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Insights from the Forefront of the Fourth Industrial Revolution

What is Industry 4.0?

“Industry 4.0 is the trend towards automation and data exchange in manufacturing technologies and processes which include cyber-physical systems (CPS), the internet of things (IoT), industrial internet of things (IIOT), cloud computing, cognitive computing and artificial intelligence.”  – Wikipedia 

The concept includes:

  • Smart manufacturing
  • Smart factory
  • Lights out (manufacturing) also known as dark factories
  • Industrial internet of things also called internet of things for manufacturing

However, the latest research – Global Lighthouse Network: Insights from the Forefront of the Fourth Industrial Revolution – from the World Economic Forum reveals that the fourth Industrial Revolution is gaining momentum, but not broadly enough. Why?

Here are the 10 key points about “why” – directly from the report, and what you can do about it.

  1. More than 70% of the companies in the manufacturing ecosystem are falling further behind.
  2. Major gaps in performance are already emerging: There are increasing disparities in productivity, efficiency and growth between the leaders and the rest of the pack; we may soon end up with a bipolar scenario, with only winners and losers
  3. Twenty-eight Lighthouses1 have been added in 2019, bringing the Global Lighthouse Network to a total of 44 sites. These are leading the way in adoption of Fourth Industrial Revolution technologies, including digitization, automation, advanced and predictive analytics, virtual and augmented reality and the industrial internet of things (IIoT).
  4. The new lighthouses are:
    1. Asia
      1. Baoshan Iron & Steel (Shanghai, China): This 40-year-old factory adopted digitization early. Its extensive implementation of artificial intelligence and advanced analytics has allowed it to maintain its industrial competitiveness in the digital era, creating value of $50 million.
      2. Foton Cummins (Beijing, China): Foton Cummins has self-deployed internet of things and artificial intelligence throughout its end-to-end product life cycle in its design, production and after service. By doing so, it has improved product quality and customer satisfaction by 40%.
      3. GE Healthcare (Hino, Japan): This GE factory, with more than 30 years’ experience of lean manufacturing, used Fourth Industrial Revolution technologies to transform into digital lean manufacturing. This has resulted in achieving the next level of performance, for example, cutting costs by 30% and reducing cycle times by 46%.
      4. Haier (Shenyang, China): The Haier Shenyang refrigerator factory is an example of a user-centric mass customization model. Achieved by deploying a scalable digital platform that connects end-to-end with suppliers and users, it has improved direct labour productivity by 28%.
      5. Hitachi (Hitachi, Japan): By leveraging a range of industrial internet of things technologies and data analytics in engineering, production and maintenance operations, Hitachi Omika Works has reduced the lead time of core products by 50% without undermining quality.
      6. Infineon (Singapore): Enabled by a digital backbone and people development, Infineon has used data, advanced analytics and automation in its manufacturing plant and supply chain network to reduce direct labour costs by 30% and improve capital efficiency by 15%.
      7. Johnson & Johnson DePuy Synthes (Suzhou, China): This site has scaled up standardized digital solutions developed in other Johnson & Johnson sites to drive performance improvements, including increasing productivity by 15%.
      8. Micron (Singapore): This semiconductor fabrication facility has integrated big data infrastructure and industrial internet of things to implement artificial intelligence and data science solutions, raising product quality standards and doubling the speed at which new products are ramped.
      9. Procter & Gamble (Taicang, China): This young site leveraged Fourth Industrial Revolution technologies to build the first lights-off operation in P&G Asia and connect its E2E supply chain. It increased productivity by 2.5x, boosted its production agility enabling e-commerce growth and improved employee satisfaction.
      10. Weichai (Weifang, China): Weichai digitally transformed its entire end-to-end value chain to accurately understand customer needs and reduce costs. Powered by artificial intelligence and the internet of vehicles, it shortened its R&D cycle by 20% and improved operating costs by 35%.
      11. Petrosea (Tabang, Indonesia): Challenged by its remote location, this mining service provider deployed multiple Fourth Industrial Revolution use cases (e.g. optimized truck dispatch, real-time monitoring, drone surveys) that transformed the mine from a loss-making entity into a profitable one in just six months.
      12. Schneider Electric (Batam, Indonesia): One of Schneider Electric’s nine smart factories, this location developed a full spectrum of Fourth Industrial Revolution solutions (e.g. IIoT platform) that were then shared with the wider Schneider Electric community, including customers and partners, thereby improving the operations of the entire ecosystem.
      13. SAIC Maxus (Nanjing, China): A challenging market environment drove this site to implement a new model for mass customization. Digitizing the value chain end-to-end, from customers to suppliers, through an integrated digital thread resulted in improved sales and reduced costs
    2. Europe
      1. AGCO (Marktoberdorf, Germany): By combining digital solutions with intelligent line design, AGCO/Fendt can manufacture nine series of tractors – ranging from 72 to 500 horsepower – on a single assembly line with a batch size of one. This has increased productivity by 24% and reduced cycle time by 60%.
      2. GSK (Ware, UK): This pharmaceutical site has applied Fourth Industrial Revolution technologies throughout its manufacturing operation, exploiting advanced analytics and neural networks to use existing datasets. It has improved line speed by 21%, reduced downtime and increased yield, delivering an overall equipment effectiveness improvement of 10%.
