Smart Factories to drive 27% increase in manufacturing efficiency over next 5 years

Capgemini has announced the findings of its Smart Factories report. According to the research from Capgemini’s Digital Transformation Institute, manufacturers expect that their investments in smart factories will drive a 27% increase in manufacturing efficiency over the next five years which would add $500 billion in annual added value to the global economy.

Often described as a building block of the “Digital Industrial Revolution”, a smart factory makes use of digital technologies including the Internet-of-Things, Big Data Analytics, Artificial Intelligence and Advanced Robotics to increase productivity, quality and flexibility. Smart factory features include collaborative robots, workers using augmented reality components and machines that send alerts when they need maintenance. By the end of 2022, manufacturers expect that 21% of their plants will be smart factories. Sectors, such as aerospace and defence, industrial manufacturing and automotive, where people are working alongside intelligent machines, are expected to be the leaders of this transition.

Early-adopters, including factories in the US and Western Europe, are leading the pack. Half of respondents in the US, France, Germany and the UK have already implemented smart factories as opposed to 28% in India and 25% in China. A divide is seen across sectors as well. Sixty-seven per cent of industrial manufacturing and 62% of aerospace and defence organizations have smart factory initiatives. Yet a little more than a third (37%) of life science and pharma companies are leveraging digital tech, opening their business up for industry disruption.

Money is pouring into smart factories. More than half (56%) of those surveyed have invested $100 million or more in smart factory initiatives over the past five years and 20% have invested $500 million or more. Yet, according to analysis by Capgemini’s Digital Transformation Institute only a small number of organizations (6%) are at an advanced stage of digitizing production. Further, only 14% of those questioned stated that they felt “satisfied” with their level of success.

The upper end of the Digital Transformation Institute’s forecast is that half of factories could be smart by the end of 2022 with the increased productivity gains adding up to $1,500 billion to the global economy

“This study makes it clear that we are now in the digital industrial revolution. The impact on overall efficiency will be profound,” said Jean-Pierre Petit, Global Head of Digital Manufacturing, Capgemini. “The next few years will be critical as manufacturers step up their digital capabilities and accelerate their digital outcomes to maximize company benefits.”

The shift to smart factories will transform the global labour market, and while previous waves of automation have reduced low-skill jobs, organizations have recognized the skills imperative and are now acting on it.

Respondents see automation as a means to remove inefficiencies and overheads, rather than jobs, so more than half (54%) of respondents are providing digital skills training to their employees and 44% are investing in digital talent acquisition to bridge the skill gap. For highly-skilled workers in areas such as automation, analytics and cybersecurity, there are even more employment opportunities.

The research, which was conducted from February to March 2017, interviewed 1,000 executives holding director or above rank in manufacturing companies with a reported revenue of more than $1 billion each. The research was conducted across six sectors; industrial manufacturing, automotive & transportation, energy & utilities, aerospace & defence, life science & pharmaceuticals and consumer goods. Directors from the US, UK, France, Germany, Sweden, Italy, India and China were interviewed in both qualitative and quantitative interviews.