Industrial Automation Magazine India

Smart Factories: A Revolution in the making

Published on : Tuesday 30-11--0001

1. The Smart Factories report is interesting and confirms the general global trends. Yet how significant are the developments?

In the next five years, manufacturers expect Smart Factories to drive performance improvements that significantly exceed previous efforts:

• Smart factories could add US $500 bn to $1.5 trillion in value added to the global economy in five years
• Manufacturers predict overall efficiency to grow annually over the next five years at 7 times the rate of growth since 1990
• We estimate that smart factories can nearly double operating profit and margin for an average automotive OEM manufacturer.

2. In the summary of the report, one of the challenges mentioned is the fact that only 14% of companies are satisfied with their level of smart factory success, and only 6% of manufacturers are ‘Digital Masters’. So there is still a long way to go?

The organisations feel they are struggling because they are not meeting their targets. For instance around 50% organisations have yet to achieve their productivity improvement targets. The organisations are struggling with two key challenges: lack of coordination among different units and lack of investment. Our research shows that the US and Western Europe in particular have made an early head start.

3. The report puts India at 28% against the global 50% in terms of early adopters of Smart Factory initiatives. Is this likely to change dramatically? (For instance, at Hannover Messe 2017, Indians formed the third largest chunk of all overseas visitors.)

Organisations in India have made advances in both digital intensity and transformation management intensity to reap the rewards from smart factories. Indian organisations that are formulating Smart Factories strategies are second highest (42%) globally, just after China. This should reflect in future statistics.

4. While the large corporates (Maruti, Tata, Hero Corp) and MNCs (Siemens, GE, Bosch) are already on the Smart Factory bandwagon, any statistics about the SME segment?

The report does not contain data related to SMEs. The report is an output of the survey done with 1000 executives at Director or more senior role among manufacturers with reported revenue of more than US $1 billion for FY 2015 hence will not have relevant statistics for SMEs.

5. SMEs cannot stay far behind as most of them are suppliers to major manufacturers and need to be integrated into the supply chain. Does the report contain any insights into this aspect?

As mentioned above, there is no insight on SMMEs in this report. However, based on another Capgemini Digital Transformation Institute global survey on Digital Culture, two-thirds of organisations still do not have a digital-first mindset, which is a key attribute for developing a Digital Culture.

6. Does the report contain any statistics about the disruption in labour and the net job loss?

The realisation of benefits from the Smart Factory initiative depends on how effectively manufacturers fulfil the demand for digital skills. The shift to smart factories will hence transform the global labour market, and while previous waves of automation have reduced low-skill jobs, organisations have realised the skills imperative and are quickly acting on it:

• 54% of respondents are providing digital skills training to their employees
• 24% are spending a significant amount of their training budget to train employees in digital skills. Some countries such as India and China seem to have grasped this imperative better than others. 72% and 65% of executives surveyed in these countries respectively are investing a significant amount of their training budget to build digital skills; and
• 44% are investing in digital talent acquisition to bridge the skill gap.

7. One of the key factors in the Indian context is always the availability of ‘cheap labour’, which actually is a misnomer. This report mentions skills, which is now high on government agenda. Is there a case for more coordination with between the policies and user industries?

According to our research 72% of executives surveyed in India are investing a significant amount of their training budget to build digital skills. Capgemini have done its bit by joining hands with the state government for reskilling initiatives. As a leading technology company, we leveraged our expertise in training and talent development to make a difference to Maharashtra’s economy by expanding the capabilities of the State’s talent pool"

Reference Links:

Manufacturing Tomorrow: http://www.manufacturingtomorrow.com/article/2017/01/what-is-the-smart-factory-and-its-impact-on-manufacturing/9043

Huffington Post: http://www.huffingtonpost.in/2016/10/09/it-industry-will-continue-to-need-people-but-different-kind-of_a_21577633/

Financial Express: http://www.financialexpress.com/industry/why-indian-smes-need-to-partner-with-iot-platforms/621872/

Business World: http://businessworld.in/article/Industry-4-0-Towards-Smart-Manufacturing/26-05-2017-118968/