Smart factories set to contribute up to £1.13 trillion to the global economy

Smart factories are set to become a revolutionary force of the manufacturing industry and provide a massive boost to the global economy, according to a new report by multinational information technology consulting company, Capgemini.

Smart factories are set to improve productivity and labor cost hugely over the next 5 years - image courtesy of APS
Smart factories are set to improve productivity and labor cost hugely over the next 5 years – image courtesy of APS.

The report found that smart factories could add anywhere between $500bn (£377bn) to $1.5tr (£1.13tr) in value to the global economy in five years.

The expected direct benefits to manufacturers from the emergence of smart factories over the next five years were highlighted in the Capgemini report. These improvements included:

  • An increase in on-time-delivery of finished products by 13 times
  • The cost of items such as Capex & Inventory to be rationalised at 12 times the rate of improvement since 1990
  • Material, logistics and transportation cost to be rationalised at 11 times the rate of improvement since 1990

By 2022 overall productivity and labor cost improvements are also expected to accelerate at 7 and 9 times the rate of growth since 1990, respectively.

The projected rapid growth of smart factories is highlighted by the fact that although 76% of manufacturers currently have a smart factory initiative only 14% of these are satisfied and just 6% can be classified as ‘Digital Masters’.

This potential for massive improvement suggests that the market for smart factories is set to ignite over the next five years as indicated by the Capgemini report.

Register for the UK’s biggest digital manufacturing show – just 4 weeks to go!

Are you looking to learn more about Smart Factories and digital manufacturing? Then don’t miss the Smart Factory Expo, taking place 15-16 November, 2017 at the Exhibition Centre Liverpool.

Organised by The Manufacturer – it is FREE to register for Smart Factory Expo, which coincides with the government’s much-anticipated Industrial Strategy and Industrial Digitalisation Review.

The Smart Factory Expo this year features:

  • More than 100 Exhibitors – including: Autodesk, Cisco, Dell EMC, IBM, Innovate UK, Oracle Netsuite, Rockwell Automation, and Siemens.
  • Free Factory Tours – including tours to: Jaguar Land Rover, Sensor City, Virtual Engineering Centre (VEC). Find out more.
  • Dedicated Exhibition Zones – Industrial Automation, Digital Transformation, Smart Factories, and Industrial Internet.
  • Free Conference Content – 90 presentations over both days from world-class manufacturers and technology experts.
  • Practical Workshops – curated by the University of Cambridge’s Institute for Manufacturing, with case studies from BAE Systems, Caterpillar, Rolls-Royce and more.
  • Innovation Alley – lifting the lid on the UK’s manufacturing high-tech start-up scene.
  • Hack and Pitch – a competition that offers an opportunity for larger manufacturing companies to engage directly with exciting new enterprises developing cutting-edge solutions around smart factories. Find out more.

A head start on Smart Factories

Capgemini’s research found that nearly half of manufacturers in the US, France, Germany and the UK have an ongoing smart factory, showing that the US and Western Europe in particular have made a head start on the rest of the world in terms of utilising smart factories.

Entrance to The Manufacturer Smart Factory Expo
An image from The Manufacturer Smart Factory Expo 2016. Register now for Smart Factory Expo 2017, which takes place 15-16 November in Liverpool.

The global industries shown to have already benefited the most from smart factories in terms of overall productivity and quality gains include; industrial manufacturing, automotive, consumer goods, energy and utilities, aerospace and defence and pharma, life science and biotech.

The Capgemini report emphasises the need for manufacturers to prepare right now for the future utilisation of smart factories, as “the rewards of smart factories are too large for manufacturers to delay preparations for the future.”

Their analysis suggests that with the appropriate investment of resources as well as effective transformation management, average manufacturers can become industry leaders through the implementation of digital technology into their processes.

The report identified that becoming digital masters was the key for manufacturers to ensure the success of their smart factory initiatives.

The analysis highlighted two key characteristics of digital masters; they are making better progress on smart progress compared to their peers, and are making aggressive investments which include training to build digital skills.

Digitising processes and leveraging advanced digital technologies through the use of digital intensity was the key difference between a manufacturers status as a digital master or beginner, as correlating statistics in the report found that approximately 80% of digital masters said that more than 50% of their processes in all the key areas have been digitised, while less than a third of beginners gave the same response.

And only a fifth of all beginners were found to be leveraging key technologies such as big data or advanced robotics compared to a significant majority of digital masters leveraging these technologies.

The Capgemini report presents the overall concept that with the roadmap to smart factory successes laid out, manufacturers must commit to digitalisation using current digital masters as the inspiration and model.

A survey as part of the study found that 98% of digital masters have established a roadmap for their smart factory initiatives, compared to 41% for beginners.

Want to become a digital master? Register for Smart Factory Expo now!