Smart factories to add $500bn to global economy

Smart factories leverage digital technologies, such as big data, analytics, artificial intelligence, advanced robotics and the Internet of Things to increase productivity, quality and flexibility.

Common features of smart factories include collaborative robots (cobots), workers using augmented reality-enabled devices and connected machines which send alerts when they require maintenance.

By the end of 2022, manufacturers expect that 21% of their plants will be smart factories. Those at the vanguard of this transition are expected to come from those sectors where people are already working alongside intelligent machines, i.e. aerospace and defence, industrial manufacturing and automotive.

These are the findings of new global research conducted by Capgemini’s Digital Transformation Institute, and published by Capgemini.

Why digitise?

As a result of productivity, efficiency and flexibility improvements, smart factories are expected to benefit from significant reductions in operating costs. For example, it’s estimated that the average automotive manufacturer could drive up to a 36% improvement in operating margin through improved logistics and material costs, equipment effectiveness and improved production quality.

As such, the majority of industrial companies have already embarked upon their digitalisation of plants to stay competitive; only 16% of those surveyed said they didn’t have a smart factory initiative in place, or upcoming plans to implement one.

Early-adopters, including factories in the US and Western Europe are leading the pack, with half of respondents in the US, France, Germany and the UK having already implemented smart factories, as opposed to 28% in India and 25% in China.

A divide is also seen across sectors; 67% of industrial manufacturing and 62% of aerospace and defence organisations have smart factory initiatives. Yet a little more than a third (37%) of life science and pharmaceutical companies are leveraging digital technologies, opening their business up for potential disruption.

Investments are healthy; more than half (56%) of those surveyed have invested $100m or more in smart factory initiatives over the past five years and 20% have invested $500m or more. Yet, according to analysis by Capgemini’s Digital Transformation Institute only a small number of organisations (6%) are at an advanced stage of digitising production. Additionally, just 14% of those polled stated that they felt ‘satisfied’ with their level of success.

As manufacturers’ smart factory efforts ramp up and returns improve, the report predicts further investments in digitisation. The upper end of the Institute’s forecast is that half of factories could be smart by the end of 2022, with the increased productivity gains adding up to $1,500bn to the global economy.