FOURTH INDUSTRIAL REVOLUTION BEACONS OF TECHNOLOGY AND INNOVATION IN MANUFACTURING - WHITE PAPER IN COLLABORATION WITH MCKINSEY & COMPANY
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White Paper Fourth Industrial Revolution Beacons of Technology and Innovation in Manufacturing In collaboration with McKinsey & Company January 2019
World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 Email: contact@weforum.org www.weforum.org This white paper has been published by the World Economic Forum as a contribution to a project, © 2019 World Economic Forum. All rights insight area or interaction. The findings, interpretations and conclusions expressed herein are a re- reserved. No part of this publication may be sult of a collaborative process facilitated and endorsed by the World Economic Forum, but whose reproduced or transmitted in any form or by any results do not necessarily represent the views of the World Economic Forum, nor the entirety of its means, including photocopying and recording, or Members, Partners or other stakeholders. by any information storage and retrieval system.
Contents Foreword 5 Executive summary 6 1. Lighthouses: Sites Embracing the Megatrends of the Fourth Industrial Revolution 8 Seeing the light: A radical leap forward for Fourth Industrial Revolution front runners 8 Identifying lighthouses 8 2. Overview of the Global Lighthouse Network 10 3. Understanding Lighthouses: Characteristics, Differentiators and Success Factors 14 Lighthouse characteristics 14 Injectors of human capital 14 Industry leaders that are resetting benchmarks 14 Open innovators and collaborators 15 Large and small companies 15 From emerging and developed economies 15 High impact with minimal replacement of equipment 16 4. How Do the Lighthouses Achieve Impact at Scale? 17 Charting a course for scale: Two routes 17 Value drivers for impact at scale 18 Scale-up enablers 18 The current state of lighthouses 18 Three tools to scale Fourth Industrial Revolution technologies in production and overcome 19 pilot purgatory 5. Successful Deployment at Scale: A Close Look at Two Lighthouses 20 Procter & Gamble (P&G) Rakona, Czech Republic: Growth through cost leadership 20 Site history 20 An inclusive vision 20 Top five use-cases 20 Achievements, impact and the road ahead 21 Rold Cerro Maggiore, Italy: Fourth Industrial Revolution implementation in SME 22 Before and after: Transformational changes 22 Key enablers 22 Top five use-cases 22 Achievements, impact and the road ahead 23 6. Call to Action 24 Why act? 24 The Fourth Industrial Revolution is essential to breaking out of productivity stagnation 24 The world is under stress 24 The Fourth Industrial Revolution presents multifaceted opportunities and challenges 24 What needs to be done? 24 Augment, instead of replace, the operator 24 Invest in capability-building and lifelong learning 24 Diffuse technologies throughout geographical areas and include SMEs 25 Protect organizations and society through cybersecurity 25 Collaborate on open Fourth Industrial Revolution platforms and handle data carefully 25 Address the climate change challenge with Fourth Industrial Revolution technologies 25 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 3
Contents Who needs to act? 25 Organizations with a lighthouse 25 Organizations without a lighthouse 25 Technology providers, start-ups and universities 25 An opportunity to form a new, global learning platform for the Fourth Industrial Revolution 25 Annex: A Look Inside the Lighthouses – Inside Perspectives 26 1. Value Drivers 26 Big data decision-making 26 Bosch Automotive in Wuxi, China 26 Christophe Chapdelaine, Senior Vice President Manufacturing and Quality Management, 27 Bosch Automotive Diesel Systems Wuxi Babur Ozden, Founder and CEO, Maana 27 Democratized technology on the shop floor 27 Natan Linder, CEO and Co-founder, Tulip Interfaces 27 Melonee Wise, CEO, Fetch Robotics 28 Agile working mode 28 Fast Radius in Chicago, USA 28 Lou Rassey, CEO, Fast Radius 29 Bosch Automotive in Wuxi, China 29 Minimal incremental cost to add use-cases 29 Microsoft’s manufacturing site in Suzhou, China 29 Darren Coil, Director of Business Strategy, Microsoft 30 Melonee Wise, CEO, Fetch Robotics 30 New business models 30 European consumer electronics manufacturer (company name undisclosed) 30 2. Scale-up Enablers 32 Fourth Industrial Revolution strategy and business case 32 BMW Group 32 Christian Patron, Head of Innovations and Digitalization in Production System, and Marcel 32 Eigner, Strategy Digitalization and Smart Data Analytics Production System, BMW Group IoT architecture built for scale-up 33 Hewlett Packard Enterprise 33 Chen Linchevski, Co-Founder and CEO, Precognize 33 Capability-building through acquiring new skills 34 Tata Steel in IJmuiden, Netherlands 34 Hans Fischer, CEO, Tata Steel in Europe 35 Daiane Piva, Improvement Consultant Energy Efficiency, Tata Steel 35 Workforce engagement 35 Schneider Electric in Le Vaudreuil, France 35 Lilian Aube, Le Vaudreuil Plant Union Representative, Schneider Electric 35 Sophie Grugier, Senior Vice President, Global Supply Chain Operations, Schneider Electric 36 Contributors 37 Project Team 37 Endnotes 38 4 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing
