key trends in industry 4.0 to watch · technology in the industry 4.0 revolution industry 4.0 will...

Key Trends in Industry 4.0 to WatchJustinas Liuima, Lead Industry Analyst

Justinas Lašinskas, Senior Industry Analyst

September, 2018

© Euromonitor International

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OVERVIEW


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1. Internet of Things2. Supply chain effectiveness3. Hi-tech goods industry recovery4. Cybersecurity5. Machine-to-Machine traffic6. Supply chain, production process tracking7. Interconnected devices growth8. Augmented reality


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IoT will be key technology in Industry 4.0

INTRODUCTION TO IOT IN MANUFACTURING SECTOR

Digital factory

FactorySuppliers

Logistics

Computer/server

Smart products

Virtual production

Custom products


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IoT will be key technology in Industry 4.0 (cont.)


IoT is set to be a pivotal technology in the Industry 4.0 revolution

Industry 4.0 will lead to rising usage of advanced production machinery, sensors and communication with manufacturers and suppliers

Industry 4.0 will require that billions of devices in the supply and production chain will be interconnected

IoT

Autonomous

Robots

3D Printing

Augmented

Reality

Simulation

Big Data Analytics

Cybersecurity


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Three pillars of IoT


IoT helps to connect physical systems and devices with each other and create large, interconnected network

Currently consumer side of IoT is the main target, but manufacturing operations provide significant future growth opportunities

The primary target is more effective production methods, that will require connectivity services

Infrastructure is another major business IoT segment. Manufacturers can track their energy, transportation and other networks, minimizing operational costs

18th

c.

18th

c.1900s 1970s

IoT

Consumer IoT

• Consumer electronics• Domestic appliances

• Smart home

Infrastructure IoT

• Energy• Transportation systems

• Logistics systems

Business IoT

• Industrial robots• Customer service

• Process management

Pillars relevant to manufacturing industries

OVERVIEW


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Effect on supply chain

SUPPLY CHAIN EFFECTIVENESS

Hi-tech goods turnover in the USA

B2B costs Value-added

Domestic consumption Trade margins

DomesticProduction Imports

mu

ltip

lic

ati

on

Increases turnover

Increases value-added

Drives B2B spending

B2B costs group Share

Hi-tech Goods 20.5%

Metal Products 11.1%

Business Services 8.6%

Information and Communications

2.9%

Finance and Insurance 2.6%

Rubber and Plastic 2.5%

Other 51.8%

Hi-tech goods industry‘s B2B costs group in the USA, 2017


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30-40% lower machinery maintenance costs

Global industry’s global cost savings could total USD140 billion per year

Total savings in global hi-tech goods industry could total USD12 billion per year

Benefits to manufacturing sector

SUPPLY CHAIN EFFECTIVENESS

0 50 100 150

Energy

Rubber and Plastic

Business Services

Information and Communications

Construction and Real Estate

Machinery

Chemical Products

Forestry, Wood and Paper

Retail and Wholesale

Metal Products

Food, Beverages and Tobacco

Utilities and Recycling

Transport Equipment

Agriculture

Hi-tech Goods

Largest spenders on machinery, 2017

USD Billion

OVERVIEW


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Business products become a haven

OPPORTUNITIES FOR HI-TECH GOODS INDUSTRY

Developed countriesseek new growth

prospects:Western Europe: 0% CAGR North America: 1% CAGR

Asia Pacific: 4% CAGR

*over 2012-2017

Consumer electronics market cools Consumer electronics demand shifts east

-100 0 100 200

Portable Computers

Imaging Devices

Home Video

Desktops

Peripherals

Wearable Electronics

Smartphones

Retail value RSP growth 2012-2017, USD billion

Invest incomponents

making

Transformsto solutionscompanies

Seek M&As

3.0%

0.5%

0.8%

-1.8% -1.5%

-3.7%

-2.5%

Retail value RSP, CAGR 2012-2017


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Industry 4.0 to kick start hi-tech goods industry


CAGR 3.2% in 2012-2017 to reach USD6.1 trillion

CAGR 4.8% in 2018-2030 to reach USD11.2 trillion

Key growth areas:

Sensors

Process control equipment

Video, sound, M2M communication systems

Software

0

2,000

4,000

6,000

8,000

10,000

12,0002

01

2

20

14

20

16

20

18

20

20

20

22

20

24

20

26

20

28

20

30

USD

bil

lio

n

Hi-tech goods Production Value


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What‘s behind the growth?


