McKinsey believes that the progressive development of industrial automation is facing a watershed between non-linear competition and technological change, and there are two forks in the road ahead: “Scenario 1: improvement” and “Scenario 2: transformation”.

In the first scenario, it will take at least another 15 years for fully automated manufacturing to reach most companies, until around 2040. In this progressive improvement scenario, the most innovative technologies will produce specific applications around 2030, and the implementation of each automation technology will still require a longer period of validation and review. From a talent perspective, the required skills haven’t changed much. In short, everything is not so different from today.

In the second scenario, fully automated manufacturing will reach most companies within the next five to 10 years, and many factories will be more fully digitized by 2035. In this transformative scenario, McKinsey predicts that by 2030 all information processing tasks will be done by edge cloud platforms, and typical manufacturing plants will automate end-to-end production processes, use more standardized solutions, and have more open ecosystems.

From the business model point of view, the hardware and software used in the factory will adopt an X-as-a-service model, and pay according to the usage, thus reducing the risk and cost of the factory to try new automation technology. From a talent perspective, manufacturing companies need more specialized digital transformation new positions to handle new industrial automation systems.

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While industrial automation has progressed steadily over the past few decades, the structure of the market has hardly changed, and McKinsey believes that the pace of change in industrial automation is accelerating due to the emergence of disruptive technologies and manufacturing landscape migration, labor shortages, and macro trends such as ESG.

The vision of smart manufacturing will certainly be realized, but whether it will take five to 10 years or more to realize the vision, McKinsey does not give an answer.

The four main categories of vendors in the market: Internet giants, traditional automation enterprises, software providers and professional players will develop dynamically based on their own advantages. Their long and short boards are very visible, as shown in the image below, dark colors are where the long board is, and the color gradually becomes lighter as the ability decreases.

To fill in the gaps, Internet giants need to expand their knowledge in the industrial sector and establish partnerships with established automation vendors and system integrators. Traditional automation companies may consider increasing the ratio of IT capabilities to strengthen their advantages in cloud platforms, software and the Internet of Things through mergers and acquisitions or ecological synergies.