Amid Recession Fears, These Factories Are Boosting Productivity, Sustainability and Resilient Supply Chains

Published
11 Oct 2022
2022
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Di Dai, Public Engagement, di.dai@weforum.org

  • The World Economic Forum welcomes 11 new sites into its Global Lighthouse Network, a platform for best practices on advanced manufacturing
  • Four existing lighthouses earn additional designation as Sustainability Lighthouse
  • The “lighthouses” were chosen for leading the way in applying advanced technologies to drive productivity, workforce engagement, sustainability, and resilience (examples listed below)
  • As recession risks rise, several companies are proving that it is still possible to further improve competitiveness and sustainability by deploying large digital transformation programs at scale across multiple sites
  • Read more in the latest article on Lighthouses at this link
  • Tune in on 13 October at 14:00 CET to watch Lighthouses Live event at this link

Geneva, Switzerland, 11 October 2022 – The World Economic Forum announces the addition of 11 new factories and industrial sites to its Global Lighthouse Network, a community of over 100 manufacturers that are showing leadership in applying Fourth Industrial Revolution technologies to drive impact in productivity, workforce engagement, sustainability, and supply chain resilience

Four lighthouse members with outstanding environmental footprint reductions are gaining the additional designation of Sustainability Lighthouses. These global leaders are gaining momentum in achieving their sustainability pledges and greater operational competitiveness by realizing the potential of Fourth Industrial Revolution technologies in operations.

Amid warnings of a global recession, energy price hikes and disrupted supply chains, the factories offer business leaders and policymakers examples of how the manufacturing sector can stay competitive and continue to create jobs.

“Manufacturing is the backbone of both social and economic development. With the right corporate strategies and industrial policies, it provides high-wage jobs, commercial innovation, and drives environmental sustainability – even in times of crisis,” said Francisco Betti, Head of Advanced Manufacturing and Value Chains at the World Economic Forum. “The new factories of the Global Lighthouse Network show how manufacturers can meet business goals while having a positive impact on economies, peoples’ livelihoods and the environment. The challenge for companies and policymakers is how much they can scale-up these innovations across whole production networks and value chains.”

Enno de Boer, Senior Partner, McKinsey & Company and Global Lead of its digital manufacturing work, explains: “It’s hard enough to digitize a single site. But then how do you scale from one site to many? Especially small sites, all different from each other, with old equipment and old ways of working. That’s what keeps so many companies from digitizing successfully—they think it can’t be done at scale, so they don’t try. And they’re left vulnerable to the next big shock.”

While most of companies are held back, 2022 shows the emergence of scaling champions: in the new cohort of lighthouses, many companies such as Cipla, Danone and Sany Heavy Industry, are deploying large digital transformation programs at scale across 20 to 40 factories in parallel, with thousands of people involved, dedicated governance in place and deploying tenths of innovative yet standardized technology use cases, over time spans of just 18 to 24 months.

“The newly designated Lighthouses show that scaling can be done, with three must haves. First, clear strategy. Without that, you get stuck in pilot purgatory, never seeing which technologies matter for your business. Second, workforce capabilities. Without enough of the right skills, your transformation runs out of steam. Third, strong governance. Without a real execution engine, you won’t capture impact or keep improving.”, added de Boer.

The latest cohort of lighthouses includes four sites designated as Sustainability Lighthouses. These are:

  • Arçelik in Ulmi, Romania: Arçelik Ulmi greenfield factory, powered by 100% green electricity, deployed sustainability use cases such as digital-twin for energy management and closed loop water management system integrated to advanced water treatment plant. In an environment suffering from water stress, it resulted in a reduction of water consumption by 25% as well as a reduction of energy consumption by 17% and GHG emission by 22%, per unit manufactured
  • Micron in Singapore: With the growing demand for memory and storage solutions, there is a need for Micron Singapore to expand and increase Gigabyte production while reducing environmental footprint. From 2018 to 2021, Micron Singapore increased output by ~270% and simultaneously reduced resources used per Gigabyte produced by ~45%. This is enabled by sustainable technology development with optimization of materials consumption through environmental footprint tracking.
  • Unilever in Dapada, India: In a bid to achieve corporate sustainability goals of 70% reduction in Scope 1 & 2 emissions by 2025 over baseline of 2015 and reducing water consumption while tackling rapidly increasing volumes, Unilever Dapada deployed 14 use cases such as ML powered energy optimization through integrated energy management system, digital twin to accelerate eco-friendly formulations. Dapada reduced its scope 1+2 emissions by 54%, its scope 3 emissions by 43% and its water consumption by 36%, and as a result is ahead of its goal to achieve the emission reduction targets.
  • Western Digital in Shanghai, China: In the context of growing demand, Western Digital doubled the site’s petabyte (PB) output between 2017 and 2021 while reducing its environmental footprint per PB to achieve corporate ambitions. This result was enabled by multiple 4IR use cases such as machine learning to dynamically optimize the performance of the water recycling plant and should consumption prediction to detect abnormal energy consumption based on real-time operating data. These measures reduced water consumption by 62% and energy consumption by 51% per PB.

