Industry 4.0: In-Depth Market Analysis: Industries & Markets

INDUSTRIES & MARKETS
Industry 4.0: in-depth market

analysis
Market Insights report
April 2023
Management summary (1/2)
Industry 4.0 or the fourth industrial revolution is quite simply the use of digital The digitalization of manufacturing across industries has resulted in the emergence
technologies in the manufacturing process to produce higher-quality goods at of service-based revenue models to complement the already existing product-
reduced costs. Even though developments in electronics and information based models. Digital technologies have also begun to usher in an era of
technology have resulted in the automation of manufacturing processes since the customization at a much lower cost in both the B2C and B2B segments. Over the
early 1960s, it is only the recent advances in digital technologies that are beginning last few years, global manufacturers such as Adidas and Nike have started moving
to extend the scope of disruption. Companies are now experiencing major benefits their production centers away from low-cost countries, closer to the consumer.
in terms of lower costs, improved efficiencies, increased yield, mass customization, Further, emphasis is now being placed on creating an agile and flexible production
and most importantly, new revenue and business models. process through the use of modularized systems that can be reconfigured in quick
time.
Digital technologies are disrupting all elements of the value chain including product
design, supply chain, manufacturing, and customer experience, while creating new Digital technologies are increasingly being customized to serve the needs across
business models. Global manufacturing giants such as Germany, France, the U.S., multiple industries with maximum application being witnessed in automotive,
Japan, and Mainland China have all launched government-backed strategic healthcare, aerospace and defense (A&D), chemicals, and consumer goods. In fact,
initiatives to digitalize production across various industries. Even though there are the automotive industry was the leader across all sectors in terms of digital
many technologies currently playing a role in Industry 4.0 and the smart factory, for adoption rates in 2020 and benefited from reductions in both time to market (TTM)
the purpose of this report, we have focused on five key ones: additive and costs.
manufacturing, artificial intelligence (AI), robotics, internet of things (IoT), and
augmented and virtual reality (AR/VR).
2
Management summary (2/2)
The A&D industry also has one of the highest rates of digital adoption owing to the Companies from various fields including information technology, automobile,
sheer complexity of its value chain. Digitalization in healthcare is centered around heavy engineering, defense, chemical, sports and personal goods are using
medical devices and pharmaceuticals. Even though the chemical and consumer advanced digital automation technologies to further their business goals.
goods industries are late bloomers, they are now not only transforming production Companies like Pivotal provides software applications in terms of big data, Internet
but also creating smart supply chains and new business models. of Things (IoT), robotics, and connected cars, whereas California-based Anaplan
provides cloud planning platform to run planning and prediction iterations over the
A large part of leading start-ups are from the U.S. – a majority of them being based
cloud. Automobile companies Audi and BMW are using digital manufacturing
in California. Pivotal received the highest funding of US$1.7 billion. The company,
technologies such as 3D printing, assistant drones, Automated Guided Vehicles
which is primarily a provider of cloud computing services, is backed by key
(AGVs), and autonomous tugger trains to reduce time taken for design, prototyping,
investors such as EMC, Ford Motor Company, GE, Microsoft, and Vmware. It got
and manufacturing. Tesla, the EV leader in the industry, is planning to further its
listed in New York Stock Exchange (NYSE) in April 2018. DataRobot is another key
digital transformation goals through its Gigafactory, slated for completion in 2022.
automation start-up that managed to secure approximately US$1bn in funding.
The company is not only aiming to build a smart automobile, but also to use smart
Large manufacturing companies such as ABB, OMRON Corporation, Schneider
manufacturing methods as well. Other leading companies include Airbus, BASF,
Electric, Siemens, ST Engineering, Teradyne, and Tesla are acquiring smaller
Carbon, Lockheed Martin, and Siemens.
companies in order to leverage their technological expertise and decrease their
learning curve.
3
Table of contents (1/2)
Management summary Virtual and augmented reality 53 Aerospace & defense 89

Digital twins 60 Healthcare 103
Table of contents Chemical industry 108
03 Trends Consumer goods 110
01 Introduction Service-based revenue models 63
Overview 07 Mass customization 66 05 Start-ups: Funding and M&A
Industrial evolution 13 Smart manufacturing 69 Global funding in start-ups 113
Impact of digitalization 14 Backshoring 72 Mergers & acquisition 123
Modular workstations 74
02 Technology Industry 5.0 77 06 Competitive landscape
Overview 24 Airbus 128
Networked readiness index 26 04 Industry analysis Anaplan 130
Patents 28 Industry 4.0 adoption 79 Audi 131
Additive manufacturing 29 Industry 4.0 investment 80 BASF 134
Artificial intelligence and robotics 39 Level of digitalization 81 BMW 135
Internet of things 47 Automotive 82 Carbon 139
4
Table of contents (2/2)
Tesla 140
Lockheed Martin 141
Siemens 143
07 Appendix
Authors 145
Glossary 146
5
CHAPTER 01
Introduction
Industry 4.0 or the fourth industrial revolution is quite simply the use of digital technologies in the
manufacturing process to produce higher-quality goods at reduced costs. Even though developments in
electronics and information technology have resulted in the automation of manufacturing processes
since the early 1970s, it is only the recent advances in digital technologies that are beginning to extend
the scope of disruption.
Companies are now experiencing major benefits in terms of lower costs, improved efficiencies, increased
yield, mass customization, and most importantly, new revenue and business models.
Digital manufacturing is rapidly reducing costs & improving quality
Overview (1/6)
Industry 4.0 or the fourth industrial revolution, a term initially published by the added connectivity to previously unconnected products. Even though Industry 4.0 is
German government during the Hannover Trade Fair in 2011, is quite simply the a global concept and encompasses the same technologies, there are subtle
use of digital technologies in the manufacturing process to produce higher-quality differences in how its viewed in countries around the world.
goods at reduced costs. Even though developments in electronics and information
In the U.S., for example, it refers to a more holistic digital evolution with many
technology have resulted in the automation of manufacturing processes since the
companies using the term digital supply network, thereby including all aspects of
early 1960s, it is only the recent advances in digital technologies that are beginning
the value chain such as partners, suppliers, customers, the workforce, and
to extend the scope of disruption.
operations. In Europe, however, where the term Industry 4.0 originated, it
The last decade has witnessed rapid advancements in technologies such as the essentially revolves around the application of these technologies in the factory.
Internet of Things (IoT), artificial intelligence (AI), robotics, mobile, cloud computing,
Industry 4.0 also risks creating sharper inequalities between developing and
big data analytics, additive manufacturing (3D printing), and virtual and augmented
developed countries. Prior to the 19th century, there was not much income
reality (VR/AR). These technologies, woven together by the massive proliferation of
disparity across countries. Today, according to estimates by the World Economic
big data, generated mostly by connected devices (IoT), are blurring the lines
Forum (WEF), the average gap in per-capita income between the developing and
between the physical, digital, and biological aspects of global production systems.
developed world is over US$40,000.
Companies are now experiencing major benefits in terms of lower costs, improved
efficiencies, increased yield, mass customization, and most importantly new
revenue and business models. For example, in addition to physical objects,
companies are now selling data and services, while technologies such as IoT have
Sources: World Economic Forum; Deloitte

Global industrial production has increased 2.5% over the last decade
Overview (2/6)
Global industrial production in billion US$(1)
+2.5%(2)
21,400
20,300 20,600
19,600 19,700
18,500 18,900
18,200
17,100 17,600
16,600
15,800
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
8 Notes: (1) WBG member countries, seasonally adjusted figures (2) CAGR: Compound Annual Growth Rate / average growth rate per year
Sources: WorldBank
The shift from Industry 1.0 to 4.0 has taken over 300 years
Overview (3/6)
The first industrial revolution or Industry 1.0 can be traced back to the end of the pressure to reduce costs resulted in companies shifting their manufacturing bases
18th century with the introduction of mechanical production facilities in the form of to low-cost countries and the subsequent formation of the concept of supply chain
water and steam-powered engines, due largely to the efforts of James Watt. This management. It was in this time that General Motors started its manufacturing
revolution laid the foundation for the shift from individual cottage businesses operations using electricity and moving assembly lines. The rapid evolution of the
serving the needs of only a few, to larger organizations as we know them today. Internet, connected systems, and other digital technologies such as artificial
This stage essentially marked the beginning of modern-day industry culture with intelligence, robotics, additive manufacturing, big data analytics, and cloud
greater emphasis on quality and efficiencies. The beginning of the 20th century computing, ushered in the fourth industrial revolution or Industry 4.0. This stage
ushered in the second industrial revolution or Industry 2.0 with the use of electricity resulted in the blurring of the boundaries between the physical and the virtual
as the primary power source, resulting in the mass production of goods using world with the emergence of Cyber-Physical Systems (CPS) and smart machines.
assembly lines. Even though electrical energy was already being used in homes, its CPS have not only connected machines with each other but have also networked
use in machines made manufacturing faster and more cost-effective. This era also them to production plants, fleets and even human beings, thereby radically altering
saw the advent of principles such as just-in-time and lean manufacturing which the manufacturing process.
further optimized the manufacturing processes.
The period after this will witness the emergence of stage five or Industry 5.0 which,
The third industrial evolution, or Industry 3.0, started in the 1970s with the use of even though not clearly defined at this stage, could include personalized mass
electronic devices such as transistors and integrated circuit chips and software, in production of goods. Humans are likely to be re-introduced in the production
order to create the first-ever fully automated machines. This resulted in reduced lifecycle to collaborate with advanced robots and create partially handmade
effort, increased speed, better accuracy, and the first instances of complete products. This is expected to usher in the era of mass personalization as opposed
autonomy in the manufacturing process. Further, the increase in competition and to one of mass customization, which is the hallmark of Industry 4.0.
Sources: Deloitte; McKinsey; PwC; World Economic Forum

Major countries promote digitized manufacturing
Overview (4/6)
Over the past few years, global manufacturing powerhouses in countries such as embedded software and systems, satellite electric propulsion, green chemistry and
Germany, the U.S., Mainland China, and Japan have each launched initiatives to biofuels, cloud computing, nano-electronics, augmented reality, robotics, and
promote digital transformation in their manufacturing processes. connected devices among others.
Germany – Industry 4.0 U.S. – The National Network for Manufacturing Innovation (NNMI)
Launched in 2013 as one of 10 “Future Projects” identified by the German Launched in 2016, NNMI, also known as Manufacturing U.S.A, is expected to result
government as part of its high-tech strategy, Industry 4.0 aims to create smart in 45 innovation centers throughout the country to develop smart manufacturing
factories and manufacturing innovation centers across the country. Named for the technologies. Some of the areas of focus include additive manufacturing,
expectation that it will usher in the fourth industrial age, the strategy essentially manufacturing of lightweight materials and developing integrated photonics. The
represents a paradigm shift from centralized to decentralized smart manufacturing federal department initially allocated US$1.2 billion to this program, with an
and production. Some of the institutions driving technological disruption in additional US$2.4 billion provided by the non-federal institute partners. The
Germany’s Industry 4.0 program include Industry-Science Research Alliance, Department of Defense (DoD), the Department of Energy, and the National Institute
Acatech – National Academy of Science and Engineering, DFKI, Fraunhofer- of Standards and Technology were the first recipients.
Gesellschaft, Platform Industrie 4.0, and SmartFactory KL.
Japan – Society 5.0
France – New Industrial France
Launched in 2016, this societal transformation plan focuses on developing
Also launched in 2013, this policy outlines plans for 34 new industrial projects solutions in the areas of IoT, artificial intelligence cyber-physical systems (CPS),
across a range of industries such as next generation high-speed trains, electric additive manufacturing, new energy vehicles, robots, virtual and augmented reality
aircraft, autonomous cars, smart textile, factories of the future, battery power, and data analytics.
10
Sources: Cabinet Office of Japan; Center For Strategic & International Studies; Congressional Research Service; Huawei
China promotes digitized manufacturing under ‘’Made in China 2025’’ policy
Overview (5/6)
Mainland China – Made in China 2025
Mainland China aims to create 40 manufacturing innovation centers by 2025. The

areas of focus include automated machine tools & robotics, new advanced
information technology, aerospace and aeronautical equipment, maritime
equipment and high-tech shipping, modern rail transport equipment, new energy
vehicles and equipment, power equipment, agricultural equipment, new materials,
and biopharma and advanced medical products.
11
Sources: Cabinet Office of Japan; Center For Strategic & International Studies; Congressional Research Service; Huawei
The Industry 4.0 value chain is spread across various functions
Overview (6/6)
Industry 4.0 value chain

Operations
Design and engineering Support services
Activities value Inbound Production Outbound
chain • Production planning and
• Order processing and
scheduling
• Planning • Demand planning fulfilment • Finance
• MRP I and II
• Product engineering • Inventory management • Transportation and logistics • Human resource
• Manufacturing and IT
• Technical feasibility and • Procurement • Aftermarket services management
support
prototyping • Transportation and logistics • Sales and distribution • Marketing
• Quality control and waste
• Warehouse management
management
Matured technology Supporting technology Emerging technology

Technology • 3D printing
• 5G
components • Asset management
• Artificial intelligence and analytics (computer vision, machine
• ERP
value chain • Industrial automation
• Cloud computing learning, visual analytics, etc.)
• Cybersecurity • Augmented reality and virtual reality
(Scope: Enabling • MES
• Microservices, as-a-service • Blockchain
• PLM
technologies for model • Cobots
• Robotics
• Other BPS and IT • Digital twin
Industry 4.0) • SCADA
applications • Drone
• Manufacturing SCM
• Generative design
• Others
• Industrial internet of things
• Quantum computing
Workforce Digital-ready workforce to enable and drive new operating models, innovative business models, and applications of new age technologies
12
Sources: Accenture
Industry 5.0 is expected to digitalize the entire manufacturing ecosystem
Industrial evolution
Industrial evolution timeline Industrial evolution themes and features
Revolution Theme Key features

Industry 5.0
Degree of complexity and productivity
First program- Complete digital

mable logic Mechanical production powered by water and
ecosystem Industry 1.0 Mechanical production
control (PLC) steam power
system –
Industry 4.0 Introduction of assembly lines and use of electrical
Modicon 084
Cyber-physical energy
(1969); RFID(1)
First assembly systems (CPS) Introduction of telegraphy in 1840 and telephony in
(1999) Industry 2.0 Mass production
line – 1870 1880
(Cincinnati meat- Industry 3.0 Ford used ‘Taylorism’(2) to implement car assembly
packing line
Application of IT
industries)
Use of electronics, IT, and industrial robotics to
improve automation of production
Industry 3.0 Application of IT
First mechanical Industry 2.0 First micro-computer in 1971
weaving loom - Mass production Apple founded in 1976
1784
Digital supply chain
Cyber-physical
Industry 1.0 Industry 4.0 Digital products, services, and new business models
production systems
Mechanical Autonomous machines and virtual environments
production
Virtual customer interface and virtualized processes
Complete digital
End of 18th Beginning of Start of 1970s 2010-2030 2030 onwards Industry 5.0 Flexible, virtual, and integrated value chain networks
ecosystem
Century 20th Century Completely connected ecosystems
13 Notes: (1) Radio-frequency identification technology: has been in use since 1999 and was a very early form of CPS (2) Taylorism - Named after the U.S. industrial engineer Frederick Winslow Taylor, this theory laid down the
fundamental principles of large scale manufacturing through assembly line factories
Sources: Deloitte; PwC
Digitalization effects all parts of the industrial ecosystem
Impact of digitalization (1/7)
Industrial ecosystem Manufacturing plants
Support and maintenance End users • Higher efficiencies leading to lower

costs, less machine downtime, higher
• Remote and on-site support helps • Personalized products
yield and faster production
decrease machine downtime
• Timely delivery
• Intelligent devices harness all
• Predictive maintenance prevents faults
• Lower prices information from existing machine
and creates new revenue streams
component sensors
• Real time data analysis enables
• Real time data transfers between all
improvements in both processes and
machines
machine design
Data center
OEMs Supply chain
• Create value with new revenue streams • Connected

and improved machine design
• Real time information flow
• Pay per use: charge for time use
• Just-in-time deliveries: reduced inventories
• Pay per outcome: charge per unit
produced
14
Sources: KPMG; PwC

Industry 4.0 benefits include energy efficiency and cost reduction
Benefits of Industry 4.0
New
solutions for • Medical devices at
marginalized affordable prices Better quality • Personalized products, mass
New and better groups & new customization
products business • New and data-based services
• Goods produced with • New pricing models
Environment eco-friendly materials models
al goods • Increased product
energy efficiency
Advanced Energy • Emission and waste

efficiency & reduction • Flexible and decentralized
digital production
input • Acceleration of circular production
technologies
economy transition • Supply chain connectivity, delivery
optimization Operational performance & logistics
cost • Agile, adaptive organization
reduction
Increased Improved
• Predictive and automatic
production capital
Employment • Improved work conditions, maintenance, downtime reduction
efficiency utilization
quality & safety • Lower inventory rate, increased
linkage to • Foster female employment cash-to-cash cycle
services • New skills, task efficiency
15
Sources: Unido
Digitalization has catalyzed the shift from mass production
Mass customization through process efficiencies requirements at lower costs but also minimize waste. Adidas is the pioneer of 3D
printing in the industry and is now using this technology to provide mass
One of the key themes of Industry 4.0 is the shift from mass production to mass
customization to its consumers and accelerate product development. To customize
product customization, resulting in on-demand production and a reduction in
its footwear line, Adidas partnered with the California-based start-up Carbon in
excess inventory.
2018 with its digital light synthesis (DLS) 3D printing processes. This collaboration
Therefore, manufacturers are now less concerned with producing at a large scale to led to a 1000% increase in design iterations and a 33% faster design-to-shipment
drive down unit costs. Even though the basic principle of decreasing product costs time.
still exists, the focus has moved to optimizing and standardizing capital and
Interestingly, it is not only large companies with significant resources who are
physical assets in order to realize efficiencies. What further drives this trend is the
pursuing this strategy, but also smaller companies such as Kennedy City Bicycles,
willingness of customers to pay a premium for personalized products: a 2019
which manufactures customized bikes from a small London workshop, and the
Deloitte report estimates this amount at approximately 20%.
Michigan-based industrial caster manufacturer, Caster Concepts, which has
Even though customized products have been offered in sectors such as automotive adopted the mass customization model to counter the caster industry's lack of
and luxury goods since the dawn of the Industrial Revolution, new technologies and standardization.
business models have now enabled diversification into a wider set of categories.
One such example is NikeID which provides customized trainers primarily for
millennials by using just-in-time production and demand flow technologies.
Another example is Under Armour’s ArchiTech line which utilizes 3D printed
midsoles and software such as Autodesk to not only create specific design
16
“In a sense we will reshore production more and more. The future is in more
mass customization, and this means more local production – because we
have to shorten the logistics chain from the production side to the side of the
user.”
Dr. Detlef Zühlke, Director

Innovative Factory Systems Department, German Research Center for Artificial Intelligence
17
Digitalization moves production closer to the consumer
Production moving closer to the consumer One of the major reasons for this is also the increase in tariff costs due to the trade
war, that has greatly diminished the low-cost advantage that Mainland China
The traditional manufacturing mindset was centered around the belief that cheaper
possessed for many years. In fact, the Gartner study showed that these tariffs have
is better. But the increasing demand for customization together with digitalization
increased supply chain costs by up to 10% for over 40% of the companies, with the
enabled efficiencies, have resulted in an increasing shift to local production. Low-
impact being even higher for over 25% of them. The Covid-19 pandemic has also
cost eastern nations, especially Mainland China, are no longer the first choice for
resulted in much longer lead times and other supply disruptions. In fact, Apple was
new manufacturing facilities, with capacities now being built closer to the centers of
one of the first global companies to announce that it would miss its 1Q2020
demand. Okuma’s completely autonomous machine tool production facility in
projections due to delayed shipments from Mainland China. The smart factory is
Japan, Local Motors’ fully digitized workshops to manufacture customized cars in
increasingly being viewed as the most popular solution to diminish the cost
the U.S., and some pharmaceutical companies moving production out of Mainland
advantage even more and bring manufacturing back to the home country.
China and back to the U.S. in wake of the Covid-19 pandemic, are only a few
examples of this popular trend. Multinational companies that have partially or wholly moved their production out
of China include, Nike, Apple, Samsung Electronics, LG Electronics, Adidas, Puma,
Even though the Covid-19 pandemic has accelerated this shift, global supply chains
Sharp, Hasbro, Kia Motors, Hyundai, Stanley, Black & Decker, Dell, HP,
were already being disrupted due to the U.S.-China trade war. Companies are now
Google/Alphabet, Microsoft, GoPro, Intel, Sony, Nintendo, Under Armour, Steve
becoming increasingly aware of the need to move away from the heavily
Madden, Old Navy/Gap, Superdry, Space NK, Naver, and Quanta Computer, among
outsourced and concentrated manufacturing model to a more regional one.
others.
According to a February and March 2020 survey by Gartner of 260 global supply
chain leaders, as many as 33% of them had already shifted their manufacturing
capabilities out of Mainland China or had plans to do so till the end of 2023.
18
Sources: MH&L; Gartner