Foreword Emitting powerful light that pierces fog and darkness, lighthouses are vital to maritime navigation. They serve as beacons and guides, ensuring safe passage for shipping. At the World Economic Forum’s Annual Meeting 2018 in Davos-Klosters, Switzerland, leaders from public and private organizations decided to seek out manufacturers in a broad range of industries who are leading the way in Fourth Industrial Revolution innovation. Connected by the World Economic Forum’s platform, these model factories – recognized as Fourth Industrial Revolution “lighthouses” – are beginning a unique learning journey that will benefit the production environment. Manufacturing has experienced a decade of productivity stagnation and demand fragmentation; innovation is long overdue. Organizations that have taken Fourth Industrial Revolution innovation to Helena Leurent, scale beyond the pilot phase have experienced unprecedented increases in efficiency with minimal Head of Shaping displacement of workers. However, most companies appear to be stuck in “pilot purgatory”. the Future Widespread adoption of Fourth Industrial Revolution technology at scale, through the combined efforts of Advanced of companies and governments, can lead to a sizeable increase in global wealth production, benefiting Manufacturing people throughout society. and Production Member of The Fourth Industrial Revolution in manufacturing remains a top priority for many leaders of private the Executive and public organizations. It is having an enormous disruptive impact on value chains, industries and Committee, World business models. With one-third of the total economic value of the internet of things (IoT) coming Economic Forum from production,1 factories are the centre of gravity of the ongoing revolution. While manufacturing represents 16% of global GDP,2 manufacturing industries account for 64% of global R&D spend.3 However, there is potential for worker displacement if changes are not handled properly. Strengthened collaboration among stakeholders is needed to understand unexpected consequences and manage the transition. “Lighthouses” are demonstrators of digital manufacturing and globalization 4.0, and exhibit all of the essential characteristics of the Fourth Industrial Revolution. Moreover, they confirm the hypothesis that they have the potential to generate new economic value, driven by improvements in the full spectrum of production value drivers: resource productivity and efficiency, agility and responsiveness, speed to market and customization to meet customer needs. Transforming existing production systems, innovating value chains and building new business models with disruptive potential for established Enno de Boer, businesses can create value. Partner and Global Leader Lighthouses highlight the global nature of production – for example, the lighthouse network includes Manufacturing, German-owned factories in China and a site in Ireland owned by a US company. This shows that McKinsey & innovation is equally relevant in all geographical areas and contexts, from sourcing basic materials to Company, USA process industries to advanced manufacturers addressing specialized needs. Furthermore, it proves that companies of all sizes, from established global blue-chips to small local businesses with fewer than 100 employees, can achieve radical Fourth Industrial Revolution innovation. Lighthouses value collaboration and open their doors to thousands of visitors annually, recognizing that the benefits of this collaborative culture far surpass potential competitive threats. They can serve as an inspiration for defining a strategy, improving the skills of the workforce, collaborating with Fourth Industrial Revolution communities and managing changes from the shop floor throughout the value chain. While they vary in size, industry and geographic location, lighthouses embody nine common distinguishing characteristics. This white paper explores findings derived from these characteristics and calls on industry and government leaders to act. Governments, universities, technology providers and companies are encouraged to use this unique network to navigate and accelerate the inclusive diffusion of technology. The Fourth Industrial Revolution in manufacturing presents the next engine of economic growth, ushering in opportunities to learn and embed values in a way that past revolutions could not. The adoption of technology, guided by an inclusive vision for a better world, can yield a stronger, cleaner, global society. Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 5
