Scaling in the Fourth Industrial Revolution

How U.S. manufacturers can become technological front-runners.  

TAKEAWAYS:
● The future of manufacturing is digital, yet despite the influx of capital investment in U.S. manufacturing recently, many U.S. manufacturers still struggle with breaking through the performance ceiling of analog operations to achieve industry-leading operational performance.
● One big barrier for U.S. advanced manufacturing is limited operational scale. For U.S. companies to compete, they need to begin with scale in mind.
● There’s much U.S. manufacturers can learn from how “Lighthouses” are deploying transformative technologies to transform their own factories into Lighthouse-level powerhouses — including network-level thinking that must be called for by CxO leaders.    

Adopting and scaling digital technology in manufacturing has become increasingly urgent in today’s dynamic and highly competitive manufacturing landscape. Five years ago, the struggle for factories scaling digital lay in getting out of the gate. In 2019, 70% of manufacturing companies we surveyed named “pilot purgatory” as their biggest barrier to realizing the benefits of digital. Today, the Global Lighthouse Network — a World Economic Forum initiative co-founded with McKinsey & Company — has identified 132 global factories, representing 80 companies, that have escaped pilot purgatory and achieved industry-leading operational performance.

These plants, in industries ranging from aerospace and medical devices to food and car manufacturing, show us that at least 80 companies have figured out the “lean + digital” blueprint needed to break through the performance ceiling of analog operations. On average, site-level improvements achieved by these Lighthouses include 10-25% reductions in production cost, 20-50% increases in productivity, and 30-70% reductions in lead time. Now, these same 80 companies are well underway in scaling these benefits across their full production networks.

With such levels of savings and productivity gains on offer, and as more manufacturers see peers like those in the Global Lighthouse Network accelerating digital transformation efforts, it’s no surprise that 89% of respondents to the NAM’s 2022 transformative technologies survey expected their company’s rate of adoption of M4.0 technologies to increase over the following two years.

Five years ago, the challenge was in getting from pilot to factory. Today, the goalposts have moved: companies across the globe, including many within the Global Lighthouse Network, are focused on scaling transformative technologies from factory to network.

U.S. Manufacturers Need Advanced Manufacturing

The U.S. is experiencing an unprecedented manufacturing boom on the back of favorable domestic policy incentives and geopolitical trends. In the past year alone more than 100 new factories have been announced in the U.S., including more than 50 semiconductor and electric vehicle factories and more than 60 greenfield announcements across other clean technology verticals. Together, these represent a doubling in planned capital investments since 2022, including $166 billion in announced investment in semiconductor and electronics manufacturing. Often, policy incentives are a core part of the business case for these new factories.