Written by:
Ela Malkovsky, Editor-in-Chief (Cambridge)
Within two short years since we published our manufacturing industry trends outlook for 2016, the discussion around implementing advanced digitized manufacturing technologies has shifted into action with the digital transformation of manufacturing as we have entered into the fourth industrial revolution, also known as Industry 4.0.
Global industry survey results indicate that industrial companies’ average level of digitization is expected to soar from the current 33% to 72% within five years, with 2.9% (US$493B) revenue gains and 3.6% (US$421B) cost reductions annually1. Today, almost 40% of small and medium sized Canadian manufacturers say that they have achieved advanced levels of digitization, and first movers on the scene are already reaping the benefits. 40-60% of early Canadian adopters of Industry 4.0 projects report increased productivity, reduced operating costs, and improved product quality2.
Industry 4.0 digital investments improve the top and bottom lines by enabling quantum leaps in performance with smart, digital factories that yield shorter operational lead times and increased efficiency, cost reduction and higher asset utilization, as well as improved quality assurance for maximum product quality. As a result, the integration of advanced technologies and the development of digital factories is creating profound opportunities for growth and is becoming increasingly vital to competitive survival.
In order to take advantage of these opportunities, companies must first overcome significant barriers related to the adoption of advanced technologies. Many companies delay investing in capital and workforce development during periods of slow global demand growth and uncertainty surrounding the free flow of goods. Companies investing in the digitization of their businesses are also contending with a skills shortage and a lack of digital culture in addition to excessive costs, along with unclear benefits of unproven technologies.
Strategically leveraging various government funding solutions at different stages of your company’s digital transformation can help offset the immediate costs of adapting digital technologies without imposing future debt, thereby mitigating the risk of investing in industry 4.0 projects such as hiring and training, new equipment/software purchases, and research & development (R&D), and thus enabling companies to compete in the new era of manufacturing.
1PWC, 2016 Global Industry 4.0 Survey
2BDC Study, Industry 4.0: The New Industrial Revolution;Are Manufacturers Ready?