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Insights from PwC 2016 Global Industry 4.0 Survey
Building Digital Enterprise
April 27, 2016 Presentation for 10th German-Japanese Economic Forum in Hannover Messe
Strategy& | PwC
Contents
1. Introduction: Review of Industry 4.0 – Key implication for Japanese Manufacturers
2. Key findings from PwC 2016 Global Industry 4.0 Survey – Hypothetical Issues in Japanese Companies
3. Recommendation to Japanese companies – Suggested Approach to Overcome Challenges
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Strategy& | PwC
1. Introduction: Review of Industry 4.0 – Key implication for Japanese Manufacturers
2. Key findings from PwC 2016 Global Industry 4.0 Survey – Hypothetical Issues in Japanese Companies
3. Recommendation to Japanese companies – Suggested Approach to Overcome Challenges
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Strategy& | PwC
Industry 4.0 will change our clients’ value chains, their future products as well as the way they serve the market
What is Industry 4.0?
Note: This presentation will focus on “1. Digitization and integration of vertical and horizontal value chains”
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Fle
xib
ilit
y an
d c
omp
lexi
ty
Industry1.0
Steam engine manufacturing
Industry2.0
Mass production and assembly lines
Industry3.0
Automation and robotic
Industry 4.0Digitization and
Integration of Value Chains and Products/
Services (Internet of Things/Services)
New Digital Business models
Integrated Data Analytics
as core capability
Digital Enterprise
End of 18th
century
Beginning of 20th century
1970s
2015+
Industry 4.0 is fourth industry revolution in the history
What is Industry 4.0?
Key question: Why/how Industry 4.0 is different form 3.0?
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Industry 4.0 is targeting ecosystem level total optimization, while conventional robotics/automation (Industry 3.0) focused more on equipment/line-level local optimization…
It is not just ultimate digitalization of manufacturing/SCM, but manufacturing paradigm change by leveraging digital
Key implication of Industry 4.0
Ultimate Transparency• Fine (Machine, Product, Worker)• Real-time• Broad (End-to-end)
Ultimate Control and Optimization• Flexible • Real-time• Harmonization as a whole
Orchestration&
Total Optimization
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Manufacturing operation/system should transform from “Closed” to “Open”
Cross-enterprise collaboration could significantly enhance operation productivity
• Track and trace throughout value chain is core capability, which require close cross-enterprise collaboration
• High productivity should be achieved by maintaining high utilization of factory /equipment through inter-company collaboration(Industry 4.0 could be viewed as implementation of “Shared Economy” in manufacturing ecosystem )
Key implication of Industry 4.0
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Big Data / Analytics is a key value-adding factor in Industry 4.0
Next level intelligence/Smartness should be achieved in manufacturing operation
Key implication of Industry 4.0
Data & Analytics is a core capability for Industry 4.0.
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Commoditization of “manufacturing” should be anther driver of Industry 4.0 movement
Industrious/diligent labors andunparalleled mastery can rarely be Competitive Advantage anymore
Factory level digitalization/automation cannot be differentiation factor, but just a ticket to the competitive arena
Industry 4.0 should be the way by which manufacturing sector in developed/matured countries maintain competitive edge
Key implication of Industry 4.0
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1. Introduction: Review of Industry 4.0 – Key implication for Japanese Manufacturers
2. Key findings from PwC 2016 Global Industry 4.0 Survey – Hypothetical Issues in Japanese Companies
3. Recommendation to Japanese companies – Suggested Approach to Overcome Challenges
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Strategy& | PwC
Over 2,000 companies in 26 countries participated in PwC’s Global Industry 4.0 Digital Operations Survey
2016 PwC Global Industry 4.0 Survey
Methodology:Based on research conducted between November 2015 and January 2016 with over 2,000 senior executives from industrial products companies in 26 countries. The majority of participants were Chief Digital Officers or other senior executives with top-level responsibility in their company for Industry 4.0 strategy and activity. Results were weighted by country GDP to provide a balanced view in global.
Industry split Participating countries
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Several important insights are gotten from the survey
I4.0
5678
Data analytics & digital trust are the foundation of transformation
Robust, enterprise-wide data analytics capabilities require significant change
Big investments with big impact: Its time to commit
2016 PwC Global Industry 4.0 Survey
Industry 4.0 is accelerating globalization, but with distinctively regional flavor
Industry 4.0 - From talk to action and
implementation 123
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Digitization drives quantum leaps in performance
Deepen digital relationships with more empowered customers
Focus on people and culture to drive
transformation
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GlobalTotal
GlobalTotal
In general, Japanese companies are confident about overall digitalization level…
Finding for Japanese companies – Digital Operation
Question: How would you classify the current level of digitization and integration in the following areas in your company? // What levels of digitization and integration are you expecting in the next five years?
