End-to-end manufacturing “Lighthouses”: Generating value well beyond the factory walls

For manufacturers applying Fourth Industrial Revolution (4IR) technologies, the potential upside is massive. Together, 4IR innovations are expected to create up to $3.7 trillion in value by 2025.

But this value won’t be spread evenly. It is already clear that a small number of organizations are running away with a first-mover advantage. 

The Global Lighthouse Network, an ongoing research project by the World Economic Forum in collaboration with McKinsey, identifies the manufacturers that are leading the way in the deployment of 4IR technologies. Since 2018, 44 ‘Lighthouses’ have been added to the network, ranging from single-site SMEs to some of the world’s largest corporations.

Of these sites, 14 have been recognized as end-to-end (E2E) Lighthouses, integrating 4IR technologies well beyond the four walls of their factories.

As diverse as these facilities are, there are several factors that successful E2E Lighthouses have in common.

To innovate their operating systems more deeply, they work across four dimensions at once: their business processes, management systems, people systems, and their IIoT and data systems.

They also develop partnerships with value-chain stakeholders, reshaping the customer experience, mass producing customized products on demand and sharing data to react rapidly to demand fluctuation.

By placing the customer at the center of process design and operations, they improve both the initial purchase experience as well as use over the product lifetime. And seamless connectivity across functions allows them to reduce redundant communications and enable more efficient decision making.

The results speak for themselves: in addition to productivity increases of up to 90 percent, Lighthouses also realize 10-80 percent reductions in lead times, 15–20 percent increases in configuration accuracy, and 50 percent increases in energy efficiency.

For manufacturers seeking to generate similar value, they can learn from the six key enablers that have allowed E2E Lighthouses to scale up advanced manufacturing use cases:

1. An agile approach makes iteration continuous. Lighthouses have built on agile principles to innovate and transform through a process of continuous iteration, moving away from pilots that are already dated by the time of completion.
2. A technology ecosystem enables new levels of collaboration, facilitated by a digital infrastructure. Advanced manufacturers have shifted from safeguarding technological solutions as a source of competitive advantage to embracing partnerships to bring new capabilities to the enterprise.
3. IIoT academies boost workforce skills. Leaders in 4IR are using internal and external expertise, ensuring that their workforce builds the skills needed to adapt to continuous change.
4. IIoT/Data architectures (“stacks”) are selected based on readiness for the next generation of technology capabilities. Lighthouses are providing their workforce with a technology infrastructure that enables innovation and breaks down silos.
5. Agile digital studios facilitate ideation. Lighthouses create spaces for development teams to organize and operate using an agile approach, so that results are delivered in sprints and iterated fast.
6. A transformation office supports enterprise-wide change. E2E leaders have established governance models focused on impact and solutions, rather than on particular technologies.

These insights are going to be critical for the vast majority of manufacturers that aren’t yet competitive with Lighthouses—the 70 percent that are still languishing in “pilot purgatory,” unable to bring manufacturing innovation to scale.

Learn more about the key factors enabling Lighthouses’ success.

(Link to: https://mckinsey.com/business-functions/operations/our-insights/industrys-fast-mover-advantage-enterprise-value-from-digital-factories)