How Industry 4.0 is propelling Asia-Pacific’s competitiveness
Han Tiong Law
APJ Manufacturing Lead
Innovation, Thought Leadership, Digitization, Manufacturing, Enterprise Networking
It’s the week of the “Industrial Transformation ASIA-PACIFIC” event – the first of its kind in the region as it races to affirm its position as the global manufacturing leader.
Manufacturing has long played a critical role in Asia-Pacific’s economy and overall competitiveness in the world. Compared to other industries, the sector has remained overall stable amid digital disruption, but not still, with Industry 4.0 offering manufacturers and their home countries the tools to innovate faster and better compete. Aware of the opportunities, today every government in Asia-Pacific is investing in Industry 4.0 and the results can be seen in the experimentation with disruptive technologies to drive new business outcomes, innovation and, for sure, competitiveness.
On one hand, the big manufacturing hubs in the region, such as Korea and Japan, are leveraging advanced automation and real-time analytics to drive intelligent operations, workforce safety, or faster go to market. What’s even more impressive is how with data and analytics products are staring to become tailored to every customer based on how they use them. This is what in manufacturing is called servitization: be ability to create a whole new value chain based on data, from R&D, to the power plant and to the customer – faster, better, and more personalized.
At the same time, new manufacturing hubs are emerging among the ASEAN countries – not because they were not relevant before, but because they’re pushing the Industry 4.0 agenda to boost automation and productivity. Indeed, Industry 4.0 could yield ASEAN productivity gains worth $216 billion to $627 billion, according to McKinsey.
Another report by Cisco on Asia-Pacific’s Readiness for Digital Transformation also shows that manufacturers in countries such as Philippines, Thailand or Vietnam more IT leaders than in other more advanced hubs consider automation relevant to future growth and success. In these countries, where labor accounts for only 10 to 20% of a garment cost, the focus on automation is not so much about reducing labor costs, but to boost productivity and remain competitive. Think about what it would mean socially and economically to Vietnam if Nike were to reduce the 75% of the production it has in the country.
No matter where we look in Asia-Pacific, Industry 4.0 is set to create major improvements across key KPIs for every leader in manufacturing, including equipment effectiveness, operational excellence, safety, productivity or customer experience.
However, despite the value, there are still challenges that either slow down or compromise the adoption of Industry 4.0.
Every company faces security risks, and manufacturers perhaps more than anyone due to the hyper-connectivity of machines and devices. Indeed, 24% of cyber attacks occur in manufacturing and adopting Industry 4.0 will only accelerate the risk. The answer is not to shy away from innovation, but to create an integrated approach to security, whereby the network becomes the sensor to detect and fight threats even before they happen.
Hyper-connectivity also means higher complexity. This is why automation beyond the factory floor is highly critical. Think about network and security automation. How successfully can a manufacturer be if it has thousands of machines connected to automatically assemble a certain product, but their security is done manually, without policy?
As manufacturers become more connected, they also need to handle massive amounts of data. The challenge is in managing multiple sources of data, identifying which data is relevant for what, storing and protecting it. But when this is done, there’s a real opportunity for manufacturers to optimize and totally redefine customer experience and personalization – based on data and analytics.
IT and OT Convergence
Bringing together IT and OT also creates challenges. Seventy-eight percent of IoT initiatives are led by line of business organizations. To ensure compliance and compatibility, IT needs to work closely with their line of business stakeholders on reliability, security and standards.
Join us at the Industrial Transformation ASIA-PACIFIC this week to know how Cisco can help you accelerate the benefits of Industry 4.0.