Charting a New Path: Lessons from Industrial Lighthouses

As the world enters a phase of ongoing uncertainty, including economic, global, and political flux, it is natural to look for beacons of hope to guide the way through any impending storms.

Enno de Boer, a partner McKinsey & Company’s manufacturing and supply chain practice, is the lead partner for the World Economic Forum Technology and Innovation for the Future of Production project. Below, Enno confronts the pressing topic of manufacturing in the Industry 4.0 revolution.

Recently, we started to look for examples of organizations that have found successful recipe to grow productivity, respond quickly to market conditions and consumer demands, and even flourish during periods of volatility.

Working in conjunction with the World Economic Forum (WEF) we’ve identified the top manufacturing sites around the world that can act as a guide to manufacturing organizations adopting Fourth Industrial Revolution (4IR) technologies. They are the 16 industrial lighthouses.

The lighthouse organizations identified from a survey of 1,000 manufacturers aren’t all huge multinationals, they’re not all in developed economies, and they operate across a wide range of industries and sectors including automotive, pharmaceuticals, electronics, consumer goods, and more. But they do share some commonalities in both their adoption of Fourth Industrial Revolution Technologies, and their culture. And it is from these shared characteristics that leaders can learn how to survive—and even thrive—during periods of uncertainty.

As the world enters a phase of ongoing uncertainty, including economic, global, and political flux, it is natural to look for beacons of hope to guide the way through any impending storms.

Firstly, they’re all effective users of three technological megatrends of connectivity, intelligence, and flexible automation. This technology isn’t displacing people, but rather augmenting them, allowing them to identify and implement new ways of using technology that can add benefit to an entire value chain. And rather than getting stuck in pilot purgatory — the all-too-common state in which companies keep launching pilots of new technologies but none of them ever reach scale — they’re using agile working methods to introduce these technologies across their business quickly and at scale.

A second success factor is the way in which these organizations have democratized technology, allowing employees to create their own solutions on the ground. They’re also creating an environment of innovation, that involves universities, start-ups and other technology providers. This collaboration can play a huge role in addressing manufacturing’s image problem, changing the perception of roles from being dirty, dull and dangerous to exciting and forward-thinking, offering attractive opportunities for the best and brightest candidates.

Alongside this democratic approach, it is important that leaders champion the implementation of 4IR technology with urgency and speed. Siloed pilot programs will not deliver impact, and so leadership must drive enterprise-wide multiple use cases. Workforce training is also critical, allowing organizations to complement existing employees’ deep expertise with digital skills to get the most out of new technologies.

And the benefits to be reaped from the effective use of technology are huge. KPI improvements in production, agility, and customization abound across the industrial lighthouses, with huge opportunities to increase productivity and quality, as well as the opportunity to respond quickly to consumer demands for mass-customization.

Finally, they’re showing that it’s important to act now. Rather than pursuing a smart-follower strategy and waiting for better or cheaper technology, they’re leading the way in their sector. And by doing so, they have the potential to capture vast rewards. Our research shows us that leaders could see up to 122% in increased cash flow over five-years, whilst followers and laggards will lose out.

Whether you choose to innovate through your production system or value chain, the industrial lighthouses can show you how to join the Fourth Industrial Revolution as a leader, creating a secure future for your organization, no matter what storms may come your way.

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