As manufacturing players decide whether or not to adopt 5G, one of the primary factors is how much it costs to deploy and operate these systems in terms of capital and operating expenditures, and how long it will take to achieve return on investment.
At the recent 5G Manufacturing Forum, several aspects of 5G manufacturing capex and opex decisions bubbled up from a conversation with Sylvia Lu, who is head of cellular technology strategy at u-blox, a board member and chair of 5G-ACIA’s Working Group 4 and who also has chaired the manufacturing working group of UK5G; and Dr. Muralidhar Lakkanna, vice president – technical for BWM Manufacturing, who has more than two decades of experience in manufacturing in India. Among the key points of consideration:
Companies see 5G integration, ROI and unclear use cases as barriers to 5G adoption. Lu noted that at a UK5G showcase earlier this year, a poll asking about barriers to adoption of 5G in manufacturing showed that the top three reported barriers were 5G integration skills, return on investment and use cases for 5G.
“I think that [integration skills] is in particular, interesting,” Lu said. “If we think about primary networks for example, the challenge is the greater integration, if you like, between the OT and ICT.” She said that the deployment and management of non-public networks requires both skills and understanding that may not typically be part of the usual OT or IT expertise.
Technologies have to be relevant to manufacturers’ goals—and that varies across the manufacturing industry. “The basic question [is], which technologies are relevant for the industry?” said Lakkanna. “If you look at the root of that … the market which is driving the industry … will also be driving the technologies.
The manufacturing industry, he explained “is a very capital intensive industry, where existing resources are already available and the characteristics of the industry plant or the organization as a whole has its own pros and cons and limitations.” There isn’t much flexibility within those existing systems of established yields and break-even points, he added—but the industry is also always aware of and looking at the new technologies to which both its products and its own systems must adapt to and adopt, and where technology might be able to bring new flexibility to capex and opex numbers, efficiency and yield. It’s also relevant to consider whether the manufacturing operation focuses on high-value or low-value manufacturing and the associated volumes, he added.
“These decisions making which are very particular to the industry,” he said. “For me, all technologies are relevant as long as it has some significance to my … company objectives.” But ultimately, he went on, “The technology will only give you flexibility [to have] choices and make the decisions. The technology is only … an enabler.”
He also sees more pursuit of 5G adoption among industrial manufacturers who are also pursuing newer technologies, such as electric vehicle manufacturers and the solar industry. Industries which have perfected their operations on legacy platforms and have deep knowledge of those platforms will have to figure out how to cope with the changing technologies and market, or they risk losing their competitiveness and relevance.
Small gains in efficiency could be enough to make a business case. Lu said that one of the lessons which has emerged from the UK5G test bed work is that even a small percentage in efficiency gain—low single digits—can in some cases produce significant enough returns to justify the adoption of 5G for, say, use cases such as augmented or virtual reality or IoT.
“I think looking forward, [there] has to be more imagination, and looking to different use cases and [looking] at the lessons learned from the test beds and trials, and really [working] together to make a new ecosystem that’s going to deliver the true value in the next decades or so,” Lu said.
The market is still being built, and testbeds offer, a vision, a glimpse of reality and potential partners. Lu went on to add that over the past five years, UK5G has completed more than 30 testbed projects across 13 regions, with about 200 project partners. “We’ve seen [use] cases from immersive industry to manufacturing … but also from healthcare to logistics,” Lu said, which is helping to “build the demand of 5G by showing the art of possibility and benefits.” Companies which participated intended to create their own use cases, she said, but testbeds also offer an opportunity for innovative creativity beyond the bounds of a single company and the ability to leverage partners’ capabilities. “There’s also element of market creation, because the 5G manufacturing market was not there on day one, so you need to really stimulate and find the needs, really identify the pain points … but also, articulate the benefits so the end user really understand the why, how and when,” she said.
Government policies make a difference in the capex/opex equation. “Public policies have a very big impact on each industry’s decision making in terms of capex and opex … because in every revenue model, taxes play a big role,” Lakkanna pointed out. “The incentives that government is going to offer in terms of capital expenditures, and in terms of the operating expenditures in the taxation … that their government is going to impose … really make a big difference in terms of the capex and opex model.”
“The more the proactiveness of the public policies is there, the technology adoption becomes more significant and it becomes more mirrored,” he went on. “But if … the industry has to cope up with … tougher policies, then the adoption of technology will become slower. The amplitude of the technology adoption is directly dependent on the public policies, and [those] public policies are very, very specific to the nation.”
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