A complex and fragmented sector

by Baptiste ROZE

Implementing new technologies is crucial to the manufacturing sector’s competitiveness and productivity, and could reduce production costs by 5% to 8%. Encompassing a wide range of businesses, company sizes and technological maturity levels, the manufacturing sector is both vast and complex, which means the pace at which these technologies are adopted will vary considerably.

Different market potential for different industries

If there is no doubt about the manufacturing sector’s market potential – representing, in Europe alone, more than two million companies and 14% of GDP – the more mature industries in terms of new technology adoption, such as the automotive and aerospace industries, appear the most likely candidates to pioneer the transition. Next will be processing industries, such as biochemical, pharmaceutical and agrifood, which are having to contend with additional levels of complexity in process automation. Sectors that still rely heavily on manual labour, however, such as textile, luxury and leather goods, will likely be much later adopters.

A strategic sector for the European economy

Manufacturing sector's share of the economy and jobs in Europe, in 2016

Source : Eurostat

Market players’ positioning becoming increasingly clear

As 90% of today’s manufacturing machines are not connected, many manufacturers are in favour of developing Industry 4.0 systems in their factories, and most are introducing innovation trials and plans for large-scale adoption.

Even though equipment suppliers are the foundational link in the value chain, purely product-based solutions are turning to hybrid product and service solutions (and some PaaS-only ones). Consortiums are emerging between equipment suppliers, telecom operators, platform owners and IT service providers (Software AG and Deutsche Telekom, Telefónica and Ericsson, etc.) to this end.

As a result, ICT companies are becoming increasingly prominent players in this market, supplying connectivity and the digital services needed to implement large-scale solutions.

A fragmented value chain

Industry 4.0 players value chain

Source : IDATE DigiWorld

Benefits that extend beyond logistics

The benefits of AR/VR solutions for Industry 4.0

Source : IDATE DigiWorld in "The immersive technologies market (VR/AR/MR)"

The manufacturing sector in the 5G era

The allocation of frequency bands and the emergence of 5G services around the world represent real opportunities for manufacturing industries. Some are already committed to developing their own private global networks, such as Volkswagen with its “Industrial Cloud” project which aims to connect its 122 production plants to optimise production worldwide.

The technologies listed here all depend on the installation of a communication solution like 5G. It will enable use cases for inter-connecting objects, monitoring production chains in real time, M2M and H2M communication, AR/VR, and production data analysis.

The manufactruing sector will aslo be affected by servicisation

Manufacturing-as-a-service reshaping the value chain

Source : IDATE DigiWorld

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