The World Economic Forum’s (WEF’s) Annual Meeting of the New Champions this week in Dalian, China, added 10 new lighthouses to the global network of organizations driving significant operational and financial impact from the fourth industrial revolution (4IR) (exhibit). A collaborative project between McKinsey and the WEF, the lighthouse review scans thousands of sites to identify the factories of the future that are using digital technologies in truly transformative ways.
In their approach to digitization, these newest examples are building on the successes illustrated by the first 16 lighthouses, digitizing not only production methods but the entire end-to-end value chain. They also recognize the value of working together across sectors and geographies, sharing best practices and helping to maximize the potential the 4IR holds for the manufacturing sector—as well as for the economies, communities, and individuals who depend on it. Moreover, they’re able to bring production and consumption together, as demonstrated by the partnership between Fast Radius and UPS in additive manufacturing, providing fast turnaround of custom orders for engineered products.
The new lighthouses confirm that 4IR frontrunners are drawing competitive advantage from innovating their production systems. By achieving the highest levels of productivity and quality in remote, low-cost locations, these leaders are upending the traditional site-selection process’s focus on accessibility and existing skill availability.
They’re innovating in new ways. For example, biotechnology firm Zymergen brought robotics and artificial intelligence (AI) to bioengineering labs, traditionally highly manual sites. Innovation rates soared, allowing Zymergen to use bioengineering for products previously were not feasible.
In another example, the commercial vehicle producer SAIC Maxus took bold new steps in online ordering by linking their customer-configuration tool to the production plant, suppliers, and the sales-and-distribution network. This innovation in mass customization means customers can now choose from more options, yet still get their vehicles faster, all at the cost of mass production. As a result, the company has grown 25 percent faster than the market.
Together, these examples, combined with the earlier-named lighthouses, show that we’re now experiencing a genuine paradigm shift in manufacturing. New technologies are making mass customization possible in a way that previously would have been too costly to pursue. Leaders no longer need to fight complexity, but can instead embrace it as a source of competitive advantage, often with only minimal—or even no—cost implications. An example is home-appliances maker Haier, which is now offering customers a direct ordering channel and full customization at no additional cost.
Our search for new additions to the network also looked at the need for organizations to scale fast and escape the trap of “pilot purgatory,” when 4IR technologies remain mired in pilot cases that never reach full scale.
Tata Steel demonstrates what can be achieved by working fast and at scale. It deployed more than 30 use cases and cracked the code for implementing predictive maintenance to 50,000 different machines. A team of just seven people identified 25 types of equipment that can use the same models and technology, so that a greenfield plant with a mostly low-experience workforce could accelerate ramp-up and reduce cost while also improving customer delivery—and all in a sustainable manner.
These cases mean that the fourth industrial revolution has passed the hype stage. We’re ready for impact at scale and speed. We need to be agile, to bundle use cases, empower our workforces, and continue to collaborate in the new spirit of coopetition. The willingness of organizations to open doors to others and to share best practices will speed the adoption of the fourth industrial revolution, and the value that manufacturers can create.
The network is continuing to grow, and we are looking for more organizations that are innovating with digitization across their value chain. Should your organization be part of this collaborative network? Read more about the new lighthouses from the WEF.