Executive summary Many companies are piloting Fourth Industrial Revolution –– These sites represent both large and small companies. initiatives in manufacturing, but few have managed Fourth Industrial Revolution innovation is accessible to integrate Fourth Industrial Revolution technologies not only to large organizations but also to small- and at scale to realize significant economic and financial medium-sized enterprises (SMEs). benefits. The World Economic Forum, in collaboration with McKinsey & Company, scanned more than 1,000 –– Lighthouses can be found in emerging and developed leading manufacturers. Subsequent outreach enabled economies. Fourth Industrial Revolution technologies visits to the most advanced sites and identification of the are also paying off in manufacturing environments that few factories that are true guiding lights in the context of benefit from low labour costs. Fourth Industrial Revolution production: lighthouses. –– Lighthouses achieve high impact with minimal This select group of manufacturing sites represent the replacement of equipment. Most were created by leading edge of adopting technology at scale. These sites transforming existing brownfield operations. Optimizing serve as beacons for the world, exemplifying the type existing infrastructure and augmenting it with new of production approach that can drive the next engine machinery can deliver many benefits. of global economic growth. They demonstrate how forward-thinking engagement of technology can create Lighthouses achieve impact at scale in different ways. The a better, cleaner world through new levels of efficiency Forum has identified two principal routes to scale by which in manufacturing. Likewise, they illustrate how Fourth manufacturing pioneers can chart their course. These routes Industrial Revolution technology at scale can transform are not mutually exclusive; rather, they can complement the nature of work itself by engaging and improving the each other: skills of human workers with minimal displacement. –– Innovate the production system: expand competitive Three technological megatrends are the principal drivers advantage through operational excellence. of this transformation in production: connectivity, intelligence and flexible automation. Front-runner –– Innovate the end-to-end value chain: create new production sites that have embraced these megatrends businesses by changing the economics of operations. at scale have seen a step change in performance. These “lighthouse factories” have taken Fourth Industrial Lighthouses have employed five value drivers to create Revolution technology from pilots to integration at scale, impact at scale using Fourth Industrial Revolution thus escaping the inertia of “pilot purgatory”, in which technologies. They demonstrate four distinct capabilities many organizations remain. that serve as scale-up enablers. The annex of this white paper provides perspectives from lighthouses that exemplify Lighthouses serve as real-world evidence to dispel these value drivers or enablers. widespread myths and misunderstandings posing obstacles to the adoption of innovative technology at The value drivers are: scale. These beacons shed light on the characteristics, differentiators and success factors that realize optimal –– Big data decision-making scaling. –– Democratized technology on the shop floor –– Agile working models –– Lighthouses are injectors of human capital. Rather –– Minimal incremental cost to add use-cases than replacing operators with machines, lighthouses –– New business models are transforming work to make it less repetitive, more interesting, diversified and productive. The four scale-up enablers are: –– Lighthouses are industry leaders resetting benchmarks. –– Fourth Industrial Revolution strategy and business case They have moved beyond the continuous improvement –– IoT architecture built for scale-up efforts that have characterized factories for decades, –– Capability-building through acquiring new skills instead making a change that resets benchmarks. –– Workforce engagement –– They are open innovators and collaborators. They In addition to the perspectives offered in the annex, this engage a trisector innovation system comprising white paper offers an in-depth look at two lighthouses business, government and the social sector, including operated by two companies that differ substantially in size. academia. The first, Procter & Gamble’s Rakona plant, represents 6 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing
