Factories of the Future Find Growth and Sustainability Through Digitalization

Published
17 Mar 2021
2021
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Di Dai, Public Engagement, World Economic Forum, di.dai@weforum.org

  • Fifteen new manufacturing sites join the World Economic Forum’s Global Lighthouse Network as leaders in applying Fourth Industrial Revolution technologies to achieve profitable growth without increasing their environmental footprint
  • A new report reveals how these leading manufacturers use digital capabilities to find new revenue streams and increase product output despite the pandemic
  • Lighthouses are prioritizing workforce and skills development to protect jobs and build resiliency
  • Hear from these leading innovators, at Lighthouse Live event here: Reimagining Operations for Growth at 09.00 New York/14.00 Geneva/21.00 Beijing on 17 March, including keynote speaker Satya Nadella, CEO of Microsoft and Alex Gorsky, chairman and CEO of Johnson & Johnson

Geneva, Switzerland, 15 March 2021 – The World Economic Forum announced today the addition of 15 new sites to its Global Lighthouse Network, a community of world-leading manufacturers using Fourth Industrial Revolution technologies to enable bottom-line growth. Despite the COVID-19 pandemic’s unprecedented disruption, 93% achieved an increase in product output and found new revenue streams.

Notably, these leading innovators created new revenue streams while driving environmental sustainability – 53% are seeing measurable and marked environmental sustainability benefits. Some have seen almost a total reduction in CO2 emissions, double-digit increases in efficiency and reduction in material use. The new report, Reimagining Operations for Growth, outlines how manufacturers accomplished these results. Their CEOs will provide more insights at the Lighthouses Live event, featuring keynote speaker Satya Nadella, CEO of Microsoft and Alex Gorsky, chairman and CEO of Johnson & Johnson on 17 March at 14.00 CET. See below for a full list of the new Lighthouses and their achievements.

The Lighthouse Network and its 69 sites are a platform to develop, replicate and scale innovations, creating opportunities for cross-company learning and collaboration, while setting new benchmarks for the global manufacturing community.

While 74% of companies remained stuck in pilot purgatory in 2020, research based on learnings from the network reveals that scalable Fourth Industrial Revolution technologies are key to long-term growth. By fully embracing agile ways of working, these manufacturers have been able to respond to disruption and ongoing shifts in supply and demand along their production network and value chains. They also prioritized workforce development – reskilling and upskilling employees for advanced manufacturing jobs – at the same pace and scale.

Asia

Bosch (Suzhou, China): As a role model of manufacturing excellence within the group, Bosch Suzhou deployed a digital transformation strategy in manufacturing and logistics, reducing manufacturing costs by 15% while improving quality by 10%.

Foxconn (Chengdu, China): Confronted with fast-growing demand and labour skill scarcity, Foxconn Chengdu adopted mixed reality, artificial intelligence (AI) and internet of things (IoT) technologies to increase labour efficiency by 200% and improve overall equipment effectiveness by 17%.

HP Inc. (Singapore): Facing an increase in product complexity and labour shortages leading to quality and cost challenges, along with a move at the country level to focus on higher-value manufacturing, HP Singapore embarked on its Fourth Industrial Revolution journey to transform its factory from being manual, labour intensive and reactive to being highly digitized, automated and driven by AI, improving its manufacturing costs by 20%, and its productivity and quality by 70%.

Midea (Shunde, China): To expand its e-commerce presence and overseas market share, Midea invested in digital procurement, flexible automation, digital quality, smart logistics and digital sales to improve product cost by 6%, order lead times by 56% and CO2 emissions by 9.6%.

ReNew Power (Hubli, India): Facing exponential asset growth and rising competitiveness from new entrants, ReNew Power, India’s largest renewables company, developed Fourth Industrial Revolution technologies, such as proprietary advanced analytics and machine learning solutions, to increase the yield of its wind and solar assets by 2.2%, reduce downtime by 31% without incurring any additional capital expenditure, and improve employee productivity by 31%.

Tata Steel (Jamshedpur, India): Facing operational KPI stagnation and an impending loss of captive raw material advantage, Tata Steel Jamshedpur’s 110-year-old plant with deeply rooted cultural and technology legacies deployed multiple Fourth Industrial Revolution technologies, such as machine learning and advanced analytics in procurement to save 4% on raw material costs, and prescriptive analytics in production and logistics planning to reduce the cost of serving customers by 21%.

Tsingtao Brewery (Qingdao, China): Facing growing consumer expectations for personalized, differentiated and diverse beers, Tsingtao Brewery rethought its use of smart digital technologies along its value chain to enable its 118-year-old factory to meet consumer needs, reducing customized order and new product development lead times by 50%. As a result, it increased its share of customized beers to 33% and revenue by 14%.

