Business leaders and policy-makers must keep track of a vast range of technologies and philosophies impacting production systems today. The Forum has developed a production technology radar as a guide to action for business leaders and policy-makers. The high-level categories selected for this graphical representation take in those largely information and communication technology (ICT)-enabled technologies that are the primary focus of this white paper: connectivity and computing, analytics and intelligence, human machine interface and digital physical transformation. Included in this schematic diagram are additional topics that fill out the broader technology landscape: advanced materials (encompassing various branches of both nanotechnology and biotechnology); advanced manufacturing processes, which in some respects may be considered traditional manufacturing processes, but whose capabilities could be augmented and extended by new technologies; and what might be termed manufacturing philosophies, which would include things such as design approaches and mindsets geared towards sustainability. Future technology mapping will provide a more comprehensive visualization of the entire production technology landscape that will take account of technology subcategories that have varying readiness levels in different production contexts, and varying levels of diffusion and adoption within different sectors. Overlapping categories will also be identified. Within the broader technology radar, five key technologies stand out by their broad applications and impact in countries, industries and value chain steps alike. The five – the internet of things, artificial intelligence, advanced robotics, wearables and 3D printing – have unleashed competition within production systems, forcing companies to rethink and retool everything that they do internally.
The chief executives and chief operating officers who embrace these technologies and rapidly transform their enterprises will set their companies up for success. Moreover, governments will need to re-evaluate their national competitive advantages and sources of economic growth. Those government leaders able to set the right policies to research, develop and diffuse these technologies, and to ready their workforces and supply chains to leverage them, will position their economies for growth. Amid excessive media exposure and charged political and social landscapes, business and government leaders find it difficult to have an accurate understanding of where these technologies can create real value, and to focus successfully on appropriate and timely investments and policies needed to unlock that value.
The five technologies, in different stages of technical readiness and adoption, also come with varied levels of uncertainty about their future direction. Disruptive technologies, especially robotics, 3D printing and augmented reality, have captured the popular imagination with exciting applications demonstrated across all sectors. However, behind the individual use cases, the readiness and adoption of each technology tells a different story. Some, such as 3D printing (or additive manufacturing) and advanced robotics, have a long industrial history and are on the cusp of mainstream adoption, albeit in certain geographies and industries. Others, such as artificial intelligence and wearables, are in a more nascent stage, but present promising use cases.
– The internet of things (IoT) is often presented as a revolution, but it is actually an evolution of technologies developed more than 15 years ago. Operations and automation technologies are now blending, albeit conservatively, with sensors, the cloud and connectivity devices of the information technology (IT) industry Information Handling Services (IHS) projects the number of those devices to grow to almost 80 billion by 2025, up from 17 billion today.4 The immediate opportunities for producers are in smart enterprise control, asset performance management in real time and smart and connected products and services. Cybersecurity and interoperability challenges are hindering producers from embracing IoT on the factory floor and in their supply chains, with 85% of assets still unconnected.
– Artificial intelligence (AI) enables producers to make sense of the overwhelming data that their factories, operations and consumers generate, and to transform that data into meaningful decisions. Today, 70% of captured production data goes unused. Applying AI to the connectivity of IoT, producers are able to orchestrate and streamline business processes from desktops to machines, across department walls and tiers of suppliers. The most promising immediate opportunities for applying AI in production systems are in quality management, predictive maintenance and supply chain optimization. AI-enabled products will be a game changer for value propositions addressed to customers, and producers must be ready to orchestrate the value networks required to deliver these.
– Advanced robotics have long handled the “dull, dirty and dangerous” jobs, and currently automates 10% of production tasks. Robots were often separated from people for safety reasons, but now, a new generation has “come out of the cage” for 24-hour shifts, working alongside human counterparts. Increasing returns on investment, insatiable Chinese demand and advances in human–robot collaboration will increase their adoption to 25-45% of production tasks by 2030, beyond their use in the automotive and electronics industries. Adopting advanced robotics and AI could boost productivity in many industries by 30%, while cutting labour costs by 18-33%, yielding a positive economic impact of between $600 billion and $1.2 trillion by 2025.
- Enterprise wearables (including augmented and virtual reality) make up a nascent, fast-growing market projected to grow from $700 million today to $5 billion by 2020, with devices continuing to mature in terms of comfort, functionality and safety. Pilot programmes of leading companies show proven returns, with up to 25% improvement in operator productivity and significant decreases in the time required for training and upskilling (e.g. from two weeks to one hour for the shipping company DHL), as well as health and safety improvements. Connecting the unconnected with the internet of things.
– 3D printing is revolutionizing traditional production processes, aided by a recent surge in metal 3D printing capabilities. In the near term, 3D printing will be best suited to industries where customization and time to market are key value drivers – typically with low-volume, high-value parts, such as aerospace and healthcare. Today, and for the foreseeable future, the economics and industry dynamics will not support 3D printing replacing conventional manufacturing for long production runs, and for mass localization of production footprints nearer to consumers.
Technologies have not disrupted all industries in the same way and at the same time. The early adopters across all technologies are industries with a high concentration of innovation and spending on research and development (R&D). Examples are the automotive and computer and electronics sectors and consumer-facing industries, where customization and time to market are the critical value drivers. More than 80% of industrial robots sold in 2015 were installed in just five industries, with automotive and electronics predominant. Additionally, more than half of 3D printing units were installed in only three industries: aerospace, automotive and electronics. Artificial intelligence applications have found a ready home in services industries such as finance, retail and healthcare, with manufacturing gaining momentum (12%). IoT is less concentrated than advanced robotics, 3D printing and AI, with manufacturing taking the largest share. Given their nascent stage, as well as broad cross-industry application, enterprise wearables have been piloted across industries and have yet to focus on a specific industry.
To clearly understand the value and opportunities that technologies offer, business leaders must explore the converging impact of multiple technologies on specific functions. While technologies are disrupting a growing number of industries, they have a radically different impact and value proposition for specific functions. This is particularly true in cases where multiple technologies converge. For example, IoT and AI converge to provide a compelling value proposition for asset management in discreet and high-tech manufacturing, as well as supply chain and fleet management for transportation, logistics and retail industries (Figure 4). The demonstrable benefits of new technologies will lead to their wider adoption, and failure to invest in them will be fatal for many firms’ long-term prospects. While the technologies are at different levels of development and adoption, we identified five cross-technology tipping points that will indicate widespread adoption, namely:
1. Core technologies advance to readiness levels of 6 to 9
2. Device costs are reduced by one-third of their current selling points
3. 40% of production assets are connected
4. 25% of the product orders require some form of customization to them
5. 25% of current capex spending is replaced with services-based expense spending.