Electronic componentswill account for 29% of hi-tech goods growth in 2017-2030.

Batteries to post the largest growth rate, thanks to autonomous vehicles and demand for mobile power.

Consumer-oriented industries continue growing, yet undergo transition.

OVERVIEW


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In 2017, global computer services revenue stood at USD2.7 trillion

Spending on computer software will grow as manufacturing companies will face growing cybersecurity issues

Computer services industry is forecast to expand by 122% over 2018-2030 to total USD5.9 trillion

Cybersecurity will be the future challenge for manufacturers

M2M traffic is expected to surge at 70% CAGR over 2016-2021, driving

demand for cyber insurance services

CYBER CHALLENGES FOR COMPANIES

0

20

40

60

80

100

120

0 50 100 150

Cy

be

r in

sura

nce

re

ven

ue

, U

SD

bil

lio

n

Number of companies in the US

2013:10 companies, USD 40 billion

2016:50 companies, USD 84 billion

2020:USD 113

billion


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Cybersecurity threats

CYBER CHALLENGES FOR COMPANIES

Operational systems protection

Threat to production process

Theft of data

Logistics system protection

Misinformation about processes

Business contamination affecting multiple clients

Data protection

Theft of data

Theft of business know-how

Consumers protection

Personal data loss

Distortion of consumer data

Threats to be contained to ensure smooth IoT usage in business operations:

OVERVIEW


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Surging data traffic – key component

INDUSTRY 4.0 AND THE M2M TRAFFIC

0

100

200

300

400

500

600

700

800

900

2017 2018 2019 2020 2021

M2

M t

raff

ic, p

etab

yte

s

Machine-to-machine traffic across regions, 2017-2021

Western Europe North America

Asia Pacific Eastern Europe

Latin America Middle East and Africa

100-150bn devices expected to be

connected to IoT by 2030

2-3bn devices are connected to IoT today

Consumer Traffic

Corporate Traffic

20-30%+ CAGR expected over

2017-2030

Source: Euromonitor International from Cisco

Mobile Telephony

Household Vehicles Industrial


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Industry 4.0 encompasses all:

Telecom companies converge with industrialenterprises

INDUSTRY 4.0 AND THE M2M TRAFFIC

5G Internet

Broadband Connection

Smart Vehicles

and Transport

Online Media

Control of Smart

Devices

Internet of Things (IoT)

• 5G internet to driveIndustry 4.0 revolution

• Telecom companies –well positioned forIndustry 4.0

• Content grows inrelevance, benefitsboth telecom and industrial companies

• IT-telecomconvergence to driveindustrialautomation

OVERVIEW


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Transportation network overhaul to benefit customers

SUPPLY CHAIN, PRODUCTION PROCESS TRACKING

• More transparency in pricing, delivery tracking

• Real time facility and transport tracking

• Time savings

Customer

Manufacturer

Retailer

Logistics

Supplier

100% Manufacturing

90%

80%


70%

60% Construction and Real Estate

50% Energy, Utilities and Recycling

40% Government, Health and Education

Business Services

30% Primary Materials

Other

20%

10%

Top Logistics Services Buyers Globally


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Digital production to help reduce errors


Around USD1.5 billion worth of food products are wasted in manufacturing process in the UK alone

On global scale, food and beverage waste losses would equate to USD64 billion

The most common causes of food waste are machinery breakages and errors in the manufacturing process

