The world’s manufacturing industries today face a tough time and a challenging future. Both mature, industrialized and emerging counterparts have experienced weak manufacturing production growth in recent years, according to the International Yearbook of Industrial Statistics 2017 produced by the United Nations Industrial Development Organization (UNIDO).
2016 saw the growth of manufacturing value added (MVA) in the world’s industrialized economies fall to under 1 percent. Significantly, even the MVA growth of China, the world’s biggest manufacturing nation, fell to 6.7 percent in 2016, down from 7.1 percent the previous year.
As the world enters the era of Industry 4.0, which brings with it increasing digitization and interconnection of products, value chains and business models, how will manufacturers adjust and thrive?
On the surface Industry 4.0 should bring great opportunities based on the digitization of horizontal and vertical value chains, and also promises to revolutionize what products and services companies can offer. With the ultimate goal of greater customer satisfaction, what technologies are most likely to digitally transform the world’s manufacturing industry ?
Servicing the more expectant, digital consumer
Consumers have become used to getting digital content for ‘free’ from various sources, prompting PwC to reason that in terms of manufacturing and consumer goods, customers now expect more for less, and “cheap” is no longer enough.
Higher expectation levels driven by the digitally-enabled customer experience have prompted consumers to expect both sophistication and quality in products. What this means for manufacturers is that they must innovate production processes and systems to remain competitive. They need to both protect their bottom lines while also creating new revenues to help them grow and progress. This is where digital technology can help.
What technologies will lead the way?
According to a recent Deloitte study Advanced Technologies Initiative Manufacturing & Innovation, digital transformation will be essential to innovation, delivering on customer demand and achieving manufacturing success. And certain digital technologies will be at the forefront of digitally transforming manufacturing.
IoT, Big Data and analytics
The power of data analytics in IoT is set to be central to digital transformation in manufacturing. Companies will be able to improve bottom lines by using connected devices and sensors in the production process to collect data for analysis. Predictive data analytics is considered potentially the most important advanced manufacturing technology for driving future competitiveness, helping manufacturers reduce wastage and streamline production processes. IoT-connected machines, fleets, production lines and people will revolutionize traditional ways of doing things across the entire manufacturing space.
AI and machine learning are forecast to become a $36 billion market in 2017, up from just $0.9B in 2013, according to Deloitte. Manufacturing can leverage AI solutions to improve multiple areas of the industry: AI paired to analytics and machine learning enable contextual intelligence and insight, which when applied to the shop floor can revolutionize manufacturing processes and practices.
The knock-on benefits of cognitive computing to issues like multi-site manufacturing, multi-tier distribution, product configuration, distributed order management and post-purchase service can be used to enable with greater accuracy, better customer responsiveness and speed to market for manufacturers.
The 3D printing and scanning market is projected to reach $20.4 billion in 2019, at 26 percent CAGR from 2013 to 2019, according to Deloitte. Examples include 3D printed electronics embedded directly into aircraft parts and 3D printed complex auto components used in car production. Cost savings on materials plus impact on assembly line and pricing will see 3D printing continue to have a major impact on manufacturing.
Making digital transformation a mission in manufacturing
Countries around the world are committing to using digital technologies to transform their manufacturing sectors and jump-start them into growth. China, for example, took one look at Germany’s Industry 4.0 plan and used it as a template, duplicating its four pillars of interoperability, information transparency, technical assistance and decentralized decisions.
The aim of Germany’s plan is to enable companies to identify and implement digital solutions that help them manufacture more sophisticated products that carry higher margins and help their industry thrive. Other countries will have to take the same route or risk being left behind.
To learn more about how manufacturing companies can use digital transformation to innovate and stay competitive, please read a new PwC whitepaper, Powering Up The Assembly Line.