“After Covid-19, we believe companies will start to localize some of their
production. Factories will need to be more digitalized and automated to
produce smaller quantities efficiently with localized manufacturing. The
Industrial Internet of Things, 5G, and industrial software are all key
enablers of the transformation to smart manufacturing.”
Alexander Stiehle, Analyst

UBS
19
Industry 4.0 plays a key role in sustainable production
Sustainability is one of the hottest trends in manufacturing today and Industry 4.0 reduce the weight of their LEAP family of aircraft engines by as much as 25% and
is increasingly playing a pivotal role in its proliferation. Digital technologies such as also lower carbon emissions by using additive manufacturing. The French energy
artificial intelligence (AI), machine learning (ML), big data analytics, the Internet of intelligence start-up Energiency, has been able to reduce its factory’s energy
Things (IoT), and additive manufacturing/3D printing facilitate simplified production consumption by as much as 15% through the use of AI and IoT-powered real time
processes and efficient recycling and remanufacturing programs. analysis for its energy performance data.
For example, the use of IoT-enabled sensors and integrated systems greatly Another example is the India-based company Deccan Fine Chemicals, which uses
improves transparency in manufacturing activity in the form of production alerts technologies such as data analytics and IoT to streamline its manufacturing
and predictive maintenance. This in turn enables manufacturers to not only idle processes. This helps them save US$10 million annually in excess inventory and
machinery prior to a failure, thereby avoiding potentially dangerous working US$500,000 a month in process improvements.
conditions but also reducing carbon footprint and operational costs.
Moreover, techniques such as process simulation and modeling assist product

developers in discovering and optimizing new processes that generate less waste
and consume less energy by default, while also incorporating key safety features
right from the start.
Therefore, many companies both big and small have started to bolster their
manufacturing processes with digital solutions to ensure greater sustainability. One
such example is the GE Aviation and Safran partnership that has been able to
20
Sources: Pollutec; Reliable plant; Futurebridge; Dormakaba, Times of India

Digitalization changes the employment landscape
Employment landscape is changing Top 5 occupations at high risk due to automation by 2030(1)
Contrary to popular belief, automation will not result in a loss of jobs but just a shift 98% 96% 95% 94%
in roles. Even though machines are likely to take over most of the repetitive manual 92%
tasks, the resultant displacement of workers will also be followed by the emergence
of new opportunities in the form of more skilled jobs and better training. GE
estimates that by 2030 the industrial IoT will add more to the world economy than
every major country, except the U.S. and Mainland China, leading to more
employment and higher income.
According to a study by PwC around 38% of the U.S. jobs could potentially be at
high risk of automation by the early 2030s, compared to Germany (35%), the UK
(30%) and Japan (21%). The report further reveals that the risks will be highest in
the transportation and storage (56%), followed by manufacturing (46%), wholesale
and retail (44%), but lower in sectors like health and social work (17%).
A more recent study by HSBC has identified a number of essential occupations,

such as cooks, construction laborers, waiters, receptionists, inspectors,
groundskeepers, and agricultural workers, as more susceptible to future
Inspector Receptionist Groundskeeper Waiter Retail sales
automation than professional occupations.
person
21 Notes: (1) Occupations at risk compared to current position in 2021
Sources: PwC; ONS; PIAAC; PwC analysis; Yahoo Finance

The IoT is anticipated to have the greatest impact on businesses
Technologies expected to have the most significant impact on businesses Industry 4.0 technologies’ expected impact
74% 88%
85%
67% 80% 81%
64%
55% 66%
61% 62%
57% 57%
45%
41%
39%
42%
38%
26%
18%
11%
9%
7% 6%
IoT(1) AI(2) Cloud Big data NT(3) Sensors RPA(4) Block 3D AR(5) QC(6) EC(7) Americas APAC EMEA
infra analytics chain printing
AI(2) Cloud Infra IoT(1) RPA(4)
22 Notes: (1) Internet of Thigs (2) Artificial intelligence (3) Nano technology (4) Robotic process automation (also includes advanced robotics) (5) Augmented reality (6) Quantum computing (7) Edge computing
Sources: Deloitte Survey of 1,802 business leaders in technology, as of 2020; Deloitte

CHAPTER 02
Technology
Digital technologies are disrupting all elements of the value chain including product design, supply chain,
manufacturing, and customer experience, while creating new business models. Global manufacturing
giants such as Germany, France, the U.S., Japan, and Mainland China have all launched government
backed strategic initiatives to digitalize production across various industries.
Even though there are many technologies currently playing a role in Industry 4.0 and the smart factory,
for the purpose of this report, we have focused on five key ones: additive manufacturing, artificial
intelligence (AI), robotics, internet of things (IoT), and augmented and virtual reality (AR/VR).
Disruption in product design, supply chain, and customer experience…
Overview (1/2)
Even though the digitization of the manufacturing process involves various system. Digital technologies simply bring down the various siloed processes in
technologies such as artificial intelligence, robotics, IoT, and others, with each one marketing, product development, manufacturing, and distribution, to create a
of them contributing substantially, it is only their coming together that can create completely integrated and transparent ecosystem consisting of elements such as
new capabilities never witnessed before. More importantly, the application of these autonomous logistics and smart procurement and warehousing.
technologies is not limited only to manufacturing or the supply chain but extends
• Customer experience: Data gathered through intelligent products and services
to business operations and ultimately revenue growth. The three main areas where
can be used to get a deeper understanding of customers in various areas such as
these technologies are expected to have the maximum impact include:
personalized direct selling and marketing strategies and prompt and efficient
• Design and manufacturing: The use of technologies such as augmented and post sales support.
virtual reality and additive manufacturing have resulted in faster and more
efficient designs through rapid prototyping. Sensors and wearables have added
connectivity to previously unconnected products, resulting in new business and
revenue models such as monetization of data. Finally, machine learning and
robotics have made the assembly process more efficient by enabling robots to
put items together with surgical precision, while the software fixes errors on a
real time basis.
• Supply chain: Probably the most important element in the Industry 4.0 vision is
the evolution of the traditional supply chain to a connected, smart, and agile
24
Sources: Deloitte; McKinsey; PwC; World Economic Forum

… are three main areas expected to have maximum impact
Overview (2/2)
Key technologies transforming industrial production
IN SCOPE FOR THIS OUT OF SCOPE FOR THIS

CHAPTER
CHAPTER
• Cloud computing analytics
• Additive manufacturing
• Big data and analytics
• Artificial intelligence and
robotics • Cybersecurity
• Internet of things
• Virtual and augmented reality
25
Sources: BCG; Statista

Sweden leads the Networked Readiness Index
Network readiness index (1/2)
According to the Portulans Institute’s 2022 Network Readiness Index, the U.S. leads
the list of countries when it comes to benefiting from investments in information
and communications technologies (ICTs). The index is essentially a study of the
state of technology infrastructure in various countries around the world. The index
is essentially based on the following four parameters:
• The state of the country’s regulatory and business environment
• Its ICT readiness — measured by affordability, skills, and infrastructure
• The level of engagement of all stakeholders including the government, its

businesses, and the general population
• The impact of the use of various technologies on the society at large
According to the results of the study, the other top countries following the U.S. are
Singapore, Sweden, the Netherlands, Switzerland, Denmark, Finland, Germany,
South Korea and Norway. Seven European countries are represented in the Top 10
Network Readiness Index. Europe is the most advanced region in terms of
technology readiness and adoption, followed by Asia and North America.
26 Notes: The Network Readiness Index is released by WEF and measures the impact of ICT on a country‘s growth.
Sources: World Economic Forum

The U.S. ranks fourth in terms of the Networked Readiness Index
Network readiness index (2/2)
Network Readiness Index(1) of leading countries for Industry 4.0 in 2021
Network Network
Rank Country Rank Country
Readiness Index Readiness Index
1 United States 80.30 13 Japan 73.09
2 Singapore 79.35 14 Australia 72.83
3 Sweden 78.91 15 Israel 72.20
4 The Netherlands 78.82 16 France 72.19
5 Switzerland 78.45 17 Luxembourg 72.10
6 Denmark 78.26 18 Austria 71.31
7 Finland 77.90 19 New Zealand 70.30
8 Germany 76.11 20 Ireland 70.15
9 South Korea 75.95 29 Belgium 70.04
10 Norway 75.68 52 Estonia 69.79
11 Canada 74.22 66 China 68.83
12 United Kingdom 73.41 67 Iceland 67.48
27 Notes: (1) The Network Readiness Index is released by WEF and measures the impact of ICT on a country‘s growth.
Sources: Portulans Institute

Top 10 patent applicants account for 11% of all international patents
Patents: Companies
% share held by the top 10 patents applicants in 2021
Huawei 1.9
Samsung 1.8
LG 1.3
Ericsson 1.0
Siemens 0.9
Raytheon
Technologies 0.9
Qualcomm 0.8
Sony 0.8
Royal Philips 0.7
Robert Bosch 0.7
28
Sources: EPO
Using metal as a basis is the biggest growth area in 3D printing
Additive manufacturing: Overview (1/4)
One of the primary requisites for making Industry 4.0 a reality, are advanced While 3D printing started by using mainly plastic as the base material, metal
techniques that can manufacture industrial products faster and more precisely as additive manufacturing technologies are currently the largest growth area for
compared to traditional manufacturing processes. 3D printing is one such additive manufacturing and include:
technique which works by turning a digital model of an object into a three-
• Selective laser melting (SLM): A laser is used to melt successive layers of metallic
dimensional physical item, by adding printable materials layer by layer on its digital
powder until completely melted. After this, the machine keeps adding additional
design. It helps in creating complex geometrical patterns which are not possible
layers of powder above the melted layer, until the object is finished. The
with traditional manufacturing methods, designing and making lighter components,
aerospace and medical devices industries have witnessed the maximum use of
and controlling various material properties such as density and stiffness. This
this technology, as the manufacturing in those industries involves complex parts
technology has also gained popularity rapidly, as it involves less prototype
which can be simplified using this process. This technology was discovered in
construction, fewer dies, and less post processing.
1995 by the German research institute Fraunhofer Institute ITL.
The aerospace and defense industry is one that is experiencing large scale use of
• Direct Metal Laser Sintering (DMLS): Developed jointly by Rapid Product
3D printing with French company Thales Group starting a global center of expertise
Innovations (RPI) and EOS GmbH, this technique is similar to SLM, with the main
in additive manufacturing in Morocco in 2017. Boeing created its first 3D printed
difference being the degree to which the particles are melted. In DMLS the
metal satellite antenna for the Israeli company Spacecom in 2019. Airbus used the
particles are not completely melted. Also, in this, the 3D printer parts are
technology to manufacture the titanium 3D printed bracket on an in series
developed from very fine Aluminum or Titanium powder.
production A350 XWB commercial aircraft in 2017 and has since announced plans
to develop 3D printed drones.
29
Sources: Sculpteo; Twi-global; Unido

EBM technology uses electron beam instead of laser to 3D-print metals
• Laser metal disposition (LMD): LMD is also known as directed energy deposition
(DED). In this a laser beam melts the metallic object and creates a sort of a pool
into which the powder is fed. The powder then melts to form a deposit, and the
required geometry is achieved layer by layer. In this, the laser and nozzle from
which the powder is delivered, are controlled using a gantry system or robotic
arm. This technology has been rapidly gaining traction in industries such as
aerospace, tooling, transportation, and oil and gas.
• Electron beam melting (EBM): Originally patented and developed by the Swedish
company Arcam, EBM differs from other techniques in that it makes use of an
electron beam as power source instead of a laser to 3D-print metal. The beam
fully melts metal powder layer by layer in a high vacuum while retaining the
original characteristics of the material. The technique can manufacture metal
parts with 100% density and is therefore also useful for industries with complex
parts such as aerospace and medical implants.
30

Most other techniques use plastic as a base material
Other 3D printing techniques include: • Selective laser sintering (SLS): SLS uses a laser to harden and bond small grains of
plastic, ceramic, glass, or metal, into layers in a 3D structure. Powder is jetted
• Stereolithography (SLA): SLA is the first 3D printing technology ever used. It
from many nozzles onto the print surface and then laser is used to sinter or fuse
hardens a liquid resin using an ultraviolet beam, thereby bonding each
the powder, layer by layer. This technique was invented by Carl Deckard, then an
successive layer. Despite its antiquity, this technology is still widely used mainly
undergraduate student at the University of Texas and mechanical engineering
due to a few advantages such as detail resolution, surface quality, and tight
professor, Joe Beaman. Objects printed with SLS are made with powder
tolerances. The materials used for this are UV-sensitive epoxy resins and ceramic-
materials, most commonly plastics, such as nylon. One of the main benefits of
reinforced materials (NanoTool, BlueStone, CeraMax). Owing to its high detail
this technique is that unlike many other 3D printing technologies, SLS doesn’t
resolution, this technique is widely used for coupling tests, dimensional
require much tooling once an object is printed. It also doesn’t require the use of
verification, ergonomic studies, and wind tunnel aerodynamics tests.
additional supports to hold an object while its being printed, as is the case with
• Fused filament fabrication (FFF): In this process, melted thermoplastic material techniques such as stereolithography.
such as plastic, wax, or metal, is sprayed from a nozzle to create many layers,
• Electron beam melting (EBM): EBM is a high energy, high temperature process
each of which are bonded to the other. The bonding is done mainly by heat or
similar to SLS, but employs an electron beam as its power source. In this, a
adhesion. The most popular metals used here are nylon, high-density
tungsten filament in the electron beam gun is superheated to create a cloud of
polyethylene, polycaprolactone, polycarbonate, and low melting point metals. FFF
electrons that accelerate to approximately one-half the speed of light. A magnetic
is the preferred method of rapid prototyping parts with standard tolerances due
field focuses the beam to the desired diameter, while the second magnetic field
to its affordability and low turn-around times.
directs the beam of electrons to the desired spot on the print bed.
31

Laminated object manufacturing is mainly used for prototyping
The technology is ideal for re-melting and refining of metals and alloys under high
vacuum in water-cooled copper molds. It is currently used mainly to produce
refractory and reactive metals (titanium, zirkonium, tantalum, niobium,
molybdenum, tungsten, vanadium, hafnium), and their alloys.
• Laminated object manufacturing (LOM): Introduced by Cubic Technologies

(formerly Helisys Inc.), LOM is a quick and comparatively cheaper method of 3D
printing objects in various materials such as metals, plastics or paper. Sheets are
bonded in successive layers and then cut into the correct shapes, according to
the 3D model. This technique is mainly used for prototyping and not for
production.
32

Additive manufacturing revenue to surpass US$45bn in 2026
Additive manufacturing: Revenue
Global additive manufacturing market in billion US$ Global unit shipments of 3D printers in millions
45
35
+21%(1)
29
+22%(1)
22
18
15
13
10
9
7 1
6
5
4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2018 2027
33 Notes: (1) CAGR: Compound Annual Growth Rate / average growth rate per year
Sources: PwC; Strategy& as of 2020; Printedelectronicsnow as of 2020

Online 3D manufacturing demand is led by industrial applications
Additive manufacturing: Market
Market share of global additive manufacturing players in 2019 Online 3D printing demand by industry in 2020
4%
8% 14%
31%
38% 10%
16%
10%
14% 21%
34%
3D printer manufacturers Materials producers 3D scanning Industrial Consumer Medical

Manufacturing platforms Software Electrical Services Other
34
Sources: EY global 3DP survey; 3Dhubs

3D printing has taken off in a big way in the aerospace and defense industry
Additive manufacturing: Leading companies (1/4)
General Electric (GE)
GE has invested over US$3 billion in 3D printing technologies and uses it in many of its businesses, including jet engines,
medical devices, and home appliance parts. An example of its use is the company’s GEnx jet engine, which was manufactured
using an advanced technique called direct metal laser melting. The company has also launched a new business unit called GE
Additive and acquired majority stakes in 3D printing companies Concept Laser, Arcam and Cobod International. Moreover, the
use of 3D printing to manufacture new gas turbine engine parts in 2021, resulted in production cost savings of around 35%.
Lockheed Martin
The company has used several components made using 3D printing technologies for its A2100 satellite buses. In addition, it
has also used this technology to build a remote interface unit for its Air Force Advanced Extremely High Frequency satellite
AEHF-6, which was launched in March 2020. The process resulted in a drop in manufacturing time from six months to 45 days
and a drop in assembly time from 12 hours to 3 hours. In addition to applying 3D printing to satellites, Lockheed aims to use
this technology for manufacturing rocket parts and, to this end, has contracted the rocket-building company Relativity Space to
produce projectiles with 3D printing for a future experimental N/ASA mission.
35
Sources: 3D Printing Media; 3D Castor

Boeing’s commercial and defense programs uses over 70,000 3D printed parts
Ford
Ford has been using 3D printing since the 1980s and is currently using industrial-grade 3D printers such as the Stratasys
Infinite Build 3D printer to develop various new digitally manufactured end-use components including Ford Focus heating,
ventilation, and cooling (HVAC) lever arm service parts and Ford Mustang GT500 electric parking brake brackets. It is also
exploring potential applications for future production vehicles, including Ford Performance products, as well as customized car
parts. The company has recently developed an automated system of 3D printers for the brake line brackets of its Mustang
Shelby GT500 sports car. This is the first product to be manufactured without the need for human intervention.
Boeing
The company’s Dreamliner 787 is the first commercial aircraft to fly using parts made with 3D printing technology resulting in
savings of around US$2 million — US$3 million on each plane. Boeing has also contracted Oxford Performance Materials to
develop 600 3D printed parts for its Starliner space taxis. which are part of the U.S. manned space program. Moreover, in 2019,
Boeing built the first 3D printed metal satellite antenna for the Israeli company Spacecom, which used it on the AMOS 17
satellite. Today, over 70,000 3D printed production parts are manufactured for Boeing’s commercial and defense programs.
36
Sources: 3D Printing Media; 3D Castor, Techcrunch

3D printing helps Nike to cut down the time taken to make prototypes
Hershey’s
3D printing has also permeated the chocolate manufacturing industry. In 2019, Hershey’s partnered with 3D Systems, a
provider of 3D printers, to make a 3D printer for chocolate and other edible products. The company’s CocoJet 3D printer can
make any chocolate design the consumer wants as it works on open-source patterns.
Nike
Using 3D printing and Selective Laser Sintering (SLS), Nike managed to reduce time to make prototypes from months to few
hours. Models where the technology has been used include a custom track spike for sprinter Allyson Felix, the Vapor Laser
Talon and the Vapor HyperAgility. Apart from footwear it has also been used to make a ‘cooling hood’ which helps in the
cooling down process for an athlete and the Football Rebento duffle bag. In May 2016, Nike partnered with IT company HP to
scale its existing 3D printing capabilities.
37
Sources: AMFG; Sulzer; 3D Printing Media Network; Techcrunch

ExxonMobil plans to manufacture a 3D printed engine
Exxon Mobil
ExxonMobil uses 3D printing to develop its proprietary cMIST(1) technology that helps to remove impurities such as H2O, CO2
and H2S during natural gas production and as a result ensures its safe and efficient transportation through the entire supply
infrastructure. The company has also licensed the technology to the Chemtech division of Sulzer for industry-wide use.
Furthermore, it has partnered with Milk Lab to manufacture the SmARt Engine, a 3D printed engine that swings into action
upon turning the key and enables the company’s sales force to showcase Mobil1, its flagship motor oil.
Medtronic
The company launched its 3D printing platform called TiONIC Technology in 2018 to make more complex designs and
integrated surface technologies for spinal implants. This has contributed to the creation of the ARTiC-L Spinal System, a
complex titanium spinal implant with a honeycomb structure to aid osseointegration. The company is also looking to combine
3D printing and regenerative medicine to create bioartificial tissues and subsequently implantable organs.
38 Notes: (1) Compact Mass transfer and Inline Separation Technology
Sources: AMFG; Sulzer; 3D Printing Media Network; Techcrunch

