Dispatch from Davos: Manufacturing 4.0 and the Fourth Industrial Revolution

The central theme of this week’s World Economic Forum is the Fourth Industrial Revolution: a time in which technological innovations are rapidly interacting with every aspect of our lives. When we think of innovation, we sometimes think of Silicon Valley and emerging companies--which are important. I want to take us back for a moment to our roots--manufacturing--because the Fourth Industrial Revolution is as prevalent there as it is anywhere. Indeed, in three distinct ways, we’re seeing Manufacturing 4.0.

First, manufacturers are leveraging the Internet of Things and the near ubiquitous ability to analyze huge amounts of data to improve everything from their operations and supply chains to their product development. Just walk on a factory floor and you’ll see companies harnessing data to predict equipment malfunctions before they happen. You’ll also see manufacturers weaving intelligence into their products, enabling not just new machine-to-machine learning but new machine-to-human communications.

Second, a new generation of more affordable and more capable robots are entering the mainstream in manufacturers of all sizes. Increasingly, today’s robots are increasingly equipped with such human abilities as sensing, dexterity, memory, and trainability, and are collaborative, working hand-in-hand with workers who train them through demonstration. The capability of robots will only increase as artificial intelligence and machine learning solutions improve.

Third, from design and development through production, 3D printing is coming of age. According to a PwC survey of U.S. manufacturers, two of three companies are already adopting 3DP in some way. From small shops to multinationals, manufacturers aren’t just using 3D printing for prototypes, they’re using them for their final products.

Notably, my discussions with leaders in manufacturing indicate that they’re not just focused on technology’s impact on their bottom line, they’re also concerned about what it means for their employees. They’re searching for ways to implement ground-changing innovations while maintaining their commitment to their staff. They're also investing to ensure that future generations of manufacturing employees have the technical skills necessary to succeed in a modern, highly automated, factory.

But are companies capturing all of the value from this innovation? Maybe. Many leaders across all industries are thinking about how to measure the speed and results of innovation. In PwC’s just-released 19th Annual Global CEO Survey, when asked in what areas business should be doing more to measure impact and value for wider stakeholders, 55% said innovation – the highest of any category. This certainly suggests that CEOs haven't figured out how to communicate innovation initiatives - including those that may positively impact the environment or society more broadly - beyond traditional financial metrics.

For manufacturers, the Fourth Industrial Revolution will undoubtedly bring with it challenges and opportunities. CEOs of these companies know this all too well. The year ahead will tell us much about their strategies for tackling both.