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The factory of the future could cut costs by up to 40%

02 February, 2017

Manufacturers who start to implement the factory of the future today will save up to 40% of their conversion costs in ten years. This is the conclusion of a US-German study that quizzed more than 750 production managers in leading industrial companies around the world.

The 2016 Factory of the Future Study was conducted jointly by the Boston Consulting Group (BCG) and the Laboratory for Machine Tools and Production Engineering (WZL) at RWTH Aachen University. The aim was to define a vision for the factory of the future in 2030. The study focused on three sectors: automotive, engineered products, and process.

The vast majority (85%) of respondents believe that their companies will benefit from implementing elements of the factory of the future. “But they appear to be struggling to build momentum,” the study adds.

Some 74% of the managers surveyed report that their companies have already implemented some elements, or plan to do so within five years. However, only 25% said they reached their targets in the past year.

The study analyses how the cost of manufacturing and conversion (manufacturing costs less material costs) would be affected ten years after implementing the factory of the future. It found that manufacturing costs would fall by up to 20%, while conversion costs could drop by up to 40%. The benefits for manufacturers will include enhanced flexibility, quality, speed and safety.

BCG estimates that to make the factory of the future a reality, companies will have to invest 13–19% of one year’s revenue spread across a period of ten years.

“The factory as we know it today will change radically,” predicts Daniel Küpper, a BCG partner who heads its Innovation Center for Operations. “Assembly lines will be replaced by flexible manufacturing islands, and workpieces will communicate even more extensively with production machinery.

Image: BCG

“The growing complexity is the central challenge of production,” he adds. “The factory of the future will have to handle a much larger number of product variations, while at the same time increasing productivity.”

Most automotive managers quizzed for the study (85%) expect smart robots to be important in 2030, with 72% predicting the same for big data and analytics, and 65% anticipating that augmented reality will be important, especially for vehicle assembly. Using smart glasses, for example, employees could be guided through processes step-by-step and notified of any assembly errors or safety hazards.

Factories of the future will need powerful and secure IT infrastructures. Suitably qualified employees will also be key, but 38% of the study’s automotive respondents see employee skills as being a major challenge.

“The factory of the future belongs on the agenda of top management,” says Küpper. “Its implementation is not just a job for production, but for all functions in the company if it’s to be successful.”

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