Breaking down walls—how lighthouses are expanding beyond a single site

The Davos annual meeting begins this week and we’ll once again meet with leaders from many of the world’s top industrial companies, discussing the insights on the Fourth Industrial Revolution. This year, we see an expansion of the Global Lighthouse Network, which identifies the world’s most advanced manufacturing sites – we are up to 44 sites in 2020 versus the 16 names at the World Economic Forum’s 2019 Annual Meeting. We also see a growing diversity: these leading sites vary in terms of their size, location, sector, industry and innovation. And, it’s the innovation component that is particularly interesting. A new, breakout sub-set of 14 lighthouses are using technology to connect their value chains end-to-end (E2E) – they’re doing something different by innovating and applying digital technologies outside the four walls of their factory from suppliers to customers, and beyond.

By taking this new approach, they’re enjoying outsized improvements in productivity, operating costs, and speed to market. This week in Davos, we’ll talk about how they are driving value in three ways:

Customer centricity: Customers’ expectations are growing. Mass customization, personalized service, and speedy delivery are expected as standard in many industries. To satisfy these expectations, organizations are transforming how they interact with their customers. They’re placing them at the center of the design process and operations, improving the purchase experience as well as use over the product lifetime.

Seamless connectivity across functions: It’s no secret that silos are going to make any transformation challenging, but if functions within your business aren’t connected, a successful digital transformation will be close to impossible. E2E lighthouses are enjoying seamless data exchange and transparency between functions. And, by doing so, they’re able to make more efficient decisions and reduce unnecessary communications.

Continuous connectivity across organizations: More than just improving connectivity within organizations, E2E lighthouses are creating new ecosystems across their value chains. Thanks to the power of 4IR technologies to enable data collection, exchange, and processing, suppliers are able to react quickly to demand fluctuation. And, thanks to advanced and predictive analytics, they can also enjoy the benefits of process optimization.

None of these value drivers being used by E2E lighthouses are new. But, for the first time, 4IR technologies are allowing them to be leveraged across the whole value chain. And by doing so, they’re working towards reducing waste, resource consumption, and emissions—more on the link between environmental sustainability and lighthouses to follow in another article.

The impact from this innovation is impressive. For example, Chinese automotive company SAIC Maxus’s has given customers a web app that allows them to design and configure their new cars, and then track production. This mass customization is available with order to delivery times of less than 4 weeks, reducing production lead times by 20 percent, achieving near-perfect (99.8 percent) configuration accuracy, and a substantial reduction in tooling and changeover time (-30 percent). And Schneider Electric is using a communication portal across all of its suppliers to reduce administration time by 85 percent, while smart inventory planning has yielded an improvement of 70 percent in supplier service rate.

A set of six enablers are helping them to drive this value, and I’ll be looking at them more closely in my next article and reflecting on our discussions in Davos. Organizations that want to leave behind the 70 percent of manufacturers who are stuck in pilot purgatory will do well to start to implement them now—they’re the secret sauce for scaling 4IR technologies and enjoying all the benefits that they can bring.