By Tan Wee Kwang
Rapid technological change is transforming the production of goods and services throughout much of the global economy. This transformation will accelerate exponentially, as we are still only in the early stages of the curve.
A research report from the World Economic Forum and A.T. Kearney, titled “Technology and Innovation for the Future of Production”, explores the impact of new technologies on the future of production, based on over a year of quantitative and qualitative research.
This research led to three primary findings for government and corporate leaders:
1) Five technologies will predominate in the years to come: the Internet of Things, artificial intelligence, advanced robotics, wearables and 3D printing.
2) The true power of these technologies lies in their convergences with one another. Understanding and planning for such convergence is the key to unlocking the highest value of future production systems.
3) For government and corporate leaders, the future of production is arriving more swiftly than many realize, and demands the rapid assessment, support and adoption of appropriate technologies.
The Internet of Things
IoT investment in production is expected to double from $35 billion to $71 billion by 2020. North America leads today’s IoT adoption, however, the Asia-Pacific region is projected to have a larger market share by 2020, in excess of $2.5 trillion.
IoT platforms are still evolving and there are no clear winners in this space. Rival technology companies creating competing platforms are targeting many industrial sectors.
IoT has three distinct uses in today’s production systems:
- Smart enterprise control: IoT enables integration of smart connected machines with the wider enterprise. This facilitates more flexible, efficient and profitable production. Smart enterprise control is complex to implement and will require the creation of new standards to enable the convergence of IT and OT systems.
- Asset performance: Deployment of sensors, easy cloud connectivity and data analytics improves asset performance, resulting in better and more forward-looking business decisions.
- Augmented operators: Future employees will use mobile devices, data analytics, augmented reality and transparent connectivity to increase productivity. Production plants will evolve to be more user-centric and less machine-centric.
IoT take-up is still nascent and 85% of potential assets remain unconnected. Barriers to widespread adoption include the establishment of industry standards to allow smart devices to interoperate, and cybersecurity protection. Security needs to be built in industrial control systems and designed into the components that make up the automation system, not added on later.
Artificial Intelligence and Advanced Analytics
The connected economy is transitioning from rigid rule-based algorithms to flexible, intelligent ones. These are machine learning solutions that learn and evolve on their own over time, with the appropriate training data.
AI has achieved recent performance breakthroughs across numerous applications, from image classification to pattern recognition and ontological reasoning. For example, over the past decade, automated image recognition has improved in accuracy from 85% to 95% (a human averages 93%), allowing innovations such as autonomous warehouse order picking.
AI creates value through:
- Optimization: AI systems are enabling new levels of production system optimization, such as predictive maintenance, intelligent scheduling and improved quality management.
- AI-as-a-service: The rise of AI-as-a-service platforms, with lower barriers to entry, will allow companies to scale cognitive solutions in a zero-marginal cost setting and reshape industry dynamics.
- Hyperpersonalization: Products and services will compete based on hyperpersonalized, cognitive features. Firms will leverage AI to process customer preferences in real time, so as to rapidly scale personalized products and services. AI currently informs 75% of consumer picks on Netflix.
- Natural language processing: NLP can be adopted to create task-specialized personal assistants, as well as platforms for conversational technologies that can be provided as a service and integrated in various applications
- Large global firms and institutions, with economies of scale that have never been unleashed due to the complex coordination required, will benefit from AI. They will use AI applications to rapidly assess, predict and simulate decisions across silos, spans and layers.
Key ethical, regulatory, legal, economic and cybersecurity questions about AI remain, and these may hamper its ability to become mainstream.
An estimated 1.8 million industrial robots are operating in global production systems today, representing a global market of approximately $35 billion. Penetration is markedly pronounced in Asia, with China being the largest robot market in the world.
With greater flexibility and intelligence, robots will proliferate across industries where they have not been deployed traditionally, including food and beverage, consumer goods and pharmaceuticals.
The ambition is for robotics to become collaborative, intuitive, self-monitoring, agile and relatable, exhibiting human-like characteristics. Ultimately, the vision is to “uncage” robots, enabling them to move on from being traditionally separated from people for safety reasons and allowing them to work alongside their human counterparts.
