Titans of industrials
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For years humans have fantasized the existence of a genie with supernatural powers, instantly granting their wishes and desires. While we still may be far from a real-life, wish-granting, superpower-endowed genie, in this era of digital revolution, it might be possible to realize just some of our far fetched dreams! With advancements in digital technologies such as AI, robotics, 3D printing, and advanced data analytics, it is possible to listen to what consumers want, incorporate it into product designs, customize products, and deliver it to the end consumers quickly. The future is not far with advents in 3D printing which allow consumers to design their own version of a product and have a printed version delivered in a matter of days. The future really is ours thanks to digital disruption in the industrial sector. However, the rapid pace of change comes with its own perils, Kodak’s downfall can be attributed to the company’s failure to foresee the rise of digital technologies, it was blinded by its success in the present and discounted the importance of the future. Companies not only have to embrace changes but they must stay ahead of them.
Digital technologies are mercilessly disrupting many sectors, in the industrial sector it is reshaping the whole supply chain from manufacturing, to warehousing, to logistics. Industry and academic leaders agree that digital technologies will transform every link in the industrial manufacturing value chain, from research and development, supply chain, and factory operations, to marketing, sales, and service. Keeping that in view, industrial companies which adopt digital technologies swiftly and readjust their business model and operations regularly will definitely own the future. According to the OECD, companies that incorporate innovative technologies into their operations are 2 to 10 times more productive than ones that don´t.
Below are 4 trends that companies need to watch out for in the industrial sector.
Trend 1: Robots are out for our jobs!
Robots wiping out the human race is no horror story, it has become a harsh reality in some workplaces. There have been considerable developments in robotics – and more and more companies, notably in manufacturing and heavy industries, are showing their inclination to replace human manpower with automated robots. According to the International Federation of Robotics (IFR), around 2.5 million industrial robots will be at work by 2019, and this number is only expected to rise in the future. In developed countries such as Germany, one hour of human labour costs around 40€, while the equivalent would cost companies around around 5€ to 8€ if they are to replace them with robotic powered labour, meaning robots are far more cost efficient. Apart from the financial advantages they pose, robots perform tasks with much more precision and can be employed 24/7, as they are not constrained by the same natural traits that limit humans. In 2017, a Chinese factory that specializes in producing mobile phones saw a 250% increase in its productivity and 80% reduction in its defects when it replaced 90% of its workforce with robots. In such a scenario, companies that don’t employ robots will find themselves trailing behind their faster and more efficient competitors.
If you were amazed by the work done by robots, you will be blown away by the cobots – which are essentially robots that can collaborate with humans. In the industrial sector especially in manufacturing, logistics, and warehousing, there are many tasks that still require the human touch. In such a case, cobots which are equipped with sensors and other smart technologies can take care of the repetitive tasks and allow their human counterparts to focus on the more complex tasks. Unlike traditional industrial robots, which have very little human contact due to safety concerns, cobots are easy to move, three times faster, smarter, and safe to work with. By the end of this year, 30% of all robots employed in the industrial sector will be cobots.
Trend 2: AI is here to get the job done!
Like many other sectors, AI is already disrupting the industrial sector, specifically in manufacturing. This self-learning and self-governing technology can detect and resolve defects in the production line with the help of smart sensors, it can predict demand, prevent fraud, and cut waste – thus saving companies millions in euros. It can also help understand the customer better and cater to their specific demands quickly with the help of smart technologies. A PwC report estimates that by 2035, the contribution of AI to manufacturing growth will be around $4 trillion. Moreover, an Accenture study about the impact of AI on industrial growth predicts that it has the potential to increase the profitability of industrial companies by 38% within the next two decades. In times when industrial companies are going through a low profit spiral, employing AI can help them boost profits and provide them with a competitive advantage.
Lately, there has been acknowledgement among business executives about the benefits of AI implementation especially in manufacturing. According to the Annual Manufacturing Report 2018, around 92% of senior executives in manufacturing are convinced that AI will radically cut their costs and improve productivity levels. Despite a lot of buzz around the idea of AI implementation in manufacturing, there has been a lack of implementation. According to research firm Forrester, around 58% of business and technology executives are looking for integration of AI into their operations but only 12% are actively implementing them. This gap between realization and execution is delaying implementation of AI in the industrial sector, and costing billions of dollars in waste and efficiency.
Trend 3: Innovate business models or step aside!
As digital technologies disrupt many industries, industrial companies need to adopt innovative business models. In this era of digitalization, consumer demands are changing quickly with customers looking for increasing customisation. The old model of mass production is becoming outdated, companies with centralized production units will find themselves increasingly at the losing end. Thanks to digital technologies, industrial companies can listen to what customers want, shorten their supply chain, customize their products, and deliver products with speed. Companies taking these steps definitely have an edge over companies that don’t. Innovation in digital technologies requires innovation in business models. Therefore, industrial companies will have to shift their focus from production-based business models to service-based business models in order to cater to the changing needs of both B2C and B2B markets.
Trend 4: 3D Printing is here to stay!
3D printing is one of the technologies that is going to have a jolting impact on the industrial sector once fully developed and implemented. Even though it is still in development, it is already being applied in fields such as healthcare, automotive, and aviation. With this technology, companies will be able to produce customized products that cater to the individual needs of consumers – instead of requiring months, products will be produced in a matter of weeks and even days. It will reduce costs, cut waste, and increase efficiency massively. In the near future it would be possible to make customized products such as cars with the help of this technology. A decade or two ago it would have sounded utopic to think of 3D printed cars for individual consumers, but that will soon become possible. This technology has the potential to create around $470 billion worth of economic value in the industrial sector in the US alone within a decade. Industrial companies that seek to have a competitive advantage should invest in adopting this technology or risk losing out to their competitors!
Summary: What to do!
This phase of digital revolution is readjusting the boundaries of many industries, what seemed impossible yesterday, seems possible today. The key to survival in this time of continuous disruption is to embrace change. Industrial companies should aggressively adopt digital technologies and innovative business models that help them cater to the needs and expectations of empowered consumers, increase their efficiency, and maintain a competitive advantage in a competitive market. Companies too slow to react risk their very existence in the digital age!
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