The 11 new lighthouses include:

  • Agilent Technologies in Singapore: With the ambition to simplify high-tech manufacturing in low-volume, high-complexity instruments to meet rising customer demand, Agilent Singapore deployed IIoT-powered digital twin, AI & Robotic Automation solutions to achieve sustainable growth, overcoming bottlenecks from specialized manpower and transforming the workforce into scalable 4IR-ready generalists. This resulted in an increased output by 80%, improved productivity by 60%, improved cycle time by 30% and quality cost by 20%.
  • CATL in Yibin, China: To catch up with significant business growth, and higher quality and sustainability expectation, CATL builds up a large greenfield in Yibin city. The plant further deployed in depth AI, IoT and flexible automation on top of CATL Ningde headquarters lighthouse digital initiatives, and has achieved 17% increased line speed, 14% reduced yield loss, and zero carbon emission.
  • Cipla in Indore, India: To preserve access to high quality affordable drugs globally while facing an increase in material and labor costs, Cipla deployed digital, automation and analytics solutions to 22 Indian sites in parallel. Indore’s Oral Solid Dosage facility led this journey by implementing 30 4IR use cases thereby improving total cost by 26% and enhancing quality by three times, while reducing greenhouse gas (GHG)emissions by 28%.
  • Danone in Opole, Poland: To address an increasing product portfolio complexity, Danone Opole engaged its whole workforce across functions and levels into a digital transformation journey to deploy connected shopfloor, artificial intelligence and automation at scale. As a result, it improved costs by 19%, efficiency by 12% while improving quality and reducing GHG emissions by close to 50%. It became a transformation leader for the other 39 Danone plants in Europe and top employer in the local market
  • Dr. Reddy's Laboratories in Hyderabad, India: Facing business challenges from severe price erosion and rapidly evolving quality expectations, the 25-year-old site embarked on large scale digitalization to sustain and grow in the generics pharma market. The site deployed 40+ 4IR use cases by operating in "garage mode" and leveraging IIoT & democratized platform for advanced analytics. As a result, it improved manufacturing cost by 43% while proactively enhancing quality and reducing energy by 41%.
  • Flex in Sorocaba, Brazil: To improve site competitiveness, sustainability and health, Flex implemented 4IR initiatives along the end-to-end value chain, such as IoT-enabled recycling of electronic waste and supply chain control tower. Digital transformation journey resulted into a 50% labor cost improvement, an 81% material loss reduction, while increasing customer satisfaction (+18%) and employees well-being.
  • Haier in Qingdao, China: Facing growing demand for customized design, fast delivery and high quality, Haier refrigerator factory leveraged big data, digital twin and advanced visual inspection technology to accelerate R&D, upgrade manufacturing process and logistics scheduling mode. The order response lead time has been shortened by 35%, production efficiency has been increased by 35% and quality performance has been improved by 36%.
  • Midea in Shunde, China: In order to meet demand for high quality products delivered in shorter lead times, Midea Shunde factory has deployed AI, digital twin and other 4IR technologies in the end-to-end value chain, achieving 24% lower unit production cost, 41% shorter lead times, 30% shorter R&D lead time and 51% less defect rate.
  • Mondelēz in Sri City, India: Driven by the aspiration to outgrow the market through superior volume delivery, cost leadership and building further resilience and diversity in a volatile environment, Mondelez’s Sri City deployed end to end digitalization, predictive analytics, artificial intelligence and advanced automations to increase labour productivity by 89%, reduce manufacturing costs by 38% and sustain 50% female workforce. Thus, making it a benchmark manufacturing site for Mondelez globally.
  • Sany Heavy Industry in Changsha, China: To address the challenges from industry specific market cycle fluctuations and product complexity (263 SKUs), Sany Changsha leveraged flexible automation, AI and IIoT at scale to build a digital and flexible heavy equipment manufacturing system. As a result, the site expanded capacity by 123%, improved labor productivity by 98%, and reduced unit manufacturing cost by 29%.
  • Western Digital in Shanghai, China: To address a 250% annual growth rate, short technology transition pace of 18 months and workforce challenges, Western Digital semiconductor backend factory in Shanghai implemented diverse 4IR use cases such as automated product design system, machine learning based virtual wafer test and intelligent planning system. The site reduced time to market by 40%, product cost by 62% and improved productivity by 221%.

Tune in to the Global Lighthouse Network Lighthouses Live event, which will be webcast live on 13 October 2022 (14.00-15.00 CET). Details here.

About the Global Lighthouse Network

The Global Lighthouse Network is a community of manufacturing sites and value chains that are world leaders in the adoption and integration of the cutting-edge technologies of the Fourth Industrial Revolution. Lighthouses apply Fourth Industrial Revolution technologies such as artificial intelligence, 3D-printing and big data analytics to maximize efficiency and competitiveness at scale, transform business models and drive economic growth, while augmenting the workforce, protecting the environment and contributing to a learning journey for all-sized manufacturers across all geographies and industries. The Global Lighthouse Network is a World Economic Forum initiative in collaboration with McKinsey & Co, factories and value chains that join the Network are designated by an independent panel of experts.

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