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- Pandemic and digital adoption: Digital manufacturing has the potential to revive the pandemic-ridden economies in India and across the world. The pandemic has accelerated digital transformation of the manufacturing sector in India. It is not deep, as it is in the West or China, but is developing breadth and depth. Digital connectivity, especially in manufacturing, is helping in overcoming supply chain constraints, adding resilience to operations.
- Compulsion for Digital Co-operation: Co-operation between like-minded nations like India and Germany in Digital Manufacturing can cushion many of the problems that most Western countries face – like ageing work force and loss of institutional knowledge. The West will need to collaborate to transfer most recent technologies to local Indian operations, and avoid monopolization of supply chains. China invested $13 billion in EU countries, mostly in mergers and acquisitions, while minimal new infrastructure was created. These M&As are designed to support the Made in China 2025 strategy to become a superpower in smart manufacturing, digitisation and emerging technologies, leaving foreign competitors behind.
- Technology for the factory floor: The simultaneous maturation of a range of technologies and their affordability is driving digitization of factory floors. Artificial intelligence, machine learning, additive manufacturing and 3D, digital twins, e-commerce and GPS tracking – these accelerate decision-making, prototyping, maintenance support, safety, logistics and market access. Accelerated digital adoption provides flexibility in operations, better asset utilization and cost savings as well as higher quality and productivity.
- Starting right: Only 1/6th of the manufacturers that embark on digital transformation, succeed. The key is to identify the correct starting point.
- Go Micro. Breakdown the manufacturing process into smaller stacks (building the new manufacturing stack). This makes problem-solving manageable and easier.
- Focus on Value Creation. Create value in business transformation. For instance, an Indian steel-maker improved yields from 80% to 99.5% in six weeks through data-driven digital intelligence, a time-consuming job for the in-house process engineer. In the Siemens’ Amberg facility in Germany, productivity improved 1400% over 10 years using the same process.
- Leverage existing digital infrastructure. Manufacturers must leverage existing digital infrastructure and integrate it with new digital tools to improve decision-making and control over the factory floor. This will generate confidence for scaling up digital transformation.
- Build capabilities. “For every dollar invested in technology, a dollar must be invested in upgrading capability.” No outsourcing to tech experts: In-house engineers are best, invested in organizational success and their contribution to it, backed by sound process expertise. Short classroom training on data science combined with extensive on-the job learnings is key to capability building.
- Scale-up. Escape pilot purgatory and scale-up by devoting adequate resources, use cases and management focus to enhance the company’s digital transformation vision and journey.
- The Micro-factory. Big factories are “a thing of the past” and can be replaced by a central platform, with tailor-made micro factories in regions where consumers are.
- Opportunities for Indian manufacturing. India wants to increase manufacturing from 16% to 25% of GDP. This translates into an additional consumption of $800 billion of manufactured goods requiring capital expenditure of $1.5 trillion in the next five to seven years. Not too many countries in the world are looking at this volume of capital expenditure. India can attract foreign manufacturers to serve the local market, drive exports and help local job creation (as Amazon did). The Productivity Linked Incentive schemes will help. Indian industry, reticent about digital adoption two years ago, now sees it as an imperative, including the SMEs.
- Challenges for Indian manufacturing. Indian manufactured goods have a 5%-15% cost disadvantage, mostly due to high costs of logistics, infrastructure, power, productivity of labour and land availability. Digital adoption can bridge the cost disadvantage – in three years, process manufacturing can be 6%-7% more competitive.
- India’s near-term advantage in software skills will not last long; imperative to overcome issues of logistics, land, labour and affordable power for long-term competitiveness.
- Foreign MNCs must follow the example of Siemens in bringing in new technology to their local manufacturing operations.
- Resilience is necessary, through policy intervention. India must work with like-minded countries to evolve strategic manufacturing policies and supply chains backed by digital technology.
- The future of Industrial Revolution Industry 4.0 will further expand to: -
- Bio-science, bio-genetics and healthcare;
- Digital inclusivity and equality.