Opinion

July 9, 2019

Factories to lead the way into IR 4.0

Charlotte Edmond / Share:

(Xinhua/Chen Junqing)

There are as many people working in manufacturing in the US now as there

were 70 years ago.
At the tail end of 1949, 12.88 million people were employed in manufacturing:
seven decades on and almost equal numbers have jobs in the sector, according
to the US Bureau of Labour Statistics.
While in 1949 the US was in the middle of a harsh recession, and a push by the
White House to boost manufacturing jobs has driven up numbers more
recently, the comparison still provides food for thought given the wholesale
changes in the economy and broader workplace since.

Despite – and also because of – the changes that have taken place in our
factories in previous decades, the manufacturing sector is still ripe for
innovation. Many manufacturers have yet to embrace the Fourth Industrial
Revolution, turning digitization and analytics to their advantage. Stagnating
productivity and volatility are still presenting significant challenges for many.

However, a group of ‘lighthouse’ manufacturing companies, identified by the

World Economic Forum, in collaboration with McKinsey & Company, are
successfully finding opportunity in using Fourth Industrial Revolution
technologies. For them, innovations like AI are transforming the nature of the
work they do, driving greater efficiencies and enhancing the work of their
human employees.
The global Lighthouse Network represents a range of industries and
geographies and provides a platform for sharing knowledge and best practices
for scaling up technology adoption. Ten new factories have been added to the
network.

Here are some of the traits lighthouses have in common:

1. Technology working alongside humans, not replacing them
Contrary to concerns about robots taking our jobs, industry leaders are
adopting technology in ways that allow employees in production to enjoy
working routines that are less repetitive, and more interesting, diversified and
productive.

At the Arçelik lighthouse in Ulmi, Romania, for example, automation of low-

value tasks has reduced operational costs by 11%. The Ford Otosan site in
Kocaeli, Turkey, meanwhile, uses digital manufacturing and advanced
automation to increase its output by 6% and employee engagement by 45%
without any additional cost.

2. Big jumps, not small steps

The manufacturing sector has typically been characterized by incremental
changes and small improvements: lighthouses, however, are making changes
that fundamentally reset industry benchmarks.
Analysis by McKinsey & Co suggests there will be a marked difference
between those manufacturers that are early AI adopters versus those that lag
behind. As the chart above shows, front-runners can expect a 122% hike in
cash flow, versus a 10% cumulative change seen by the followers.

3. Collaboration is key
Innovation happens best in an ecosystem that involves working with
universities, start-ups and other technology providers. Leading manufacturers
are showing the way but they are not working in isolation.

Nokia’s site in Oulu, Finland uses 5G to bring together its design and
production functions to introduce new products. Various technologies
connected by a private wireless network have allowed the site to improve
productivity by 30%, and it now brings products to market 50% faster than
before.
The Posco plant in Pohang, South Korea works with AI to boost productivity
and help drive improvements in the steel industry. It is working with
academia, SMEs and start-ups to build its own smart-factory platform.
And Schneider Electric’s base in Batam, Indonesia is sharing a number of its
technology solutions with its customers and partners, improving the
operations of the entire ecosystem.
4. Size doesn’t matter
Innovations with the biggest impact are not the preserve of the biggest
companies. SMEs can also make huge changes by focusing on key issues that
don’t require significant investments.
Likewise, innovation and access to new technologies isn’t limited to the
richest nations. China is home to the largest number of lighthouses, while a
number are in Eastern Europe.

5. New isn’t always better

Big changes can be made by adapting existing systems and technologies
rather than just by investing in new ones. Legacy equipment has not
presented a barrier to innovation for many of the lighthouses, which have
instead transformed their existing operations.

The remote location of the Petrosea plant in Tabang, Indonesia throws up a

number of challenges. But by adopting technology like optimized truck
dispatch, real-time monitoring and drone surveys the mine was transformed
from a loss-making entity into a profitable one in just six months.

Charlotte Edmond, Formative Content, World Economic Forum.

https://www.khmertimeskh.com/50622046/factories-to-lead-the-way-into-ir-4-0/