Collaboration between humans and robots increase efficiency by 85%
Artificial intelligence and robotics: Overview (1/2)
The use of AI and robotics in manufacturing can be traced back to 1954, when Worldwide installations of industrial robots in thousands
George Devol patented a design for a programmable mechanical arm. This
development was commercialized in 1961 by U.S. based entrepreneur Joseph
Engelberger who created Unimate, an awkward machine used in General Motor’s 517
New Jersey assembly line.
Since then, AI has advanced heavily and now lies at the very core of Industry 4.0 423
+12%(2) 400
391 394
and the smart factory. In fact, according to a 2016 study by the MIT(1), teams made
of humans and robots collaborating efficiently can be 85% more productive than
teams made of either humans or robots alone. This assumed greater importance 304
during the COVID-19 pandemic, which highlighted the need to create more resilient 254
supply chains and involve more humans in the manufacturing process. 221
166 178
Interestingly, developments in neural networks and more specifically deep learning 159
are enabling robots to learn and adjust to novel situations without any human
intervention. AI has now automated many elements of the manufacturing process,
including some of those that require human cognitive capabilities. Based on human
ingenuity, learning, and adaptability, which cannot be replicated by machines,
human-robot collaborations are expected to be the future of manufacturing. 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
39 Notes: (1) Massachusetts Institute of Technology (2) CAGR: Compound Annual Growth Rate / average growth rate per year
Sources: IFR
Self-learning robots are resulting in more autonomy
Artificial intelligence and robotics: Overview (2/2)
This self-learning ability of robots and the development of branches of AI such as • Sealing: Robots are increasingly being used for sealing applications in various
natural language processing (NLP), deep learning and computer vision, is already industries where it is difficult for any human to work in that environment.
playing a critical role in the smart factories being developed by many OEMs across
What is also interesting is that robots are no longer delivering benefits only for
industries. Some of the use cases include:
large corporations but are also being used for smaller businesses. A good example
• Autonomous manufacturing: Recognizing equipment and parts and determining of this trend is Skyline, a manufacturer of customized windows, which uses robots
how each of them must be used, without any human input. to automate tasks such as cutting holes in the metal and installing its windows. This
is just one example of many instances of inexpensive robots becoming increasingly
• Error handling: Using pattern recognition to form best practices for error
available to smaller companies, thereby allowing individuals to start businesses in
handling. For example, an AI application spots a defect in a factory making
industries with large labor requirements.
aircraft equipment and feeds that data into a cloud computer. This results in the
pullout of the defective parts thus leading to huge savings in recalls and repairs. According to estimates by The International Federation of Robotics, the operational
inventory of industrial robots across industries crossed the four million mark in
• Learning database: Creating a database of all faulty manufacturing processes
2022. This expected increase has resulted in fear mongering and media hype on
and using the learning to optimize future tasks.
the potential loss of jobs to robots. However, this is not going to be the case with
• Conversational technologies: Using NLP to create conversational technologies, automation not only resulting in significant improvements in a country’s GDP but
especially useful for fully autonomous cars. also creating more skilled jobs with higher pay.
• Drilling and fastening: Robot deployments in the form of automated drilling and
fastening machines in aerospace and defense.
40
Sources: Control Engineering Europe; Forbes; The International Federation of Robotics; MIT Technology Review; Mckinsey
AI revenues expected to grow at a CAGR of 41% during 2020-2025
Artificial intelligence and robotics: Revenue
Global revenue projection in billion US$
126
94
+41.0%(1)
71
51
35
23
15
10
2018 2019 2020 2021 2022 2023 2024 2025
Sources: Tractica as of 2020

The U.S. to witness AI’s highest impact on GVA growth rates
Artificial intelligence and robotics: Impact on real GVA (1/2)
Potential impact of AI on real GVA(1) by 2035 in % of growth

2.6
U.S. 4.6
2.1
Finland 4.1
2.5
UK 3.9
1.7
Sweden 3.6
1.6
The Netherlands 3.2
1.4
Germany 3.0
1.4
Austria 3.0
1.7
France 2.9
0.8
Japan 2.7
1.6
Belgium 2.7
1.7
Spain 2.5
1.0
Italy 1.8
AI Steady State Baseline
42 Notes: (1) GVA represents a close approximation of a country‘s GDP. The AI steady state refers to the expected economic growth after factoring in the impact of AI.
Sources: Accenture and Frontier Economics

AI expected to have a big impact on GVA growth rates in diff. industries
Artificial intelligence and robotics: Impact on real GVA (2/2)
Potential impact of AI on real GVA(1) by 2035 in % of growth in by industry

Information & communication 3.4 1.4
Manufacturing 2.1 2.3
Financial services 2.4 1.9
Wholesale & retail 2.0 2.0
Transport & storage 2.1 1.9
Professional services 2.3 1.5
Healthcare 2.2 1.2
Construction 2.3 1.1
Agriculture, forestry & fishing 1.3 2.1
Accomodation & food service 1.4 1.8
Utilities 1.4 1.7
Social services 1.6 1.2
Public services 0.9 1.4
Education 0.9 0.7
Baseline Increase from AI Steady State
43 Notes: (1) GVA represents a close approximation of a country‘s GDP. The AI steady state refers to the expected economic growth after factoring in the impact of AI.
Sources: Accenture and Frontier Economics

South Korea has highest robot density in manufacturing
Artificial intelligence and robotics: Robot density
Robot density(1) in the manufacturing industry in 2021

South Korea 1,000
Singapore 670
Japan 399
Germany 397
China 322
Sweden 321
Hong Kong 304
Chinese Taipei 276
U.S. 274
Slovenia 249
Switzerland 240
Denmark 234
The Netherlands 224
Italy 217
Belgium & Luxembourg 198
Austria 196
Spain 167
France 163
Finland 161
Global average: 141
44 Notes: (1) Robot density: number of multipurpose industrial robots per 10,000 employees
Sources: IFR World Robotics

BMW and Tesla are leading users of AI in automotives
Artificial intelligence and robotics: Examples (1/2)
Berg Health
A biopharma company, Berg Health uses AI to analyze patient biological data to determine why some people survive diseases
while others not. It then applies these insights to modify existing therapies/drugs and develop new ones. In September 2019,
the company presented data-based on its novel Bayesian AI driven Interrogative Biology Technology to identify tumors.
In May 2021, the company received approval from the U.S. Food and Drug Administration (FDA) to conduct the Phase II clinical
trial for an agent used in the treatment of brain cancers.
BMW
To implement artificial intelligence throughout its value chain efficiently and effectively, BMW has introduced an initiative
known as Project AI. A major area of focus is automated image recognition, a technology that analyses component images in
real time and compares them, all within milliseconds, to hundreds of other images in the same series. This helps BMW to
identify the deviations from the standard in real time. Additionally, in July 2022, Marco Görgmaier, the company’s GM, data
transformation and AI, said that his team had been able to deliver over 800 AI related use cases that had already yielded a
value of over US$1 billion. These uses cases span across R&D, logistics, sales, quality and supplier network.
45
Sources: Analytic Steps; BBC; Bloomberg; Techcrunch; BMW; Breg; Computerworld; Roboticsandautomationnews
Tesla is aiming for full automation
Artificial intelligence and robotics: Examples (2/2)
Tesla
Tesla aims to fully automate much of its car manufacturing processes at various factories around the U.S. In June 2018, the
company announced that 95% of the Model 3 production was automated. Moreover, in May 2020, it announced the
installation of more production robots at its Fremont factory in order to increase capacity. In terms of vehicle performance, the
company plans to build an autopilot system based on computer vision, machine learning, and camera video alone and not
LIDAR or a high-definition mapping system. Tesla’s latest AI initiative is the Dojo supercomputer which is expected to be used
to accelerate the development of fully autonomous cars. In fact, the company claims that four cabinets of Dojo systems can do
auto labeling work equivalent to 4,000 GPUs in 72 racks put together.
Foxconn
The Taiwanese multinational electronics contract manufacturer aims to replace 80% of its human workforce with robots by
2028. Over the years, the company has invested substantially in automation across its facilities and includes an investment of
US$4 billion in robotics and new automation technology. In 2021, a new AI-enabled machine vision platform called Gloria has
been launched by Foxconn's Industrial Internet division. The system is powered by Qualcomm's Cloud AI 100 solution, which
reduces human intervention by supporting up to 24 high-definition cameras for video analytics applications.
46
Sources: BBC; Bloomberg; Techcrunch; BMW; Computerworld; Roboticsandautomationnews

The Internet of Things connects previously separated technologies
Internet of things: Overview (1/3)
When Kevin Ashton coined the term Internet of Things (IoT) in 1999, he ushered in Global IoT manufacturing spending in 2020
a new era in computational technology. Computers no longer needed to be 57%
programmed for each use case but could simply feed off the information being
given out by devices connected to each other through the internet. The use of this
technology gained momentum in the manufacturing industry, thus setting the
stage for the next industrial revolution known as the Industrial Internet of Things
(IIoT).
Latest advances in connected devices through smart sensors that result in the real
time exchange of data is probably the most important cog in the digitalization of
manufacturing. This is mainly because it is the use of these sensors to connect 22%
various devices across the value chain that is responsible for the convergence of
previously standalone production technologies.
12%
According to a 2020 survey of mainly North American respondents conducted by
Plataine, a provider of optimization solutions based on IIoT and AI, the 5% 4%
manufacturing industry’s IoT adoption had tripled as compared to 2018. Moreover, 0% 0%
66% of respondents also stated that they found IIoT to be one of the key Field Construction Robots Oil/gas well Mining RFID tag Asset
technologies for the future of their company’s success and profitability. devices vehicles sensor equipment reader tracking
subsystem
47
Sources: N/ASSCOM (India); MIT; Schneider Electric; Wall Street Journal; Plataine
Global IoT connected devices to surpass 75 billion by 2025
Even though the IoT is often presented as a novel technology, sensors have been in • Asset performance management: Wireless sensors, cloud connectivity, and data
use for over 15 years. It is only the recent drop in their prices, enhanced computing analytics will result in a more efficient real time flow of information on the
power, advances in data connectivity in the cloud, and machine-to-machine Working of connected machines and lead to accurate predictions of machine
communication that has stimulated their use in smart factories. Sensors fitted on breakdowns and thus aid predictive maintenance.
equipment provide accurate and timely information on each machine’s functions,
• Augmented operators: Even though there has been speculation on machines
thereby enabling managers to track metrics such as temperature and vibration.
making humans redundant in the smart factory, future employees are expected
According to the World Economic Forum (WEF), IoT investment in production
to make use of IoT technologies to instead assume specialized roles, thereby
doubled from US$35 billion in 2016 to US$71 billion by the end of 2020, with three
making the manufacturing plants more user-centric and less machine-centric.
key functions driving investments: asset tracking, condition-based maintenance,
and robotics processing. In today’s production scenario, IoT systems have three key
uses:
• Smart enterprise control: IoT allows smart connected machines and connected
manufacturing components to be linked to a central computing system, which
results in efficient production and lower costs. However, since this process
requires an overhaul of the IT and operations technology systems, its large scale
implementation is expected to only occur in the medium to long term.
48
Sources: MIT; Schneider Electric; Wall Street Journal

Global IoT connected devices to reach almost 30 billion by 2030
Global installed base of IoT connected devices in billions
29
27
+11%(1) 25
23
21
19
17
15
13
11
10
9
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Sources: Transforma insights

The IoT enables predictive maintenance and wearable technology
Internet of things: Examples (1/3)
ABB
Embracing the concept of predictive maintenance, the power and robotics company ABB has a smart platform (ABB Ability)
that uses connected sensors to monitor its robots’ maintenance needs and repair them before they stop working. Moreover,
its dual-arm robot YuMi (short for You and Me) is designed to work alongside humans and has sensitive force-control feedback
and flexible software that allows programming through teaching as opposed to coding.
Airbus
Airbus launched a digital manufacturing initiative called the ‘Factory of the Future’ to address potential losses caused by single
errors in the assembly process. The company has developed three smart tool families that can be used in different stages such
as drilling, measuring, and quality data logging and tightening. It has also given its workers wearable technology such as smart
glasses, which has in some cases enabled a 500% improvement in production. Additionally, in September 2019, Airbus also
commenced in-flight trials of IoT connected cabin technologies on its A350-900 aircraft by attaching sensors on parts such as
seats and overhead bins for a more traceable experience.
50
Sources: BBC; Bloomberg; Techcrunch; Businessinsider

Apple used a 3D sensor camera in the iPhone 8, enabling facial recognition
Apple
The company has been one of the largest users of motion sensors, light sensors and fingerprint sensors in the smartphone
manufacturing industry. In fact, according to research firm IHS, the company displaced Samsung as the top consumer of
sensors in mobile devices in 2010 and has maintained its market leading position since. Apple partnered with
STMicroelectronics in 2015 to open a joint laboratory to develop camera sensors in Grenoble. In March 2017, Apple confirmed
that a 3D camera sensor would be used in the iPhone 8 which will enable facial recognition technology in the handset.
Chevron
The California-based energy corporation has partnered with Microsoft to launch a predictive maintenance solution for its oil
fields and refineries. The company is aiming to build thousands of sensor-enabled pieces of equipment by 2024 with the help
of Microsoft's IoT services in order to anticipate when equipment will need to be serviced.
51
Sources: BBC; Bloomberg; Techcrunch; Businessinsider

GE uses IoT to improve real time operational performance
GE
The company has been using sensors on its machines for a long time. However, till now they were not connected to the
internet and so were only useful in conducting real time operational performance monitoring, such as displaying a pressure
reading on a machine. In 2012, the company began creating a cloud-based platform called Predix that could use data analytics
to schedule maintenance checks and reduce downtime. In February 2016, GE announced a US$1 billion investment to install
sensors on gas turbines, jet engines, and other machines, connect them to the cloud and use the resultant data to assess the
overall health of machines and predict breakdowns long before they occur.
Tesla
In October 2016, Tesla announced that all its subsequent cars would be fitted with the necessary hardware for complete self-
driving capability. This included ultrasound sensors that would increase the range of the soon-to-be-released Model 3 to 500
meters, eight surround cameras for 360-degree visibility, 12 updated ultrasonic sensors to add redundancies to the cameras,
and forward-facing radars which would serve as a primary control sensor alongside Tesla’s vision system.
52
Sources: BBC; Bloomberg; Techcrunch; GEP

The use of virtual and augmented reality is at a tipping point
Virtual and augmented reality: Overview (1/5)
Virtual reality (VR) is a computer-generated simulation of a real-life environment repair tasks, data and information access, remote collaboration, and supply chain
that enables the user to experience a particular situation firsthand. Augmented functions.
reality (AR) on the other hand is also a computer simulation that not only creates a
Some of the industries that are early adopters of this technology include
virtual environment mirroring the actual one, but also adds virtual enhancements
construction, automotive, logistics, aerospace & defense, industrial equipment,
on top of it, in order to make it more interactive for the user.
mining, and oil & gas.
Even though the use of AR and VR in industrial manufacturing is still in its nascent
stages, it is now being used for a variety of operations ranging from the pre-
manufacturing stage to core manufacturing and even the support processes such
as maintenance and training. These systems can now be used to select equipment
parts in a warehouse, receive repair instructions on mobile devices, impart training
to technicians, control quality, manage risk and safety of workers, and also in
logistics support.
In fact, according to a PwC survey of U.S. manufacturers, while 33% of the

respondents were using AR/VR or in 2018, the number is expected to increase to
50% by 2025. The research also found that manufacturers most commonly use
VR/AR to support product design and development, for safety and manufacturing
skills training, virtual assembly, process-design improvement, maintenance and
53
Sources: Satellitetoday; Im-mining; Oracle

Key areas of application for virtual and augmented reality include design, quality
control, and workflow management
Key areas of application for AR and VR
Quality
Control
Mainten-
Design
ance
Virtual &
Augmented
Reality Training
Inspection
Workflow Safety
Mgt.
54
Sources: PwC
Increasing use of AR/VR across the manufacturing value chain
Assembly time consuming. Technologies such as smart glasses not only help the employees
always keep the picking lists in their view, but also show them the best route
The modern manufacturing process involves the precise assembly of hundreds or
through the warehouse. This helps in reducing errors, decreasing the time spent on
even thousands of components in the shortest possible time, depending on the
the job, and a reduction in on the job training. This has proven to be important for
complexity of the product. Traditionally, the work instructions for this process have
retailers especially during peak seasons when temporary and entry level employees
been delivered in the form of PDFs that can be difficult to work through. AR/VR
are carrying out such tasks. Another area of application is predictive modelling.
makes these instructions available in an easy-to-use format which is often hands-
Large retailers such as Amazon often have manufacturing and warehousing centers
free and voice-controlled. For example, Vital Enterprise, a developer of AR software,
throughout the country and internationally and these AR/VR tools help them keep a
in addition to these functions also provides a sample video showing how the work
check on inventory at all locations from a central point
is supposed to be done, all embedded in its AR glasses. Interestingly, even though
AR/VR have been used in manufacturing for quite some time, what makes them Maintenance
different today is mostly size and capability, according to Milan Kocic, Hexagon
AR is increasingly being used in the maintenance of manufacturing equipment. For
Manufacturing Intelligence’s business development manager. He compares the
example, Mitsubishi Electric has enhanced its maintenance support using a system
technology’s evolution to 3D printing where the printers have evolved from being
that enables users to confirm the order of inspection on an AR display and then
slow and expensive to cheaper and faster.
enter inspection results with their voice. Elevator manufacturer Thyssenkrupp also
Supply chain management uses AR in the form of Microsoft’s HoloLens technology which helps technicians see
and identify problems with elevators ahead of reaching the jobsite. It also gives
Before the advent of AR/VR, workers juggled through inventory by picking the
them remote and hands-free access to expert information while performing the
correct item using RFID or barcode scanners, a process that was cumbersome and
55

The use of AR/VR in design reduces wasted expenditure
job. General Electric also uses AR to improve its general maintenance with claims to both AR and VR to train workers at its manufacturing plants.
have realized productivity improvements of nearly 35%.
Design
Quality control and inspection
Quite simply, AR/VR can help industrial designers look at a product’s design and
Even though the use of AR/VR in quality assurance is still in its nascent stages, workings before it is completed, while also making any modifications at this stage.
companies such as Porsche have already begun to use the technology. While AR can also be used to compare actual designs to their digital versions in order to
inspecting vehicle parts, workers can take pictures and compare them to images find any discrepancies before the product enters production, thereby reducing
provided by the company’s suppliers via an AR overlay, to quickly and precisely find wasted expenditure.
out where the problem lies. Slashgear, a provider of digital content on technology
and cars, stated that the eventual plan would be to link Porsche’s cameras on the
production floor to its cloud-based components database to obtain real time
information and tailor their inspections accordingly.
Training
With global industries currently facing a labor shortage especially in semi-skilled

positions, AR/VR technologies have the potential to alleviate some of these
concerns. They can enable newly hired employees to receive more tailored and
relevant training while on the job in the form of training prompts. One such
example is Honeywell which has introduced a cloud-based simulation tool that uses
56
Sources: Via Satellite; International Mining; Oracle

Augmented reality and virtual reality market to reach US$52bn by 2027
Global augmented and virtual reality market in billion US$ Investment in augmented and virtual reality technology worldwide by 2024 in
billion US$
52
48
43
37
31
25
20
18
4 4 3
2021 2022 2023 2024 2025 2026 2027 VR gaming, VR Training Industrial Retail showcasing
video/ feature maintenance
viewing, and
AR gaming
57
Sources: Statista; IDC

Caterpillar launched an AR-based live calling platform in 2017
Virtual and augmented reality: Examples (1/2)
Lockheed Martin
The company’s engineers wear AR glasses that are fitted with cameras, depth, and motion sensors to get real time visuals on
its aircraft and overlay images onto the real working environment. This enables them to see augmented and virtual images of
all the parts of an aircraft, along with instructions on how to assemble the various components. According to company
estimates, the use of AR technology has resulted in a 50% reduction for torque applications while working on the Orion
spacecraft.
Thyssenkrupp
In October 2018, Thyssenkrupp unveiled a mixed-reality stairlift solution that allows users to visualize and customize products
in their own homes. In collaboration with Microsoft and Zühlke, the company launched HoloLinc – a first-of-its-kind, fully
digitalized sales process for the stairlift industry. With this, customers will be able to see exactly how the products appear in
their own homes and can customize them according to their needs. As a result, customers will benefit from an order process
that is four times faster than the previous one.
58
Sources: Eetimes; Augmentedrealitynews

Augmented reality helps with assembly, repair, and maintenance
Virtual and augmented reality: Examples (2/2)
Caterpillar
The company is using AR to give technicians access to real time data and images that assists them with machinery
troubleshooting and repair. In March 2017, Caterpillar and Scope AR launched the CAT LIVESHARE software platform. This
platform provides AR-based live video calling to CAT dealers so they can conduct real time remote support, training, and
equipment maintenance. The platform combines AR with live video streaming, voice, 3D animation, annotation, screen sharing,
and white-boarding.
Ford
The company has developed its own immersion lab where designers and engineers wear the Facebook-developed Oculus Rift
headset, which allows them to explore the exterior and interior of its cars. VR is also used to test various designs and assess
how individual parts of the car look, without actually having to build the car. It links directly with the company's computer-
aided design (CAD) software to help engineers to make alterations and visualize results.
59
Sources: Eetimes; Augmentedrealitynews

