The Switch To Smart

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Find out how the shift to smart factories will transform the labor market and why countries need to invest in a significant amount of their training budget to build digital skills.

Digital India, championed by the Indian government, is a program set to transform the lives of citizens across the country. It is emerging as a movement for social and economic empowerment, while delivering its core mandate of digital access and connectivity for every citizen. India’s digital leadership was clearly visible post-demonetization when the effort to boost the digital payments ecosystem received a much-needed fillip. Also, the government’s push on manufacturing through the “Make in India” initiative has garnered considerable attention from the industry and put the spotlight back on the manufacturing sector.

The government has embarked on a journey to make the country a manufacturing hub through leadership in innovation and new technology. There will be  tremendous impetus towards modern manufacturing, thereby creating factories of the future, i.e. smart factories. The smart factory revolution is part of the broader digital transformation of the manufacturing industry. Often described as a building block of the “Digital Industrial Revolution,” a smart factory makes use of digital technologies including the Internet-of-Things (IoT), Big Data Analytics, Artificial Intelligence and Advanced Robotics to increase productivity, quality, and flexibility. Smart factory features include collaborative robots, workers using augmented reality components, and machines that send alerts when they need maintenance.

Manufacturers across segments have already started realizing the potential of smart factories, with industrial manufacturing seeing the biggest gains in productivity and quality of output. The findings of a recent global survey by Capgemini suggest that by the end of 2022, manufacturers expect that 21% of their plants will be smart factories. Sectors such as aerospace & defence, industrial manufacturing, and automotive, where people work alongside intelligent machines, are expected to lead this transition. Faurecia, one of the largest international automotive parts manufacturers, plans to save €10 million on the purchase of plastic material via scrap reduction and production improvements owing to digital manufacturing.

India has a unique opportunity to innovatively pave its own road to smart manufacturing. It can skip several steps that other countries adopted in their evolution from an agrarian society to their current stage of development. Organizations in India have made advances in both digital intensity and transformation management intensity to reap rewards from smart factories. Organizations that are formulating smart-factory strategies are second highest (42%) globally, just after China. This should reflect in future statistics. This multi-modal capability enhances flexibility.

The factories of India and their machines are getting smarter. GE invested over $200 million in a flexible “brilliant factory” in Pune to produce diverse products, from jet engine parts to locomotive components, for four different GE businesses all under one roof. At Mahindra & Mahindra’s Nashik plant, there are robots building car body frames and a similar scene plays out in Pune at the Tata Motors plant. Most large OEMs from the automobile industry in India have 40% of plant work done using robotics. Over the course of the decade, they will move to 70% to be globally competitive.

However, the realization of benefits from smart factory initiatives depends on how effectively manufacturers fulfill the demand for digital skills. The shift to smart factories will transform the labor market, and while previous waves of automation have reduced low-skill jobs, organizations have now realized that skills are imperative and are providing digital skills training to their employees. Organizations will spend a significant amount of their training budget to train employees in digital skills. Countries like India and China seem to have grasped this concept better than others. Around 72% and 65% of executives surveyed in these countries respectively are investing a significant amount of their training budget to build digital skills. The aim of the smart factory framework is to cut down on wastage, thereby reducing environmental impact, organizing production flow, and transforming Indian manufacturing into a highly efficient and advanced industry.

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