Asia Pacific ahead of the rest of the world in Industry 4.0 technologies

21 April 2018 Authored by Consultancy.asia

Asia appears to be at the forefront of the global digital revolution, according to a report by Strategy&. The firm has bestowed the status of Digital Champion on 20% of the firms surveyed in Asia, which is the highest figure across the globe.

Strategy& is PwC’ strategy consulting arm, formerly known as Booz & Company. As a part of the firm’s ‘Global Digital Operations’ survey for 2018, the consulting firm has analysed the level of Industry 4.0 technology being used across multiple sectors globally. While technologies like AI, IoT and automation  are having an impact on every corner of the manufacturing industry,  the uptake of such technologies has been slower in the Americas and EMEA regions with the vast majority of companies lacking high levels of automation and connection.  

The maturity of digitalisation in Asia has been attributed to the fact that the manufacturing industry itself is young. With a lower level of entrenched processes than their American or European counterparts, Asian manufacturing businesses have greater ability to alter their operations. By integrating and adapting new technologies, companies can lower operating costs and increase efficiency across every sector of their business.

Key results from the digital maturity index

Embracing digital technologies in the manufacturing sector can have tremendous value. This is particularly true for companies that are willing to go beyond basic automation and systems networking and implement end-to-end digitalisation. Planning and strategy to support digital company culture are key factors for those who are succeeding in the transformation process and yet these are both area’s in which the majority of companies are lacking.  

The Strategy& study highlights sectors and geographical regions that are far-reaching and aggressively innovative in digitalisation. Those deemed to be at the forefront have been dubbed by the consulting company as ‘Digital Champions’. What distinguishes them from the rest is a mastery of four critical business ecosystems; customer solutions, operations, technology and people which are connected through an encompassing digital architecture. 

Reinhard Geissbauer, a partner at PwC in Germany, said in response to the survey: “Ultimately people enable and support the efforts of a company’s strategic direction, solutions, performance and operations, thus influencing its evolution. To make this transformation, Digital Champions assess the status quo of their workforce; advance the best and brightest and most digitally-oriented existing talent while training others to also achieve this category, and inject new talent into the organisation where gaps in people’s skill sets and capabilities are revealed.”

Digital Champion Graph

Only 10% of companies surveyed were considered to be Digital Champions. Of that small percentage, nearly all have either begun to integrate or have fully integrated the most recent technological advances like IoT and advanced robotics. Around a third of Digital Champions have adopted AI within their major functions, although AI is generally still in its infancy. The study does note, however, that the uptake of AI in Asia is around 15% of companies interviewed, significantly higher than the rest of the world.  

Digital champions of Asia

Globally, Asia had a higher rate of digital maturity than anywhere else with 19% of surveyed manufactures receiving Digital Champion status from Strategy&. This is the result of the combination of multiple factors. Firstly the rate at which Asian companies introduce and adapt their processes to new technologies. Secondly, the enthusiasm that  young and personally tech-savvy corporate managers have on company culture and strategy. Lastly, the rise of costs (both production and compensation) is causing a transition in Asia towards information economies. The introduction of Industry 4.0 technologies into the workplace intends to help companies in the region maintain their competitive edge. 

Digitalisation in the manufacturing process will result in a higher level of productivity and will drive prices down for those who utilise the technology. According to the report, as much as 14% of global GDP gains towards 2030 may be attributed to digitalisation and smart automation. Seamless connectivity will reduce costs and specific technology including data ingestion, management technology, and predictive maintenance and sensing technology have significant benefits.  

Levels of digital maturity by geographic region

Asian companies have been the best at incorporating these processes into their ecosystem and have saved millions by reducing cycle times, and repair and maintenance resources. Across the region, manufacturing businesses are attacking the challenge of creating a viable digital ecosystem with 42% of respondents saying that it was a priority for their company. The gains in digital for Asia are set to continue into the future, solidifying the region as leaders in the field.  

As for the rest of the world, playing catch up could mean missing out on economic opportunities. America currently has a digital maturity rate of 11%, and the EMEA trails behind with only 5% of respondents interviewed being Digital Champions. Both of these regions have got digitalisation on their mind, with companies in the Americas (24%) and EMEA (15%) looking to become digitally mature in the next 5 years. With these numbers in mind, the gap is still set to grow as Asian companies are setting the bar high, with 32% of companies hoping to establish digital maturity in the same time period.  

Reinhard Geissbauer, said: “Asian companies are far out-manoeuvring their Western counterparts because they have the advantage of setting up robust digital operations from essentially a blank slate in terms of factory automation, workforce and even organisation information technology networks. Therefore they don’t have numerous complex legacy systems and facilities to upgrade, integrate or discard. In addition, Asian companies appear to be keener to try new business models and develop innovative products and services.”

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