Smart Manufacturing

By Pilar del Castillo, MEP, Industry, Energy and Research Committee (ITRE) (pictured)
Spring 2016

Digital developments are truly transforming and enabling technologies (such as 3D printing, Cloud computing, big Data, Machine to Machine communications and very soon 5G), which can improve efficiency, effectiveness, productivity, competitiveness and customerisation across the economy as a whole. This process affects all sectors, from energy to health, from transport to education, etc. Its potential is so great that it is estimated that digital technologies could cut global total economic costs by $4.9 trillion: $1.2 trillion from reduced electricity expenditure, $1.1 trillion from reduced fuel expenditure.

Being an integral part of our economy, manufacturing cannot be an exception. In fact it is even more pressing in this area. Not just because of its importance. Manufacturing represents the major share of investment in R&D (62.3% in 2013), it's a key source of exports (80% of total EU exports) and in terms of employment it has been demonstrated that each additional job in this sector creates between 0.5 to 2 jobs in others. In addition Europe has shown that it has found difficulties in maintaining a strong industrial base and a competitive position at international level (in the last 6 years the share of manufacturing in GDP has fallen from 15.8% to 15.1%).

For all of these reasons we must move away from past and current mainstream thinking and practices regarding industrial policy. There is an urgent need for a shift towards a coordinated approach at all levels, that is: between Member States, across industry, between public and private entities, and even between the different directorates-general of the European Commission.

This new coordinated approach must boost the application of advanced communications systems to conventional manufacturing processes, making them more flexible, efficient and responsive. In other words it has to fully embrace "smart manufacturing".

This transformation will be possible due to Cyber-Physical Systems, also known as 'Industry 4.0' or as 'The Industrial Internet of Things'. In the context of manufacturing it will imply a combination of Smart Machines, Smart Materials and Smart Products, all of which are interconnected and generate continuous data that is collected, processed and analyzed in a central location.

Making our manufacturing 'smart' will effectively transforms factories from traditional cost centers into high performance plants, fully optimized in their use of direct material inputs as well as their use of energy. It will help improve production costs and quality, while minimizing natural resource use, and energy consumption. Only in energy terms, according to #SMARTer 2030 report, industry smart manufacturing solutions have the potential to create global energy savings of 4.2 billion MWh and could abate 2.7Gt CO2 emissions.

We are none the less still far away. A recent Accenture survey in this area showed that a little over a third of companies currently apply automation technology, thus showing the current low rate of ICT adoption among manufacturers.

Several technological barriers must be overcome before a truly smart manufacturing operation can be realized. If we manage to overcome these barriers, Smart Manufacturing will enable innovations like virtual manufacturing, customer-centric production, 3D printing and virtual production networks, and circular supply chains for resource efficiency to become commonplace.

I believe that the European Union is well aware of the opportunities and challenges, and in this regard, "Industrie 4.0", "Usine du Future", "Smart Industry", "High Value Manufacturing" and "Fabbrica Intelligente" are just a few of the 20 initiatives that exist around Europe to use advanced ICT to transform Europe's industrial heritage and future. However, we must avoid the risk of fragmentation from all these national initiatives in order to fully exploit the digital transformation of Europe's industry.

In addition, much more must be done, as policy makers we must incentivize investments in infrastructure geared to connecting the unconnected while establishing a balanced and consistent regulatory approach to electronic communications that promotes innovation and investment, protects intellectual property rights and ensures consumer privacy and security.

Lastly, the responsibility of fully seizing all the potential of the digital revolution lye in everybody's hands and the private sector has a great role to play. Business leaders must drive investments in ICT uptake and cooperate with other sectors and explore ICT-enabled revenue and costsaving opportunities.

Even more than in other sectors of the economy, regarding industry first movers have a great competitive advantage, let us not lose this opportunity for Europe.