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

Posted on 17 Oct 2017 by Aiden Burgess

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 – 50% bigger for 2018!

Are you looking to learn more about Smart Factories, technology, innovation and high-growth opportunities? Then don’t miss Digital Manufacturing Week, taking place 14-15 November, 2018 at Exhibition Centre Liverpool.

Organised by The Manufacturer, Digital Manufacturing Week includes Smart Factory Expo – Europe’s largest showcase for the Fourth Industrial Revolution, and Manufacturing Leaders Summit – the UK’s largest manufacturing conference.

New features for Smart Factory Expo 2018:

  • Six dedicated Visitor Zones, grouping together exhibitors thematically and helping visitors meet with the companies most relevant to them: Digital Transformation, Industrial Automation, Industrial Data, Internet of Things, Manufacturing Innovation, and Smart Factory.
  • Partner Districts showcasing some of the world’s largest tech companies’ partner ecosystems, allowing you to see which solutions are the most integrated.
  • Grab a seat and a coffee in the Case Study Café and be inspired by a display of UK manufacturing success stories that take you on a digital manufacturing journey.
  • Come along and watch The Business Show as The Manufacturer’s Editorial team interview the great and good of UK manufacturing about their successes and failures, quiz exhibitors, and rope in passing show visitors to tell their story.
  • Match/Makers is an opt-in web networking platform allowing visitors to set-up meetings with exhibitors and one another on the show floor.
  • Attend one of the dozens of Manufacturing Tours on offer to facilities in and around Liverpool, and discover the fabulous infrastructure the region has to offer.

Click here to register your attendance at Smart Factory Expo for free.  

Manufacturing Leaders Summit 2018:

  • Ten Conference Streams feature UK and international manufacturing success stories: Leadership, Finance, Export Excellence, Innovation, Future Factory, Digital Transformation, Industrial Automation, Big Data, Talent Management, and Supply Chain & Logistics.
  • Grab a sandwich, choose a zone and get a guided group-tour of the co-located Smart Factory Expo and finish in a dedicated VIP Lounge with our Networking Lunches.
  • Pay it forward by offering five minutes of advice to the next generation of manufacturing talent via our Mentor Minutes.
  • Summit delegates receive priority booking for dozens of Manufacturing Tours, organised on 13 and 16 November.
  • The Hack and Pitch Competition offers a platform for the UK’s most promising tech start-ups to pitch the next big thing live to our audience of manufacturing leaders. But there can only be one ‘Rising Star’!

If you lead a team and want to benefit from the hard-won experience of other successful manufacturers – register now.

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.