Industry 4.0 was just a buzzword few years ago, but now is an integral part for major manufacturing companies world over as they have realised the high impact and potential of industrial automation. Companies acknowledge the benefits of bringing together various technologies like Internet of Things, artificial intelligence, cloud computing, large-scale machine-to-machine communication (M2M), smart data exchange and robotics to the factory floor. Also, they are looking for technology-enabled transformations for their next horizon of performance improvement, innovation and business growth. Automation systems help companies act on real-time insights and develop new operating models.
Industrial automation is drastically changing the way companies work and manufacture products. It could help firms capitalise on large-scale benefits, improve overall customer experiences and enhance employee productivity. Automation transformation thereby creates significant business impact and help in building a long-term competitive advantage. Hence, it is one of the top strategic priority areas for several global business leaders.
It should be noted that there is no one size fits all. So, each company will have to decide where to focus and what to prioritise based on the capability and resources required to manage the transition. It didn’t take much time for the digital transformation to impact across all functions in the business. A similar story is expected to play out at the factory floor. Industries and companies may soon feel they are lagging if they do not begin the process of industrial automation in the coming years.
Europe today holds the top position in industrial automation across the world. It has the highest robot density. As per the International Federation of Robotics, more than three million industrial robots were globally operational in 2020 compared to 700,000 in 1997, signifying an exponential increase. The adoption of robotics in industrial automation is growing at an average of 14% per year.
Robots were one of the earliest automation examples on the factory floor, especially in the auto industry. The early stages of adoption comprised automation of hazardous, repetitive jobs – largely in terms of welding. Today, labour is being subsidised through Collaborative Robots (COBOTS). Thus, one person can be responsible for four or five COBOTS. This has helped auto and other industries in speed-to-market without bringing many changes to the existing infrastructure.
North America is next in line to acquire a significant market share in industrial automation in the coming years owing to advanced production and manufacturing capabilities in the region.
What is the worldwide trend? Machine building, automotive, pharmaceutical and chemicals, food and beverage, electronics and semiconductors have all adopted industrial automation. In fact, the large auto players — Germany and North America— are leading industrial automation on the global map. Hence, the pace of industrial automation in the auto sector is faster than others.
With industrial automation, companies are witnessing higher flexibility and efficiency in production processes and decreased time-to-market for new products. The advantages are in terms of an increase in added value and human capacity; new level of data support and production traceability; improved flexibility; greater speed-to-market; real-time monitoring and predictive maintenance; additional safety; reduced cost; high productivity; and better quality and consistency.
According to industry estimates, the global industrial automation market was valued at $190bn in 2021. Analysts expect the industry to exhibit a CAGR of 9% over 2021—28 and reach $360bn in 2028.
Asia-Pacific region is yet to embrace industrial automation in a big way. However, it is expected to grow significantly as companies are experienced with the initial adoption of factory and industrial automation solutions and components like DCS and SCADA.
Industrial automation will considerably depend on companies understanding its benefits, along with the availability of technical expertise. Each company will do its own measure of gains over high installation costs and consider compatibility issues.
Many manufacturing companies have been piloting digital initiatives for over one to two years, but very few have managed to achieve significant operational and financial synergies. Heterogenous systems and application landscape (different equipment running on varied operating systems) could be acting as a major impediment for realising the full benefits of automation.
To capitalise on the full opportunity, companies need to consider industrial automation as an organisational level initiative considering the future needs of the business.
Bhasker Canagaradjou, Vice President, Avalon Global Research
With over 20 years of experience across corporate strategy and business consulting services, Bhasker advises several Fortune 500 companies and marquee startups across multiple industries, including banking and financial services, consumer goods, logistics, industrial goods, automotive and healthcare in North America, Europe, Middle East and Asia Pacific.
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