How technology can unlock manufacturing’s potential and $3.7 trillion in global GDP

Imagine a factory computer that can accurately predict when equipment might fail and then repair it or prepare substitute parts. Imagine that this happens long before it breaks down and paralyzes an entire production line. Or imagine an assembly-line worker who can put on a pair of voice-activated augmented-reality glasses to guide her—step-by-step and in real time—through a complicated new task.

These aren’t the technologies of some far-off future. Nor are they mere plans on drawing boards or ideas in some engineer’s brain. In fact, they are just two of the unprecedented technologies now seen in the Fourth Industrial Revolution. Advances in artificial intelligence, the Internet of Things (IoT), and robotics—among other innovations—have begun transforming the way companies analyze, create, design, organize, and manufacture products and deliver them to customers.

Technology is driving the world toward a future of autonomous, self-organizing factories and integrated or hyperconnected production systems. Manufacturing companies, suppliers, and customers will ultimately connect on a common platform that will make factories exponentially more creative, more productive, and safer.

Adopting technology for massive productivity gains

Fully integrated into global manufacturing, these new technologies could create up to $3.7 trillion of global GDP by 2025—larger than Germany’s economy. Yet less than a third of all manufacturers have begun implementing them, 41 percent are still piloting at a single site, and 30 percent haven’t even started.

Over the last year, my colleagues and I have worked with the World Economic Forum on the Technology and Innovation for the Future of Production initiative—an in-depth inquiry into how businesses can accelerate the adoption of new technologies and how the private, social, and public sectors might collaborate in promoting technological transformation.

We scanned about 500 technology companies, from start-ups to industry leaders, and invited them to discuss their manufacturing innovations. The possibilities that might come from bringing together these disparate achievements just blew us away.

Moving to scale in a year or less

From an array of successes, we identified about 40 proven innovations ready for an immediate scale-up in a broad, diverse array of companies, industries, and sectors. The white paper we introduced at the World Economic Forum’s annual meeting, in Davos, Switzerland, highlights each of these innovations, which could become self-funding when implemented.

We found that many companies are stuck in “pilot purgatory”: unable to break out of early-stage development. In thinking through the challenges, we identified 12 best practices that can help companies move rapidly to scale.

Factories that are creative, entrepreneurial, and exciting

We also identified ways for governments to create an environment that would enable the adoption of technologies.

Let’s be frank: turning factories into high-tech platforms will displace a significant number of workers. We cannot ignore the social and humanitarian consequences of automation. Governments, businesses, and civil society must take the lead in easing the transitions of workers by upholding social compacts and equipping current and future workers with the training and education they need. All sectors will have to reinvest in local economies and in new areas of growth.

We can’t forget that people still do a lot of things much better than machines. Many jobs will continue to depend on intrinsically human, hard-to-automate qualities, such as managing people, providing deep expertise, solving problems creatively, and carrying out nonroutine work.

This Fourth Industrial Revolution could transform factories into creative, entrepreneurial, and exciting places to work. Appropriately trained and upskilled line workers will play valuable roles as problem solvers and innovators. We are ready to create factories that attract and excite the best and brightest!

Sharing the benefits of this technology revolution

Cross-sector collaboration will be key to ensuring the smooth adoption of the new technologies. Society as a whole has learned a great deal about how people want to work. First, we want to create a future workplace that augments the humanity of workers. Second, we should strive to include a broad base of the population in growth. Third, we need to honor the social compact to reskill today’s workers and to upskill tomorrow’s. Education systems must be retooled to train the millions of data scientists, translators, IoT architects, and software engineers industry will need.

Just as we’re bringing society along, we must also bring along the rest of the business community. Today, 99 percent of all US manufacturers have fewer than 500 employees, so the full potential will be achieved only if the entire value chain, including smaller suppliers, can be digitized.

If we really want to realize the benefits of this Fourth Industrial Revolution—for our families, our companies, and our communities—we’ll need to collaborate on moving forward. We have great options to get started (such as using joint test beds, building capability centers, and sharing early deployment successes), so we can test, troubleshoot, and demonstrate promising technologies and their applications. With universities, research centers, and nongovernmental organizations, we can collaborate on setting universal standards for interoperability, cybersecurity, and data protection.

The tools to unlock manufacturing’s potential already exist. We need only to use them.

Read the full white paper on the World Economic Forum website.  

I’m a partner at McKinsey and lead our global work on digital manufacturing, as well as our operations hub in the Mid-Atlantic region. Please reach out and connect with me here on LinkedIn.