Industry 4.0: Reinvigorating ASEAN manufacturing for the future
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New digital
technologies can help Southeast Asian manufacturers reassert their place in the
global landscape.
No industry is immune to the disruptions brought by
digital technologies. While media, telecommunications, and banking have been
among the first to feel the full brunt of these new technologies, manufacturing
is now coming into the crosshairs. Globally, many manufacturers, especially
those in advanced industries, have been looking for ways to exploit digital
technologies. These efforts, generally dubbed “Industry 4.0,” are at a point where
greater reliability and lower costs, largely attributable to improved storage
and computing capacities, are fueling their rapid adoption over a variety of
industry applications.
Industry 4.0 is the
confluence of disruptive digital technologies that together carry the potential
to change the manufacturing sector beyond recognition. The movement has gained
critical momentum as a number of factors have come together: an astonishing
rise in data volume, computing power, and connectivity; the emergence of
advanced data-analytics and business-intelligence capabilities; new forms of
human-machine interaction, such as touch interfaces and augmented-reality
systems; and improvements in how digital outcomes are transferred to the
physical world—for instance, through advanced robotics and 3-D printing.
Industry 4.0 is
expected to drive productivity increases comparable to those generated by the introduction
of the steam engine in the Industrial Revolution. Globally, it is expected to
deliver between $1.2 trillion and $3.7 trillion in value. The
Association of Southeast Asian Nations (ASEAN), whose member economies have
significant manufacturing components, has the potential to capture productivity
gains worth $216 billion to $627 billion of this value.
In a recent McKinsey
survey of more than 200 business leaders throughout ASEAN, the transformative
potential of Industry 4.0 was clearly confirmed. Almost all of the respondents,
96 percent, believed Industry 4.0 will bring new business models to their
industries and slightly less, 90 percent, said improved performance will be one
of the main benefits from these new technologies. Additionally, in
manufacturing-based economies like Indonesia, Thailand, and Vietnam,
respondents were generally optimistic about prospects of Industry 4.0.
However, even as they
acknowledged the potential of digital technologies, respondents showed slow
adaptation. Only 13 percent said their companies had begun an Industry 4.0
transformation. ASEAN manufacturers cannot risk failing to capture the
large opportunities made possible by these new technologies. By embracing Industry 4.0, ASEAN
manufacturers can become the next leaders in their fields.
Despite the potential,
few manufacturers truly appreciate the enormous long-term possibilities and
implications of Industry 4.0 initiatives on their production systems. Too
often, managers wrongfully dismiss Industry 4.0 as the latest buzzword. But,
the technologies behind this trend will touch all aspects of the manufacturing
process. And these technologies provide a clear opportunity for companies in
ASEAN to improve their productivity and help the region reassert its status as
a global manufacturing hub.
Embracing Industry 4.0
technologies in ASEAN countries requires a clear understanding of the obstacles
delaying its adoption, a shared vision of its potential benefits, and a policy
and education environment that encourages implementation. Manufacturers in
ASEAN may have had a slow start in the race toward these new technologies, but
the marathon is young and there is ample track ahead to overtake the leaders.
https://www.mckinsey.com/business-functions/operations/our-insights/industry-4-0-reinvigorating-asean-manufacturing-for-the-future?cid=other-eml-alt-mip-mck-oth-1802&hlkid=e47b46566aee415c813c2b4003c6c672&hctky=1627601&hdpid=355a8bce-005d-44f7-8e98-799af6f04b39
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