Digital twins use real time data to make simulations and predict performance
Digital twins
The advancements in Industry 4.0 have allowed manufacturers to develop digital According to an IBM report, the industries best suited for this technology are
twins or virtual replicas of production processes, plants, and supply chains. Digital engineering, automobile manufacturing, aircraft production, railcar design, building
twins are essentially computer programs that use real time data to make construction, and power utilities.
simulations that predict how a product, machine, or process will perform.
Manufacturing companies can therefore use the technology to get a complete
digital footprint of their products across the value chain, which further enables
them to reduce defects, tap into new business models, and bring their products to
market more quickly. The key elements of this technology are:
• Sensors: Sensors form the bedrock of digital twin technology by generating

signals that enable computers to capture real time operational and
environmental data. This data is then transferred to the digital universe through
technologies such as edge, communication interfaces, and security.
• Data analytics: The data is also aggregated and analyzed with the help of
algorithmic simulations and visualization routines to enable the digital twin to
create the best digital model of the physical world. The primary objective is to
identify components of the value chain where major deviations from optimal
conditions emerge.
60

Siemens’ digital twins application optimizes Service Lifecycle Management
Digital twins: Examples
Siemens
Siemens, in collaboration with IBM, launched a new solution in 2020 which optimized the service lifecycle management (SLM)
of assets by dynamically connecting real-world maintenance activities and asset performance with design decisions and field
modifications. Companies can use this to create and manage a closed-loop, end-to-end digital twin that allows them to
innovate new services and generate revenue by breaking down traditional silos.
Ford
By using a digital twin, Ford's Dearborn Research and Engineering Campus Central Energy Plant manages energy and
operational risks related to its combined heat and power (CHP) system, heat recovery chillers, electric centrifugal chillers,
thermal energy storage, and other equipment. By pairing a virtual representation of the CEP's mechanical systems with real-
time data, the digital twin model enables better decision-making processes in the areas of learning, reasoning, and dynamic
recalibrating. By monitoring the major energy-consuming equipment, the CEP team can drive operational excellence.
61
Sources: Better Buildings; IBM

CHAPTER 03
Trends
The digitalization of manufacturing across industries has resulted in the emergence of service-based
revenue models to complement the already existing product-based models. Digital technologies have
also begun to usher in an era of customization at a much lower cost in both the B2C and B2B segments.
Over the last few years, global manufacturers such as Adidas and Nike have started moving their
production centers away from low-cost countries, closer to the consumer. Further, emphasis is now
being placed on creating an agile and flexible production process using modularized systems that can be
reconfigured in quick time.
Manufacturers move to profitable service-based revenue models
Service-based revenue models (1/3)
The digitalization of manufacturing across industries has resulted in the emergence industrial machine, manufacturing companies are now connecting their machines
of service-based revenue models to complement the already existing product- to other devices in the ecosystem, to generate large volumes of big data which can
based models. The ability to design and manufacture bespoke products is expected further be used to offer services such as predictive maintenance, quality control,
to progressively open up a range of associative services once the product is sold. plant floor efficiency, and customer engagement.
This change is mainly driven by connected devices (IoT) which generate large
Even though large corporations such as GE and John Deere have been early
volumes of sensor data. This data is captured and monetized in the form of
pioneers of the product-as-a-service model, other manufacturers across industries
packaged insights that deliver value to the consumer while the product is in use.
are now following suit.
According to the findings of a 2019 survey by the research firm FutureBridge that
• Rolls Royce: One of the best examples of its implementation is Rolls Royce, which
was conducted with over 70 industrial engineering companies, 75% of them stated
is now charging companies more money if its jet engines do not break down. It
that they expected service delivery to become a more important part of their
offers predictive maintenance services based on Big Data that is powered AI to
company within the next three to five years. This is mainly because service has the
ensure that corrective measures are taken to achieve the least possible
potential to be a highly profitable business and result in higher and faster return on
breakdowns of its machines. The overall approach is therefore preventive as
investments (ROIs), as compared to more capital-intensive product related
opposed to reactive as has been the case traditionally. The company also sells
investments such as R&D programs, new production facilities, or even company
the power in its engines on an hourly basis, instead of focusing solely on selling
acquisitions.
the entire engine. Here, customers pay for each unit of power consumed, with
Connected industrial machines are now presenting significant opportunities for Rolls Royce assuming full responsibility for the maintenance and support of
companies to offer B2B knowledge-based services along with their existing product engines.
portfolio. For example, instead of simply making a one-time profit on the sale of an
63
Sources: Cognizant; Forbes; Futurebridge

Manufacturers move to profitable service-based revenue models
• Caterpillar: U.S.-based heavy equipment manufacturer Caterpillar uses sensors

on its rented machines to gather data from generators, engines, GPS, air
conditioning systems, and fuel meters. The company’s asset intelligence platform
uses this data to offer predictive maintenance services. For example, the
company’s marine division was able to identify a direct correlation between the
amount of fuel and power used by refrigerated containers. Using this data, it was
able to ascertain the optimum operating conditions for that container, simply by
modifying power output from the generators. This resulted in an hourly savings
of approximately US$30.
• Hilti: The Liechtenstein-based construction tools and machinery company Hilti

launched a fixed-fee fleet management solution that charges customers based
on the number of drills, as opposed to a one-time charge for the drill machine.
The customers find it economical as they do not have to worry about purchasing
additional machine tools to meet any surge in demand. Concurrently, the
company successfully recorded a sharp increase in revenue and leased more
than 1 million tools to approximately 100,000 customers in 2020.
64
Sources: Cognizant; Forbes; Futurebridge;

Many service-based revenue models viable for manufacturers
Service-based revenue models Overview on service-based revenue models
Service-based revenue models Revenue

Category Description
models
Machines & Manufacturing firms can offer remote access to their

Tools machines and tools online in the cloud
Hardware as Software as a Infrastructure as a Platform as a Hardware as a
a service service service service service
Testing
Remote access to testing equipment as an online service
Equipment
Product focused Cloud hosted software that enhances the functionality of

Software the product leading to improved customer experience
Software as a
service Manufacturing firms often develop their own software.
Machines & Tools Testing equipment Product focused Software
Here, companies offer access to this software as an online
as a service as a service Software as a service Outsourcing
service to others
Manufacturing firms often invest heavily in their own

Infrastructure
Virtual Machines computational infrastructure. Here, companies provide
as a service
remote access to these power processors via the cloud
Platform as a Services in this sector are often provided by dedicated ‘pure

Platform
service service’ IT firms. Use in the manufacturing industry is limited
65
Sources: Core
Manufacturers shift from mass production to mass customization
Mass customization (1/2)
Before Henry Ford uttered the famous line – “The customer can have it (car) Interestingly, these trends are not only evident in the B2C segment but also in B2B.
painted any color he wants, so long as it's black”, manufacturing was primarily For example, Hoffman, a subsidiary of Pentair, provides custom electrical closets
characterized by craftsmanship and uniqueness. Consumers used to buy and Flying-parts.com, which manufactures co-designed parts at a fraction of the
customized items created only for them, which often became points of pride for the cost of those offered by traditional aviation parts manufacturers. Other
makers. However, Henry Ford changed all that and manufacturing soon became conventional B2B sectors such as construction and glass manufacturing are also
defined instead by economies of scale, repeatability and affordability. adopting mass customization models with a focus on 3D printing technologies.
Now almost 100 years hence, Industry 4.0 has again begun to usher in an era of Lean customization is another interesting trend arising from mass customization in
customization with the only difference being, that this time it is being done at an which manufacturers make use of just-in-time inventory and digital technologies to
unprecedented scale. Technologies such as the IoT, big data, 3D printing, and produce items at scale at low prices. A good example of this is Liberty Bottleworks,
robotics are at the core of this revolution. who’s plant in Portland, Oregon manufactures about 70,000 aluminum drinking
bottles every month. Even though the company’s size and scale doesn’t come close
Traditionally, personalization meant losing some volume and was therefore
to Chinese manufacturers, its bottles are competing effectively with them in retail
available only at a premium. However, now consumers can place orders for
stores all throughout the US. According to the company’s COO Ryan Clark, the main
customized cars, mobile phones, and even machines which will be manufactured at
reason for this is lean customization, which allows consumers to choose the exact
scale and delivered to each consumer on time. This is possible because of the
shape, size, color and graphic that they want on their bottle, at no extra cost to the
ability of robots and other machines to be rapidly configured and then
company.
reconfigured to adapt to different specifications supplied by the customer.
66
Sources: ResearchGate; Industryweek

Digitalization enables mass customization
Mass customization (2/2)
Illustration of mass customization
Product
Smart product
configuration VR,
design
hybrid
proto-
typing
Customer
Specific
needs
ERP
management
production
software
Smart
and sim-
ulation –
different
Manufacturer/ Central Database models Smart factory
Producer (Cloud Storage)
Automated,
production
robotized
IoT, CPS(1)
Supplier
67 Notes: (1) Cyber-Physical Systems
Sources: ResearchGate
“Consumers’ mindsets have fundamentally changed – they now think in
terms of what companies can provide for them, rather than relying on
companies to figure that out.”
Merijn Versyp, Senior Consultant

Delaware
68
Production has moved closer to centers of demand
Smart manufacturing (1/2)
For the last two decades, major corporations have been outsourcing their The Covid-19 pandemic has further catalyzed this trend with as many as 64% of
manufacturing to low-cost regions such as Greater China (electronics), Mexico American companies bringing manufacturing and sourcing back close to home,
(clothing), Vietnam (shoes), and other countries. Even though, these global supply according to an April 2020 Thomas survey of 878 North American manufacturing
chains have the attractive benefit of cheap labor resulting in low product costs, and industrial sector professionals. One of reasons cited for this was that it brought
disadvantages such as long lead times, low flexibility, instability in supply chains, suppliers closer to market for U.S. businesses and reduced dependence on ocean
poor quality standards, and rising labor costs, have all begun to drive or airfreight.
manufacturing closer to the consumer.
According to Herbert Hainer, former CEO of Adidas, smart manufacturing is taking
However, the biggest catalyst of this change is the advent of the smart factory, the industry towards an on-demand manufacturing model which will see
which coupled with the increasing consumer appetite to have customized products customized shoes being delivered in as soon as in a day. Apart from a drastic
delivered quickly, is pushing production back closer to markets from where the reduction in time, this trend will also be important to keep up with the growing
demand originates. demand for customization.
One of the major benefits of this approach is the shortening of the supply chain. Nike is an example of a big corporation that is moving production back from the
The distant mass production centers simply have too many stages in the value eastern countries. The company has partnered with Flextronics International, a U.S.
chain including transportation, warehousing, insurance, manpower, etc. which not based technological manufacturer, to develop automation and customization
only increases costs manifold but also the time it takes to get a new product to solutions. It has also tied up with Belgium-based European Logistics Campus to
market. “accelerate the company’s drive toward the supply chain of the future”.
69
Sources: Hannover Messe; Harvard Business Review

“In a sense we will reshore production more and more. The future is in more
mass customisation and this means more local production – because we
have to shorten the logistics chain from the production side to the side of the
user.”
Dr Detlef Zühlke. Chairman

the SmartFactoryKL Technology Initiative
70
Smart manufacturing reduces supply chain complexity
Smart manufacturing (2/2)
Illustration of traditional supply chain Illustration of smart manufacturing
Traditional supply chain Smart manufacturing supply chain
Components
Location a
Components
Location b
Raw materials
Raw materials
Location c
Raw materials
Location d
Supplier Overseas Overseas Overseas Retailer Customer Supplier Manufacturing Warehousing Retailer Customer
manufacturing – warehousing Distribution hub –
low-cost centers Additive
Manufacturing
71
Sources: Spare parts 3D

Nearly 60,000 manufacturing jobs returned to the U.S. from China in the last
decade
Backshoring(1) (1/2)
Number of jobs from the U.S. manufacturing companies that were reshored between 2010 and 2021, by country
China 59,643
Mexico 28,347
Canada 12,825
India 7,376
Japan 6,750
Singapore 4,320
Honduras 2,214
Germany 2,106
Russia 1,755
Switzerland 1,539
Spain 1,215
South Korea 1,202
UK 1,137
Taiwan 1,121
72 Notes: (1) Backshoring (also known as onshoring or inshoring) is the process of moving the production from low-cost countries back to the home countries, despite higher labor costs
Sources: Reshoring Initiative

Nearly 35,500 manufacturing jobs returned to the U.S. from South Korea in
2022
Backshoring(1) (2/2)
Number of jobs from the U.S. manufacturing companies that were reshored in 2022, by country
South Korea 35,403
Vietnam 22,500
Japan 14,349
Canada 13,671
Germany 9,855
China 8,985
The Netherlands 4,659
India 4,620
France 4,551
Taiwan 4,500
73 Notes: (1) Backshoring (also known as onshoring or inshoring) is the process of moving the production from low-cost countries back to the home countries, despite higher labor costs
Sources: Reshoring Initiative

Modularization paves the way for efficient mass customization
Modular workstations (1/2)
It’s been about 100 years that Henry Ford gave the automotive industry its first
assembly line. Since then, cars have been manufactured in a fixed and sequenced
line, consisting of pre-defined and rigid processes. In other words, once an
assembly line is designed for a particular model, it cannot be changed throughout
the lifecycle of a car and dictates the intra-logistical processes of the production
and supply chain.
Because of these restrictions, if an auto manufacturer wants to release a modified

version of a particular model, it cannot do so without creating a different assembly
line and thereby incurring huge costs. Other industries such as apparel,
pharmaceutical, and chemical are also facing a similar problem in the face of
increasing demand for customization.
In order to create an agile and flexible production process, companies are now
making use of the concept of modularization. Modularity essentially refers to the
capability of a system to be reconfigured on a plug-n-play basis, thereby allowing it
to respond to changes in customer requirements quickly and efficiently.
74

“Modular production will simplify engineering, make production more
flexible, reduce the time to market, increase plant efficiency, and lead to
improved overall competitiveness.”
Felix Seibl, Director

Measurement Technology & Process Automation, Electrical and Electronic Manufacturer’s Association
75
Audi uses modular workstations to increase productivity
Modular workstations (2/2)
Audi is one such company that has created independent workstations, each The key advantages of this system include:
assigned a particular production function. Unfinished cars move autonomously
• On the spot correction of any problem that may arise in the supply chain without
from one workstation to the other, with the help of driverless transport systems
stopping production completely.
(DTS), where connected robots and a few humans assemble a particular part of the
car. • The advent of DTS means that human workers no longer have to adapt to the
assembly line’s speed or move with the line.
If one DTS reaches a station that is already occupied, it is programmed to head to
another available station, thereby removing the delays that are a part of the • AI and deep learning techniques are equipping the connected systems to learn
conventional assembly line. This modular assembly also allows for changes to be from past experiences and improvise as and where needed.
made on the go. Audi has partnered with Arculus, a manufacturer of modular • Customizations and other changes can be made without incurring additional
production systems, to test this new production method at their factory in costs.
Ingolstadt, Germany and expects a 20% increase in productivity.
The German chemical and pharmaceutical companies are also developing flexible
modular concepts for their processing plants, which has led them to achieve a
faster time to market of up to 40%, 30% energy savings, 20% lower operating costs,
and 40% less capital expenditure.
76

Industry 5.0 looks to augment human-robot collaboration
Industry 5.0
Industry 4.0 heralded the arrival of automation technologies, IoT, and the smart Technology enablers of Industry 5.0
factory, which created intelligent and connected supply chains and mass-
customized products with minimal human intervention. However, Industry 5.0
looks to leverage the partnership between machines and humans to create
responsive and distributed supply chains, sustainable manufacturing methods,
hyper-customized products, resilient businesses, and enhanced customer
Exoskeleton Additive Technology
experiences. In other words, it does not signal another industrial revolution but
rather a reinforcement of existing Industry 4.0 technologies through more effective
human-robot collaboration. Vivid examples of Industry 5.0 in action include
humans wearing exoskeletons to increase physical strength or humans working
Drones 5G and beyond
with augmented reality devices in order to improve performance. According to a
recent SAP study, Industry 5.0 can also be seen in:
• Development of AI-powered human/robot collaborations to help with waste

Top Technology
reduction and increase sustainability compliance.
Enablers of Industry 5.0
• Simulation models and digital twins that minimize the wear and tear of real-world
systems, thereby enabling maximum innovation and efficiency.
Industrial Blockchain Mixed-Reality
77
Sources: SAP, i-Scoop, International Society of Automation, Frost & Sullivan

CHAPTER 04
Industry Analysis
Digital technologies are increasingly being customized to serve the needs across multiple industries with
maximum application observed in automotive, healthcare, aerospace and defense, chemical, and
consumer goods. The automotive industry is witnessing rapid digital adoption with benefits including
faster time to market and lower costs, and in fact maintained a lead over all other industries in 2020 in
terms of digital adoption rates. The A&D industry also has one of the highest rates of digital adoption
owing to the sheer complexity of its value chain. Digitalization in healthcare is centered around medical
devices and pharmaceuticals. Even though, the chemical and consumer goods industries are late
bloomers, they are now not only transforming production but also creating smart supply chains and new
business models.
The automotive industry is witnessing rapid digital adoption
Industry 4.0 adoption
Industry 4.0 adoption by industry in 2020
Automotive 36%
Comp, electronic
29%
& electric
Metals & Mining 29%
Process
29%
industries
Machinery
26%
& equipment
Energy 25%
Other discreate
24%
industries
Other hybrid
24%
industries
79
Sources: IOT Analytics

Industrial manufacturing leads in digital factory transformation
Industry 4.0 investment
Annual investments in digital factory transformation 2022 in billion US$
Industrial Manufacturing 318
Chemicals/Process Industries 289
Retail & Consumer Goods 214
High Tech & Electronics 172
Automotive & Transportation 112
Pharma & Medtech 45
Grand Total 1.150
80
Sources: Pwc
Denmark leads the digital competitiveness rankings in 2022
Level of digitization
Digital competitiveness rankings of top 15 countries in 2022
Denmark 100.0
U.S. 99.8
Sweden 99.8
Singapore 99.5
Switzerland 98.2
The Netherlands 97.9
Finland 96.6
Korea Republic 95.2
Hong Kong SAR 94.4
Canada 94.2
Taiwan, China 94.1
Norway 93.2
UAE 91.4
Australia 87.9
Israel 87.4
81
Sources: International Institute for Management Development (IMD)

Manufacturers invest in smart factories to improve efficiencies
Automotive: Overview (1/2)
The automotive industry has always been a leader in digital transformation. The Most of the physical work in automotive smart factories is now being carried out by
first instance of digitalization can be traced back to Henry Ford who introduced the advanced robots that are capable of performing multiple tasks. Other technologies
first-ever moving assembly line in 1913, which reduced assembly time by 90%. such as IoT, machine learning, additive manufacturing, augmented reality, and data
analytics, are also playing a significant role in helping companies achieve faster
Now, over a century after the second Industrial Revolution, digital technologies
time to market and lower costs.
such as AI, robotics, and sensors that are bound by big data generated mainly from
connected devices, are enabling manufacturers to enhance product design and This adoption is especially imperative for traditional OEMs with large scale
correct legacy production and supply chain inefficiencies. While some technologies operations whose business models have been slow to evolve. They now face a
have more focused applications, such as robotics and 3D printing on production, credible threat from more agile and technologically advanced digital companies like
others such as cloud computing, data analytics and cybersecurity are resulting in an Uber, Google and Autolib who are digitalizing the entire value chain and creating
unprecedented sharing of information and new applications across the value chain. new business models such as ride-sharing.
A 2022 survey conducted by PwC of over 700 global corporations revealed that
industries are spending over US$1 trillion a year in digital factory transformation,
with the automotive & transportation industry accounting for nearly 10% of the
share.
Interestingly, companies such as Renault and Mercedes Benz are already

witnessing the benefits of smart factories, and the latter has achieved a four-fold
reduction in rejection rates for some of its components.
82
Sources: Capgemini; Ernst & Young

“By using smart factory technology in our business, we have seen great
benefits with regard to our employees’ productivity. They use sophisticated
tools such as smart robots to create a safer environment, which in turn
provide them with more time to focus on other important tasks.”
Grégoire Ferré, Chief Digital Officer

