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The financial benefits of industry 4.0 – cost reductions and increased productivity

For early adopters, industry 4.0 is business as usual. It’s here to stay, and they are reaping the benefits.

For others it feels like the future and a little way off yet. But what it does hint at is a future featuring cost reductions and increased productivity for manufacturers.

The benefits are there. For complex organisations however, it requires an overview of procedures and processes to ensure key areas are digitised.

It can and should be done. Here’s why.

The financial impact of industry 4.0

In 2016, PwC published their Global Industry 4.0 Survey on building the digital enterprise. Key stats from within the report include the following:

  • The companies surveyed that successfully implemented industry 4.0 expected to increase their annual revenues by an average of 2.9% p.a.
  • They also expected to reduce costs by an average of 3.6% p.a.

All in, totalling all the businesses surveyed, that amounts to a total of US $421bn in cost reductions and US $493bn in increased annual revenues in the five years following the report.

They’re some big numbers.

Additionally, broken down by industry (according to the report) it’s expected to see the following growth and increased revenues by 2020:

  • Electronics: $62 billion
  • Industrial manufacturing: $52 billion
  • Automotive: $28 billion

Again, big numbers.

So, where are these benefits coming from? And how can manufacturers make the most of it?

A quick overview

Those manufacturers digitising their supply chains, could potentially limit up to 70% of manufacturing failures through predictive maintenance, while data-driven insights can potentially boost productivity by up to 30%.

Key benefits include:

  • Real-time production monitoring and quality control to reduce waste and the need to rework
  • Predictive maintenance to prevent any costly repairs and reduce any unplanned downtime
  • Increased automation to assist with reducing labour costs
  • The use of 3D printers for faster prototyping, reducing the cost of engineering and speeding up time to market

Enhancing supply chain performance – on-demand suppliers  

Businesses that work with an on-demand supplier, will often work with the same supplier from prototyping into low-volume production.

The key aspect is that the supplier has the ability to scale through advanced automation to ramp up production quickly and on-time, as demand requires. They’ll be little to no wastage and the manufacturer will be responding direct to customer need.

Working in this lean way has the following benefits:

  • Companies can purchase the exact quantity of parts as and when they’re needed, reducing inventory costs
  • This can streamline production and simplify partner relationships creating a digital flow from initial design through to production
  • This digital flow will tie together each element of the supply chain and will also supply data at each stage of the process
  • Acting on this data can therefore speed up each element of the supply chain, increasing productivity

For many manufacturing businesses, digitising their operation can seem like a costly undertaking. But with tangible benefits to reduce costs and increase productivity, the revolution is well and truly real.

At J B Cole, we work with manufacturing and complex organisations to understand operational inefficiencies and customer requirements to identify the right tech to respond to the individual challenges of the specific sector and client.

 

Posted by
Josh Bolland Profile
Founder & CEO
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