Smartest factories post 93% jump in output during ‘unprecedented’ Covid disruption
The World Economic Forum has added 15 new ‘smart’ manufacturing sites to its ‘global lighthouse network’, and claimed production output among Industry 4.0 leaders spiralled upwards by 93 percent in the past year, through the Covid-era. New joiners include factories owned by Bosch, Foxconn, HP, Tata Steel, and Tsingtao Brewery in Asia; Johnson & Johnson, Procter & Gamble, and Siemens in Europe; and Ericsson and Procter & Gamble (again) in North America.
The latest intake, part of a bi-annual review process run by McKinsey & Company, takes the total number of smart factories in the network to 69. The last (September 2020) intake saw 10 new additions, including factories owned by Alibaba, Unilever, Renault, Saudi Aramco, and Schneider Electric. The year-ago (January 2020) influx comprised 18 factories, including from Hitachi, Infineon, Renault, and Unilever.
The lighthouse list positions the world’s smartest factories as an “engine of the ‘great reset’”, according to its authors. The idea is to establish a “platform to develop, replicate and scale innovations”. (The story, and new entrants, can be traced back through the above links.) The World Economic Forum said its lighthouse network has, on average, achieved a 93 percent jump in product output through the Covid-19 era, in the face of “unprecedented disruption”.
It said 53 percent had recorded “measurable and marked environmental sustainability benefits”, alongside, with some recording an “almost total reduction in CO2 emissions, [plus] double-digit increases in efficiency and reduction in material use. A new report is available with all the findings. Meanwhile, the research reckons 74 percent of companies are still “stuck in pilot purgatory”. The full list of new entrants is included below, with text from McKinsey.
Enno de Boer, partner at McKinsey & Company, said: “Though no industry is immune from digital transformation, four sectors are resetting benchmarks – advanced industries, consumer packaged goods, pharmaceutical and medical products, and heavy industries. We are seeing a paradigm shift emerge, from reducing cost to more focus on enabling growth and environmental sustainability.”
Francisco Betti, head of advanced manufacturing and production at the World Economic Forum, said: “This is a time of unparalleled industry transformation. The future belongs to those companies willing to embrace disruption and capture new opportunities. Today’s disruptions, despite their challenges, are a powerful invitation to re-envision growth. The lighthouses are illuminating the future of manufacturing and the future of the industry.”
Bosch (Suzhou, China)
As a role model of manufacturing excellence within the group, Bosch Suzhou deployed a digital transformation strategy in manufacturing and logistics, reducing manufacturing costs by 15% while improving quality by 10%.
Foxconn (Chengdu, China)
Confronted with fast-growing demand and labour skill scarcity, Foxconn Chengdu adopted mixed reality, artificial intelligence (AI) and internet of things (IoT) technologies to increase labour efficiency by 200% and improve overall equipment effectiveness by 17%.
Facing an increase in product complexity and labour shortages leading to quality and cost challenges, along with a move at the country level to focus on higher-value manufacturing, HP Singapore embarked on its Fourth Industrial Revolution journey to transform its factory from being manual, labour intensive and reactive to being highly digitized, automated and driven by AI, improving its manufacturing costs by 20%, and its productivity and quality by 70%.
Midea (Shunde, China)
To expand its e-commerce presence and overseas market share, Midea invested in digital procurement, flexible automation, digital quality, smart logistics and digital sales to improve product cost by 6%, order lead times by 56% and CO2 emissions by 9.6%.
ReNew Power (Hubli, India)
Facing exponential asset growth and rising competitiveness from new entrants, ReNew Power, India’s largest renewables company, developed Fourth Industrial Revolution technologies, such as proprietary advanced analytics and machine learning solutions, to increase the yield of its wind and solar assets by 2.2%, reduce downtime by 31% without incurring any additional capital expenditure, and improve employee productivity by 31%.
Tata Steel (Jamshedpur, India)
Facing operational KPI stagnation and an impending loss of captive raw material advantage, Tata Steel Jamshedpur’s 110-year-old plant with deeply rooted cultural and technology legacies deployed multiple Fourth Industrial Revolution technologies, such as machine learning and advanced analytics in procurement to save 4% on raw material costs, and prescriptive analytics in production and logistics planning to reduce the cost of serving customers by 21%.
Tsingtao Brewery (Qingdao, China)
Facing growing consumer expectations for personalized, differentiated and diverse beers, Tsingtao Brewery rethought its use of smart digital technologies along its value chain to enable its 118-year-old factory to meet consumer needs, reducing customized order and new product development lead times by 50%. As a result, it increased its share of customized beers to 33% and revenue by 14%.
Wistron (Kunshan, China)
In response to high-mix and low-volume business challenges, Wistron leveraged AI, IoT and flexible automation technologies to improve labour, asset and energy productivity, not only in production and logistics but also in supplier management, improving manufacturing costs by 26% while reducing energy consumption by 49%.
Henkel (Montornès, Spain)
To drive further improvements in productivity and boost the company’s sustainability, Henkel built on its digital backbone to scale Fourth Industrial Revolution technologies linking its cyber and physical systems across the Montornès plant, reducing costs by 15% and accelerating its time to market by 30% while improving its carbon footprint by 10%.
Johnson & Johnson Consumer Health (Helsingborg, Sweden)
In a highly regulated healthcare and fast-moving consumer goods environment, J&J Consumer Health addressed customer needs through increased agility using digital twins, robotics and high-tech tracking and tracing to enable 7% product volume growth, with 25% accelerated time to market and 20% cost of goods sold reduction. It made further investments in connecting green tech through Fourth Industrial Revolution technologies to become Johnson & Johnson’s first ever CO2-neutral facility.
Procter & Gamble (Amiens, France)
P&G Amiens, a plant with a steady history of transforming operations to manufacture new products, embraced Fourth Industrial Revolution technologies to accommodate a consistent volume increase of 30% over three years through digital twin technology as well as digital operations management and warehouse optimization. This led to 6% lower inventory levels, a 10% improvement in overall equipment effectiveness and a 40% reduction in scrap waste.
Siemens (Amberg, Germany)
To achieve its productivity goals, this site implemented a structured lean digital factory approach, deploying smart robotics, AI-powered process controls and predictive maintenance algorithms to achieve 140% factory output at double product complexity without an increase in electricity or a change in resources.
Middle East |
STAR Refinery (Izmir, Turkey)
To maintain a competitive edge within the European refinery industry, Izmir STAR Refinery was designed and built to be “the technologically most advanced refinery in the world”. Leveraging more than $70 million investments in advanced technologies (e.g., asset digital performance management, digital twin, machine learning) and organizational capabilities, STAR was able to increase diesel and jet yield by 10% while reducing maintenance costs by 20%.
North America |
Ericsson (Lewisville, USA)
Faced with increasing demand for 5G radios, Ericsson built a US-based, 5G-enabled digital native factory to stay close to its customers. Leveraging agile ways of working and a robust IIoT architecture, the team was able to deploy 25 use cases in 12 months. As a result, it increased output per employee by 120%, reduced lead time by 75% and reduced inventory by 50%.
Procter & Gamble (Lima, USA)
A shift in consumer trends meant more complex packaging and an increased number of products that had to be outsourced. To reverse the tide, P&G Lima invested in supply chain flexibility, leveraging digital twins, advanced analytics and robotic automation. This resulted in an acceleration of speed to market for new products by a factor of 10, an increase in labour productivity by 5% year on year, and plant performance that was two times better than competitors in avoiding stock-outs during the year.