TCSESM083F23F1 Smart factories such as MES, ERP, PLM and other smart factory markets are estimated to be worth about $154 billion in 2019, growing at a compound annual growth rate of nearly 10% from 2019 to 2024.

The smart manufacturing platform market alone was $4.4 billion in 2019 and is expected to grow at a compound annual growth rate of 20% over the next five years.

The manufacturer plans an annual investment base of 3.24% of its revenue over the next three years. The planned investment is 1.7 times higher than in each of the past three years.

Manufacturers plan to build more than 40% of smart factories in the next five years, with annual investment increasing 1.7 times over the past three years.

TCSESM083F23F1 These and many other insights come from the Capgemini Institute in a report titled “Smart Factory Scale,” a copy of which can be downloaded from here. The Capgemini research team study found that the two main challenges to achieving smart factory production levels are the convergence of information technology (IT) and operational technology (OT) systems and the need to find candidates with scope expertise, knowledge and skills to lead smart factories. Capgemini found that there are challenges with good smart factory initiatives, with only 14% of manufacturers feeling their initiatives are successful. The Capgemini study surveyed 1,000 manufacturers, focusing on organizations that have already implemented smart factory initiatives. The research methods are given on pages 42-43 of the report. Key insights from the study include the following:

Manufacturing execution systems (MES), monitoring and Data acquisition (SCADA), and product lifecycle management (PLM) systems are essential technologies for the success of smart factory initiatives. Manufacturers take a pragmatic, proven approach to defining and rolling out smart factory initiatives, relying on their own long-term systems that operations teams use every day. In the plastics manufacturing and processing industry, real-time monitoring is the path to lighter (or fully automated manufacturing transition). Manufacturing executives interviewed believe that real-time monitoring can provide context-rich, real-time data streams that enable long-established technologies such as track/trace and emerging technologies (analytics /AI, industrial iot, robotics, and smart energy management) to deliver results.

China, Germany and Japan are the top three countries with the highest smart factory adoption index, followed by South Korea, the United States and France. Capgemini has built a Smart Factory Adoption index that ranks each country more accurately. Smart factory adoption by a country or sector with an index greater than one indicates higher-than-average plans for more aggressive expansion. Here’s how each country scored:

TCSESM083F23F1 Nearly 70 percent of manufacturers are now rolling out smart factory initiatives, a significant increase from 2017. Two years ago, only 43% of manufacturers were rolling out smart factory initiatives. Today, 68 percent of manufacturers do. Most organizations that were planning smart factory initiatives two years ago (33%) have now launched initiatives. Dr. Seshu Bhagavatula is President of New Technology and Business Initiatives at Ashok Leyland, India’s largest heavy duty vehicle manufacturer. He said, “There are three main reasons for our smart factory initiative. The first is to improve the productivity of our old factories by modernizing and digitizing their operations. The second is to deal with quality problems that are difficult for humans to detect. The third is the ability to synthesize or mass customize.”

The power, energy and utilities industry has so far led other industries in smart factory progress and is above the global average. Discrete manufacturers have the most ambitious plans, with 43 percent of all production centers in the industry expected to be smart factories within five years. Discrete manufacturing also has a higher smart factory adoption index over the forecast period than other industries, further highlighting the industry’s aggressive approach to smart factory competition.

TCSESM083F23F1 On average, 40% of production facilities now use MES/SCADA solutions. The same 40% use PLM for discrete manufacturing and consumer products. The deployment of newer solutions such as remote monitoring, mobile/augmented engineering (AR/VR) and manufacturing intelligence (from industrial IoT to analytics and AI) remains at an average of two-thirds of the production line.

Share of production lines currently managed by digital platform technology. Source: Capgemini Institute report “Smart Factory Scale”

52% of manufacturers identified the integration of MES/SCADA systems with enterprise resource planning (ERP) as a key requirement for their smart factory initiatives. More than half (48%) of manufacturers believe that integrating product lifecycle management (PLM) systems is necessary for the success of smart factory initiatives. Surprisingly, only 40 percent of manufacturers launching smart factory initiatives have end-to-end integration platforms that span from devices to data analytics.

TCSESM083F23F1 Three core technologies to realize smart factory. The three core technologies are connectivity (using the Industrial Internet of Things to collect data from existing devices and new sensors), intelligent automation (e.g., advanced robotics, machine vision, distributed control, drones), and cloud-scale data management and analytics (e.g., enabling predictive analytics /AI). Capgemini found that these digital technologies will also enable IT-OT convergence, enabling end-to-end digital continuity from design to operation (digital twin).

55% of manufacturers include new construction projects in their smart factory plans. Capgemini found that new construction was particularly prevalent among small and medium-sized companies (those with less than $10 billion in annual revenue). For example, among companies with revenues between $5 billion and $10 billion, 59% of new construction projects were built in 2019, compared to 50% in 2017.