a large multinational. The other, Rold Cerro Maggiore, is operated by a small SME headquartered in Italy. The story of change at each of these sites offers valuable insights into the broad transformation occurring in the manufacturing environment. The World Economic Forum issues a call to action to break out of productivity stagnation and address the significant challenges – such as climate change, resource scarcity and an ageing workforce – the world is facing. The Forum suggests six principle-based actions to ensure the Fourth Industrial Revolution in manufacturing delivers the maximum positive benefit for society: –– Augment, instead of replace, the operator. –– Invest in capability-building and lifelong learning. –– Diffuse technologies throughout geographical areas and include SMEs. –– Protect organizations and society through cybersecurity. –– Collaborate on open Fourth Industrial Revolution platforms and handle data carefully. –– Address the challenge of climate change using Fourth Industrial Revolution technologies. The responsibility for action lies with both the public and private sectors, and the Forum encourages them to engage the network of lighthouses to be part of a unique learning journey. By engaging the findings and example of the lighthouse network, organizations and governments can realize the great potential that lies with the Fourth Industrial Revolution in production. Coupling this knowledge and technology with a commitment to environmental stewardship and social responsibility can play a role in driving the next economic growth engine towards a brighter future for all of society. Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 7
1. Lighthouses: Sites Embracing the Megatrends of the Fourth Industrial Revolution Seeing the light: A radical leap forward for thus realizing significant financial and operational benefits. Fourth Industrial Revolution front runners Qualification as a lighthouse requires meeting high standards in four categories: significant impact achieved; successful integration of several use-cases*; a scalable technology Three technological megatrends are the principal drivers of platform; and strong performance on critical enablers such a Fourth Industrial Revolution transformation in production: as managing change, building capability and collaborating connectivity, intelligence and flexible automation (Figure 1). with a Fourth Industrial Revolution community. Lighthouses have embraced these megatrends and the results are compelling. Identification of lighthouses followed a comprehensive Adoption of Fourth Industrial Revolution technologies at scanning of more than 1,000 leading manufacturers in all scale can have a radical impact upon organizations. A close industries and geographical areas. Contact with more than look at one of these three megatrends makes it clear just 150 of the most advanced companies yielded proposals how powerful this effect can be. For example, a McKinsey from many companies’ most sophisticated sites to be Global Institute analysis projects a remarkable gap between considered lighthouses. Site visits were carried out to companies that adopt and absorb artificial intelligence (AI) document findings, which were then presented to a Fourth within the first five to seven years and those that follow or Industrial Revolution expert panel of members from private lag behind. The analysis suggests that AI adoption “front organizations, universities and technology pioneers. This runners” can anticipate a cumulative 122% cash-flow panel selected 16 lighthouses and recognized them as the change, while “followers” will see a significantly lower impact most advanced production sites, including factories operated of only 10% cash-flow change (Figure 2). by Bayer, BMW, Bosch, Danfoss, Fast Radius with UPS, This shows the importance of early adoption of technology, Foxconn, Haier, Johnson & Johnson, Phoenix Contact, since companies that wait risk missing a large share of the Procter & Gamble, Rold, Sandvik Coromant, Saudi Aramco, benefits. Company leaders who move to implementation Schneider Electric, Siemens and Tata Steel (Figure 3). early, rather than waiting for decreased technology and Myths and misunderstandings pose obstacles to the transition costs, will realize the greatest benefit. Thus, the adoption of the Fourth Industrial Revolution. Dispelling largest factor here is related to the competitive advantage these is vital to understanding how accessible the revolution of front runners, which by far outweighs the higher transition is to organizations of all kinds. With visionary leadership, costs and capital expenditure related to the early adoption.4 companies large and small can embark on an innovation journey and realize the benefits of digital transformation. The Identifying lighthouses Forum’s analysis of lighthouses has provided meaningful insights that clarify the path to successful adoption at scale The lighthouses of the Fourth Industrial Revolution are of the Fourth Industrial Revolution. These beacons of light the factories that have taken Fourth Industrial Revolution cut through the fog and provide clarity to organizations technology from pilot schemes to integration at scale, throughout the manufacturing environment. Figure 1: Key technology megatrends transforming production Creates links between discrete network nodes, increasing visibility Connectivity Automates event Incorporates recognition and response mechanisms, translation for Flexible automation and remote decision-making Intelligence movement automation * Use-case: application of one or multiple Fourth Industrial Revolution technologies in a real production environment to address a business problem 8 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing
