Smart Factories Could Add $500 Billion to Global Economy in 5 Years
By now it is pretty much common knowledge that by using digital technologies like IoT, big data analytics, AI, advanced robotics and 3D printing, manufacturers will increase not only efficiency and productivity but revenues as well.
A new report, Smart Factories, by Capgemini’s Digital Transformation Institute found that some sectors, in particular, have embraced these technologies in the form of smart factories. Industrial manufacturing, aerospace and defense, and automotive and transportation are the specific sectors that have ongoing smart factory initiatives.
These smart factories are a strong economic drive as they could add as much as $500 billion to $1.5 trillion in value to the global economy in five years, according to the report.
Manufacturers predict overall efficiency to grow annually over the next five years at 7 times the rate of growth since 1990 . And the report estimates that smart factories can nearly double operating profit and margin for an average automotive OEM manufacturer.
Furthermore 76% of manufacturers either have a smart factory initiative that is ongoing or are working on formulating it. And more than half of manufacturers (56%) have aligned $100 million or more towards smart factories.
However, there are challenges. Only 14% of companies are satisfied with their level of smart factory success. Only 6% of manufacturers are ‘Digital Masters’: at an advanced stage in digitizing production processes and with a strong foundation of vision, governance and employee skills. Digital Masters outpace all other categories in realizing the benefits of smart factories.
Looking at the improvement of specific metrics, due to the adoption of smart factories, the report revealed the following:
On-time-Delivery of the finished products is expected to accelerate by 13 times, while quality indicators are expected to improve at more than 12 times the rate of improvement since 1990.
Important cost items such as Capex & Inventory is predicted to be rationalized at 12 times and material, logistics & transportation cost expected to be rationalized at 11 times the rate of improvement since 1990.
Overall productivity and labor cost improvements are reported to accelerate at 7 times and 9 times the rate of growth since 1990, respectively.
Read the report for more insights and understand how manufacturers can realize their smart factory vision.
Original article published: http://www.industryweek.com/technology/smart-factories-could-add-500-billion-global-economy-5-years