Technologies that represent the Fourth Industrial Revolution, such as the internet of things (IoT), promise to boost manufacturing productivity, but many businesses are slow to embrace these technologies, also known as Industry 4.0, or 4IR.
The World Economic Forum and business consultants McKinsey studied more than 1,000 factories worldwide and identified nine with the best track record of implementing 4IR technologies. These factories of the future — three are in China, five in Europe, and one in the US — performed 20% to 50% better than the rest.
The joint study found that 85% of factories that have implemented 4IR technologies in production increased their resource productivity and efficiency. The technologies also enable new business models that will help companies capture more value, according to McKinsey.
“The Fourth Industrial Revolution is expected to deliver productivity gains and transform the future of manufacturing, but we are still at the beginning of the journey,” Helena Leurent, member of the Executive Committee at the World Economic Forum, said in a statement.
Earlier research by the World Economic Forum found that 70% of businesses that had invested in 4IR technologies, including big data analytics, artificial intelligence, and 3D printing, failed to move beyond pilot projects because of initial implementation problems. McKinsey concludes that to achieve effective implementation, companies must be able to identify the appropriate technologies and have the right strategy and structures in place, as well as the management courage and capacity to oversee the change.
The top 9 factories of the future
The definition of Industry 4.0 and its use is very broad, said Detlef Zühlke, chairman of Germany’s Technologie-Initiative SmartFactory KL and scientific adviser to two of the top nine factories of the future.
The term includes anything from automated, highly flexible factories to new supply chain applications using real-time product scanning and location, Zühlke said. “The most advanced application field is semiconductor manufacturing because they have already very modular factories and need plug ‘n’ play functionality based on worldwide standards because their machines are replaced by new ones in 12-month time frames or even less.”
Manufacturers in Asia and Europe are at the forefront of adopting 4IR technology, the joint study found:
Europe. Several European countries started early to develop national platforms that support 4IR in manufacturing, foster collaboration, and aim at increasing competitiveness of their industrial sector. For example, the “Platform Industrie 4.0” in Germany was launched in 2013, and similar initiatives can be found in 19 other European countries:
- Johnson & Johnson’s Depuy Synthes factory at Cork in Ireland uses IoT to enable old machines to communicate and co-operate.
- Schneider Electric’s factory at Vaudreuil in France is a “smart and integrated factory” with completely automated contactor assembly lines, backed by IoT and augmented reality, enabling predictive maintenance of equipment.
- Procter & Gamble’s operations at Rakona in the Czech Republic has production lines that can be instantly changed to different output. This is backed by the digitisation of the supply network, enabling suppliers to respond rapidly.
- Phoenix Contact’s factories at Bad Pyrmont and Blomberg in Germany uses 3D modelling to enable low-volume production to be achieved at the same cost as mass production.
- Bayer Biopharmaceutical at Garbagnate in Italy optimised scheduling to drive improvements in quality control.
Asia. European companies have installed 4IR technology at their manufacturing plants in Asia. Also, factories in Asia are under constant pressure to improve and lower cost.
“In Asia, manufacturing has been a key driver for economic development,” said Jay Lee, professor at the University of Cincinnati and founding director of National Science Foundation Industry/University Cooperative Research Center on Intelligent Maintenance Systems. “Companies are transforming from lean manufacturing to smart manufacturing to avoid the issues of lack of workers, dynamic demand of production volume, as well as reduce the impacts on waste and pollution.”
- Bosch Automotive at Wuxi in China is using AI to predict maintenance requirements.
- Haier at Qingdao in China is both using AI for predictive maintenance, plus an “order-to-make” customisation platform.
- Siemens Industrial Automation Products in Chengdu, China, uses 3D simulated production, backed by augmented reality.
North America. The US is home to global tech giants such as Amazon, Facebook, and Google, but only one of the top nine factories of the future is located in the US.
- UPS Fast Radius in Chicago combines globally distributed 3D printing centres with real-time manufacturing analytics.
Key drivers of advanced manufacturing technology
The World Economic Forum/McKinsey list of the Factories of the Future includes various features that represent the key drivers of advanced manufacturing technology. They include:
- On-demand production.
- Digitised supply chains to avoid excess stock, responding to actual production needs.
- Improved data use.
- Predictive analytics for machinery maintenance to avoid production holdups.
- Machine learning.
- Augmented reality.
- Using IoT to improve communication within factories.
- Use of real-time metrics.
— Paul Gosling is a freelance writer based in the UK. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, an FM magazine senior editor, at Sabine.Vollmer@aicpa-cima.com.