One of the key rationales for using robotics is its growing ability to perform dull, dirty and dangerous operations. Removing people from these operations could create a safer workplace, with companies able to redeploy workers to higher-value tasks.
Robotics enable a connected, synchronized supply chain that enhances the ability to react to changing consumer demands and to produce “just in time”.
Three key barriers obstruct widespread adoption: technology constraints, high costs of implementation and workforce limitations.
The fast evolution of robotic advancements will outpace the workforce skill level. A lack of educational programmes and a shortage of the required technical skills sets pose significant barriers to implementing robotics successfully.
Wearables and Augmented Reality (AR)
Technology for augmented reality (AR) and virtual reality (VR) could become the next computing platform, following personal computers and smartphones. These technologies fundamentally shift the way that information is relayed to the user, offering immediate access to critical data.
Wearables, AR and VR present valuable use cases for quality inspection, work instructions, training, workflow management, operations and safety, logistics and maintenance.
Wearables can offer value across multiple dimensions in production:
- Productivity improvements through communication, data digitalization and IoT integration
- Health and fitness wearables will lead to improved health, fewer safety incidents and reduced insurance premiums.
- AR and wearables will lead to improved quality through remote verification, automatic mistake proofing and live, step-by-step instruction/documentation
- VR and wearables will lead to significant reduction in workforce training costs and increased training effectiveness.
- VR will be an integral part of design methodology and design for manufacturability, reducing time to market for new products.
Industries with a high labour cost or high cost of mistakes have the greatest potential to achieve a significant return on investment with these technologies.
3D printing drivers include a growing library of materials conducive to manufacturing techniques, an ability to produce complex geometries (e.g. engine parts), a lower number of components required to make a product, and a streamlining of workflows.
3D printing works best in industries where customization is critical, typically those with low-volume, high-value parts. Consumer products and the automotive, medical and aerospace industries are leading the use of 3D printing technologies
3D printing has improved and become more versatile. It is now transitioning from rapid prototyping to scaled production for select products, tooling and patterns, as well as repair and maintenance.
3D printing is becoming integrated in shop-floor production systems and will slowly move towards a “break even” point versus traditional manufacturing. Experts disagree but the general consensus is that desktop printing applications will eventually outpace industrial ones.
3D printing is already in mainstream use to produce highly customized medical devices, such as hearing aids and dental structures. 3D bioprinting is still early in the hype cycle, with 5-10 ten years until mass adoption.
As a process that has the potential to produce little to no waste and is capable of recycling materials, 3D printing could help to create a circular economy.
While trade in IP seems a logical progression, 3D scanning and copyright infringement are a significant threat to this type of trade. Establishing laws and regulations for controlling IP infringement is necessary to support and encourage further investment and innovation in 3D printing.
Converging Technologies: New Opportunities to Create Value
The convergence of these technologies will generate extraordinary value-creation opportunities. It will also raise important strategic questions for organizations and individuals throughout the economy and around the world.
1) For production sites, converging technologies give rise to a “factory of the future” model in which costs plummet; efficiency increases; and high-quality, quick-turnaround “batches of one” become feasible.
2) For firms, this convergence will open new avenues for the creation of customized and connected products, as well as novel business models such as pay-per-performance. To realize the full value of such developments, companies will need to establish new forms of collaboration with suppliers and other partners across the production chain.
3) For entire industries, the five technologies will combine to unlock wide-scale efficiencies and a deepened understanding of key customer segments.
4) For society, such prospective efficiencies are already generating fierce debate, and will compel governments to make hard choices and tradeoffs. Leaner production systems could well lead to further losses in industrial employment, but could also generate new job opportunities in a range of sectors.
5) Finally, for individuals, these shifts in the production cycle will have widely varying consequences. Workers in all sectors will need both technical skills and the ability to augment those skills as new technologies and business models arise.
These changes will compel government and business leaders to focus on what the convergence of advanced production technologies will mean for their companies and for society. Leaders of both sectors will have an interest in improving infrastructure, raising the technical skill levels of workers, and identifying gaps in governance structures.