Faurecia
83
Digital technologies form the core of a smart factory
Automotive: Overview (2/2)
Illustration of a smart factory
IoT
Raw materials IoT
Process Products
IoT
Central Database
Customer data
(Cloud Storage) Management
Data analysis Machine learning
84
Sources: KPMG
IoT helps in providing real time data for manufacturing
Automotive: IoT applications
According to a study by the market research company Counterpoint, the worldwide delivering an early warning on delays in inventory, the system also provides
connected car market is expected to double by 2025, with over 270 million cars information about the exact location of both JIT and stock parts, which can prove to
shipped globally. This robust growth in the adoption of IoT systems at the be invaluable in the case of vehicle recalls.
consumer level also reflects its increasing use in manufacturing.
Maintenance: Data derived from connected cars starting from the production
Historically, the automotive industry’s supply chain has suffered from long lead phase and from onboard sensors, can help manufacturers link maintenance
times due to a complex structure aimed at getting the right components into the functions to assembly and quality inspection records. The OEMs thus have a better
relevant factories at the best time. This is why most manufacturers are now using understanding of the actual cause of repair and maintenance requirements,
IoT to increase the transparency of their supply chain by digitalizing partner whether external or traced back to the assembly process. This understanding helps
integration, with real time data critical to this transformation. them in keeping only the required inventory of spare parts at various dealerships,
thereby resulting in considerable cost savings.
The myriad of sensors attached to all production systems allow various devices and
machines used in all stages of the supply chain to connect to each other and to Customization: Customers are able to use the manufacturer’s online platform to
human interfaces and result in large volumes of real time data. configure whatever car designs or specifications they want. This data is then passed
on to the various OEMs who are then able to adjust their manufacturing process
IoT is expected to benefit automotive manufacturers in three key areas:
accordingly and provide real time visibility of delivery dates to the car company.
Just-in-time (JIT) inventory: One of the biggest issues facing OEMs currently is the
delays caused due to the JIT arrival of auto parts during the assembly process. An
increased use of an efficient IoT system helps vendors to track operative and
delivery processes and react accordingly on the production floor. Apart from just
85
Sources: Counterpoint Research

Connected supply chain facilitates better production management
Automotive: Connected supply chain
Illustration of a connected supply chain
Information Tracking
Raw material Finished goods

Supplier network Manufacturing Stock transit Customers
inventory inventory
• Raw material levels • Raw material levels • Machine availability and allocation • Stock levels • Transit stocks • Demand data
• New/existing • BOM check/Bills • Manufacturing updates • Failures • Orders
contracts processing
• Expected completion timeline • Delays • Returns
• Transit tracking
• Order completion • Shipping time • Feedback
Materials flow
Information flow
86
Sources: PwC; Statista analysis

AI helps in driver safety in complex and subtle situations
Automotive: AI applications (1/2)
The march 2017 acquisition of machine learning company Mobileye by Intel for a Employee productivity: Enhanced computing power and AI algorithms are resulting
price of US$15.3 billion is just one example of the growing importance of AI and in the development of robots with a certain degree of intelligence, that can work
robotics in automotive manufacturing. Mobileye has a computer vision system that alongside humans while responding to changes in the environment with less
employs deep learning to not only capture images as the cars drive around but also configuration. An example is Rethink Robotics which has built collaborative robots
to dynamically learn about various elements in the driving environment such as that can be easily programmed by a human simply by taking its arm off and guiding
road markings, traffic signs, other vehicles, and pedestrians. More specifically, it through movements such as gripping and releasing objects. McKinsey estimates
Mobileye is now using reinforcement learning, a technique inspired by the way the potential impact to be a 20% gain in productivity levels.
animals learn through experience, to teach computers how to drive safely in
Quality control: The quality control process in most manufacturing plans is handled
complex and subtle situations.
by humans making it slow and error prone. An AI based visual quality check system
According to a McKinsey study, the five key areas where AI will impact automotive and other hardware not only reduces errors but also learns dynamically based on
manufacturing are: feedback received. According to McKinsey estimates, AI based machines can detect
defects up to 90% more accurately than humans. Leading to productivity increases
Minimum equipment failure: AI algorithms make use of the large amount of real
up to 50%.
time data from IoT systems to detect anomalies and predict breakdowns in any
part of the manufacturing process. McKinsey estimates the impact to be a 20%
increase in equipment availability, up to 25% lower inspection costs and up to 10%
lower total annual maintenance costs.
87
Sources: McKinsey
AI use in project management results in R&D productivity gains of 10 to 15%
Automotive: AI applications (2/2)
Leaner supply chains: Machine learning powered supply chains are flexible to adapt
to changing inventory requirements due to unforeseen events or by incorporating
real time data on advertising campaigns, prices, even weather forecasts. In the
future, AI will enable the creation of a fully autonomous supply chain function
where decisions are taken wholly by machines with no human intervention.
McKinsey estimates that AI will reduce forecasting errors by 30 to 50% and reduce
overall inventories by 20 to 50%,
Project management: Organizations often find it hard to determine how much

money and time to spend on a project, especially the ones related to research and
development. Machine learning systems can use data to not only identify the most
potentially lucrative projects but also forecast factors that lead to low performance.
QuantumBlack is one such company providing AI systems for better project
management, with McKinsey estimating their approach to result in R&D
productivity gains of 10 to 15% and an acceleration in time to market by 10 to 40%.
88
Sources: McKinsey
Global A&D companies are leaders in the adoption of the smart factory
Aerospace & defense: Overview (1/4)
According to a 2020 survey by Accenture of 6,047 business and IT executives, Furthermore, an engine manufacturer can share 3D models of component design
including 87 business and IT executives across eight countries from the A&D with each supplier who in turn provides information related to price, quality, and
industry, 30% of A&D respondents stated that they had adopted AI technologies delivery times. This transparent sharing of information leads to a reduced level of
across multiple business units, compared to 23% for all other industries. Overall, risk for suppliers and the manufacturer, better management of any design
77% of the respondents stated that AI technologies had been adopted or piloted in changes, and a faster delivery of the finished product. Boeing used 3D models to
their business, compared to 73% across all industries. develop its most recent mainframes for the 777 and 787 airliners, which reduced
time to market by over 50%.
Another study conducted by Deloitte in January 2020 found that A&D companies
had achieved 32.4% returns on digital investments (RODI), as compared to 25.4% Interestingly, smart manufacturing is on the rise across industries, especially after
for other industries. The A&D industry has a very complex supply chain. A modern the arrival of the COVID-19 pandemic. According to Deloitte’s 2021 Global Resilience
jet turbine engine has hundreds of different parts which are either sourced from Study, as many as 66% of the surveyed leaders in areas such as in manufacturing,
multiple vendors or made internally. This means that modification to just one part industrial products, and construction believe that global events such as COVID-19
can impact the manufacturing of all the other parts. will now disrupt supply chains more frequently than before. For this reason,
companies will need to be more agile and consistently resilient.
This is where digital technologies such as cloud computing and data analytics play a
big role. They help manufacturers get a comprehensive and clear view of all
processes between engineering, manufacturing, and the supply chain. This in turn
helps them to determine in real time the best point to introduce engineering
changes in order to enjoy reduced risks and costs.
89
Sources: Aviationweek; McKinsey; PwC; Accenture

“We are expecting to see around 40,000 new aircraft delivered to airlines in
the next 20 years. To cope with that, you need to manufacture more
effectively. Look at the complexity of a single airplane: The Boeing 747 is
made of six million parts that must be assembled. We have to find new ways
to manufacture aircraft, and Industry 4.0 is helping us to do that.”
Paolo Colombo, Global Director

A&D, ANSYS
90
Digital technologies are used for equipment MRO
In the past, the high cost of MRO(1) resulting mainly from inefficiencies could be increased revenues. Rolls Royce, instead of following the earlier model of charging
passed on to the customer. However, increasing competition has forced MRO(1) companies to repair their equipment, now uses data analytics, AI and sensor
providers to modernize their practices by leveraging technologies such as IoT, technology to prevent breakdowns and charges companies more money if their jet
additive manufacturing, natural language processing, inspection drones, engines do not malfunction or breakdown over a specified period of time. The
augmented reality, and data analytics, to create a unified platform which addresses company also sells the power in its engines on an hourly basis, instead of focusing
these new productivity levels. solely on selling the entire engine. In this model, customers pay for the power
consumed with Rolls Royce assuming responsibility for the MRO (1) of engines.
Autonomous inspection
Augmented Reality (AR)
Autonomous equipment such as UAVs and robots equipped with 3D scanners are
being used in MRO(1) factories for automated inspections of various aircraft parts. Many companies are using AR equipment such as smart glasses and hand-held
The captured images are compared against the respective 3D model and any computers to assist with MRO(1) work. For example, Australian company TAE has
discrepancy can be reported in less than an hour, as compared to the 4-6 hours developed Fountx, a solution that connects on-site operators with a technical
taken earlier. expert anywhere in the world, in real time. Through a wearable AR headset, both
the parties can get access to enhanced version of the real environment, which is
IoT and data analytics
particularly useful in dealing with MRO(1) issues in tight spaces. Further, AI
Using data from connected devices and sensors installed in the equipment to technologies such as NLP and robotics are being used along with AR not only to
identify component failures and areas requiring repair, is another trend that is enhance the detection and repair of the equipment but also to simplify human-
gaining widespread traction. Manufacturers and MRO(1) providers are being able to machine interaction.
predict breakdowns before they occur, leading to reduced downtimes and
91 Notes: (1) Maintenance, Repair and Overhaul
Sources: PwC; Aerospace Manufacturing and Design; Manufacturing-Operations-Management

3D printing technologies are used to manufacture spare parts on-site
3D printing
The complex and specialty nature of A&D equipment makes for a vast support
chain and therefore poses significant challenges from an MRO(1) standpoint. 3D
printing can be used to manufacture spare parts on-demand and on-site without
having to order the part from another corner of the world or investing in expensive
manufacturing set ups. This results in a reduction in operational downtime and
saves costs. In 2015, GE Aviation became the first OEM to use a 3D printed part to
house its T25 sensor on its GE90 jet engine. The sensor provides pressure and
temperature measurements for the control system and is fitted on more than 400
of its engines currently in service.
92 Notes: (1) Maintenance, Repair and Overhaul
Sources: PwC; Aerospace Manufacturing and Design; Manufacturing-Operations-Management

Data analytics helps in predictive maintenance
Companies like Boeing, Lockheed Martin, and Bombardier, who manufacture and troubleshooting steps.
aircraft and other hardware, have access to enormous amounts of data which is
New business models
generated in large scale during the design, construction and operation phases. For
example, the latest A350 aircraft has 400,000 data parameters and a data output of The use of data analytics to improve competitive positioning and add revenue
around 250GB per flight. Bombardier’s C-Series jetliner with Pratt and Whitney’s streams is one of the primary areas of focus for most A&D companies. The data
Geared Turbo Fan (GTF) engine is equipped with 5000 sensors that generate up to generated through sensors is increasingly not only being used for predictive
10 GB of data per second. This data is now being used to deliver various benefits maintenance but is also sold to other manufacturers to help them improve their
design and production processes. It can also be used to create a new market for
Predictive maintenance
after sales add-on products. For example, Pratt and Whitney can use the data
According to PwC, the cost of maintenance related delays for airlines was over collected from its engine sensors which shows a faulty power cell, to launch a new
US$500 million in 2016, in the U.S. alone, with over a third of total delay time taking model of engines with enhanced power and reduced fuel consumption.
place due to unplanned maintenance. By combining the data from sensors with
advanced analytics, it is now possible to not only monitor the aircraft in real time
but also to predict the remaining useful life of an engine component so that any
anomalies can be spotted before they occur, thereby preventing mechanical
failures. For example, Airbus’s aircraft maintenance analysis (Airman), used by 106
customers, monitors overall aircraft health and transmits faults or warning
messages to ground control, providing rapid access to maintenance documents
93
Sources: McKinsey; PwC and SAP

“Moving from a reactive maintenance schedule to predictive maintenance
solutions will improve Maintenance, Repair and Overhaul (MRO) for the
long term. It will allow for more cost-effective strategies and increase
productivity for maintenance technicians. When applied in the aerospace
industry, the advantages can be seen instantly.”
Michael Edelen, Solution Specialist

SAP Aerospace & Defense
94
3D printing is used in prototyping and large-scale manufacturing
Aerospace & defense: 3D printing (1/3)
This is one of the main technologies being used by A&D companies to boost their
production and create new designs previously unachievable with traditional
manufacturing. N/ASA’s and SpaceX’s focus on developing a completely 3D printed
rocket engine or GE’s use of the technology to manufacture jet engine parts are
examples of the current evolution of additive manufacturing techniques from mere
prototyping to commercial manufacturing at scale and lower costs.
With the rising popularity of 3D printed parts, aerospace and technology

companies are forming strategic alliances with each other to develop innovative
solutions. In February 2020, Etihad Airlines formed a partnership with the German
mechanical engineering firm BigRep and installed the company’s BigRep Edge 3D
printer at its MRO facility in Abu Dhabi. This made it possible to print both flying
and non-flying parts on-demand. Moreover, British Airways began investigating the
use of 3D printing for up to ten aircraft spare parts in December 2019, believing
that it could help reduce a part’s weight by up to 55%. The company is currently
looking for strategic partnerships with OEM manufacturers. Other partnerships
include, U.S. Air Force and MIT’s AeroAstro labs to develop a 3D printer drone and
the technical partnership between Stratasys and BOOM Supersonic, which aims to
enhance a supersonic aircraft through additive manufacturing.
95
Sources: Fisher Unitech; PwC; Aviationtoday

“Additive manufacturing, or 3D printing will provide significant possibilities
to the Department of Defense, both in revolutionizing the industrial supply
chain, as well as in providing radically new technological capabilities.”
Subcommittee on Emerging Threats and Capabilities

the U.S. Dept. of Defense
96
Leading defense OEMs adopt 3D printing to increase efficiency
GE
In 2016, GE developed the fuel nozzles for its new LEAP family of engines using direct metal laser melting. The technique not
only reduced the weight of the nozzles by 25% but also the number of parts used to create the nozzle from 18 to 1. It also
allowed for more intricate cooling pathways and supports, thereby resulting in a five-fold increase in their durability. The
market has been very responsive to these engines and the company has received thousands of orders over the past few years.
In Jan 2020, Boeing announced the successful completion of the first flight of its 777X jet, powered by twin GE Aviation-
manufactured GE9X engines consisting of over 300 3D printed parts.
N/ASA
In 2016, N/ASA announced the development of a fully 3D printed rocket engine with 12 test firings at the Marshall Space Flight
Center in Huntsville, Alabama. Most of the engine’s components, including the fuel turbopump, fuel injector, and valves, were
all 3D printed. N/ASA has also developed 3D printed metal fabrics that can be used to make astronaut spacesuits, shields and
insulation for space craft, or large antennas and other devices. Currently, N/ASA's Rapid Analysis and Manufacturing
Propulsion Technology project, or RAMPT, is developing an additive manufacturing technique that uses metal powder and
lasers to cost-effectively manufacture complex 3D printed rocket engine components.
97
Sources: BBC; Bloomberg; Techcrunch; N/ASA; 3D Printing Media Network; TCT Magazine
SpaceX’s Raptor engines have over 40% 3D printed parts
SpaceX
In January 2014, SpaceX launched its Falcon 9 rocket with a 3D printed main oxidizer Valve (MOV) body in one of the nine
Merlin 1D engines in what was its first effort at flying a 3D printed part. Then in 2015, the company won a contract to build
rocket engine prototypes, with many of the parts made with 3D printing technology. Additionally, SpaceX is also investing
US$67 million of its own money to develop a prototype of its reusable Raptor propulsion system, which has many 3D printed
parts including the turbopump. In fact, one of the Raptor engines tested by SpaceX in 2016 had over 40% 3D printed parts. In
more recent times, SpaceX has also made use of 3D printing technology to create "The Hub," its first ever 3D-constructed
building, at its Starbase facility in Texas.
98
Sources: BBC; Bloomberg; Techcrunch; N/ASA; 3D Printing Media Network; TCT Magazine
Robotics are crucial for mass production of components
Aerospace & defense: Robotics (1/3)
The airframes of many of the latest airliners such as Boeing’s B787 and Airbus’s
A350 use composite materials because of their strength and light weight. In order
to manufacture these components in sufficient volumes and to the required
accuracy and consistency, many OEMs are automating their manufacturing
processes with the use of robots. Different where robots are finding increasing use
in the aerospace industry include welding, drilling and fastening, sealing and
dispensing, assembly, painting, parts inspection, and material removal.
99
Sources: Fisher Unitech; PwC

“The future aerospace manufacturing environment will feature flexible and
reconfigurable robotic systems that work in close proximity with the human
workforce.”
Rick Meyers, an automation and robotics program manager

the Air Force Research Laboratory (AFRL)
100
Airbus is developing humanoid robots to work on its aircraft assembly lines
Airbus
In collaboration with the Joint Robotics Laboratory Airbus is developing humanoid robots to work on its aircraft assembly lines.
This project is especially important because unlike the automotive industry, aerospace manufacturers cannot use fixed base
robots owing to the sheer scale of operations. Even mobile robots have proved to be unfit for use due to their inability to climb
stairs and ladders or move past obstacles on the factory floor. Using a technology called multi-contact locomotion, these
humanoid robots will be able to perform all these tasks and also enter confined spaces. Further, multiple points of contact also
make it possible to increase a robot's stability, as well as the force it can apply when executing a task.
Boeing
The company uses robots manufactured by KUKA, a German manufacturer who develops robots for the aerospace industry
which are used for drilling, riveting, polishing, welding and fuselage assembly. Boeing uses Kuka’s robots at its Everett plant in
Washington, to assemble fuselage sections of its 777 twin-aisle airplane. The robots work together, one inside the fuselage and
one outside, to drill and countersink holes, insert the fasteners, finish the riveting and to spray paint. They also developed an
automated manufacturing process called Fuselage Automated Upright Build (FAUB), that basically allows the fuselage of the
aircraft to remain upright throughout the process, with the robots working at all angles; something that was not possible with
only humans working.
101
Sources: BBC; Bloomberg; Techcrunch

Leading aerospace OEMs using robotics to increase efficiency
GKN Aerospace
At the company’s plant in Bristol, automated fiber placement machines lay the carbon fibers of the 27-meter rear wing spar
while autonomous vehicles transport wing structures to independent workstations for machining and drilling by robots. On
other assemblies, the company also uses robots for tasks such as welding and installing fasteners. According to Chris Gear, the
company’s CTO, the use of robotics in aerospace manufacturing is increasing “to meet demands for increased rates of
production along with even finer manufacturing tolerances and higher levels of consistency.”
102
Sources: BBC; Bloomberg; Techcrunch

Digitalization focused on medical devices and pharmaceuticals
Healthcare: Overview (1/2)
In the past, innovations in the healthcare industry have been restricted to the technologies such as deep learning and natural language processing with big data
digitization of manual tasks in order to save on time and effort. However, the from consumer wearables, sensors, and connected devices to detect patterns for
recent growth of Industry 4.0 technologies in the areas such as medical device mutations and linkages in diseases. This is then used to manufacture customized
manufacturing, customized pharmaceuticals, and surgeries has taken a few drugs down to the familial and individual level. An example is Flow Health, which is
industry experts by surprise owing to the sector’s strict regulations in terms of data building a knowledge graph of medicine and genomics using over 30 petabytes (30
sharing, compliance, and quality control. million gigabytes) of longitudinal clinical data to determine how each gene variant
in the genome affects phenotype(1)
The digitalization of manufacturing in healthcare is essentially centered around the
medical devices and pharmaceuticals. Medical devices
Pharmaceuticals 3D printing is currently playing a major role in the manufacturing of expensive

medical equipment at lower costs and with higher precision. For example, The
As computing power becomes more advanced and algorithms smart enough to
Open-Hand Project used the technology to produce prosthetic hands for just
spot patterns in digital data and images, the process for diagnosing and treating
US$1,000 with the price of the units otherwise going up to US$100,000. The
illnesses is becoming more of a data-driven practice. Companies such as Atomwise
Melbourne-based medical device company Anatomics is also using 3D printing to
use machine learning and 3D neural networks to accelerate drug discovery for
create a sternum and rib cage for patients suffering from chest wall sarcoma. This
diseases such as Ebola, multiple sclerosis, and leukemia. In 2015, the company’s
implant was difficult to create using conventional prosthetics. Additionally,
solution discovered two new drugs to combat the Ebola virus, with the analysis
technologies such as IoT and data analytics are helping manufacturers to keep
finishing in just one day. The market for precision medicine or the customization of
track of their manufacturing supply chain including maintenance of equipment.
pharmaceuticals is also witnessing rapid growth. Companies are combining digital
103 Notes: (1) The total set of observable characteristics displayed by an individual under a particular set of environmental factors
Sources: Deloitte; L&T Technology; Economic Times; 3D Printing Media Network

