of a dealership,” he said.

But he said the company has changed its dealer management system software platform – that’s the system dealerships use to manage sales, inventory, financing, compliance and more. The new DMS is from Canada-based PBS Systems, and it replaces a product by Texas-based CDK Global. Passey said Pinegar estimates annual savings at $200,000 with the switch, and he notes the new system was developed around the dealership’s needs, instead of offering a one-size-fits-all approach.

A new building under construction is being built with customer and employee processes in mind, with a key management system that eliminates physical keys in favor of credentials.

The cars still have keys, and tracking those is easier with the new system, Passey said.

“A big problem dealerships have is key management,” he said. “With 300-400 vehicles, keeping track of two sets of keys for each one, it’s easy to misplace those.”

Passey is excited about the new three-lane drive that will lead to the service department. When customers drive in, their license plate will be scanned to pop up in a database that instantly orients a service adviser, whether the customer has an appointment or not. Additionally, scanners will check tire treads, vehicle alignments and visible damage.

The list of innovative technology is much longer, but Passey notes the new systems are integrated with one another with efficiency in mind. As the McKinsey study notes, organizations that embrace innovation tend to direct their technology where it will provide the most bang for the buck: accelerating competitive differentiation while embedding a sustainable operating model.

“There are tons of little things that are happening to improve efficiency, and that can kind of go unnoticed,” Passey said.

Passey said the dealership had planned to complete its upgrades by the end of this year but is now aiming for early 2025.

Permission slip
The Robert W. Plaster Center for Advanced Manufacturing at Ozarks Tech is a regional hub for technical education, but it’s also a functional incubator space for businesses to try out new technology.

A leasable section of the Plaster Center allows industries to try untested technology without disrupting their own manufacturing floor. Lebanon-based DT Engineering is the current lessee, as well as the sole tenant since the center’s 2022 opening. A new company will likely take their place in 2025, Hudson said.

“It’s not intended to be for long-term tenants,” Hudson said, noting companies use the space for a year or two. “If you want to foster the spirit of innovation, we don’t want to become your warehouse. We’re trying to launch innovation and training.”

Eaton said the model Hudson describes allows companies to become tech adopters with a degree of comfort.

“Innovation and manufacturing have to go hand in hand,” he said. “Manufacturing solves problems. Most manufacturing operations got started because some guy, some woman, said, ‘There’s a problem there. I’ll bet I can figure out a solution.’”

As an added bonus, students at Ozarks Tech can get the training they need to become nimble with innovative technology – not merely to operate a certain type of equipment.

“People have the misconception that we’re training machine operators,” Hudson said. “That’s a byproduct – it’s not our outcome.”