At this week’s annual World Economic Forum meeting in Davos, many of the members of the WEF’s Global Lighthouse Network will be coming together to celebrate not only their successes at the cutting edge of the Fourth Industrial Revolution (4IR), but also their impact on manufacturing as a whole. With their application of innovative digital and analytics techniques, these Lighthouse organizations are showing the way for the 70% of companies that remain stuck in pilot purgatory. It’s an example of how the power of networks and the sharing of best practices is helping companies across industries make significant improvements both within and—most importantly—beyond their four walls.
The Global Lighthouse Network now includes 44 organizations: 16 were identified in 2018, and a further 28 joined in 2019. They are a diverse group of companies in terms of their size, geographic location, and industry, representing sectors from pharma to automotive to electronics.
But what has really caught my eye about a cohort of 14 of these organizations is their designation as end-to-end Lighthouses. They’re extending their use of digital technologies, analytics, and other 4IR levers beyond the four walls of their factories, across the entire value chain from suppliers to customers—and beyond. By doing so, they’re changing relationships, blurring the lines between manufacturing and service.
The productivity increases alone—up to 90%—speak for themselves. But these Lighthouses show a wide range of additional outcomes, such as 10–80% reductions in lead times, 15–20% increases in configuration accuracy, and 50% increases in energy efficiency.
Of course, there’s precedent for this type of impact. Decades ago, Toyota recognized that to build on its cost and quality improvements, it would need to take its Lean Management vision to companies throughout its supply chain. China-based manufacturer Haier is following a similar model, focusing on customer experience to shift its mind-set from centering on one-time purchases to emphasizing a lifetime-user mentality.
An interactive ordering system now allows customers to design and order a highly customized product. Manufacturing has therefore become much more flexible and dynamic to accommodate the customized orders. And sensors placed within the units provide real-time performance data, reporting any deterioration directly to the manufacturer and improving aftermarket service by quickly identifying and replacing the source of any issue.
Meanwhile, German manufacturer Henkel is innovating its value chain end-to-end to answer a different consumer demand: improved sustainability. Its connection of distribution centers through a cloud-based platform is producing a 38% reduction in energy usage, together with reductions in waste thanks to a 30% increase in overall equipment effectiveness and reductions in processing and logistics costs.
What is driving these moves? Customer expectations are increasing, requiring personalized service that is not only quicker and cheaper than before, but also more environmentally sustainable—a difficult needle to thread. Products must therefore become more efficient to manufacture and to use, even as they fulfill more of the customer’s needs.
Changing market dynamics, such as new business models and digital attackers, are also influencing the shift. Bio-tech digital native Zymergen is using 4IR innovation to transform traditionally slow production processes that depended on manual labor. Its machine-learning infrastructure combined with high levels of automation is allowing engineers to design and run thousands of experiments at once, changing the game in the pharma industry.
The final question for organizations is how to make this transition work. They escape pilot purgatory by scaling fast, working across four dimensions at once: business processes, management systems, people systems, and IIoT and data systems. Together, these four dimensions will continue to show the full extent of what is possible in the Fourth Industrial Revolution. In doing so, these Lighthouses will bring the advantages that they are capturing internally across their supply chain and to their customers in a much more game-changing way.