UK manufacturers are falling behind their counterparts in Asia and the US in the international race for industrial transformation. They are also bottom of the pile for integrating artificial intelligence (AI) into manufacturing processes.
These are the findings of a new study by PwC research arm Strategy&, which also claims the automotive sector is the most advanced at digitising its functions and processes, and industrial manufacturing has made least progress in the transition to smart factory systems.
Just one per cent of UK manufacturers have attained a digital leadership position, or ‘champion’ level, awarded in the study for heavy investment in smart factory operations and services. By contrast, 19 per cent of Asian companies and 11 per cent of manufacturing outfits in the Americas are demonstrating a sustained commitment to digital change.
The report says UK firms are increasingly deploying low-power wide-area connectivity technologies and data analytics platforms to enable faster processes and predictive maintenance, but are failing to keep pace with their international peers’ smart factory upgrades.
Darren Jukes, PwC UK’s industrial manufacturing and services leader, said: “While the UK’s industrial strategy reinforces the huge potential technology can offer, making radical shifts across the manufacturing process or supply chain is neither quick nor easy to implement. There is a risk that if UK companies don’t pick up the pace, they could find themselves outmanoeuvred by digital champions in other territories.”
In total, 10 per cent of global manufacturing companies are digital ‘champions’. Strategy& describes the leading pack as “aggressively innovative… well beyond mere automation and networking”. Two thirds have barely started to get to grips with digital technologies, according to the report.
Reinhard Geissbauer, partner at PwC Germany and co-author of the report, said: “Asian companies have the advantage of setting up robust digital operations from essentially a blank slate in terms of factory automation, workforce and even organization information technology networks. They don’t have complex legacy systems and facilities to upgrade, integrate or discard. In addition, Asian companies appear to be keener to try new business models and develop innovative products and services.”
Strategy& polled 1,155 executives at global manufacturing companies in 26 countries. It found regional differences in the value placed upon digital technologies. Notably, AI divides opinion, and progress.
While one-third of so-called ‘digital champions’ have adopted AI across major functions, primarily for automating manual and cognitive tasks, 98 per cent of digital ‘novices’ have no AI activities at all. Asian companies are at the forefront with AI, with 15 per cent implementing significant AI solutions, compared to just five per cent in Europe, the Middle East and Asia (EMEA).
In the UK, AI sits at the bottom of the implementation chart among manufacturers, with business leaders more uncertain about the return on investment, the maturity of technologies and the reliability of the data than their global counterparts.
The study found two thirds of manufacturing bosses do not have a clear smart factory vision and strategy; around one in four reckon their employees have the required qualifications to master a digital future.
“Employees are a crucial cog in this digital evolution – they enable and support the efforts of a company’s strategic direction, solutions, performance and operations,” commented Jukes.
“As they navigate this transformational road ahead, firms must not only assess the status quo of their workforce, advancing the best and brightest and most digitally-oriented existing talent while training others to match these skills, but inject new talent into the organisation where gaps in people’s skill sets and capabilities are revealed.”
The automotive sector has the largest share (20%) of digital ‘champions’ followed by the electronics market (14%). Consumer goods (6%), industrial manufacturing (6%) and process industries (6%) are lagging significantly behind, the report found.
Cara Haffey, PwC UK’s automotive leader, cited supply chain integration and “end-to-end planning” as reasons for the automotive sector’s lead. “A decades-old push to gain efficiencies, accelerate output, reduce waste and recoup working capital through lean techniques means auto firms are always looking for better ways and new technologies they can fine-tune their already well-established supply chains,” she said.