      3. Henkel (Düsseldorf, Germany): Henkel has developed a cloud-based data platform that connects more than 30 sites and more than 10 distribution centres in real time. This helps meet growing customer and consumer expectations on service and sustainability, while achieving double-digit cost and inventory reductions.
      4. Arçelik A? (Ulmi, Romania): This greenfield factory is a product of the Arçelik use case laboratory, where it was designed twice as fast as previous generation factories. Since it was established, automation of low-value tasks has improved operational costs by 11%.
      5. Groupe Renault (Cleon, France): This Renault site uses a wide range of Fourth Industrial Revolution technologies (e.g. cobots and virtual reality) to support operators, eliminate waste, reduce energy consumption and automate repetitive tasks.
      6. Nokia (Oulu, Finland): Nokia’s fully digitalized 5G factory focuses on bringing together design and production to introduce new products. Implementing a range of Fourth Industrial Revolution solutions, connected by a private wireless network, this site improved productivity by 30%, and now brings products to market 50% faster than before.
    3. Latin America
      1. Groupe Renault (Curitiba, Brazil): Renault Curitiba approached Fourth Industrial Revolution technologies with a focus on improving employee accountability and E2E connectivity, engaging its workforce and developing a connected ecosystem throughout value-chain players including dealers, customers and workers. Results include improving its productivity by 18%, without major capital deployment.
      2. MODEC (Rio de Janeiro, Brazil): Leveraging advanced analytics for predictive maintenance, a digital twin of its process plant, and a proprietary data platform to accelerate development and enable the exponential scale-up of new algorithms across oil production vessels, this offshore facility has reduced downtime by 65%.
    4. Middle East
      1. Petkim (Izmir, Turkey): This 35-year-old petrochemical facility embarked on a digital journey to drive value creation. Self-developed artificial intelligence algorithms optimize process and product pricing by analysing billions of production scenarios, resulting in an earnings before interest and taxes improvement of more than 20%.
      2. Unilever (Dubai, UAE): In a drive to improve cost competitiveness, a local entrepreneurial team established a factory data lake and developed and deployed at scale Fourth Industrial Revolution use cases. With limited investment and in a short period of time it achieved a cost reduction of more than 25%.
      3. FORD OTOSAN (Kocaeli, Turkey): This site leverages digital manufacturing and advanced automation to move beyond lean,increasing its output by 6% and employee engagement by 45% without additional capital expenditure investment.
    5. North America
      1. Johnson & Johnson Vision Care (Jacksonville, USA): Vision Care has digitally connected its value chain end-to-end from suppliers to consumers, as well as implementing reconfigurable manufacturing, to achieve double-digit cost reduction and sales growth.
      2. Zymergen (Emeryville, USA): A digital native, this bio-engineering site is using robotics and artificial intelligence on processes that have traditionally been highly manual, resulting in a doubling of its innovation rate.
    6. East Asia
      1. POSCO (Pohang, Republic of Korea): This plant leverages artificial intelligence to drive productivity and quality improvements in the steel industry. It is building its own smart factory platform through a collaboration with a local ecosystem of academia, small and medium-sized enterprises (SMEs) and start-ups.
    7. South Asia
      1. Tata Steel (Kalinganagar, India): This greenfield steel plant is helping to set a new standard in the speed at which a factory can achieve full capacity from complete nascency. It additionally improved time to market by 50%, thanks to significant investments in digital and analytics solutions, as well as capability-building to develop the digital skills of a relatively junior and inexperienced team.
  5. Lighthouses operate in an entirely new way. They start by changing the way they operate as a business and go well beyond adding incremental digital tools. To innovate the operating system, Lighthouses work across four dimensions to create the intended systems change.
  6. Six enablers provide essential reinforcement in the scaling of advanced manufacturing use cases:
    1. Agile approach to iterate continuously
    2. Agile digital studio
    3. Technology ecosystem enables new levels of collaboration
    4. IIoT academies boost workforce skills
    5. IIoT/data architecture built for scale-up
    6. Transformation office
  7. End-to-end Lighthouses show three ways of driving value:
    1. Customer-centricity
    2. Seamless connectivity across functions
    3. Continuous connectivity across organizations
  8. Vision is vital – both to see beyond the confines of traditional divisions (and break them down), and to detect potential for connecting beyond the factory.
  9. Common actions Lighthouses are taking to prepare the workforce:
    1. Empowering front-line workers to innovate by using technology and data
    2. Proactively building capabilities, both technical and soft, and managing talent development
    3. Adjusting the organizational structure to enable Fourth Industrial Revolution transformation
    4. Implementing new ways of working such as agile methodologies and increased transparency
    5. Augmenting day-to-day assembly and operational tasks through automation and technology
    6. Increasing levels of problem-solving and collaboration on the front line.
  10.  Four opportunities for the Global Lighthouse Network to further strengthen its impact and footprint.
    1. Achieve carbon-neutral manufacturing by 2025
    2. Enable technology diffusion across production networks, including SMEs
    3. Invest in capability-building and lifelong learning
    4. Upgrade regulations, policies and industrial development strategies

Lighthouse: a leading group of manufacturers have made impressive progress scaling Fourth Industrial Revolution technologies within the manufacturing plant environment, earning the “Lighthouse” designation.

Read the full report here.

Image by Gerd Altmann from Pixabay

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