Manufacturing and Value Chains

The 3 key ingredients for the digital transformation of manufacturing

economic growth, advanced manufacturing, digital transformation, workforce

Advanced manufacturing is creating opportunities to shape a new wave of economic growth Image: UNSPLASH/Louis Reed

Peter Herweck
Chief Executive Officer, Schneider Electric
Francisco Betti
Head, Global Industries Team; Member of the Executive Committee, World Economic Forum
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Advanced Manufacturing

This article is part of: World Economic Forum Annual Meeting
  • Advanced manufacturing is at the heart of the Fourth Industrial Revolution.
  • It opens opportunities for companies to shape a new wave of economic growth.
  • But only 29% of industrial companies actively deploy Fourth Industrial Revolution technology at scale.

The process of digital transformation is happening in a range of industries, but perhaps no more so than manufacturing. There are examples of successful digital transformation, but the reported success of digital transformation at scale is slow. In early 2019, the World Economic Forum, in collaboration with McKinsey & Company, reported that more than 70% of industrial companies were in “pilot purgatory” when it came to their adoption of Fourth Industrial Revolution technology. The same report found that only 29% actively deploy Fourth Industrial Revolution technology at scale, while a greater number, 30%, have yet to pilot this technology or are on the cusp of doing so.

Advanced manufacturing is at the heart of the Fourth Industrial Revolution, shaping the future of production and value chains. It is opening a range of opportunities for companies to transform factories, business models and to shape a new wave of economic growth.

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During the last three years, through its Platform for Shaping the Future of Advanced Manufacturing and Production, the World Economic Forum has been working with a group of pioneers at the forefront of the Fourth Industrial Revolution to help accelerate the digital transformation of manufacturing across industries and regions. A Global Lighthouse Network, which brings together some of the most advanced manufacturing facilities in the world, has been established to recognize pioneering companies who are successfully deploying Fourth Industrial Revolution technologies at scale, while also keeping people and sustainability at the heart of their innovation strategies.

The network has launched a cross-company learning journey and is helping manufacturers develop collaborations and partnerships aimed at shaping an inclusive future of production. What the learning journey has revealed to date is that there are two main drivers for the successful digital transformation of manufacturing:

  • Business needs must propel all transformation efforts
  • Organized processes deployed through a global programme are key to success

Business needs must drive all transformation efforts

Digital transformation without business sense makes no sense. Instead, start by getting to the crux of what you need to achieve to keep your business relevant as well as develop it in the digital economy. For example, setting goals that are outcome focused rather than “testing technology” will set the right tone for your digital transformation initiatives. Consider objectives such as:

  • Empowering your workforce to be safer and more efficient
  • Optimizing the efficiency of assets and processes
  • Ensuring operations are reliable and secure

Organized processes deployed through a global programme are the key to successfully delivering such outcomes. Smart factories in the Global Lighthouse Network learning journey have revealed the three key ingredients that are essential in a global digital transformation programme to be:

  • A “top down, bottom up” approach
  • Rigorous and centralized programme management
  • External benchmarking

Top down, bottom up

Strong support and commitment from senior management is essential to the deployment of a global digital transformation programme. It sets a cultural expectation within an organization and helps to spread a digital mindset. When combined with a global education programme to ensure all employees become digital citizens, it is a powerful tool for cultural change management.

Companies with smart factories that are part of the Global Lighthouse Network are reporting this process has even led to ideas being generated and suggested by employees. Leadership can set the pace of a digital transformation programme by supporting a “start small” approach, and not putting on pressure for fast-tracked results before a programme has matured.


From the bottom, most manufacturing companies have considerable expertise in operating their plants and operations. Leveraging this expertise to champion digital transformation efforts can help enormously with deployment. It is likely that there will be people within your organization who are passionate, highly educated and skilled in areas like manufacturing software, internet of things and analytics, advanced robotics and automated guided vehicles as well as augmented reality. Having these people take on ambassador roles in their area of expertise can support the roll out of advanced manufacturing technologies. These people can also be called on to provide cross-site collaboration on the implementation, testing and scaling up of new technologies to shape the changes required to reap the benefits of the digital transformation programme.

Rigorous and centralized programme management

A second key ingredient in terms of digital transformation is a central digital transformation team in the service of the manufacturing sites undertaking the digital transformation efforts. Such a team can be regarded as consultants who are tasked with deploying technology solutions in an agile manner. They also ensure that solutions are implemented to address specific business needs and that value can be found throughout the business, not just at one smart factory. They achieve this by standardizing solutions, creating best practice recommendations and duplicating success in different sites. For example, the Global Lighthouse Network shows that leading companies are testing solutions in one plant for three months, then testing in another plant for three months, before rolling out throughout the business.

External benchmarking against the Global Lighthouse Network

Leveraging the World Economic Forum’s Global Lighthouse Network to benchmark digital transformation against pioneering companies can accelerate your programme in two ways:

  • Creating interest and competition among your different sites with the aim of securing accreditation as a lighthouse has been shown to increase the pace of scaling up digital transformation and duplication efforts.
  • Piquing interest from your wider ecosystem of partners, suppliers and customers. For example, at Schneider Electric the deployment of the Smart Factory Programme in conjunction with the Global Lighthouse Network has increased interest from stakeholders who want to understand the programme and then duplicate the processes for digital transformation on a large scale, resulting in new business opportunities

Finally, the learning journey has highlighted two pitfalls:

  • Imposing technology from the top down without proper input or buy-in from operations. Doing this can result in underutilized technology and unrealized benefits.
  • Trying to replicate success from one plant to another without first taking the individual behaviours, processes and cultural norms of that plant into consideration.
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The views expressed in this article are those of the author alone and not the World Economic Forum.

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