3D printing was extensively used especially amid the outbreak of the COVID-19
pandemic
Healthcare: Overview (2/2)
Moreover, 3D printing is also playing a vital role in manufacturing medical devices

and equipment at scale in the wake of the COVID-19 pandemic. In June 2020, HP
partnered with the printing company Redington 3D to produce 120,000 ventilator
parts for medical equipment supplier AgVa Healthcare in India. Using advanced
additive manufacturing technologies, parts such as inhale and exhale connectors,
valve holders, oxygen nozzles, and solenoid mounts were created in just over three
weeks, a process which otherwise would have required four to five months. In June
2020, the Singapore based industrial equipment supplier Creatz3D created a 3D
printed transparent training mannequin in collaboration with equipment
manufacturer AuMed to enable trainees to practice collecting nasopharyngeal
swabs.
104
Sources: Deloitte; L&T Technology; Economic Times; 3D Printing Media Network

AI systems reduce time and costs to develop novel drugs
Healthcare: Drug discovery
According to the findings of a study consisting of 63 of 355 new therapeutic drugs • Atomwise: This uses machine learning and 3D neural networks to accelerate drug
and biologic agents approved by the U.S. Food and Drug Administration (FDA) discovery for diseases like Ebola, multiple sclerosis, and leukemia. In 2015, the
between 2009 and 2018, the median cost of bringing a new drug to market was company’s solution discovered two new drugs to combat the Ebola virus, with the
US$985 million, whereas the average cost was US$1.3 billion. Even then, less than analysis finishing in just one day.
10% of potential medicines make it to market, said Jackie Hunter, CEO of
• Berg Health: A Boston-based start-up has an inverse approach to drug discovery.
BenevolentBio, the life science arm of London’s BenevolentAI. Apart from being
It analyzes data to determine why some people survive diseases and then applies
time consuming and expensive, this process also limits the number of diseases
the results to improve current therapies and/or create new ones.
scientists can focus on.
• Stanford University: For situations where insufficient data hampers the
Machine learning algorithms can play a very important role in reducing the time
effectiveness of conventional deep learning algorithms, scientists at Stanford
and cost by using previously generated data to establish patterns and decipher
University have developed ‘one-shot learning,’ a new kind of deep learning that
which experiments need to be done. Other algorithms can also be used to predict
requires only a small number of data points (usually hundreds). Even though the
the side effects of certain chemical compounds on humans, thereby speeding up
researchers were skeptical about the efficacy of this method, tests results
the approval process.
published in ACS Central Science in April 2017 yielded highly positive results.
Key developments in this area include:
• Insilico Medicine: It uses a new deep learning technique known as a generative
• twoXAR: It leverages big biomedical data such as gene expression adversarial network (GAN) that uses historical biological and chemical data to
measurements, protein interaction networks, and clinical records to discover ‘imagine’ new cancer-like molecules with specific properties.
drugs that treat diseases such as glaucoma and liver cancer.
105
Sources: Techcrunch; Stanford; Biospace

AI is used to map the human DN/A to deliver precision medicine
Healthcare: Precision medicine and personal genetics (1/2)
Precision medicine has been available for some time now in the form of low-tech Even though much of the research in this field is still very much in its early stages, a
therapies such as allergy treatments and blood transfusions. Even genetic targeting few of the promising projects are:
of tumors has become more commonplace now, spawning medications such as the
• Flow Health: It is building a knowledge graph of medicine and genomics using
famous Herceptin(1) which targets the HER(2) protein associated with an aggressive
over 30 petabytes (30 million gigabytes) of longitudinal clinical data of 22 million
form of breast cancer. However, AI technologies such as deep learning and natural
veterans over 20 years. The aim is to determine how each gene variant in the
language processing are now being combined with big data from consumer
genome affects phenotype.(2)
wearables, sensors, and connected devices to detect patterns for mutations and
linkages in diseases. This is then used to deliver precision medicine down to the • Human Longevity: This was started by Craig Venter, the man credited with
familial and individual level. mapping the human genome. The company conducted a study which showed
that clinicians were able to identify adults at risk for key health problems by
One of the most significant uses of AI in the healthcare industry is in understanding
combining whole-genome sequencing with advanced imaging and blood
the human DN/A. Greater insights into an individual’s genetic makeup are providing
metabolites. The study was published in the Journal Proceedings of the National
the opportunity to deliver personalized healthcare for each person based on
Academy of Sciences, in early 2020.
his/her biological disposition.
• Deep Genomics: A Toronto-based start-up which applies GPU-based deep
learning to determine how strongly genetic variants affect RN/A splicing(3) whose
alteration contributes to many diseases. The company’s database is aiming to be
able to explain how hundreds of millions of genetic variations can impact a
human’s genetic code.
106 Notes: (1) Has been used to treat more than two million patients worldwide and has generated global sales of >US$64 billion for Swiss pharma company Roche (2) The total set of observable characteristics displayed by an
individual under a particular set of environmental factors (3) The removal of certain DN/A sequences
Sources: Techcrunch; company sources; Nature; EurekAlert
Editas Medicine is using AI for gene editing
Healthcare: Precision medicine and personal genetics (2/2)
• AstraZeneca: The company is expected to analyze up to two million genome

sequences by 2026 through its company-wide genomics initiative in an effort to
discover rare genetic sequences that are associated with various diseases.
• Editas Medicine: They specialize in a process called gene editing using a

technology called CRISPR/Cas9. The company aims to use this tool to treat
genetic diseases such as eye disease, cancer, sickle-cell anemia, and Duchenne
muscular dystrophy. One of its initial plans is to inject a virus containing Cas9 into
the eyes of people suffering from a rare form of progressive blindness caused by
a specific gene mutation. The enzyme would then cut the faulty sequence,
triggering a natural DN/A response in which the cell repairs the deficit itself.
107
Sources: Techcrunch; company sources; Nature; EurekAlert

The chemical industry has been slow to adopt digital technologies
Chemical industry
The chemical industry had been slow to adopt digital technologies. In fact, a 2019 • Predictive maintenance: Being an asset-heavy industry, it has access to large
survey by PwC had revealed that only 33% of the chemical companies had heavily volumes of data generated from sensors on critical equipment like turbines,
invested in training to get their workforce ready for digital transformation. compressors, and extruders. Companies are now using this data to not only
However, this is changing now with most of the disruption happening in Europe as recognize patterns and prevent breakdowns but also to design new and
opposed to North America or Asia. Technologies are now being used by chemical enhanced manufacturing facilities.
manufacturers to not only transform production but also to create smart supply
• New revenue streams: Monsanto, an agrochemical and agricultural
chains, new business models, and process efficiencies. In fact, according to a 2022
biotechnology company, now offers farmers real time information on variables
PwC survey of over 700 global corporations, the chemical industry invests nearly
such as temperature, weather, and soil conditions, along with customized
US$290 billion per year in digital technologies, trailing only industrial manufacturers
recommendations. Similarly, other chemical companies that have historically sold
(US$318 billion).The key areas of transformation include:
only water-treatment chemicals are now also offering paid recommendations for
• Smart manufacturing: Big data analytics are being used by chemical companies water-treatment based on their knowledge of the properties of different
to enhance R&D and manufacturing processes. For example, in the area of treatment materials.
material genomics, advanced analytics help to analyze the chemical properties of
• Automated inspection: Aerial systems, such as drones equipped with advanced
materials at a granular level in order to develop novel materials using different
cameras and various sensors, are being used to inspect dangerous plant
combinations. Furthermore, scientists at the University of Glasgow have created
locations, such as elevated pipelines, power lines, tanks, and flare stacks,(1) that
additively manufactured polypropylene reactors as a cost-effective alternative to
were formerly accessed using ropes and ladders. The use of drones not only
stainless steel reactors. These plastic reactors have proven to work just as well as
reduces safety hazards but also captures more information in comparison to
traditional reactors at 150 degrees Celsius.
maintenance engineers.
108 Notes: (1) An elevated vertical stack used for burning off unusable waste gas in a variety of oil and gas and chemical production applications. Temperatures here can exceed 2000 degrees Celsius
Sources: Deloitte and PwC

“Chemical buyers have been trained to tolerate 1980s type of processes, but
as older buyers retire and the younger demographic comprises an increasing
percentage of the workforce, they will have certain expectations and
demands for technology.”
Ali Amin-Javaheri, CEO

Knowde
109
Digital disruption recently started in the consumer goods industry
Consumer goods (1/2)
Companies manufacturing consumer goods have been digitizing their marketing, on a scale of 1-10 but had led to conflicting results on account of taste being
sales, and customer service efforts for some time now. However, their supply chain subjective. The company then used data collected by infrared sensors that
and production areas have only recently started to experience digital disruption measured spiciness based on specific parameters, to create comprehensive
with the use of data analytics and other digital tools which have made the quantitative models that would assess the products for flavor consistencies. Within
manufacturing process leaner and more efficient. only a year of introducing the program, annual customer complaints dropped from
7,000 to less than 150, a drop of 90%.
Big data analytics, connected devices and cloud computing have had the maximum
impact in improving supply chain management. A company’s data on sales and • Predictive maintenance: A diaper manufacturer had been replacing cutting
operations, machine performance, training materials, delivery schedules and so on, blades at fixed intervals regardless of their working condition. This sometimes
which was earlier fragmented and siloed, led to problems such as late deliveries resulted in blades being replaced too soon or too late, which either increased
and equipment downtimes. However, the consolidation of all this data into digital costs or affected productivity. To address this problem, the company installed
hubs powered by cloud computing, has led to enhanced collaboration across all sensors in its machines which could detect microfibers and other debris which
levels of the value chain, thereby making the entire manufacturing process more indicated blade dullness. This data was then uploaded onto the cloud and fed
efficient. into customized algorithms to determine the best time for replacement of the
blade. According to McKinsey estimates, the application of predictive analytics by
McKinsey case studies put the use of data analytics in various stages of the
consumer goods companies has decreased maintenance costs by 10%-40%.
consumer goods manufacturing process in perspective.
• Production: A potato-chip maker wanted to ensure consistency in the taste of its

products in terms of spiciness. In the past, human testers had rated the products
110
Sources: McKinsey
Data analytics also helps in supply chain optimization
Consumer goods (2/2)
• Supply chain optimization: A European dairy company was facing fluctuating

profits due to inaccurate allocation of raw milk for pasteurization and to make
butter, cheese and powdered milk. In the past, regional businesses of the
company were given the freedom to allocate raw milk as they saw fit. However, in
an effort to reduce costs and maximize profits, the company used a data
analytics solution that determined the best allocation plans factoring in variables
such as milk supply, regional production capacity and overall global demand. This
resulted in a 5% increase in profits without altering production volumes or
capacity.
111
Sources: McKinsey
CHAPTER 05
Start-ups: Funding and M&A
Most of leading start-ups are from the U.S., with a majority of them based in California. Pivotal received
the highest funding of US$1.7 billion. The company, which is primarily a provider of cloud computing
services, is backed by key investors such as EMC, Ford Motor Company, GE, Microsoft and Vmware. The
company got listed in New York Stock Exchange (NYSE) in April 2018. DataRobot is another key
automation start-up that successfully secured approximately US$1bn in funding.
Large manufacturing companies such as ABB, OMRON Corporation, Schneider Electric, Siemens, ST
Engineering, Teradyne and Tesla are acquiring smaller companies in order to leverage their technological
expertise and decrease their learning curve.
Global funding in start-ups (1/10)
# Company Area Funding in mUS$ Investors Headquarter
1 Pivotal Cloud computing 1,700 EMC, Ford Motor Company, GE, Microsoft, VMware California, U.S.
Accomplice, Atlas Venture, IA Ventures, Intel Capital, New Enterprise

AI and Robotic,
2 DataRobot 1,000 Associates, New York Life Insurance Co, Recruit Strategic Partners, Right Side Massachusetts, U.S.
Predictive analytics
Capital Management, Techammer, Techstars, Altimeter Capital
CDH Investments, CITIC Securities, Green Pine Capital, Minsheng Securities,

3 Ubtech Robotics AI and Robotics 942.8 Shenzhen, China
Qiming Venture Partners, Tencent Holdings, Haier, Telstra Ventures
General Catalyst, Andreessen Horowitz, Warburg Pincus, AllianceBernstein,

4 Samsara Industrial IoT 930 California, U.S.
Empede Capital, Dragoneer Investment Group
HGGC, Activant Capital, Austin Ventures, CIT Bank, Wells Fargo Capital Finance,
5 Upland BlueVenn Cloud computing 836.4 Texas, U.S.
Regions Financial, Capital One, HSBC Securities, Credit Suisse Loan Funding
BMW i Ventures, Bolt, Data Collective, GE Ventures, GV, Kleiner Perkins Caufield
6 Desktop Metal Additive manufacturing (3D printing) 811.8 & Byers, Lowe's Ventures, Lux Capital, New Enterprise Associates, Saudi Massachusetts, U.S.
Aramco Energy Ventures, Stratasys, 40 North Ventures, Koch Industries
ARCHina Capital Partners, Autodesk, BMW Group, BMW i Ventures, FIS, GE, GV,
7 Carbon Additive manufacturing (3D printing) 683.4 JSR Corp, Nikon, Northgate Capital, Reinet Investments, Sequoia Capital, Silver California, U.S.
Lake Kraftwerk, 40 North Ventures, Madrone Capital Partners, Baillie Gifford
Access Technology Ventures, Barclays Investment Bank, East West Bank,

8 DigitalOcean Cloud computing 491.3 Fortress Investment Group, HSBC Bank, IA Ventures, Opus Bank, Pacific New York, U.S.
Western Bank, Trinity Capital Investment, Webster Bank, Global Secure Invest
113
Sources: Crunchbase

Advanced Equities, CMEA Capital, Datalogic, Digital Bandwidth, DuPont, Equitek
9 Alien Technology Industrial IoT 454.9 Capital, Forsythe, H&S Ventures, Kalaari Capital, Koninklijke Philips, Lago California, U.S.
Ventures Fund, Miami Valley Venture Fund, Sunbridge Partners
Hexagon, Bridge Bank, Altran, Alumni Ventures, Blue Ivy Ventures, Horizons
10 Divergent 3D Additive manufacturing (3D printing) 428 California, U.S.
Ventures, Spike Ventures, Synapse Partners, O Luxe Holdings
Accel Partners, Andreessen Horowitz, Buddy Arnheim, CAA Ventures, IVP,

11 Skydio AI and Robotics 340 California, U.S.
Next47, Playground Global
Caterpillar, Caterpillar Ventures, Cottonwood Technology Fund, GE Ventures,

12 Sarcos Robotics 316.1 Microsoft, Schlumberger Limited, Alex. Brown & Sons, Rotor Capital Partners, Utah, U.S.
DIG Investments
Air Liquide, Alto Invest, Ambition Numérique @ Bpifrance, Bpifrance, Bpifrance

13 Sigfox Industrial IoT 308.4 Large Venture, Elaia Partners, Elliott Management Corp, Engie, Eutelsat, Henri Labège, France
Seydoux, Intel Capital, Khazanah Nasional, Telefónica Innovation Ventures
Brookside Capital, Cherry Tree Investments, Coatue Management, DFJ Growth,

Founders Circle Capital, Granite Ventures, Harmony Partners, Meritech Capital
14 Anaplan Cloud computing 299.9 California, U.S.
Partners, PremjiInvest, Salesforce Ventures, Sands Capital Ventures, Shasta
Ventures
Data analytics, Industrial IoT, Demarest Media, Eclipse, First Round, Lerer Hippeau Ventures, Pritzker Group
15 Augury 294 New York, U.S.
Machine learning Venture Capital, Insight Partners, Qualcomm Ventures, Eclipse Ventures
114
Sources: Crunchbase
16 QingCloud Cloud computing 280.8 BlueRun Ventures, Lightspeed China Partners, Matrix Partners China Beijing, China
17 DAQRI Augmented reality 275 Tarsadia Investments California, U.S.
C4 Ventures, DFJ Growth, Founder Collective, Foundry Group, Pitango Venture

18 Formlabs Additive manufacturing (3D printing) 253.7 Massachusetts, U.S.
Capital, SOSV, Tyche Partners, SoftBank Vision Fund, New Enterprise Associates
Breyer Capital, InterWest Partners, Pat House, Sutter Hill Ventures, TPG
19 C3 Industrial IoT 228.5 California, U.S.
(formerly Texas Pacific Group), TPG Growth, Wildcat Venture Partners
Caterpillar Ventures, GreatPoint Ventures, Lightbank, New Enterprise

20 Uptake Technologies Data analytics 218 Illinois, U.S.
Associates, Revolution, Baillie Gifford
21 StorageCraft Cloud computing 187 TA Associates Utah, U.S.
Energy Impact Partners, Envision Energy, Envision Ventures, E.ON, Foundation

22 AutoGrid Systems Data analytics 161 California, U.S.
Capital, National Grid, Voyager Capital, Xcel Energy, Shell Ventures, ARPA-E
Adveq, Bezos Expeditions, CRV, Draper Fisher Jurvetson, GE Ventures, Goldman

23 Rethink Robotics AI and Robotics 149.5 Massachusetts, U.S.
Sachs, Highland Capital Partners, Wellington Management, Sigma Partners
115
Sources: Crunchbase

ABB Technology Ventures, GE, Investor Growth Capital, MissionPoint Capital
24 Trilliant Cloud computing 146 California, U.S.
Partners, UMC Capital, VantagePoint Capital Partners, Zouk Capital
Acorn Pacific Ventures, Ant Capital Partners, Black River Ventures, Cisco,
Cloud computing,
25 Ayla Networks 144.4 Crosslink Capital, IFC Venture Capital Group, Linear Venture, Mitsui & Co, TMD California, U.S.
Industrial IoT
Ventures, Voyager Capital, Arrowroot Capital Management, Sunsea
26 Logicworks Cloud computing 142.6 Pamplona Capital Management, Seaport Capital New York, U.S.
Innovate Indiana Fund, Intel Capital, Millennium Technology Value Partners,

27 Precision Hawk Drones 136 North Carolina, U.S.
NTT DOCOMO Ventures, USAA, Verizon Ventures, Yamaha Motor Ventures
ConocoPhillips, Enbridge, GE Ventures, NRG Energy, Third Wave Ventures,

28 Ingenu Industrial IoT 123.6 California, U.S.
Venvest Capital
Andreessen Horowitz, Caterpillar, DHVC (Danhua Capital), Felicis Ventures, First

29 Airware Cloud computing 119.8 Round, Fresh VC, GE Ventures, GV, Lemnos Labs, NextWorld Capital, Shasta California, U.S.
Ventures, Y Combinator, Kleiner Perkins
30 Glowforge Additive manufacturing (3D printing) 113.2 Foundry Group, True Ventures, Vault Capital, DFJ Growth, Jo-Ann Stores Washington, U.S.
31 Seegrid Robotics 107 Giant Eagle, G2VP, Atlas Innovate Pennsylvania, U.S.
116
Sources: Crunchbase

Centerview Capital, Citi Ventures, Draper Nexus Ventures, FLOODGATE, GE
32 Ayasdi AI and Robotics, Predictive analytics 106.4 California, U.S.
Ventures, IVP, Khosla Ventures, Kleiner Perkins Caufield & Byers
BDCA Venture, Craton Equity Partners, EDB Investments, Singapore EDB, ST

33 Greenwave Systems Industrial IoT 101.3 California, U.S.
Telemedia, The Westly Group
Conor Venture Partners, Faurecia Ventures, Finnvera Venture Capital, Horizon

34 TactoTek Additive manufacturing (3D printing) 96 Oulu, Finland
2020, Nordea, Shenzhen Leaguer Venture Capital, Tekes, VTT Ventures
Oreilly AlphaTech Ventures, Shasta Ventures, SoftBank, Sway Ventures, Fort

35 Fetch Robotics AI and robotics 94 California, U.S.
Ross Ventures
AI and robotics, Draper Nexus Ventures, eLab Ventures, FundersClub, GE Ventures, Huron River
36 Sight Machine 80.4 California, U.S.
Data analytics Ventures, IA Ventures, Jump Capital, Mercury Fund, LS Group
37 Xjet Additive manufacturing (3D printing) 79 Autodesk, Catalyst CEL Fund, CIRTech Fund, Landa Ventures, Hifuture Electric Rehovot, Israel
Chevron Technology Ventures, ConocoPhillips Technology Ventures, Frost Data

38 Maana Data analytics 77.2 California, U.S.
Capital, GE Ventures, Intel Capital, Shell Technology Ventures, CICC
Caterpillar Ventures, Eclipse, GE Ventures, Hedgewood, iNovia Capital, RRE

