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Industry Updates

‘Lighthouse’ Firms Lead, Not Stuck in ‘Pilot Purgatory’

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Companies that advance their manufacturing processes are acting like “lighthouses” in the United States and around the world by succeeding in the Fourth Industrial Revolution (4IR), harnessing automation, analytics, IoT and digitization to connect their value chains end-to-end. Those who are lagging behind in these efforts could lose out on up to $3.7 trillion in value by 2025, according to a new report from McKinsey & Company and the World Economic Forum.

The report, “Insights from the Forefront of the Fourth Industrial Revolution,” shows how American manufacturing companies are lagging behind the rest of the world. However, those operations that can adopt the lighthouse-level transformations can find major improvements in productivity, operating costs and speed to market. Top findings in the report include:

  • 70 percent of manufacturers are unable to bring manufacturing innovation to scale and are at higher risk of permanently falling behind lighthouses;
  • Europe and Asia are embracing 4IR much faster than the United States, with 41 of 44 total lighthouses;
  • Companies are generating value from 4IR technologies beyond the factory: 14 of the 28 newly identified lighthouses are integrating end-to-end manufacturing innovation from their suppliers to their customers and beyond; and 
  • Job automation is forcing companies to evolve their operational models and upskill workers to use cognitive and creative skills that have no AI equivalent.

“While many manufacturers have made strides toward technological transformation, more than 70 percent of the companies in the manufacturing ecosystem are falling further behind, with their Fourth Industrial Revolution efforts stuck in what we defined as “pilot purgatory,” the report says. “This is the attempt to implement advanced manufacturing technologies without realizing appealing returns on investment or measurable improvements in operational key performance indicators.”

Johnson & Johnson Vision Care in Jacksonville, Fla., was recognized as a lighthouse in the United States. This company uses 4IR technology like virtual reality and digital twins to improve the patient experience. J&J Vision Care has also digitally connected its value chain end-to-end from suppliers to consumers, and implemented reconfigurable manufacturing, helping it realize double-digit cost reduction and sales growth.

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