Smart factory adoption rate is highest in the automotive industry and automotive is set to increase investment by over 60 per cent in the next three years, which could result in productivity gains up to $167 billion, a new report said on Thursday.
According to a report by Capgemini Research Institute, auto industry plans to make 44 per cent of its factories smart in next five years.
The report pointed out that 3 out of 10 automotive factories have been made smart in the past 1.5 to 2 years. For instance, Bosch invested 31 million euros in an Indian plant that features the latest industry 4.0 solutions.
However, the report warned that companies must also invest in skills and systems to take full advantage.
According to Seshu Bhagavatula, President, New Technologies and Business Initiatives at Ashok Leyland, he opted smart factory initiatives to improve the productivity of old factories, deal with the quality issues that are difficult for human beings to detect and to incorporate made-to-order or mass-customisation capabilities.
"Cloud computing, 5G, advanced automation are considered as the enablers of digital transformation for auto manufacturers," the findings showed.
Other technologies used in the factory include virtual assembly technology, autonomous ground vehicle, driverless floor conveyor, remote maintenance portal, metal 3D printing centre, collaborative robots and drones, etc.
"Eighty per cent of automotive manufacturers believe 5G would be key to their digital transformation over the next five years," said the report.
By 2023, the research estimated that smart factories could have delivered a productivity gain in the region of $135 billion (average scenario) to $167 billion (optimistic scenario), an annual improvement of 2.8 per cent-4.4 per cent, and an overall productivity gain of 15.1 per cent-24.1 per cent for the industry as a whole by 2023.
"For instance, Mercedes-Benz Cars has achieved a fourfold reduction in rejection rate on some key components through its use of advanced data analytics to create self-learning and self-optimising production systems," the report said.
For the report, Capgemini surveyed 100 automotive executives from large automotive OEMs and suppliers, 98 of which have existing smart factory operations, across 11 countries, with revenues of more than $1 billion.