Digital production

Ingredients

0 2,000 4,000 6,000 8,000

Household Goods

Pharmaceuticals and Medical…

Rubber and Plastic

Forestry, Wood and Paper

Non-metalic Mineral Products

Textile and Leather Products

Machinery

Chemical Products

Transport Equipment

Hi-tech Goods

Metal Products

Food, Beverages and Tobacco

Top 10 Global Manufacturing Industries, USD Billion, 2017


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Benefits for manufacturers


Cost Reduction

• Lower labour costs• More flexible

supply chains• Digitization helps

to track inefficiencies

Flexibility

• Ability to produce on demand = less stock in warehouse

• Customisation and diversified product mix

Higher Precision

• Less errors in production process

• Lower aftersales cost

OVERVIEW


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Prerequisites for IoT adoption in industries

INTERCONNECTED DEVICES

Industry’s sophistication

Higher

value-added

Supply chain

Financialstrength

Profitability

Presence of large

companies

Investments in innovations

Industry’s spending on digitization

efforts (machinery,

computers, IT systems, etc.)


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Leading economic sectors


0.0 0.1 0.2 0.3 0.4 0.5 0.6

Primary Materials

Hotels and Restaurants

Government, Health andEducation

Personal and RecreationalServices

Construction and Real Estate


Business Services

Manufacturing

Transport andCommunications

Finance and Insurance

Energy, Utilities and Recycling

Best Positioned Sectors to Use IoT Energy, utilities and recycling

Benefit from strong financial backup from countries’ governments, and relatively

universal activities throughout the world simplifying the sector’s transition to IoT

Services-related sectors

Strong financial standing and high value-added created within the sectors drive

competition in the technology department. Digitalization effort is a key factor driving the

transition to IoT

Manufacturing

Manufacturers and governments seek to boost sectors productivity


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Energy and Utilities: using IoT to handle renewable energy


Data Collection

Energy companies can increase efficiency by using IoT:

Equipment monitoring

Data analytics can forecast peak demand/supply

Lower reaction times

Infrastructure control

Infrastructure effectiveness to increase:

Communication between different equipment

Smart meters, sensors

Creation of smart grid

By 2030 power generation from renewable sources in EU is expected to reach 30%.Smart systems will have to be implemented to handle this.


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Autonomous cars – future growth area


Businesses operating in closed environments (agriculture, mining)

Road freight transport and taxi companies bring autonomous cars on the road

Private consumers adopt new technology

USD216 billion globallyautomotive industry’s spending on hi-tech goods in 2017

Key growth sectors:

SensorsEnvironment recognition,

hazard detection

Signal EquipmentAntennas, data transfer

Movement Control Units

Steering, driving, torque controls

Comfort Equipment

Infotainment systems

Time 2018 2025 2030 2035

Autonomous cars’ evolution

30 million of autonomous cars of various levels

on the road

OVERVIEW


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Virtual reality

Industry 4.0 expands reality to improve processes

AUGMENTED REALITY CHANGES MANUFACTURING PROCESSES

Augmented reality

Mixed reality

Industry 4.0 offers several virtualization layers

Fully digital visualization

Digital-reality visualization

Digital-reality-experience visualization


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Reinvesting manufacturing process

AUGMENTED REALITY CHANGES MANUFACTURING PROCESSES

Introduction of the„Digital Twin“

Physical inspection

Proactivemaintenance

Reactive maintenance

Limited geographicaldependency

Geographicaldependency

Minimized humanerror possibility

High human errorprobability

Modelled aproachCalculated guessing

Minimized costsHigh waste due to

errors

• Higher efficiency

• Safer environment

• Lower costs

• New products launch

• Stronger quality control

• Deeper employee training

Thank You

Justinas Liuima, Lead Industry Analyst

Tel: +370 5 243 1577 EXT [email protected]

Justinas Lašinskas, Senior Industry Analyst

Tel: +370 5 243 1577 EXT [email protected]

mailto:[email protected]

mailto:[email protected]

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