Figure 2: Economic gains by AI adoption front runners, followers and laggards5 Relative changes in cash flow by AI adoption cohort Front-runner breakdown % SIMULATION % change per cohort, cumulative change per cohort -18 130 Front- 120 122 runners 135 -77 (absorbing 110 within first 100 5 to 7 122 years) 82 90 80 70 Economy- Output Transition Capital Total wide gain/loss costs expenditure 60 output from/to 50 gains peers 40 30 Laggard breakdown % change per cohort 20 Follower (absorbing 10 10 by 2030) 11 0 Laggard 49 23 -10 (do not -20 absorb 19 -23 by 2030) 4 -30 Economy- Output Transition Capital Total 2017 20 25 2030 wide gain/loss costs expenditure output from/to gains peers The increasing importance of data and interconnectivity in manufacturing changes the dynamics of technology adoption: Waiting for cheaper and better technology does not pay off, since frontrunners are expected to capture largest benefits. Note: Numbers are simulated figures to provide directional perspectives rather than forecasts. Source: McKinsey Global Institute analysis Figure 3: Global network of lighthouse factories Lighthouses Phoenix Contact Industrial Automation, DE Sandvik Coromant Industrial Tools, SE Procter & Gamble Tata Steel Consumer Steel Products, NL goods, CZ Siemens Industrial Automation Products, CN Danfoss BMW Group Industrial Equipment, CN Johnson & Johnson Automotive, DE DePuy Synthes Fast Radius with UPS Medical Devices, IR Haier Additive Manufacturing, US Home Appliances, CN Bosch Bayer Automotive, CN Schneider Electric Division Electrical Pharmaceuticals, IT Components, FR Foxconn Industrial Internet Saudi Aramco Electronics, CN Gas Treatment, SA Rold Electrical Components, IT Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 9
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Top 5 use cases Impact Highlight Digital performance management 35% OEE A group-wide strategic initiative aims at digitizing Mixed reality change overs 30% Change over time the customer experience Advanced analytics on deviations 80% Deviations and internal operations, as well as developing new Advanced analytics on breakdowns 50% Breakdown business models Integrated people and asset scheduling 75% Batches per FTE² Data analytics and predictive maintenance 25% Unplanned downtime of press Strategy focused on effectiveness, the right Smart autonomous logistics transports 35% Logistics cost mindset and easy access Smart maintenance and assistance 5% Rework to improve quality, cost and productivity Collaborative robotics and automation 5% Efficiency in assembly IoT enabled machine condition monitoring >90% Benchmark OEE Big data from connected machines used to improve Digital inventory management >10% Total inventory operations, and agile Digital value stream mapping 15% Unit output proofs-of-concept support rapid deployment of new Digital tool life-cycle management >10% Tool inventory use cases Real time labor processing and time tracking >15% Performance loss Digital operator assistant system 50% Cost of scrap Big data from connected machines used to improve AI-enabled quality management system 57% Customer complaints operations, and agile Real-time machining quality control 7% Machining cycle time reduction proofs-of-concept support rapid deployment of new Flexible automation assembly line 30% Labor productivity use cases Digital R&D and engineering >40% Design iteration cycle time Cloud-based platform connecting machines NA Transparency Clear top-down strategy, implementation enabled by Lights-out manufacturing 31% Units per hour dedicated team and focus Real-time monitoring and prediction 60% Unexpected breakdowns on capability building Automated testing using artificial intelligence 50% Misjudgement IoT-enabled nozzle status tracking 25x Lifespan of nozzles Mass customization & B2C³ online ordering 33% Lead time Innovated new business model with web-based Real-time operator performance ranking 64% Labor productivity B2C sales channel for Digital quality management system 21% Defects per million configuration and ordering of air conditioners Digital manufacturing performance NA OEE increased Digital product after sales 50% Customer, maintenance staff OEE real-time monitoring of critical assets 5% Asset utilization Dedicated Fourth Industrial Revolution space serves as Additive manufacturing (3D printing) 25% Cost of goods sold in-house testing ground for Autonomous process optimization 10% Scrap the agile testing and deployment of new use cases VR training and design tool 4 5x Safety information retention Collaborative Robotics 25% Labor efficiency Digital replicas of physical assets NA Highly automated lot size 1 line Innovated a new business model based on a in-house Digitized production performance tools 30% Production time additive manufacturing Mixed reality maintenance NA Time and errors start-up which serves both internal as well as external Building energy management ~7.5% Energy costs customers Additive manufacturing (3D printing) 60% Cycle time Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 11