33% 72%+39% In 5 yearsToday
Low
33 26
19 38
27 31
35 9
40 27
47 41
27 9
31 40
35
CA
IN
NL
FR
BR
UK
DACH
MEJA
CN
SA
IT
E/PT
S
DK
USMX
82 71
60 76
59 69
77 74
64 65
82 62 64
72 57
77 76
MX
SAME
IN
BR
US
CA
CN
JA
UK
IT
DACH
FR
DK
SNL
E/PT
Note: Figures in percent
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59
59
61
21
27
29
13
16
1
10
20
26
34
10
27
33
21
41
29
43
JapanGermany
… while many Japanese companies are concerning about unclear future vision and next investment target
Japanese manufacturers might not have a clear Industry 4.0 / digital operation vision and strategy…
Finding for Japanese companies – Digital Operation
Question: Where are the biggest challenges or inhibitors for building digital operations capabilities in your company?
Note: Up to three mentions possible; figures in percent
Lack of a clear digital operations vision and support / leadership from top management
Lack of digital culture and training
Unclear economic benefit of digital investments
Concerns around loss of control over your company's intellectual property
Lack of digital standards, norms and certification
Unresolved questions around data security and data privacy with external data
Slow expansion of basic infrastructure technologies
High financial investment requirements
Business partners are not able to collaborate around digital solutions
Insufficient talent
Concrete practical issues
High-level strategic issues
Japanese companies’ challenge
German companies’ challenge
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Note: Up to three mentions possible; figures in percent
High-level strategic issues
Japanese companies’ challenge
German companies’ challenge
Japanese companies tend to struggle with “what to do”, while German’s are concerning more about “how to do”
Japanese manufacturers might not have a clear business vision/strategy for “Analytics” in digital operation area
Finding for Japanese companies – Analytics
Question: Where are the biggest challenges in regards to the utilization of data analytics?
36
50
26
49
33
11
29
25
21
24
41
28
58
57
35
57
54
52
Japan
Germany
Lack of Top Management support or willingness to invest
Lack of opportunities to use big data analytics to your company's benefit
Uncertainty regarding data property or data security
Lack of analytical methods or algorithms to be applied
Lack of skills and competencies in your company's workforce
Uncertainty whether or to what extent data privacy laws allow analysis
Poor access to relevant operations data
Poor existing data quality
Inability to divide irrelevant from relevant data in the data collection process
Note: Up to three mentions possible; figures in percent
Concrete practical issues
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60
50
37
15
0
48
73
52
19
10
JapanGermany
Partnerships or co-operationswith technology providers
Increase skill levels/technology in-house
Partnerships or co-operationswith skill or training provider
Acquisition of teams ordata analysis companies
None of the above
Japanese companies rely more on external experts than German companies
Japanese manufacturers may not clearly position “Analytics” as future core competency yet, while others do …
Finding for Japanese companies – Analytics
Question: How are you planning to improve your data analysis capabilities in the future?
Note: Multiple answers possible, figures in percent
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1. Introduction: Review of Industry 4.0 – Key implication for Japanese Manufacturers
2. Key findings from PwC 2016 Global Industry 4.0 Survey – Hypothetical Issues in Japanese Companies
3. Recommendation to Japanese companies – Suggested Approach to Overcome Challenges
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Strategy& | PwC
It should be the first step to clarify vision and agree on transformation strategy and roadmap
• Well understand industry trends and essential nature behind Buzzwords– Inevitable change in manufacturing and supply chain competitive dimension– Shift from local optimization to total optimization– Shift from Close to Open– Next level of “Intelligence” through Big Data / Analytics
• Revisit, analyze and fully understand your industry (products, customers, and overall ecosystem) and its possible future scenarios
• Establish your vision and develop strategy/roadmap to achieve it– New business model– New partnership and collaboration– New mind-set (corporate culture) and skills, in addition to new technologies
• Implement the strategy, giving bold investment (monetary and human resource)
Recommendations
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Contacts
Stefan SchraufGerman Industry 4.0 Lead
PwC / Strategy& Partner, Germany+49 151 4612 [email protected]
Masahiro OzakiJapan Industry 4.0 Lead
PwC / Strategy& Partner, Japan+81 90 7192 [email protected]
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Strategy& | PwC
© 2016 PwC Consulting LLC. All rights reserved.
PwC refers to the PwC network member firms and/or their specified subsidiaries in Japan, and may sometimes refer to the PwC network. Each of such firms and subsidiaries is a separate legal entity. Please see www.pwc.com/structure for further details.
Disclaimer:
This content is general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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