Smart factories could add $1.5tn to world economy

Posted on 29 Nov 2019 by The Manufacturer

Smart factories could boost the global economy by at least $1.5tn over the next five years, so long as manufacturers can adopt the technologies necessary for the transformation.

Adoption of artificial intelligence (AI) and Internet of Things (IoT) can unlock trillions in revenue for firms across the world according to a report by the Capgemini Research Institute – but the majority of manufacturers planning to invest in the technologies are still struggling to scale-up their operations.

Smart Factory Intelligent Enterprise Industry 4.0 and monitoring app - image courtesy of Depositphotos.

The convergence of IT-OT (information and operational technology), upskilling and digital know-how are identified as the key barriers to Industry 4.0, according to Capgemini’s Smart Factories @ Scale report, inhibiting opportunities for innovation, efficiency and value-added business.

Of the more than 1,000 industrial companies surveyed from 13 countries, UK manufacturers now lag behind the top 10% in smart factory adoption, with China, Germany and Japan currently leading the trend, closely followed by South Korea, the US and France.

Despite an uptick in organisations progressing their smart factory initiatives when compared with two years previous, 60% of firms said they are still struggling to scale their operations owing to a deficit in essential skills and technology.

Capgemini expected gains graph

Digital platforms, data readiness and cybersecurity, as well as competencies necessary for cross-functional capability and problem-solving were all “hard to come by”, according to those interviewed.

Other leading global manufacturers, however, are said to be planning for 40% more smart factories by 2023 and increasing their annual investments almost two-fold compared to the past three years, with 5G tipped to become a key enabler.

During that time, Capgemini said there is the potential for up to $2.2tn for the global economy if manufacturers can solve the skills and technology challenges they currently face.

Firms need to “learn from high performers making significant investments in the foundations”, such as digital platforms, data readiness, cybersecurity, talent and governance, according to the report – and well-balanced “efficiency by design” and “effectiveness in operations” approaches, leveraging the potential of data and collaboration, it added.

Capgemini Productivity gains

The report also details PLM (product lifecycle management), MES/SCADA (manufacturing execution system/supervisory control and data acquisition) and robotics as key components of industrial architecture.

China, France, Finland, Germany, Japan, India, Italy, South Korea, The Netherlands, Spain, Sweden, the UK and the US were among the 13 countries with organisations that currently have smart factory initiatives underway.

“A factory is a complex and living ecosystem where production systems efficiency is the next frontier rather than labour productivity,” said Jean-Pierre Petit, director of digital manufacturing at Capgemini. “Secure data, real-time interactions and virtual-physical loopbacks will make the difference.

“To unlock the promise of the smart factory, organisations need to design and implement a strong governance program and develop a culture of data-driven operations.

“The move to an ‘Intelligent Industry’ is a strategic opportunity for global manufacturers to leverage the convergence of IT and OT, in order to change the way their industries will operate and be future ready,” he added.

Smart Factories - Capgemini's smart factory implementation statues across countries

Mourad Tamoud, executive vice president of global supply chain operations at Schneider Electric, said his company began with one site before scaling to 70 by 2019 certified by the World Economic Forum.

“By training our managers, engineers, support staff, and operators, we have equipped them with the right knowledge and competences. In parallel, we have also started to scale this experience across the organisation through a virtual network to achieve such a fast ramp up,” he noted.

By Rory Butler, Staff Journalist

*All graphs courtesy of Capgemini, photo courtesy of Depositphotos