39 Clearpath Robotics AI and robotics 76 Ventures, Silicon Valley Bank, Kensington Capital Partners Limited, McRock Kitchener, Canada
Capital
117
Sources: Crunchbase

Darling Ventures, Dell Technologies Capital, GE Ventures, March Capital
Industrial IoT,
40 FogHorn 72.5 Partners, Robert Bosch Venture Capital, Saudi Aramco Energy Ventures, California, U.S.
Cloud computing
Yokogawa Electric Corp, Intel Capital
Amino Capital, Autodesk, Avalon Ventures, Bee Partners, ff Venture Capital, GV,
41 Skycatch Drones 71.6 Mind the Seed - MTS Fund, Qualcomm Ventures, Riverwood Capital, Urban Us, California, U.S.
VTF Capital, Wavemaker Partners, Sherpalo Ventures, Akkadian Ventures
Battery Ventures, Bessemer Venture Partners, Cisco Investments, Intel Capital,

42 Stratoscale Cloud computing 69 Tel Aviv, Israel
Qualcomm Ventures, SanDisk Ventures
Kleiner Perkins Caufield & Byers, Munich Re / HSB Ventures, Start-up

43 Relayr Industrial IoT 66.8 Berlin, Germany
bootcamp Amsterdam, DTCP, Kalrock
DCM Ventures, H. Barton Asset Management, Lightspeed Venture Partners,

Cloud computing,
44 Kespry 61.4 Rothenberg Ventures, Wilson Sonsini Goodrich & Rosati, Salesforce Ventures, California, U.S.
G2VP
Osterhout Design 21st Century Fox, Shenzhen O-film Technology, Vanfund Urban Investment &
45 Augmented/Virtual reality 58 California, U.S.
Group (ODG) Development
46 Tempered Networks Industrial IoT 56.1 IDG Ventures, IDG Ventures USA, Ignition Partners, Rally Capital Services Washington, U.S.
CNF Investments, GE Ventures, New Enterprise Associates, Procyon Ventures,

47 Upskill Wearable technology 53.4 Virginia, U.S.
Salesforce Ventures, The Boeing Company, Work-Bench, Cisco, Accenture
118
Sources: Crunchbase

Data analytics, ClearSky Power & Technology Fund, EnerTech Capital, E.ON, NEC, Novus
48 SpaceTime Insight 50 California, U.S.
Industrial IoT Energy Partners, Zouk Capital, Opus Capital
49 ProGlove Wearable technology 49.1 Bayern Kapital, GETTYLAB, Intel Capital, TechFounders, Summit Partners Munich, Germany
Lenovo Capital and Incubator Group (LCIG), Emerson Ventures, Meitav

Wireless connectivity platform for
50 CoreTigo 48 Investment House, Sierra Ventures, Cardumen Capital, Qualcomm Ventures, Netanya, Israel
IIOT
Magma Venture Partners, Meron Capital
City Light Capital, Fisk Ventures, Harbor Light Capital Partners, Activate Venture New Hampshire,
51 Senet Industrial IoT 44.8
Partners U.S.
Cody Gate Ventures, GE Ventures, Stonehenge Growth Equity, Trillium Group,

52 Omni-ID Sensors 44 New York, U.S.
YFY
53 Oqton AI-powered software 40 Fortino Capital, Sandvik, PMV California, U.S.
Caffeinated Capital, Focus Ventures, Formation 8, Founders Fund, Haystack

AI and robotics,
54 Tachyus 39.3 Partners, Huron River Ventures, Primwest, StartX, Streamlined Ventures, Struck California, U.S.
Capital, Montrose Lane
Bessemer Venture Partners, Draper Nexus Ventures, Felicis Ventures, General

55 Aria Insights Drones 39 Massachusetts, U.S.
Catalyst, Lux Capital, Motorola Solutions Venture Capital
119
Sources: Crunchbase

Flex Lab IX, FundersClub, RON/Aholdings, Shanda Group, Sherpa Capital,
56 Atheer Augmented/Virtual reality 35.3 California, U.S.
Signatures Capital, Streamlined Ventures, SGH CAPITAL
Band of Angels, Comerica Bank, CRCM Ventures, DCM Ventures, Intel Capital,
57 Arrayent Cloud computing 34.1 California, U.S.
Opus Capital, ORIX Ventures
Data Collective, Innovation Endeavors, Khosla Ventures, Monsanto Growth

58 Blue River Technology AI and robotics 31.1 Ventures, Pontifax AgTech, Stanford Angels and Entrepreneurs, Syngenta California, U.S.
Ventures, Ulu Ventures, National Science Foundation, DCVC
Industrial IoT, Cane Investments, Cisco Investments, Liberty Global Ventures, Orange Digital
59 Veniam 26.9 California, U.S.
Cloud computing Ventures, Verizon Ventures, Yamaha Motor Ventures, True Ventures
60 3DSignals Industrial IoT 26.6 Grove Ventures, State of Mind Ventures, Mercura Capital Kfar Saba, Israel
Industrial IoT,
61 Mnubo 18.4 McRock Capital, White Star Capital, Munich Reinsurance Montreal, Canada
Data analytics
Khosla Ventures, G20 Ventures, Lincoln Financial Group, Boeing HorizonX

62 Digital Alloys Additive manufacturing (3D printing) 17.9 Massachusetts, U.S.
Ventures, Q Venture Partners
Human Condition
63 Wearable technology 15.6 N/A New York, U.S.
Safety
120
Sources: Crunchbase
64 Sky-Futures Drones 13.5 Bristow Group, MMC Ventures, Mitsui & Co London, England
Microsoft Accelerator Bangalore, Wipro Technologies, Wipro Ventures, TVS

65 Altizon Systems Sensors and predictive analytics 11 Pune, India
Motor Company
66 SESTO Robotics Autonomous technologies 9.7 Singtel Innov8, Heliconia Capital Management Singapore
Data analytics, BDC Venture Capital, Momenta Partners, NBIF, Globalive Technology,
67 Eigen Innovations 8.1 Fredericton, Canada
Industrial IoT Atlantic Canada Opportunities Agency
68 Cirro Data analytics 8 Brad Jones, Frost Data Capital, GE Ventures, Miramar Ventures, Toba Capital California, U.S.
Alsop Louie Partners, Dolby Family Ventures, First Round, frogVentures,

69 New Matter Additive manufacturing (3D printing) 6.5 California, U.S.
Idealab
70 Ubimax Wearable technology 6 Atlantic Bridge, Westcott LLC Bremen, Germany
71 NVBOTS Additive manufacturing (3D printing) 5.3 CRCM Ventures, Woodman Asset Management Massachusetts, U.S.
121
Sources: Crunchbase

Cloud computing,
72 RtTech Software 3.9 McRock Capital, NBIF Moncton, Canada
Industrial IoT
British Columbia,
73 aDolus Technology Cloud computing 3.5 Creative Destruction Lab, Colin Harris, Amit Mittal, Ray Muzyka, Kurt Whipp
Canada
Wireless connectivity platform for Canada Foundation for Innovation, Natural Sciences and Engineering Research
74 BehrTech 3 Ontario, Canada
IIOT Council of Canada
75 Alluvium Data analytics 2.5 Bloomberg Beta, IA Ventures, Lux Capital New York, U.S.
76 Alias Robotics Robot Cybersecurity 0.8 Wayra, Baron capital Management Pais Vasco, Spain.
77 ULS Robotics Robot Technology - FutureCap, K2VC, UnityVC Shanghai, China
78 Qsee Predictive insights - Techstars Tel Aviv, Israel
Amsterdam, The
79 Mechanica AI Machine learning and AI - Alchemist Accelerator
Netherlands
80 Atrio Cloud computing - N/A California, U.S.
122
Sources: Crunchbase
Mergers & Acquisitions (1/4)
Company Description Deal value in mUS$ Acquirer Date
Sapio Sciences A leading, high growth lab informatics platform company N/A GHO Capital Dec-22
ValitaCell A company that creates analytical technologies and products for the biopharmaceutical industry N/A Beckman Coulter Sep-22
Omni-ID A global manufacturer and provider of RFID tags and industrial IoT hardware devices N/A HID Global Aug-21
An information technology and service company that manages SCADA also provides products,
Mission Communications N/A TASI Group May-21
solutions and support
A company that offers the world’s most reliable and robust wireless condition monitoring
Senceive N/A Eddyfi NDT May-21
solutions
An independent supplier of machinery protection and condition monitoring systems for rotating
Brüel & Kjær Vibro 214..5 NSK Mar-21
and reciprocating industrial machinery
Datawatt A business serving the water, energy and industry markets with RTUs and scada solution N/A Ovarro Jan-21
A company that provides a comprehensive suite of instruments and analyzers for precision
Process Sensing Technologies N/A AEA Dec-20
measurements.
A leading developer of robotic systems, machine learning applications and inspection technology
ULC Robotics N/A SPX Corporation Sep-20
for the energy, utility and industrial sectors
A company that specializes in the development of measurement systems, autonomous and

Ijinus N/A Groupe Claire Nov-19
connected recordings for monitoring applications
123
Sources: Company Websites, EC M&A

Hawxeye A company that works on pc imaginative and prescient and facial recognition software program N/A Bossa Nova Robotics Jul-18
Neptec A company focused on robotics 32 Maxar Tech Jul-18
L&T Electrical & Automation Unit of L&T that specializes in electrical and automation 2,070 Schneider Electric May-18
MiR Company that develops mobile industrial robots 272 Teradyne Apr-18
An integrator, engineering firm and developer of robot control, simulation and machine vision
Energid N/A Teradyne Mar-18
software.
Chongqing Nanshang
HTI Cybernetics Develops robotic welding systems for auto makers 50 Oct-17
Investment
Auro Robotics A company that develops self-driving vehicle technology N/A RideCell Oct-17
Neato Robotics A company that makes vacuum bots and other smart bots for domestic use N/A Vorwerk Group Sep-17
Grit Labs and Pitch are focused on AI driven robotics. These two start-ups merged to launch
Pitch N/A Grit Labs Sep-17
aside fund focused on AI and robotics.
Blue River Technology A start-up focused on manufacturing AI based farming equipment 305 John Deere Sep-17
124
Sources: Company Websites


A company that automates Intralogistics in manufacturing environments, and other commercial
Aethon 46.8 ST Engineering Jul-17
settings using smart autonomous mobile robot.
Bernecker + Rainer Industrie-

A manufacturer of programmable controls for machines used by various companies 2,000 (Approx.) ABB Apr-17
Elektronik
A manufacturer of specialized industrial cameras, machine vision systems for industrial

Sentech N/A OMRON Corporation Apr-17
applications and cameras for various medical and laboratory applications.
Mentor A provider of electronic design automation (EDA) software N/A Siemens Mar-17
Grohmann Engineering A firm that specializes in automated manufacturing N/A Tesla Nov-16
A provider of enterprise resource planning (ERP) software to track inventory and manufacturing
NetSuite 9,300 Oracle Nov-16
processes and perform accounting tasks.
A provider of enterprise analytics tools to enhance business intelligence with computational and
BeyondCore 110 Salesforce Aug-16
statistical analysis.
A provider of embedded software and configurable processor solutions for critical video and
Eutecus N/A Sensity Solutions Aug-16
multi-sensory analytics systems.
Coolan A start-up that develops software for analyzing data about data center hardware N/A Salesforce Jul-16
Maglan Information Defense An Israeli cybersecurity company that provides services such as offensive cyber simulation, cyber
N/A Accenture Jun-16
Technologies forensics and malware defenses
125


An Italian company that offers a full suite of IoT products, including a gateway for collecting data
Solair 20-30 Microsoft May-16
and an enterprise platform for custom deployments
A provider of TCAD and EDA simulation solutions for design technology co-optimization (DTCO)
Gold Standard Simulation N/A Synopsys May-16
of advanced process nodes
A provider of software products for the conversion of 3D scan data into high-quality computer
Simpleware N/A Synopsys May-16
models used for engineering design and simulation.
An analytics consulting company that specializes in the application of data science to create
OpsRules Partners N/A Accenture May-16
supply chain and operations analytics solutions.
ItSeez A provider of Computer Vision (CV) software and consulting services N/A Intel May-16
A start-up that provides deep learning analytics to help businesses crunch through data and
MetaMind 32.8 Salesforce Apr-16
make better decisions.
A company that specializes in adding safety functions to chips used in robots, self-driving cars
Yogitech N/A Intel Apr-16
and other autonomous devices.
A provider of electronic design automation software solutions for the design and development
WinterLogic N/A Synopsys Mar-16
of integrated circuits (IC) and systems on a chip.
126

CHAPTER 06
Competitive landscape
Companies from various fields including information technology, automobile, heavy engineering,
defense, chemical, sports and personal goods are using advanced digital automation technologies to
further their business goals. Companies like Pivotal provides software applications in terms of big data,
Internet of Things (IoT), robotics, and connected cars, whereas California-based Anaplan provides cloud
planning platform to run planning and prediction iterations over the cloud. Automobile companies Audi
and BMW are using digital manufacturing technologies such as 3D printing, assistant drones, Automated
Guided Vehicles (AGVs), and autonomous tugger trains to reduce time taken for design, prototyping, and
manufacturing. Tesla, the EV leader in the industry, is planning to further its digital transformation goals
through its Gigafactory, slated for completion in 2022. Not only is the company aiming to build a smart
automobile, but it is also planning to use smart manufacturing methods. Other leading companies
include Airbus, BASF, Carbon, Lockheed Martin, and Siemens.
Airbus uses robotics and additive manufacturing
Airbus: Overview (1/2)
Airbus, founded in 1970, is a European aerospace company that designs and Digital technologies used in manufacturing
manufactures aircrafts. The Company manufactures corporate jets and passenger,
The main technologies being used to achieve this goal are sensor systems, robotics,
freighter, and military aircrafts. In addition, the company provides engineering
and additive manufacturing.
services, maintenance, logistics, spare parts, online souvenir shopping, and
training. • Sensor systems: InFactory Solutions has developed a sensor that is fitted directly
to Airbus’s automated fiber placement (AFP) production, to continuously monitor
In 2016, Airbus launched a spinoff company called InFactory Solutions which aims
the quality of composite production. It is being used to manufacture A350 XWB
to further the corporation’s vision of its ‘Factory of the Future’ with a fully digital and
twin-engine wide-body jet airliners. The company is also working to develop new
connected production environment.
sensor systems for processes such as surface treatment monitoring and cure-
flow.
Year Founded: 1970 • Additive manufacturing: Beyond using the technology to build parts that are
already operational, Airbus is using additive manufacturing techniques to build
Number of employees: 134,267 (as of Dec 2022)
missing parts at the assembly level including those made up of titanium,
Revenue: US$62.7 billion (as of Dec 2022)(1) aluminum, and super alloys.
Order intake: US$88.1 billion (as of Dec 2022)(1)
Total income: US$4.5 billion (as of Dec 2022)(1)
128 Notes: (1) Converted from EUR to US$, exchange rate: EUR-US$ 1.06749 as of 31st Dec 2022 (Oanda)
Sources: Company sources; Annual report; Press releases

Tasks such as waterproofing tests on doors and windows are being performed
by Robots
Airbus: Overview (2/2)
• Robotics: Airbus has been incrementally launching robotics applications such as

lightweight robots and small machining systems on an annual basis starting from
2015 to perform tasks such as waterproofing tests on fuselages, doors and
windows. The robots are also being tested to manufacture helicopter blades’
skin, a process that requires high levels of precision. They are being programmed
to move autonomously throughout the workshop without colliding with others.
Additionally, the company is also developing wearable robotic devices or
exoskeletons to help workers lift heavy objects or work in difficult spaces.
129
Sources: Company sources; Annual report; Press releases

Anaplan provides software for digitalization of supply chain
Anaplan: Overview
Anaplan is a California-based IT company that provides a cloud-based planning and Key products – manufacturing
performance management platform to enterprises. The company provides
• Cloud planning platform: Enables an enterprise to run planning and prediction
solutions in areas such as finance, sales, supply chain, work force management,
iterations over the cloud by connecting data, people, and plants in every part of a
marketing, and IT. Its leading clients include companies from industries including
business.
aerospace & defense, automotive, engineering & construction, healthcare,
insurance, manufacturing, oil & gas, pharmaceuticals, and telecom. For the • Security: The company takes data security and compliance seriously, as
manufacturing industry, the company provides predictive analytics solutions to evidenced by its sophisticated use of BYOK, role-based access control, user
optimize the supply chain in terms of planning and forecast Anaplan got listed on management, SAML 2 compliance, and data encryption.
the New York Stock Exchange (NYSE) in October 2018. • Supply chain:
• Bill of material costing: application designed to assist manufacturing

companies to analyze pricing of a product-based on cost of finished goods
Year Founded: 2006
• Rough-cut capacity planning with Shelf Life: application to assist supply chain
Number of employees: >2,200 (as of Jan 2022) and manufacturing personnel in planning and executing production plans
Revenue: US$592.2 million (as of Jan 2022) subject to raw materials, and other capabilities constraints
Market capitalization: US$9.6 billion (as of Jan 2023) • Sales and operations planning: application that allows companies to make
cross-functional decisions based on impact of “what-if” scenarios to align
Net Loss: US$203.6 million (as of Jan 2022)
supply and demand and respond to disruptions
130
Sources: Forbes; Fortune; Company sources; Press releases; Companies marketcap

Audi opened its first smart factory in 2016
Audi: Overview (1/2)
Audi, founded in 1899, develops, produces, assembles, distributes, and sells Digital technologies used in manufacturing
vehicles of the Audi and Lamborghini brands in Germany and internationally. In
• 3D printing center: The company has an aluminum and steel printer which uses
December 2016, Audi opened its first ‘Smart Factory’ in Mexico where robots work
laser melting to process metal powder into complex steel and aluminum parts.
in conjunction with human beings to manufacture cars. Connected systems and big
This technology is currently being used to make parts for series production tools,
data analytics play a major part in the manufacturing process in these factories,
with printing of car components for small models, planned for the future.
along with technologies such as additive manufacturing, virtual reality, drone
material transport, machine learning and piloted cars that drive themselves off the • Flexible screw points: The system, which is also known as LBRinline, gets rid of
production lines. One of the main objectives of such factories is to develop a new the pain of having to screw parts underneath the cars. Workers can now simply
method of production in which cars are no longer built on an assembly line but roll the LBRinline under the cars and then press a button to finish the entire
with a new concept called modular assembly. screwing process.
• Flexible gripping: The FlexShapeGripper uses an elastic cap that has been molded
Year Founded: 1899 by compressed air and spring tension, to grip an object.
Number of employees: 87,342 (as of Dec 2022) • Assembly assistance system: The system, which is also called as motionEAP, uses
an infrared depth camera to stream a live image in order to point out the exact
Revenue: US$65.9 billion (as of Dec 2022)(1)
place where a part should be placed.
Market capitalization: US$82.9 billion (as of Jan 2023)
Net profit: US$7.6 billion (as of Dec 2022)(1)
131 Notes: (1) Converted from Euro to US$, exchange rate: EUR-US$ 1.06749 as of 31st Dec 2022 (Oanda)
Sources: Company sources; Annual report; Press releases; Companies marketcap

Connected systems and big data analytics play a major role
Audi: Overview (2/2)
• Assistant drones: Audi is testing two types of drones to either carry car parts
around the factory or offer camera-based repair and maintenance services. The
drones are programmed to fly autonomously on a pre-determined route and can
also detect any obstacles in their way.
• Wearable scanners: The wearable embedded barcode scanner, known as the

ProGlove, is equipped with an ergonomically optimized trigger button on the
index finger that enables the workers to have both their hands-free. The logistics
employees use it to dispatch car components all around the world.
• AI welding software for quality control: Artificial intelligence (AI) is being used to
improve spot weld quality at Audi's assembly plant in Neckarsulm, Germany. To
join the parts of the Audi A6, an estimated 5300 spot welds are needed.
Previously, a random sampling of manual checks was made using ultrasound
technology. Recently the company introduced AI based software so that
deviations in quality can be detected automatically and in real time. Each weld's
current flow and voltage is continuously checked by the AI algorithm to ensure
that it conforms to predetermined standards.
132
Sources: Assembly; Company sources; Annual report; Press releases