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support new, support new, Fourth new, Fourth Industrial Fourth Industrial Revolution Industrial Revolution Revolution United Fast United Fast States Radius States Radius with UPS in Chicago, technology-enabled Greenfield site to technology-enabled Greenfield site to business support new, business support new,models Fourth models Fourth Industrial Industrial Revolution Revolution United United Fast Stateswith States Radius with UPS UPS in in Chicago, Chicago, technology-enabled technology-enabled Greenfield site to business business support new,models models Fourth Industrial Revolution United Stateswith UPS in Chicago, Fast Radius technology-enabled businessnew, Greenfield site to support technology-enabled models Fourth Industrial Revolution United United States States technology-enabled business business models models United States technology-enabled business models Source: Lighthouse sites 1 Earnings Before Interest, Tax, Depreciation and Amortization; 2 Enterprise Resource Planning; 3 Manufacturing Execution System; 4 Product Lifecycle Management; 5 Virtual Reality; 6 Advanced Analytics; 7 Sales and Operations Planning 12 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing
Top 5 use cases Impact Highlight Top 5 use cases In-process quality control Impact NA Scrap Highlight Capability-building represents a key element of Automatic In-process changes to products on prod. line quality control 50% NA Change over time Scrap Capability-building the digital transformation, represents a key element of End-to-end supply chain Automatic changes synchronization to products on prod. line 35% 50% Inventory Change over time with a «digital college» and the digital transformation, «SMART Lab» leveraged to Digital direction End-to-end setting supply chain synchronization 35% Reliability NA Inventory and OEE with a «digital college» and upskill employees «SMART Lab» leveraged to Modelling and simulation Digital direction setting NA Testing time Reliability and OEE upskill employees Machine Modellingalarm aggregation and simulation NA Reactiontime Testing time for alarms Collaborations with universities support skill- Digital dashboards Machine to monitor OEE alarm aggregation 11% NA OEE Reaction time for alarms Collaborations with building and dedicated universities support skill- Sensor-based KPI reporting Digital dashboards to monitor OEE 11% Transparency NA OEE of machine status events ensure a high level building and dedicated of workforce engagement Cost modeling KPI reporting Sensor-based NA Accuracy of cost Transparency calculation of machine status events ensure a high level of workforce engagement Additive manufacturing (3D printing) Cost modeling NA Time to market Accuracy of cost calculation Parametric Additive design and manufacturing manufacturing (3D printing) 41% NA Improved productivity Time to market High level of operator involvement in Digital thread Parametric through design andproduction process manufacturing 38% 41% Improved productivity Engineering productivity High level of operator development of new use involvement in Business intelligence Digital thread throughplatform production process NA Quality of productivity 38% Improved Operator decisions productivity cases development of new use Real-time process control Business intelligence system platform NA Machine Quality ofOEE decisions cases Unmanned vehiclescontrol Real-time process for inspection system 5% NA Environmental Machine OEE waste Collaborated with universities to develop a Asset predictive Unmanned analytics vehicles for inspection 2% 5% Energy efficiency Environmental waste Collaborated with dedicated program for universities to develop a Asset Performance Management predictive analytics 3% 2% Reliability Energy efficiency specialists in data science dedicated program for and robotics Wearables for operators Asset Performance Management 10% 3% Workforce Reliability productivity specialists in data science and robotics Analytics Wearablesand for artificial operators intelligence center 12% 10% Maintenance cost Workforce productivity Predictive maintenance Analytics and through IoT artificial intelligence center 7% 12% OEE Maintenance cost Workforce involved in the digital transformation from Mixed reality Predictive for maintenance maintenance work through IoT 20% Time to diagnosis/repair 7% OEE Workforce involved in the the beginning, leveraging digital transformation from Energy management Mixed reality through IoT for maintenance work 10% 20% Energy Time to costs diagnosis/repair digital technologies such as the beginning, leveraging virtual reality to Lean digitization Energy management through IoT NA 10% Time forcosts Energy lean analysis digital technologies such as communicate vision virtual reality to Smart supply chain- Automated Guided Vehicles Lean digitization 80% NA Time for milk lean runs analysis