SOURCE: Boston Consulting Group

Boston Consulting Group

December 06, 2016 00:01 ET

Study Finds That Implementing the Factory of the Future Will Reduce Conversion Costs by up to 40%

Leading Manufacturers Are Focusing on Modular Production, Advanced Analytics, Smarter Robots, and Augmented Reality

DUSSELDORF, GERMANY--(Marketwired - Dec 6, 2016) - Investments in the factory of the future will pay off, and industrial companies that begin implementation today will save up to 40% of their conversion costs in ten years. To succeed, however, manufacturers have to leverage the potential of modular production concepts and new technologies, as well as optimize their processes. These are the findings of the 2016 Factory of the Future Study, conducted by The Boston Consulting Group (BCG) and the Laboratory for Machine Tools and Production Engineering (WZL) at RWTH Aachen University. "The factory as we know it today will change radically: assembly lines will be replaced by flexible manufacturing islands, and work pieces will communicate even more extensively with production machinery," says Daniel Küpper, a BCG partner and head of the firm's Innovation Center for Operations. More than 750 production managers from leading industrial companies worldwide took part in the study, which focused on the automotive, engineered products, and process industries.

Companies in the industrial sector have already recognized the potential of transforming their factories: 74% of respondents said their company had already implemented elements of the factory of the future or planned to do so within the next five years. However, only 25% said they reached their related targets last year. To make the factory of the future a reality, companies have to invest 13% to 19% of one year's revenue across a period of ten years.

Future Automotive Production Must Be Highly Flexible
Particularly in the automotive industry, flexible plant structures are becoming increasingly significant. In fact, 92% of automotive participants see modular line setups as highly relevant in the factory of the future in 2030. "The growing complexity is the central challenge of production. The factory of the future will have to handle a much larger number of product variations, while at the same time increasing productivity," says Küpper.

In addition, 85% of automotive respondents expect smart robots to be highly relevant in 2030, and 72% anticipate the same for big data and analytics. Sixty-five percent of automotive respondents expect augmented reality to be highly relevant, particularly in vehicle assembly. Using smart glasses, for example, employees will be guided through work processes step by step and notified of any assembly errors or safety hazards. Digital plant logistics and 3D production simulations will be key support systems in the factory of the future, enabling leaner production and faster reaction to more complex customer needs.

Strategy, IT Infrastructure, and Employee Qualifications Are Key Enablers
"The factory of the future belongs on the agenda of the top management. Its implementation is not just a job for production but for all functions in the company if it's to be successful," says Küpper. Most important, the factory of the future needs a powerful and secure IT infrastructure. Additionally, employee qualifications are key to the transformation agenda. However, 38% of automotive respondents see employee skills as a major challenge.

Companies Can Experience the Factory of the Future
BCG's Innovation Center for Operations (ICO) gives companies the opportunity to experience the factory of the future. In three model factories in Aachen, Kaiserslautern, and Stuttgart, production managers can test on site how augmented reality, human-robot interfaces, and smart logistics wearables can advance production.

Learn more about BCG's Innovation Center for Operations here.

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries. For more information, please visit bcg.com.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter, and LinkedIn.