Capgemini report reveals auto industry investment in smart factories

New York-based Capgemini has announced a report by its Digital Transformation Institute that reveals the automotive industry can expect to achieve $160 billion in productivity gains annually from smart factory adoption from 2023 onward. The report, “Automotive Smart Factories: How Auto Manufacturers Can Benefit from the Digital Industrial Revolution,” demonstrates that the automotive sector has set more aggressive targets for smart factory initiatives compared to other sectors.

A smart factory makes use of digital technologies across the whole production journey using technology such as artificial intelligence, IoT, augmented reality, and components that help to increase productivity, quality, and flexibility of manufacturing plants.

A global top 10 automotive manufacturer can expect to realize an additional $4.6 billion or a 50 percent growth in operational profits annually within five years of a full smart factory implementation, according to Capgemini. The report predicts that the average productivity growth of smart factories within the automotive sector will be 7 percent as of 2023, while an automaker will break-even within a year of executing the full potential of its smart factories.

By the end of 2022, automotive manufacturers expect that 24 percent of their plants will be smart factories. Forty-six percent of automotive companies already have a smart factory initiative, behind only industrial manufacturing (67 percent) and aerospace (63 percent), while at 43 percent of automotive companies, smart factory initiatives currently are being formulated. According to the report, the automotive sector has the highest share (49 percent) of organizations that have invested more than $250 million in smart factories.

However, 42 percent of automotive manufacturers accept they are not on track to realize the full potential of smart factories and are struggling with the technology move. This is the highest across all the manufacturing sectors studied. The report identified that those making the best progress are investing three times more than the companies that are struggling. The more advanced manufacturers also are investing in software such as advanced analytics and AI-based components, whereas those struggling focus too heavily on hardware-based components.

While 46 percent of OEMs have been successful in their smart factory initiatives, 32 percent of automotive suppliers claim to have been successful. The report highlights that OEMs are leading the way but can do more to help suppliers adopt smart factories. For example, it highlights that OEMs can contribute through financial support and working closely with suppliers on innovation via startups and academies. When OEMs and suppliers work together to create smart factory processes, issues can be minimized early in the production process.

A copy of the report can be downloaded here.