Modular assembly expected to increase productivity by 20%
Audi: Digital manufacturing initiatives
Modular assembly: Key features of the ‘modular assembly’ are:
Even though Audi’s manufacturing plant in Ingolstadt, Germany, produces a car • New assembly stations: These stations consist of one or two technicians who
every 30 seconds, the rigid sequential process of an assembly line poses many work steadily at their own pace as they no longer have to adapt to the working of
problems such as lost time and reduced efficiency. For example, the installation of different stages of the assembly, nor have to move with a car that’s on a
optional extras such as auxiliary heating systems in a small number of cars, results conveyor belt.
in inactivity on other sections of the assembly line.
• Driverless transport systems: Car bodies and components such as screws and
In order to combat these problems Audi has introduced the concept of ‘modular sliding roofs are transported on a just-in-time basis between the various
assembly’, which essentially gets rid of all assembly lines and instead segments assembly stations by completely autonomous transport systems. These systems
each part of the manufacturing process into individual work stages, carried out in are controlled by a central computer and their movement according to the
different workstations. company are accurate to the nearest centimeter. One such system is called
‘Paula’ and is equipped with laser scanners to survey its surroundings in order to
Audi expects this to result in a productivity increase of over 20%. The first modular
prevent any clashes with workers.
assembly will be tested in the production of engines at Audi’s plant in Győr,
Hungary. • Central computer: Monitors and manages all activities taking place in the
assembly hall with the aim of making the entire process flexible with regards to
time and space. For example, if a particular assembly station is overloaded with
work, the computer automatically redirects the autonomous transport system to
another station.
133
Sources: Audi
BASF uses seven core digital technologies
BASF: Overview
BASF Corp, founded in 1865, is a New Jersey-based chemical manufacturing Digital technologies used in manufacturing
company that engages in the manufacturing and supply of chemicals and
The company is using several digital technologies including 3D visualization,
intermediates ranging from solvents, plasticizers, and monomers to glues and
predictive analytics, augmented and virtual reality. Specific examples are:
electronic chemicals.
• With Xarvio, BASF created a digital farming solution for monitoring weather and
BASF is using seven core digital technologies including augmented reality, additive
identifying problems such as crop disease and pest presence. The use of real-
manufacturing, AI, big data analytics, cloud computing, IoT, to digitize its offerings
time field photos and field monitoring gives farmers access to information about
across its horizontal and vertical value chain. Some of its focus areas are predictive
their crops, supports farmers in protecting their crops, and helps their bottom
maintenance, automated production, process enhancements, virtual plants,
line.
demand forecasting.
• In Kaiserslautern, Germany, the company's smart pilot plant produces liquid
soaps automatically. Radio-frequency identification tags (RFITs) attached to soap
Year Founded: 1865 containers automatically relay information on soap composition and packaging
to manufacturing machinery, enabling scale-up production of customized soaps.
• The company is using predictive analytics to analyze macroeconomic data to
Revenue: US$93.2 billion (as of Dec 2022)(1)
estimate demand which in turn helps to plan manufacturing capacities in terms
Market capitalization: US$46.1 billion (as of Jan 2023) of material acquisition, technology deployment, and staffing levels.
Net profit: US$7.0 billion (as of Dec 2022)(1) • Using augmented reality to display information related to maintenance or
training gathered from smart phones or tablets directly to the chemical plant.
Sources: TCS; Company sources; Annual report; Press releases; Companies marketcap
BMW plans on automating the entire process of manufacturing
BMW: Overview
BMW is a German luxury vehicle, motorcycle, and engine manufacturing company Digital manufacturing
founded in 1916. BMW’s digitalization efforts around all aspects of manufacturing
BMW is also currently focusing on digitally connecting and enhancing its vast
and supply chain management are focused towards eventually establishing a fully
logistics network. To give an idea of its scale, Oliver Zipse, BMW’s board member for
connected cyber-physical production system. The company is focused on
production, says that the company’s inbound supply chain consists of 30 million
automating the entire process right from when a customer places the order, to
parts from 1,800 suppliers and 7,000 sea freight containers per day. It also includes
deciding which factory would fulfil the order, to ordering material and eventually
84 million cubic meters across ocean, road, rail and air freight annually. On the
delivering the car. This is particularly important because BMW gives its customers
other hand, its outbound supply chain includes around 9,000 vehicles leaving BMW
the flexibility of customizing vehicles up to six days before production.
plants each day on their way to 4,500 dealers in 160 countries.
In order to support such a large network, BMW is currently developing a completely

Year Founded: 1916 decentralized and connected supply chain system, aided by technologies such as
AGVs, smart robots, AR, and connected vehicle distribution. The company is also
looking into Blockchain technology to solve its supply chain complexities, with the
Revenue: US$152 billion (as of Dec 2022)(1) launch of a project called PartChain. Developed in partnership with blockchain
Market capitalization: US$60.5 billion (as of Jan 2023) protocol Hyperledger Fabric, PartChain aims to unify all disparate links in BMW’s
supply chain into one decentralized, shared ledger, that will increase transparency
Net income: US$19.8 billion (as of Dec 2022)(1)
among all stakeholders.

Connected distribution system helps in on time delivery
BMW: Digital manufacturing initiatives (1/2)
Listed below are the key digital manufacturing initiatives by BMW Data goggles:
AGVs: These glasses help by detecting and pointing towards the right places to find goods
and keep them. They can also visually record the various components and
In 2016, BMW had launched a ‘Smart-Transport Robot’ (STR) in association with the
complete a full quality check by comparing information with a previously compiled
research organization Fraunhofer IML. Equipped with sensors and self-driving
database.
technology, the STR, which is about the size of a suitcase, travels autonomously to
different assembly workstations in dynamic manner, instead of following just pre- Connected distribution:
determined routes. Each STR is made of recycled lithium-ion batteries from BMW’s
BMW is integrating built-in telematics and infotainment systems in its vehicles to
electric i3 model and can carry about half a ton of weight. The main difference
get real time information on variables such as tire pressure, mileage, battery
between the STR and other AGVs is that the STR navigates without using induction
charge, and whether the vehicles are securely locked. This information is fed into
loops such as magnetic strips set out on factory floors, which makes them
the company’s distribution system, thereby allowing managers to track the vehicle
completely autonomous. BMW is currently testing many of these STRs at its plant in
and determine if its heading for on time delivery or needs to be sped up.
Wackersdorf, Germany and expects roll it out to other centers in Regensburg,
followed by Leipzig and Dingolfing. Project AI:
Autonomous ‘tugger trains’: BMW plans to implement AI throughout its value chain under Project AI. A major
area of focus is automated image recognition, which analyzes vehicle component
These trains are autonomous vehicles that transport material over longer distances
images in real time and compares them to hundreds of other images in the same
such as between warehouses and the assembly line. They use laser signals to move
series. This helps BMW to quickly identify deviations from the standard.
around, while generating a digital 2D room profile.
136
Sources: Automotive Logistics

BMW aims at building a connected cyber-physical production system
BMW: Digital manufacturing initiatives (2/2)
BMW’s digitalization efforts around all aspects of manufacturing and supply chain plants each day on their way to 4,500 dealers in 160 countries.
management are focused towards eventually establishing a fully connected cyber-
In order to support such a large network, BMW is currently developing a completely
physical production system. The company is focused on automating the entire
decentralized and connected supply chain system, aided by technologies such as
process right from when a customer places the order, to deciding which factory
AGVs, smart robots, AR, and connected vehicle distribution.
would fulfil the order, to ordering material and eventually delivering the car. This is
particularly important because BMW gives its customers the flexibility of
customizing vehicles up to six days before production.
Autonomous transport in the form of automated guided vehicles (AGVs),

automated tugger trains and mobile robots are deemed critical to this vision as
they would pick and move parts, subassemblies and even entire shelves to
workstations.
BMW is also currently focusing on digitally connecting and enhancing its vast
logistics network. To give an idea of its scale, Oliver Zipse, BMW’s board member for
production, says that the company’s inbound supply chain consists of 30 million
parts from 1,800 suppliers and 7,000 sea freight containers per day. It also includes
84 million cubic meters across ocean, road, rail and air freight annually. On the
other hand, its outbound supply chain includes around 9,000 vehicles leaving BMW
137
Sources: BMW
“We are working towards a reorganization of production processes by
connecting all the work flows in logistics. The idea is that, through
digitalization, our global value chains will be more transparent. In the long
term, we want to move away from central steering towards the self-steering
of objects in the supply chain.”
Oliver Zipse, board member for production; 2016

BMW Group
138
Carbon develops various rapid 3D printing technologies
Carbon: Overview
Carbon 3d Inc. (Carbon) is engaged in the research and development of various Key products – manufacturing
rapid 3D printing techniques. The company provides 3D printing solutions to
• Continuous Liquid Interface Production (CLIP): Carbon’s proprietary 3D printing
various sectors including aerospace, athletic apparel, automotive, consumer
technology is a photochemical process that uses light and oxygen to develop
electronics, industrials, and medical devices and equipment.
parts. It works by projecting ultraviolet (UV) images, generated by a digital light
Its business model consists of renting out its machines or leasing them on three- projector, through an oxygen-permeable window into a reservoir of UV curable
year contracts rather than selling the printers. It also generates revenues from resin. Unlike additive 3D printing, CLIP uses oxygen-permeable optics, digital light
selling materials such as resins and elastomers, to users of its printers. projection, and programmable liquid resins to manufacture an object.
• SpeedCell: This is a system of connected manufacturing unit operations that

enables repeatable production of end-use parts on a large scale. It has two
Year Founded: 2013 different configurations: Design SpeedCell and Production SpeedCell. Even
though customers are provided with the same materials, hardware and software
Number of employees: N/A
in both the configurations, Production SpeedCell has multiple production floor
Revenue: N/A compatible M2 3D printers, as opposed to an M1 or an M2 in Design SpeedCell.
Valuation: US$2.5 billion (as of Sep 2020)
Total funding: US$683.4 million (as of Dec 2021)
139
Sources: Techcrunch; Company sources; Press releases; Crunchbase

Tesla is planning to use smart manufacturing methods in Gigafactory
Tesla: Overview
Tesla designs and develops fully electric vehicles and energy storage systems. The Key products – manufacturing
company also installs, operates, and maintains solar and energy storage products.
• Gigafactory: The Berlin Gigafactory, slated for completion in 2022, will be Tesla’s
In addition to manufacturing electric vehicles, Tesla looks to leverage its expertise
most advanced, sustainable, and efficient facility. It will manufacture powertrains,
in batteries, power electronics, and integrated systems to manufacture and sell
batteries, and automobiles, beginning with the Model Y and Model 3. Not only is
energy storage products. Its main manufacturing facilities are located in Fremont
the company aiming to build a smart automobile, but it is also planning to use
and Lathrop (California), Tilburg (the Netherlands), and Reno (Nevada).
smart manufacturing methods. The factory’s rooftop is fitted with solar panels,
which will enable a more sustainable means of manufacturing.
Year founded: 2003
Number of employees: 127,855 (Dec 2022)
Revenue (group): US$81.5 billion (Dec 2022)
Revenue (automotive): US$71.5 billion (Dec 2022)
Net profit: US$12.6 billion (Dec 2022)
140
Sources: Company sources; Press releases

Lockheed Martin uses 3D printing to develop aircraft components
Lockheed Martin: Overview (1/2)
Lockheed Martin, founded in 1909, is a Maryland-based security and aerospace Digital technologies used in manufacturing
company that engages in the research, design, development, manufacture,
The main technologies being used by Lockheed Martin are additive manufacturing,
integration, and sustainment of technology systems, products, and services
virtual and augmented reality and robotics.
worldwide.
• Additive manufacturing: Lockheed Martin’s additive manufacturing techniques
Lockheed Martin has created a platform called Digital Tapestry that aims to digitize
are being used to develop parts for aircraft, satellites, and space projects. In fact,
its procurement, production, transportation and storage. For this it is making use of
the Juno spacecraft that is currently orbiting Jupiter has additively manufactured
technologies such as 3D modelling, virtual reality simulation, big data analytics, 3D
components in it. Apart from being able to design complex parts that traditional
printing, and automated inspection and testing..
manufacturing cannot handle, the technique also enables Lockheed Martin to
reduce the weight of its products. This provides benefits such as reduction in
Year Founded: 1909 amount of fuel needed to power rockets and allowing for a larger payload using
the same size of rocket and fuel.
• Robotics: In February 2017, Exechon, a joint venture company comprising Abu
Revenue: US$66.0 billion (as of Dec 2022)
Dhabi-based Injaz National, Lockheed Martin, and Sweden-based Tecgrant,
Market capitalization: US$121.3 billion (as of Jan 2023) introduced its new XMini portable robotic manufacturing system. It uses Parallel
Net income: US$5.7 billion (as of Dec 2022) Kinematics Machining (PKM)(1) to carry out industrial automated manufacturing,
either as a standalone tool or part of an existing manufacturing system.
141 Notes: (1) A next generation machine tools system that combine the flexibility and envelope of the robots with the accuracy and stiffness of traditional Machine Tools
Sources: Satellitetoday; Company sources; Annual report; Press releases; Companies marketcap
The company is saving US$10 million per year by leveraging AR and VR tools
Lockheed Martin: Overview (2/2)
• Virtual and augmented reality: The company annually saves US$10 million by
implementing virtual and augmented reality (VR & AR) tools for the production of
its space assets. First used for the maintenance of the F-22 Raptor and F-35 Joint
Strike Fighter aircraft, the technologies are now being used in almost all product,
tooling and facility designs. Specifically, Lockheed uses 3D imaging in VR to detect
any engineering errors that take place before the start of production. The two
distinct VR applications being used are the Cave Automatic Virtual Environment
(CAVE), which allows workers to manipulate full-scale, 3D models that float
holographically in space and body sensors which enable the virtual designing of
products.
• Modular, open-systems architecture: By combining its mission expertise with

commercial practices and technology, Lockheed Martin plans to offer customers
the best of both worlds. 5G is one of those commercial technologies. Tactical
forces have always faced challenges connecting warfighters at the edge and
bridging "the last mile.“ However, with 5G networks, data, connectivity, and
bandwidth will be delivered to the edge.
142
Sources: Satellitetoday; Politico; Company sources; Annual report; Press releases

Siemens additive manufacturing, AI and cloud computing
Siemens: Overview
Siemens is a technology company focusing on areas such as automation and Digital technologies used in manufacturing
digitalization. The major industries the company focuses on include process and
The main technologies being used to achieve this goal are sensor systems, robotics,
manufacturing, intelligent infrastructure for buildings and distributed energy
and additive manufacturing.
systems, conventional and renewable power generation and power distribution,
smart mobility solutions for rail and road, medical technology, and digital • Additive manufacturing: Siemens and Hewlett Packard (HP) teamed up to design
healthcare services. Siemens reports six business segments including Digital a cooling duct, 75% faster than the traditional manufacturing process, using
Industries, Smart Infrastructure, Gas and Power, Mobility, Siemens Healthineers computational fluid dynamics (CFD). This is an additive manufacturing technology
and Siemens Gamesa Renewable Energy. A good example of its Industry 4.0 that essentially simulates the 3-dimensional behavior of a fluid, subject to specific
strategy is its manufacturing plant in Amberg, Germany where almost 100% of the conditions in a complex physical volume. Siemens also used 3D modeling
production has now been automated. capabilities additive manufacturing to optimize material handling, logistics,
machine utilization, and labor requirements.
Year Founded: 1847 • Cloud-based IoT platform: Siemens provides MindSphere, a cloud-based IoT
platform, which provides engineers and technicians a real time analytical view of
Number of employees: 311,000 (as of Sep 2022)
activities in the manufacturing plant and help people interact with each other.
Revenue: US$76.8 billion (as of Sep 2022)(1)
• Data analytics and artificial intelligence: This endeavor was undertaken to apply
Market capitalization: US$109.8 billion (as of Jan 2023) digitalization to the pre-manufacturing phase. Siemens captured data on fish
Net income: US$4.7 billion (as of Sep 2022)(1) growth patterns and analyzed it using AI to find process efficiencies and
optimization.

CHAPTER 07
Appendix
Authors
Leonie Senn-Kalb Dev Mehta Contact

Team Lead Product Development Founder and Director, AgileIntel U.S. support@statista.com
Research EU: eu.support@statista.com
l.senn@statista.com
As Team Lead at Company Insights, Leonie specializes Dev Mehta has over 12 years of experience working
in Product Development. Additionally, she continues to for market research, legal, and consulting companies.
carry out the tasks of her previous role at Statista as He has worked in various sectors such as defense,
Senior Project Manager, leading department-wide digital marketing, fintech, insurance, and consumer
projects. Before that, she worked as a consultant at EY goods.
for Transaction Advisory Services with a focus on large
Dev Mehta completed his Postgraduate Diploma,
carve-out and integration projects.
majoring in Business Management at Massey
University, New Zealand, and has a Master of Arts in
Marketing Management from Middlesex University,
London.
145
www.statista.com
Glossary
Term Abbreviation Explanation
Artificial Intelligence (AI) essentially refers to computing technologies that are inspired by the ways people use their brains and nervous
Artificial Intelligence AI
systems to reason and make decisions, but typically operate quite differently.
It is the act of reintroducing domestic manufacturing to a country. It is the reverse process of offshoring, where manufacturing is moved to
Backshoring -
another country where labor is cheaper. It is also known as onshoring, inshoring, and backshoring.
A term initially published by the German government on the Hannover Trade Fair in 2011, is quite simply the use of digital technologies in the
Fourth Industrial Revolution Industry 4.0
manufacturing process to produce higher-quality goods at reduced costs.
It is the measure of the value of goods and services produced in an area, industry or sector of an economy. Represents a close approximation
Gross Value Added GVA
of a country‘s GDP.
Internet of Things IoT The interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data.
It is concerned with developing and training robots to interact with people and the world in general and predictable ways. However, current
Robotics -
efforts also revolve around using deep learning to train robots to manipulate situations and act with a certain degree of self awareness.
Involves designing new learning algorithms and improving existing ones to enable computers to act without being programmed explicitly.
Machine Learning -
These algorithms allow computers to analyze large volumes of complex data to recognize patterns, make predictions, and adjustments.
146

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INDUSTRIES & MARKETS

Industry 4.0: in-depth market

Management summary Virtual and augmented reality 53 Aerospace & defense 89

Sources: World Economic Forum; Deloitte

Global industrial production in billion US$(1)

Sources: Deloitte; McKinsey; PwC; World Economic Forum

Mainland China – Made in China 2025

Mainland China aims to create 40 manufacturing innovation centers by 2025. The

Industry 4.0 value chain

Matured technology Supporting technology Emerging technology

Industrial evolution timeline Industrial evolution themes and features

Revolution Theme Key features

First program- Complete digital

Industrial ecosystem Manufacturing plants

Support and maintenance End users • Higher efficiencies leading to lower

• Create value with new revenue streams • Connected

Sources: KPMG; PwC

Benefits of Industry 4.0

Advanced Energy • Emission and waste

Dr. Detlef Zühlke, Director

Sources: MH&L; Gartner

Alexander Stiehle, Analyst

Moreover, techniques such as process simulation and modeling assist product

Sources: Pollutec; Reliable plant; Futurebridge; Dormakaba, Times of India

A more recent study by HSBC has identified a number of essential occupations,

21 Notes: (1) Occupations at risk compared to current position in 2021

Sources: PwC; ONS; PIAAC; PwC analysis; Yahoo Finance

Sources: Deloitte Survey of 1,802 business leaders in technology, as of 2020; Deloitte

Sources: Deloitte; McKinsey; PwC; World Economic Forum

Key technologies transforming industrial production

IN SCOPE FOR THIS OUT OF SCOPE FOR THIS

• Virtual and augmented reality

Sources: BCG; Statista

• The state of the country’s regulatory and business environment

• Its ICT readiness — measured by affordability, skills, and infrastructure

• The level of engagement of all stakeholders including the government, its

• The impact of the use of various technologies on the society at large

Sources: World Economic Forum

Network Readiness Index(1) of leading countries for Industry 4.0 in 2021

2 Singapore 79.35 14 Australia 72.83

3 Sweden 78.91 15 Israel 72.20

4 The Netherlands 78.82 16 France 72.19

5 Switzerland 78.45 17 Luxembourg 72.10

6 Denmark 78.26 18 Austria 71.31

7 Finland 77.90 19 New Zealand 70.30

8 Germany 76.11 20 Ireland 70.15

9 South Korea 75.95 29 Belgium 70.04

10 Norway 75.68 52 Estonia 69.79

11 Canada 74.22 66 China 68.83

12 United Kingdom 73.41 67 Iceland 67.48

Sources: Portulans Institute

% share held by the top 10 patents applicants in 2021

Royal Philips 0.7

Robert Bosch 0.7

Sources: Sculpteo; Twi-global; Unido

Sources: Sculpteo; Twi-global; Unido

Sources: Sculpteo; Twi-global; Unido

• Laminated object manufacturing (LOM): Introduced by Cubic Technologies

Sources: Sculpteo; Twi-global; Unido

Sources: PwC; Strategy& as of 2020; Printedelectronicsnow as of 2020

3D printer manufacturers Materials producers 3D scanning Industrial Consumer Medical

Sources: EY global 3DP survey; 3Dhubs

General Electric (GE)