All the latest news from the industry weekly compiled by the editorial team for you free of charge.
This eMail is already registered.
An unexpected error occured.
Please accept our Terms of Use.
Registration successful.

Digitisation will help unlock new ecosystems and new types of business models.

Image: Siemens

Automotive Manufacturing Smart factories are around the corner

Dec 20, 2016

It is believed that digitisation is going to take up the industry by storm and will transform every facet of manufacturing. The question is how exactly this disruption will happen and what are the new ecosystems that will emerge out of it. The feature discusses on how companies can embrace this digital revolution to become future-ready.

In this new industrial revolution there will be digitisation of complete manufacturing sector with embedded systems in virtually all products produced as well as the manufacturing equipment that is being used. These radical changes which will change the way we know the industry will be driven by four disruptive technological enablers. These are namely computational power and connectivity; analytics and intelligence; human and machine interaction and digital to physical conversion.

These enablers have been existing in the industry as well as consumer usage for some time now, but now is the time that their full potential has to be unmasked and they be integrated into the way we do business.

Digitisation as a disruptive technology

As we are already seeing the use of technology is increasing multiple folds in our day-to-day life, the effects of this digital transformation in industry is going to have far reaching effects even though the pace of this change is going to be slow. This is mainly because of the longer investment cycles, companies tend to be conservative in their decision-making when it comes to fundamental disruption. But as in earlier industrial revolutions, the value was created with major revamps to manufacturing assets requiring major capex intensive upgrades, with digitisation the changes expected to have significantly less impact with respect to investments.

Digitisation will also help unlock new ecosystems and new types of business models. One such model is creation of ‘Platforms,’ in which by using predefined systems, there can be an exchange of product services and information.Imagine open-source software applied to the manufacturing context. For example, a company might provide technology to connect multiple parties and coordinate their interactions.

SLM Solutions, a 3D printer manufacturer, and Atos, an IT services company, are currently running a pilot project to develop such a marketplace. Customers can submit their orders to a virtual broker platform run by Atos. Orders are then allocated to SLM’s decentralised network of production sites, and subsequently produced and shipped to the customer. But people are still curious to know how their existing conventional business models will evolve and sustain with the new developments. How are global leaders adopting this change into their repertoire?

Embracing digital revolution

By 2020, European industrial giants will invest €140 billion annually in an attempt to embrace this digital revolution, which is roughly on average, 3.3% of their annual revenues. These investments will have to be used along the entire value chain in order to achieve maximum success. In five years, more than 80% of companies will have digitised their value chains. The industrial internet increases productivity and resource efficiency — an 18% increase in efficiency within five years. It is anticipated widely by industry leaders that there will be an average efficiency increase of 3.3% per year across all industry sectors due to the digitisation of value chains. This amounts to a total of 18% in the next five years. They also expect annual savings of 2.6% with respect to cost reduction.

There is a huge scope for new applications/technology as the need is for a data driven factory of the future, where all internal and external activities are connected through the same information platform. A bit closer to home McKinsey estimates that IoT in the ASEAN manufacturing sector can generate savings of US$3.7 trillion annually. IoT devices help manufacturers make money by finding new efficiencies. IDC survey results show that 55.0% of discrete manufacturers are researching, piloting, or in production with IoT initiatives.

Smart automated plants

In order to be efficient, it necessitates teaming operators and machines in making complex parts of the assembly process faster, easier, and safer. The industry is more at ease with the idea that robots can complement humans instead of replacing them and opening more and more opportunities due to increased production. Between 2010 and 2014, robot sales to the automotive industry increased by 27% on average per year (CAGR).

The BMW i3 plant in Leipzig can be considered an early example of the smart automated plant, as it is an integrated and highly automated plant. Robots are used at each stage of production, including the body shop, the paint shop, and the assembly shop. Real-time RFID product tracking and localisation is in place, and operators have mobile control tablets to monitor and access all data. Finally, plant management is centralised in one main building that acts as a ‘central nervous system’ for the plant.

The ever-increasing proximity of machines and humans has increased the acceptance and created easier methods of interaction between them. AR/VR which was earlier perceived as a medium of entertainment has now found its way into industrial usage to create effective and fast ways of communication and transfer of information between machines and humans. Head-mounted devices will be the leading AR device across industries. It leverages the use of virtual reality in systems such as parts analysis and simulation, staff support, asset tracking, production layout simulation, manufacturing planning, assembly and maintenance. High expected growth in the use of mobile devices (Global heads-up display market in 2014 $1.76 billion -> $7.05 billion in 2022).

Need for customisation

One of the key drivers for manufacturers moving towards digitisation is being able to adapt with the growing need for customisation and also being able to introduce new products with desired qualities faster than competitors. 3D printing resides right at the heart of the solution for the dilemma, as it allows for parts or assemblies to be manufactured from concept. 3D printing is forecasted to grow by 300% from 2012 to 2020. PwC surveyed over 100 industrial manufacturers, from small contract manufacturers to multinationals and found that companies are reimagining supply chain and are anticipating 3DP driven savings in materials, labour and transportation costs compared to traditional subtractive manufacturing process. Extensive use will be made of 3D printers to, for example, quickly get customised tools and moulds to plug into production line machines.

This is how the E-plant in a box concept will emerge utilising the prowess of digitisation levers and 3D printing. For this plant type, the overarching goal is not just operational effectiveness but rather also to leverage the digital growth to tap into new value pools by enabling plant operations at remote locations or in markets that would normally be considered subscale.

Driving digital transformation

This multifold growth will have its fair share of challenges that come along with it. A major hindrance will be finding the right set of talent to nurture this digital strategy and the sheer pace at which skills will need advancing. What business leaders need to do is to identify new talent or develop existing ones which can act as catalysts to this change. They should be empowered with the right sponsorship, positioned in the organisation correctly at an appropriate level to influence and make changes happen.

It has to be driven into the system that organisations fostering a culture of data-based decision making will be in a stronger position to weather the changes ahead. This along with the commitment to drive digital transformation in the core strategy, systems and processes of the organisation will help leaders who see their firms at the forefront of the new industrial revolution. ☐

Image Gallery

  • One of the key drivers for manufacturers moving towards digitisation is being able to adapt with the growing need for customisation and also being able to introduce new products with desired qualities faster than competitors

  • The ever-increasing proximity of machines and humans has increased the acceptance and created easier methods of interaction between them

Companies related to this article
Related articles