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Smart factories could boost global economy by up to $2.2 trillion by 2023

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A new study from the Capgemini Research Institute finds that smart factories could add at least $1.5 trillion – or even up to $2.2 trillion – to the global economy through productivity gains, improvements in quality and market share, along with customer services. However, two-thirds of this overall value is still to be realised: efficiency by design and operational excellence through closed-loop operations will make equal contributions. According to the new research, China, Germany and Japan are the top three countries in smart factory adoption, closely followed by South Korea, United States and France.

The report called “Smart Factories @ Scale” identified two main challenges to scaling up: the IT-OT convergence and the range of skills and capabilities required to drive the transformation, including cross-functional capabilities and soft skills in addition to digital talent. The report also highlights how the technology led-disruption towards an Intelligent Industry is an opportunity for manufacturers striving to find new ways to create business value, optimise their operations and innovate for a sustainable future.

Key findings of the study, which surveyed over 1000 industrial company executives across 13 countries, include:

  • Organisations are showing an increasing appetite and aptitude for smart factories: compared to two years ago, more organisations are progressing with their smart initiatives today and one-third of factories have already been transformed into smart facilities. Manufacturers now plan to create 40% more smart factories in the next five years and increase their annual investments by 1.7x compared to the last three years.
  • The potential value add from smart factories is bigger than ever: based on this potential for growth, Capgemini estimates that smart factories can add anywhere between $1.5 trillion to $2.2 trillion to the global economy over the next five years. In 2017 Capgemini found that 43% of organisations had ongoing smart factory projects; which has shown a promising increase to 68% in two years. 5G is set to become a key enabler as its features would provide manufacturers the opportunity to introduce or enhance a variety of real-time and highly reliable applications.

Scaling up is the next challenge for Industry 4.0: despite this positive outlook, manufacturers say success is hard to come by, with just 14% characterising their existing initiatives as ‘successful’ and nearly 60% of organisations saying that they are struggling to scale.

According to the report, organisations need to learn from high performers (10% of the total sample) that make significant investments in the foundations – digital platforms, data readiness, cybersecurity, talent, governance – and well-balanced “efficiency by design” and “effectiveness in operations” approach, leveraging the power of data and collaboration.

“A factory is a complex and living ecosystem where production systems efficiency is the next frontier rather than labour productivity. Secure data, real- time interactions and virtual-physical loopbacks will make the difference. To unlock the promise of the smart factory, organisations need to design and implement a strong governance program and develop a culture of data-driven operations,” said Jean-Pierre Petit, Director of Digital Manufacturing at Capgemini.

[Image credit: Lenny Kuhne for Unsplash]

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