22 Sep 2018

TECHNOLOGY AND INNOVATION FOR THE FUTURE OF PRODUCTION

The current pace of technological development is exerting profound changes on the way people live and work. It is impacting all disciplines, economies and industries, perhaps none more than production, and how, what, why and where individuals produce and deliver products and services.

Production fundamentally impacts economic structure at global, regional, national and local levels, affecting the level and nature of employment, and today is inextricable from environmental and sustainability concerns, considerations and initiatives. Collectively, the sectors of production have been the source of economic growth in developed and developing nations alike, a major source of employment for a rapidly evolving and increasingly skilled workforce, and they continue to be the dominant focus of innovation and development efforts in most countries. The transformative potential of technology in production systems is widely recognized, even while the precise configuration and extent of the possible transformation remain unknown.

Many of these technologies have yet to realize their full potential and contribution to inclusive global productivity. Unlocking their value will largely depend on the ability of businesses and governments to improve the technical readiness of the technologies, educate the necessary skilled workforce, foster inclusive diffusion and adoption, ensure availability of underlying infrastructure and address issues of data governance and cybersecurity. Inevitably, the demonstrable benefits of new technologies will lead to their greater 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, the Forum identified five cross-technology tipping points that will indicate widespread adoption.

Unlocking the Value of Technology

The technologies touch on every step of the end-to- end production process and global value chains; their convergence raises a new set of strategic choices related to value. Those choices deal with how value is created within firms and redistributed among industry players, countries and society.

A few companies and countries have already launched significant transformation and policy initiatives, unleashing a whole new wave of industrial and geopolitical competition. Industrial giants are waging a fierce war in industrial platform dominance and extracting higher value from their large production footprints. Recognizing the importance of production to their industrial future, countries have launched programmes to support the deployment of these technologies to their domestic manufacturers. Notable examples include the Made in China 2025 programme, with more than $3 billion in advanced manufacturing investments, and the European Union (EU) €7 billion Factories of the Future initiative.

While technologies hold valuable opportunities for efficiency and growth, their current development pace shows they may also exacerbate existing inequalities. Not every company and country in current value chains will capture the value unlocked by these technologies to the same degree. Laggard producers (large ones, as well as small- and medium-sized enterprises), bear the highest risk of negative impact from technologies. Many countries will be challenged in assisting their small- and medium-sized producers to reap the value of technologies.

Technologies shaping Production

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.

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.

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.

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. The most promising immediate opportunities for applying AI in production systems are in quality management, predictive maintenance and supply chain optimization.

In conclusion, 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. 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.

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