How manufacturing can thrive in a digital world and lead a sustainable revolution

As the world of production face a perfect storm wrought by the Fourth Industrial Revolution (4IR), the accelerating climate emergency, raising trade tensions and growing economic uncertainty, manufacturers must develop new capabilities and adapt. The companies best positioned to successfully navigate this storm are those that embrace advanced manufacturing technologies and solutions across their factories and supply chains, creating value and improving operations while also increasing sustainability. These companies can offer valuable lessons to those at risk of falling behind.

The need for vision and leadership in the manufacturing sector is clear: More than 70% of companies are struggling to adopt technology effectively, with their efforts to respond to the 4IR stuck in what we call “pilot purgatory”, the attempt to implement new technological solutions without realizing the expected returns on investment or improvements in efficiency.

To address this, the World Economic Forum’s Global Lighthouse Network, in collaboration with McKinsey & Company, has identified and brought together 44 of the most advanced factories in the world that are showing leadership in applying advanced manufacturing technologies, including AI, the internet of things and big data analytics, to drive financial and operational impact at scale and transform value chains end-to-end.

A new report outlines several key lessons from this community that can help the industry thrive in the 4IR:

Ensure technology solutions can scale and evolve

To succeed in the rapidly changing landscape of the 4IR, factories must operate in a new way. That requires a strong focus on identifying problems and then creating solutions that go beyond adding incremental tools to existing processes. Factories that create new operating systems that incorporate combinations of technology in an agile approach to continuous iteration can create new ways to not only improve efficiency but also scale new solutions across the entire company.

For example, Fast Radius in the US created an analytics platform that captures data in the manufacturing process using sensors and applies machine learning to provide feedback, allowing workers to more quickly improve design and address any issues. This has led to a 36% inventory reduction and a 90% reduction in the time it takes to get products to market.

At SAIC Maxus in China, the company developed a web app to enable customers to customize and place orders and then track the production status. The company uses 3D and digital twin design, which uses a digital version to represent the physical asset, to configure and produce the cars, and then applies an automated smart engineering system and an AI quality assurance tool to check and identify errors. This has led to shorter time to market, 35%, and increased accuracy, 99.8%.

Optimize efficiency to drive sustainability

Manufacturing represents 54% of the world’s energy consumption and is responsible for 20% of global emissions. Increases in efficiency driven by technology can help reduce materials consumption and CO2 emissions.

Henkel in Düsseldorf, Germany, has developed a unique cloud-based data platform that connects more than 30 sites and more than 10 distribution centres in real time. This helps to meet growing customer and consumer expectations on service and sustainability, while achieving double-digit cost and inventory reductions.

Unilever has reduced its material waste by more than 40% in their Dubai, UAE, factory by digitally enabling end-to-end quality management. This was driven by a local entrepreneurial team with limited investment and in a short time period.

Focus on reskilling and enabling workers

Any technological solution must consider the effects on workers and put people first. Manufacturing leaders in the 4IR leverage internal and external expertise to reskill their workforce, making sure their teams receive continuous capability building, guidance and training.

This involves empowering workers to innovate with technology, managing talent development and implementing new ways of working. Some examples of effective learning methods are offering a gamification of new skills, applying virtual or augmented reality and delivering real-time work instructions via digital platforms.

For example, Ford Otosan in Turkey developed a “Talent Development Agile” team, made up of HR, manufacturing and vocational training to help employees develop their innovation, data and creativity skills. Schneider Electric runs “Digital Weeks” consisting of a hackathon used to generate new ideas and include workers in leading the company’s digital transformation. Phoenix Contact in Germany has built an application that guides operators through their jobs and tracks accomplishment, giving them more time for managing and trouble-shooting and helping them demonstrate their success.

Create a shared learning journey

The manufacturing sector can only realize the full benefits of the 4IR if there is a complete transformation across value chains and production systems. Leaders in this space should support the diffusion of technology through their entire production networks, lifting up SMEs to improve overall results. This shared learning journey can lead to not only a return on investment but also a more inclusive distribution of knowledge, which can accelerate innovation across the industry.

Bringing companies together to share best practices and develop new approaches to future success is a key goal of the Global Lighthouse Network. Only together can we transform the manufacturing ecosystem to thrive in a digital world and lead a sustainable revolution.

This article is related to the World Economic Forum’s Annual Meeting in Davos-Klosters, Switzerland, 21-24 January 2020.