AutoPartsAsia | OCTOBER 2017 | 45mass production. It is closer to
consumers.
According to a report by Capegemini
Consulting, smart factories can nearly
double operating profit and margin
for an average automotive OEM
manufacturer. In the next five years,
world over manufacturers expect
smart factories to drive performance
improvements that significantly
exceed previous efforts: On-time-
Delivery of the finished products is
expected to accelerate by 13 times,
while quality indicators are expected
to improve at more than 12 times
the rate of improvement since 1990.
Capital expenditure and inventory
are predicted to be rationalized
at 12 times and material, logistics
and transportation cost expected
to be rationalised at 11 times the
rate of improvement since 1990.
Overall productivity and labour
cost improvements are reported to
accelerate at 7 times and 9 times the
rate of growth since 1990, respectively
The report also states that the
average overall productivity gains
from smart factories and the average
realized quality gain from smart
factories so far for the automotive
industry has been 19 percent.
Smart factories have the potential
to add $500 billion to $1,500 billion
annually to the global economy in the
next five years. The report estimates
that, in a conservative scenario, the
added output to the economy from
smart factories annually would reach
a level of $500 billion in the next five
years. It represents 0.7 percent of
world’s annual GDP by 2015.
In an optimistic scenario where
manufacturers accelerate their
smart factory efforts and deploy or
transform more than 50 percent of
their plant base into smart factories,
it would add up to $1,500 billion
in eight surveyed geographies or
two percent of world GDP. They
can nearly double operating profit
and margin, propelling an average
automaker to top of the league.
As part of the ‘Make in India’ business
initiative, the Indian government
aims to advance industrialization
and modernize production in the
country. Connected manufacturing
offers great opportunities to faster
react to market requirements, reduce
manufacturing downtimes, improve
the efficiency of supply chains and
increase productivity–factors which
all can contribute to increase the
competitiveness of the Indian industry
over the long-term.
In its pursuit to foster best-in-class
manufacturing infrastructure in
India, the “Make in India” initiative
is spearheading wider adoption of
‘Industry 4.0’.Conclusion
Netscribes, a global market
intelligence and content management
firm, has assessed that the global
smart factory or Industrial 4.0 market
is expected to grow at a CAGR of10.4 percent and will reach USD
74.80 billion by 2020.At present, Europe has the largest
smart factory market share, followed
by APAC countries, and the US.
Germany leads in the adoption of
smart factories, followed by the
US and Japan. Cloud computing,
augmented reality, and 3D printing
are the top three technologies for
smart factory-related patents.Although India scores high in the
sheer size of its workforce, there
are several challenges for the
manufacturing companies to adapt
the smart factories. Important among
them is the requirement of a skilled
workforce that is experienced and
equipped to create and implement
smart systems.Equally crucial is the willingness of
senior leadership, other stakeholders
and investors to invest in new
technologies. There is the need to
address fears of security breaches
that can take place anywhere
along the entire value chain of
manufacturing because it is open,
interconnected and networked.However, given the push that
connected manufacturing is getting
the world over, and the obvious and
considerable advantages it promises
to bring, corporate leaders across
industries will be encouraged to
embrace the factory of the future.NB: Photos are representational;
Courtesy: Bosch, GM.