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Slow-Adopting Asia Runs Risk of Missing Out on Industry 4.0 Benefits

Industry 4.0 is coming, although not as quickly as some at Singapore's Industrial Transformation Asia Pacific event would like, with Asian companies currently seen as largely lagging far behind many of their rivals in Europe and the US.

Photo: Reluctant to robotise and adverse to automation, will Asia miss out in the coming digital revolution? (Shutterstock.com)
Reluctant to robotise and adverse to automation, will Asia miss out in the coming digital revolution?
Photo: Reluctant to robotise and adverse to automation, will Asia miss out in the coming digital revolution? (Shutterstock.com)
Reluctant to robotise and adverse to automation, will Asia miss out in the coming digital revolution?

The Asian economies are seen by many as among the fastest-growing in the world. The region is home to many early adopters of Industry 4.0 – a trend characterised by greater automation, IoT connectivity, machine learning and big data. The Industrial Transformation Asia Pacific event gathered many of the leading players in the Industry 4.0 movement to share their vision for 21st-century manufacturing.

Setting the scene for the event, Jochen Köckler, Chairman of the Managing Board at Deutsche Messe AG, which organised the expo, emphasised the importance of the region's economies, saying: "ASEAN and Asia are fast-growing economic regions that have a significant impact on the manufacturing industry. The current US-China trade war, as well as the current global outlook, has both sides as well as Europe looking to Southeast Asia as a region into which they can redirect investment. There is also a demonstration of strong commitment by many governments in the region to increase the speed of Industry 4.0 adoption and to attract foreign direct investment."

Although many are moving to adopt Industry 4.0 thinking and methods, the transformation may be taking longer than it needs to in some cases. Tomas Koch, Senior Partner of international management consultancy McKinsey & Company, presented a mixed picture of the global move towards Industry 4.0, saying: "Many companies across the globe have embraced Industry 4.0 solutions. Two-thirds of industrial companies worldwide say that digitising the production value chain is one of their highest priorities.

"However, most companies are stuck in the 'pilot trap'. While there is significant importance placed on the topic and many pilots have been launched across a range of use cases, less than a third of respondents cite having moved to critical use cases, such as digital performance management, into large-scale rollout, with 85% of companies spending more than one year in the pilot phase. At the same time, more than 90% of surveyed companies believe they are either at the forefront of digital manufacturing in their industry or, at least, on par with the competition. This, of course, cannot be true."

Koch saw some common causes in organisations failing to move from trial to full implementation, adding: "The three biggest reasons cited for being stuck in 'pilot purgatory' are lack of resources, high cost of scaling, and difficulty in justifying the business case.

"McKinsey and the World Economic Forum indicate 26 companies that are end-to-end digital – the 'lighthouses'. Of these, 10 are in Asia, with six in China, two in ASEAN, one each in India and South Korea."

Karel Eloot, Senior Partner and Co-leader of Asia Operations Practice, and Matteo Mancini, Partner, Leader of Manufacturing and Supply Chain in Asia for McKinsey, set out the potential gains on offer for those companies that can break out of the test-case stage into full take-up, saying: "We project the productivity gains for Asia to be worth US$216 to $627 billion.

"Today, we see Chinese companies as significantly less automated than the rest of the world. The global average is 74 robots per 10,000 employees; the Chinese have 68. The Japanese and Germans are the leaders with 303 and 309 robots, respectively. Industry 4.0 is the opportunity for China and the rest of Asia to close the gap."

Michael Bosbach, Global Corporate Manufacturing Director of Ohio-headquartered P&G, gave advice on how to avoid the 'pilot trap'. He explained how for P&G, every 'touch' on the supply chain equals a 'loss', saying: "It's an evolution of operational excellence to deliver the next level of productivity and synchronisation. For us, this has resulted in an 88% increase in process reliability, 30% reduction in customer complaints, 14% increase in productivity and 7% savings.

"The way forward is to be business driven. Don't fall into the trap of having a technology looking for a business problem to solve; focus on the people."

3D printing is an important element in Industry 4.0 and several speakers addressed the technique's potential – as well as some of its current limitations. Volker Hammes, Managing Director of Germany's BASF 3D Printing Solutions, elaborated on its challenges, saying: "There are limited choices in high-performance materials, with one, PA12, dominating. Important engineering plastics and embedded reinforcements are not yet available.