communicate vision Digital Smart performance supply chain-management Automated Guided Vehicles 40% 80% Defects Time for per milkmillion runs A scalable IoT architecture supports the Integration Digital of ERP²/MES³/PLM performance management 4 100% 40% C/O 5 quality Defects compliance per million A scalable IoT deployment of new use architecture supports the 3D Simulation Integration for Production Line of ERP²/MES³/PLM 4 20% Cycle 100% C/O time compliance 5 quality cases deployment of new use Digital Assistant 3D Simulation forSystem for Operators Production Line 100% 20% Issues from customer claims Cycle time cases Implementation Digital Assistant of Automation System for Operators ~45% 100% Labor Issues avoidance from customer claims AA 6 -based image Implementation ofrecognition Automation 50% Cost ofavoidance ~45% Labor yield losses A digital academy has trained more than 200 AA-based AA -basedraw 6 material image selection recognition NA 50% Cost of yield raw materials losses A digital academy has employees from all levels of trained more than 200 AA-based product quality raw material optimization selection 80% NA Quality Cost of reject rate raw materials the organization in data employees from all levels of analytics and digital tools Prediction of weld quality AA-based product quality optimization 50% 80% Reduction of re-welds Quality reject rate the organization in data analytics and digital tools S&OP planning Prediction 7 based of weld on artificial Intelligence quality 50% Late deliveries Reduction of re-welds Rapid 7design S&OP prototyping planning based onthrough artificial 3D printing Intelligence 89% 50% Time to market Late deliveries An agile working mode supports the Advanced analytics Rapid design platform prototyping through 3D printing 95% 89% First Timepass yield to market An agile working mode implementation of new use supports the Digital Advancedtwins – factory analytics network platform NA 95% Lead time yield First pass and cost cases as well as the implementation of new use improvement of products 3D scanning Digital twins –forfactory qualitynetwork NA Quality control Lead time and labor cost content cases as well as the improvement of products 3D scanning for quality NA Quality control labor content Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing 13
3. Understanding Lighthouses: Characteristics, Differentiators and Success Factors Lighthouse characteristics different Fourth Industrial Revolution use-cases to transform their operations. They have, on average, 10–15 use-cases Injectors of human capital at an advanced stage and are working on the development of an additional 10–15. Accordingly, lighthouses are Contrary to widespread concerns about worker resetting industry benchmarks for operational and financial displacement, the lighthouse factories are not deploying key performance indicators (KPIs). Some lighthouses even Fourth Industrial Revolution technology to replace operators. outperformed their internal expectations by a factor of two. A McKinsey report suggests that fewer than 5% of With this transformative approach, lighthouses radically alter occupations consist of activities that are 100% automatable their operations and achieve a step change in performance with today’s technology, while 62% of occupations have at increase – thereafter, they can engage in accelerated least 30% of automatable tasks6 (Figure 4). continuous improvement efforts, using new Fourth Industrial Consequently, employees in production enjoy a working Revolution technologies and capabilities (Figure 5). routine that is becoming less repetitive and more interesting, diversified and productive. Employees at all career stages Open innovators and collaborators enjoy new tasks and responsibilities that demand the human skill of dynamic decision-making in a changing environment. The lighthouses demonstrate that the Fourth Industrial Revolution journey need not be solitary – beacons can Industry leaders that are resetting benchmarks guide the way. Indeed, lighthouses are part of an innovation environment that involves universities, start-ups and other The Fourth Industrial Revolution differs from the continuous technology providers. Lighthouses have worked through improvement efforts that have characterized factories for the process of discerning amid thousands of technology decades. It is not incremental; rather, it involves a step providers – they have narrowed the options to a system change – it is resetting benchmarks. Lighthouses employ with which they collaborate closely and develop their Fourth Industrial Revolution solutions on the shop floor. Figure 4: Automation potential of manual activities7 Share of roles 100% = 820 roles 62% of occupations have at least 30% of 100 their activities that are automatable 91 73 90 >80 >70 >60 >50 >40 >30 >20 >10 >0 Technical automation potential, in percent Source: McKinsey & Company 14 Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing
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