Wistron (Kunshan, China): In response to high-mix and low-volume business challenges, Wistron leveraged AI, IoT and flexible automation technologies to improve labour, asset and energy productivity, not only in production and logistics but also in supplier management, improving manufacturing costs by 26% while reducing energy consumption by 49%.

Europe

Henkel (Montornès, Spain): To drive further improvements in productivity and boost the company’s sustainability, Henkel built on its digital backbone to scale Fourth Industrial Revolution technologies linking its cyber and physical systems across the Montornès plant, reducing costs by 15% and accelerating its time to market by 30% while improving its carbon footprint by 10%.

Johnson & Johnson Consumer Health (Helsingborg, Sweden): In a highly regulated healthcare and fast-moving consumer goods environment, J&J Consumer Health addressed customer needs through increased agility using digital twins, robotics and high-tech tracking and tracing to enable 7% product volume growth, with 25% accelerated time to market and 20% cost of goods sold reduction. It made further investments in connecting green tech through Fourth Industrial Revolution technologies to become Johnson & Johnson’s first ever CO2-neutral facility.

Procter & Gamble (Amiens, France): P&G Amiens, a plant with a steady history of transforming operations to manufacture new products, embraced Fourth Industrial Revolution technologies to accommodate a consistent volume increase of 30% over three years through digital twin technology as well as digital operations management and warehouse optimization. This led to 6% lower inventory levels, a 10% improvement in overall equipment effectiveness and a 40% reduction in scrap waste.

Siemens (Amberg, Germany): To achieve its productivity goals, this site implemented a structured lean digital factory approach, deploying smart robotics, AI-powered process controls and predictive maintenance algorithms to achieve 140% factory output at double product complexity without an increase in electricity or a change in resources.

Middle East

STAR Refinery (Izmir, Turkey): To maintain a competitive edge within the European refinery industry, Izmir STAR Refinery was designed and built to be “the technologically most advanced refinery in the world”. Leveraging more than $70 million investments in advanced technologies (e.g., asset digital performance management, digital twin, machine learning) and organizational capabilities, STAR was able to increase diesel and jet yield by 10% while reducing maintenance costs by 20%.

North America

Ericsson (Lewisville, USA): Faced with increasing demand for 5G radios, Ericsson built a US-based, 5G-enabled digital native factory to stay close to its customers. Leveraging agile ways of working and a robust IIoT architecture, the team was able to deploy 25 use cases in 12 months. As a result, it increased output per employee by 120%, reduced lead time by 75% and reduced inventory by 50%.

Procter & Gamble (Lima, USA): A shift in consumer trends meant more complex packaging and an increased number of products that had to be outsourced. To reverse the tide, P&G Lima invested in supply chain flexibility, leveraging digital twins, advanced analytics and robotic automation. This resulted in an acceleration of speed to market for new products by a factor of 10, an increase in labour productivity by 5% year on year, and plant performance that was two times better than competitors in avoiding stock-outs during the year.

“This is a time of unparalleled industry transformation. The future belongs to those companies willing to embrace disruption and capture new opportunities. Today’s disruptions, despite their challenges, are a powerful invitation to re-envision growth. The lighthouses are illuminating the future of manufacturing and the future of the industry,” said Francisco Betti, Head of Shaping the Future of Advanced Manufacturing and Production, World Economic Forum.

Enno de Boer, Partner, McKinsey & Company, and Global Lead, Manufacturing, said: “The 69 Lighthouse manufacturers open a window into the future of operations. Though no industry is immune from digital transformation, four sectors are resetting benchmarks - Advanced Industries, Consumer Packaged Goods, Pharmaceutical and Medical products, and Heavy Industries. We are seeing a paradigm shift emerge, from reducing cost to more focus on enabling growth and environmental sustainability. The Lighthouses are proving that unlocking smart capacity through digital technologies is more effective than spending on capital infrastructure.”

The goal of the Global Lighthouse Network is to share and learn from best practices, support new partnerships and help other manufacturers deploy technology, adopt sustainable solutions and transform their workforces at pace and scale. The extended network of “Manufacturing Lighthouses” will be officially recognized at Lighthouse Live: Reimagining Operations for Growth at 14.00 CET/09.00 EST 17 March.

Together with a diverse group of experts and innovators, the meeting aims to initiate, accelerate and scale-up entrepreneurial solutions to tackle climate change and advance sustainable development. Click here to follow the meeting.

Notes to editors

Learn more about the Global Lighthouse Network here

Read the white paper here

Follow the Lighthouse event live here

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