05/04/2017

Bringing digitisation to the factory floor and beyond

Author: Reinhard Geissbauer, Head of PwC’s Industry 4.0 Practice, EMEA Reinhard Geissbauer

Last week the world’s largest industrial trade show, the Hannover Messe, took place in Germany. With 6,500 exhibitors from 70 countries, every industrial technology you can imagine was on display, and there was real energy and optimism.

I lead up our European Industry 4.0 practice for PwC, so for me the Hannover Messe – and especially the Executive Lunch and Think Tank events we host there -- is a great time to find out more about what my clients and other companies are thinking and doing, share some research that we’ve done recently and have some intense discussions about the future of manufacturing.

This year, many executives have confirmed that their companies have made some real progress with regard to digitisation. With that comes increased realism.

Making digitisation a priority for the long-haul

For our recent study, Digital Factories 2020: Shaping the future of Manufacturing, we interviewed decision-makers in Europe and found that digitisation is high on their agenda -- nearly all of them are making investments in digitising production. Overall they are quite bullish on the prospects for Industry 4.0 to drive growth and are willing to wait for it. While in past years, many survey respondents were expecting payback times measured in months, that’s no longer true. Most respondents this year expect to see a return on investments over the next 2-5 years. Companies are in it for the long-haul: they want to increase their long-term competitiveness, not look for a quick fix.

Choosing the right technologies

The biggest motivation for further investments in digital factories is efficiency – 98% expect it to improve. Some of the technologies they are relying on to get there include connectivity technologies, using sensors and Manufacturing Execution Systems, and a whole range of data-driven approaches, including predictive maintenance and process improvement, visualisation and optimisation. For these technologies, usage is expected to double over the next 5 years.

Grafik_12                         Source PwC, Digital Factories 2020: shaping the future of manufacturing

Building digital savvy one step at a time

Still, with so many different technologies out there, I often hear from clients (especially middle market companies with fewer resources) that they are reluctant to chase after every new technology trend. That makes sense – implementing individual technologies for their own sake can fall far short of generating the value that you can gain from developing a comprehensive digital strategy, including an understanding of how different technologies can help you achieve your business goals. But sitting back and waiting too long can mean falling behind, which is why I often encourage executives to begin small, with a clearly defined pilot project. One good example is predictive maintenance, where sensors and data analysis can help companies understand in advance when to take machines out of production for maintenance. These types of systems can often bring clear results that help encourage companies to think more broadly about the value they can gain from digitisation of their production process.

Bringing your people on board

When we spoke to executives for our study, and also during my conversations in Hanover, another topic kept coming up again and again: people. We believe any digitisation programme can only succeed if companies engage with their employees throughout the process and support them in managing change. And I have seen many companies that have already taken that message to heart. In our research, we found that companies are already anticipating the need for more training, including lifelong learning for employees. Encouraging was that most also believe the extra costs will be covered by the increases in efficiency.

And while some jobs – particularly those that can be easily automated – will certainly disappear, entirely new types of work will take their place. I believe that the net impact – especially here in Europe’s heartland – looks set to be positive. Our study suggests that survey respondents agree: 90% told us that they believe digitisation offers more opportunities than risks for their company.

Dr. Reinhard Geissbauer is the Head of PwC’s Industry 4.0 Practice in EMEA and a member of our Global Operations Leadership team. As a partner in our Munich office, he specialises in Industry 4.0, Procurement 4.0, Smart Supply Chain and Smart Manufacturing projects for leading industrial companies. Besides Industry 4.0 strategy development, he advises his clients on implementing digitisation pilots ranging from supplier data analytics to logistics digitisation or automating key purchasing processes. Read more

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