McKinsey: digital manufacturing, preparing for a new normal
As COVID-19 continues to change the manufacturing industry like never before, we look at how digitalisation can provide a speedy recovery for the industry.
While the impact of COVID-19 is presenting many challenges to the industry, such as health and safety; supply chain shift impacting sourcing and distribution; supplier resilience and labour shortages, McKinsey highlights the importance of production facilities moving quickly to respond to new sources of supply and shifting customer demands when the crisis eventually resolved.
“It is these types of pressures that make digital capabilities so critical, providing flexibility and resilience manufacturers need to mobilise and operate in unfamiliar territory,” says McKinsey.
In a recent study conducted by McKinsey, the organisation uncovered new insights into the challenges and success factors for European companies looking to implement digital manufacturing at scale. “The time for organisations to act and to implement digital is now,” states McKinsey who reports that only 17 out of the 44 members of the Global Lighthouse Network are in Europe, and only three are using industry 4.0 tools across their end-to-end value chains.
“Our research has revealed five fundamental principles that translate into tangible actions for scaling and sustaining digital technologies, regardless of a manufacturer’s starting point,” added McKinsey.
These five principles include:
Image source: McKinsey
The value of industry 4.0
Industry leaders within manufacturing are harnessing the capabilities of digital transformation to develop new or enhance the ways in which their organisations operate. These organisations are using a variety of capabilities including:
Data, computational power and connectivity: sensors, the internet of things (IoT), cloud technology and blockchain
Analytics and intelligence: Big Data, advanced analytics, artificial intelligence (AI) and knowledge-work automation
Human-machine interaction: virtual reality, augmented reality, robotics, automation, robotic process automation (RPA) and chatbots
Advanced production methods: additive manufacturing and renewable energy
By harnessing these types of industry 4.0 tools, companies have reported a 30 to 50% reduction when it comes to machine downtime; a 15 - 30% improvement in labour productivity; a 10 to 30% increase in throughput; and a 10 to 20% decrease in the cost of quality.
“Although all of the manufacturers we assessed are transitioning to digital manufacturing, they are not deploying these technologies at the same rate. In fact, most organisations find themselves stuck in ‘pilot purgatory’,with no clear approach for quickly scaling up innovations across the manufacturing network,” commented McKinsey, who highlighted that according to findings from the Global Lighthouse Network, at least 70% of manufacturers are stuck in ‘pilot purgatory’.
Among the most significant challenges, McKinsey reports that Culture is considered the highest when it comes to success at scale, in addition to the absence of several fundamentals:
Strategic direction: where and how digital manufacturing will bring business value, as well as the incentives for people to make it happen
The required capabilities: technical, managerial, and transformational, in order to understand and execute the changes
Robust data and IT infrastructure: to mitigate bottlenecks when scaling successful pilots
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First Solar to Invest US$684mn in Indian Energy Sector
First Solar is about to set up a new photovoltaic (PV) thin-film solar manufacturing facility in Tamil Nadu, India. The 3.3GW factory will create 1,000 skilled jobs and is expected to launch its operations in Q3 of 2023. According to the company, India needs 25+ gigawatts of solar energy to be deployed each year for the next nine years. This means that many of First Solar’s Indian clients will jump at the chance to have access to the company’s advanced PV.
Said Mark Widmar, First Solar’s CEO: ‘India is an attractive market for First Solar not simply because our module technology is advantageous in its hot, humid climate. It’s an inherently sustainable market, underpinned by a growing economy and appetite for energy’.
A Bit of Background
First Solar is a leading global provider of photovoltaic systems. It uses advanced technology to generate clear, reliable energy around the world. And even though it’s headquartered in the US, the company has invested in storage facilities around the world. It displaced energy requirements for a desalination plant in Australia, launched a source of reliable energy in the Middle East (Dubai, UAE), and deployed over 4.5GW of energy across Europe with its First Solar modules.
The company is also known for its solar innovation, reporting that it sees gains in efficiency three times faster than multi-crystalline silicon technology. First Solar holds world records in thin-film cell conversion efficiency (22.1%) and module conversion efficiency (18.2%). Finally, it helps its partners develop, finance, design, construct, and operate PV power plants—which is exactly what we’re talking about.
How Will The Tamil Nadu Plant Work?
Tamil Nadu will use the same manufacturing template as First Solar’s new Ohio factory. According to the Times of India, the factory will combine skilled workers, artificial intelligence, machine-to-machine communication, and IoT connectivity. In addition, its operations will adhere to First Solar’s Responsible Sourcing Solar Principles, produce modules with a 2.5x lower carbon footprint, and help India become energy-independent. Said Widmar: ‘Our advanced PV module will be made in India, for India’.
After all, we must mention that part of First Solar’s motivation in Tamil Nadu is to ensure that India doesn’t rely on Chinese solar. ‘India stands apart in the decisiveness of its response to China’s strategy of state-subsidised global dominance of the crystalline silicon supply chain’, Widmar explained. ‘That’s precisely the kind of level playing field needed for non-Chinese solar manufacturers to compete on their own merits’.
According to First Solar, India’s model should be a template for like-minded nations. Widmar added: ‘We’re pleased to support the sustainable energy ambitions of a major US ally in the Asia-Pacific region—with American-designed solar technology’. To sum up: Indian solar power is yet the next development in the China-US trade war. Let the PV manufacturing begin.