Davos Agenda

Now is the time to double down, not slow down, on transforming industry

industrial transformation: robot with conveyor in smart factory industry 4.0 concept.

Some manufacturing frontrunners are leading the way in industrial transformation, embracing Industry 4.0 technologies. Image: WEF/iStockphoto

Barbara Frei
Executive Vice-President and Chief Executive Officer, Industrial Automation, Schneider Electric
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Davos Agenda

This article is part of: World Economic Forum Annual Meeting

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  • Headwinds had severe repercussions on supply chains, and catapulted operational resilience, agility, sustainability to top of corporate agenda.
  • “Lighthouses” guide other players in the sector as they seek to overcome challenges and scale opportunities of the 4th industrial revolution.
  • The next chapter is to take the power of digitized manufacturing systems and apply them across organizations’ production and logistics networks.

Throughout the 20th century, science fiction books and film and TV spinoffs have imagined what the future would look like. Isaac Asimov’s robot stories talked about the power of automation and Philip K. Dick’s 1955 short story "Autofac" featured self-replicating machines that take over a factory and push production to its limits.

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Most of these industrial transformation predictions haven’t come true. But the latest "World Robotics" report reveals that the use of new industrial robots is at an all-time high. Half a million were installed in factories around the world in 2021 alone. And 5G networks, the Internet of Things (IoT) and Artificial Intelligence (AI) have provided the building blocks for an industrial future that looks vastly different to the present, let alone 1955.

Staying focused on industrial transformation and efficiency

Today’s industrialists recognize that these “Industry 4.0” technologies can transform their operations, revolutionize operational efficiency and improve their competitiveness beyond just productivity.

But implementing this shift at scale and speed remains challenging. Most industrial companies are experimenting with a variety of use cases, but have yet to realize the tangible benefits of smarter operations.

What’s more, companies around the globe are currently facing unprecedented uncertainty. The aftermath of the pandemic. Geopolitics. The global energy crisis. Soaring commodity prices. See-sawing logistics costs. Accelerating climate change. And the ever-increasing pressure to reduce carbon emissions and environmental impact.

All these have had severe repercussions on supply chains, and have catapulted operational resilience, agility and sustainability to the top of the corporate agenda.

Leading responsible industrial transformation within sites

In the face of all this, some manufacturing frontrunners are leading the way in industrial transformation, embracing the full range and game-changing potential of Industry 4.0 technologies.

Behind the gates of Schneider Electric’s Le Vaudreuil plant in north-eastern France, for example, driverless vehicles and collaborative robots are part of the daily ebb and flow of production. Recognized as both an Advanced and a Sustainability Lighthouse by the World Economic Forum, Le Vaudreuil is one of seven manufacturing sites recognized for pioneering digitization, industrial efficiency and sustainability, alongside factories operated by Johnson & Johnson in Ireland, Western Digital in China, Unilever in India, and Micron in Singapore.

These “lighthouses” – as the name suggests – guide other players in the sector as they seek to overcome the challenges, and scale the opportunities, of the fourth industrial revolution.

Operational data converge in Le Vaudreuil’s unified control centre to reveal the performance of assets, energy and processes. Dashboards display what’s happening in every corner of the 14,000-square-metre shop floor, giving on-site operators and remote teams real-time updates, alerts and data-driven insights into the effectiveness of machinery and any production-line bottlenecks or spikes in demand.

Le Vaudreuil’s energy use and carbon emissions are down by 25% and material waste by 17% since its digitization programme began in 2018. And its AI-enabled recycling processes help save precious water resources.

Taking industrial transformation beyond the site level

Impressive as all this is, we’re by no means at the end of the journey. The next chapter in the industrial transformation story is to take the power of these digitized manufacturing systems and apply them not just to single sites, but across organizations’ entire production and logistics networks and supply chains.

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These networks can consist of dozens, even hundreds, of sites – manufacturing facilities, warehouses and the like – in many different countries and continents. Schneider Electric, for example, has close to 200 factories, over 80 distribution centres and thousands of suppliers with whom we’re working closely to tackle our scope 3 carbon emissions.

For many companies, integrating such complex networks is a huge challenge. Too often, sites operate in silos, using different legacy systems, standards and approaches. And all-too often, transformation ambitions fall short because they focus on single plants or disparate processes.

To address the seemingly endless string of crises around us, companies need to fundamentally rethink how they approach industrial transformation – ensuring it happens in a systemic, digital, data-driven and holistic way that allows them to scale value and operational performance across multiple sites, throughout the entire enterprise.

Imagine how much more could be achieved by standardizing data exchange between IT systems, such as software for Enterprise Resource Planning (ERP), and the operational technology on the shop floor. Or by orchestrating a fully interconnected ecosystem of suppliers and partners, accessing orders and inventories spread across multiple facilities to improve planning, quality and anticipate risk.

Or imagine being able to meet net-zero targets faster, and make utility cost savings by unearthing ways to reduce resource consumption and control energy rationing.

All this requires applying a clear digital technology roadmap, underpinned by governance around data standardization and cybersecurity strategies.

People are the beating heart of enterprise-scale industrial transformation

Of course, all this requires planning, investment and time.

It also takes the right people. And that means making big efforts to attract digital natives from diverse backgrounds, and continuously offering employees the chance to upgrade their skills and capabilities.

But we also need a mindset shift: It’s only when companies, teams and individuals grasp the strategic importance of operating as one integrated organization that they can move beyond simply meeting short-term productivity goals, towards maximizing the full long-term potential that technological change can bring to industries of the future.

So, let’s finally lay those nightmare sci-fi robot fantasies to rest. To meet the challenges of the coming years and decades, industries need to take transformation to the next level, leveraging the complementary strengths of humans and machines. That means embracing data-driven efficiency, enterprise-wide, and investing employees with the skills and training they need.

Do that, and we have a chance of becoming the sustainable, agile, and resilient industrial companies that the world needs.

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Related topics:
Davos AgendaAdvanced Manufacturing
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