Photo: PA12: High-performance 3D-printing material.
PA12: High-performance 3D-printing material.
Photo: PA12: High-performance 3D-printing material.
PA12: High-performance 3D-printing material.
Photo: Germany: The most robotic of nations.
Germany: The most robotic of nations.
Photo: Germany: The most robotic of nations.
Germany: The most robotic of nations.

"There is a limited choice of industrial printers. Most lack speed, robustness and reproducibility. Solutions are not yet scalable, certification standards are not yet there, nor is there proper IP protection, while there is a lack of industry-specific experienced design engineers and not enough data sets for AI in the design process."

Larry Lyons, Vice President of Product for US company Desktop Metal, saw how the limitations of raw materials are being overcome, saying: "In the 2020s, metals will achieve a new level of complexity, new metals will become available, they will be 30-50% lighter, and be mass customisable. 3D printing will re-engineer global supply chains, avoiding today's tariffs, transport costs and time penalty. Parts can be made to order, matching production rates to demand.

"The three challenges facing the most common process, powder bed laser fusion, are the limitation of the materials, both in terms of properties and the limited range of useable metals, and the cost of the powder, printer and operations, and the speed. For these reasons, the process is targeted mainly at the prototype market, rather than mass production.

Benjamin Moey, Vice President of Additive Manufacturing for German industrial giant Siemens, discussed how advances in material science have made it possible for polymers to replace metals, saying: "Superior tensile properties have been achieved with micro welding. Enhanced properties with complex lattice structures have resulted in lighter weight materials of similar strength. Costs have been reduced with cheaper materials and better design optimisation have all resulted in reduced costs, opening additive manufacturing as a solution for more applications.

"The barriers facing the industry include the need to validate and certify the new materials and new manufacturing processes. The limited supply of the raw materials and the development of new alloy design is still in its infancy, hampered by the limited data sets."

Singapore's Deputy Prime Minister and Minister for Finance Heng Swee Keat issued a challenge to the public and private sectors to embrace change or face the consequences, saying: "To fully benefit from Industry 4.0, companies, industries and governments need to transform their processes and operations. At the same time, we need to take into account the challenges that the rapid advancement of technologies present.

"Technological disruption will render some industries and jobs obsolete. This disruption is more acute as it's taking place at a time when the global economy is facing significant headwinds, with weakening support for global trade and greater uncertainty. Manufacturing industries have come under pressure, and companies are consolidating their operations.

"Those with adaptable, productive and cost-effective factories will have the headroom to innovate and reinvent themselves, and the capacity to overcome the downturn. Those with less efficient facilities will be under severe pressure."

The minister set out a bold vision for Singapore as a leader in Industry 4.0, saying: "Research and innovation in advanced manufacturing is also a key emphasis of our Research, Innovation and Enterprise 2020 (RIE2020) plan. We have allocated US$2.35 billion in R&D for advanced manufacturing and engineering to build up the innovation capacity of companies embarking on Industry 4.0. This will ensure that Singapore has a strong base of leading technology and solutions providers that can provide the relevant technical expertise to support Industry 4.0 adoption, making it an ideal location for many global companies to carry out high-value manufacturing activities.

"Southeast Asia is well-positioned to be a regional manufacturing powerhouse, and the home for factories of the future. To kick-start the sharing of best practices and industry-level insights, Singapore will be sharing the current state of industrial transformation across our manufacturing sectors. This is based on the insights gathered from 200 Singapore-based manufacturers."

Photo: Industrial Transformation Asia Pacific: Focusing on the future form of the region’s manufacturing base.
Industrial Transformation Asia Pacific: Focusing on the future form of the region's manufacturing base.
Photo: Industrial Transformation Asia Pacific: Focusing on the future form of the region’s manufacturing base.
Industrial Transformation Asia Pacific: Focusing on the future form of the region's manufacturing base.

The 2019 edition of Industrial Transformation Asia Pacific took place from 22-24 October at Singapore Expo.

Ronald Hee, Special Correspondent, Singapore

Content provided by Picture: HKTDC Research
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