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Sparking the Fourth Industrial Revolution in U.S. manufacturing

An encouraging call to action rings out for U.S. factories to join the World Economic Forum's Global Lighthouse Network of advanced manufacturers.
Enno de Boer

Leads the firm’s global work in digital manufacturing and collaboration with the World Economic Forum on technology adoption

The Global Lighthouse Network (GLN) is a World Economic Forum initiative, in collaboration with McKinsey & Company, that brings together 44 of the most advanced manufacturing facilities who are setting new benchmarks in productivity, sustainability, agility, speed to market, and customization—indeed, realizing Fourth Industrial Revolution (4IR) transformation at scale. Notably, only three lighthouses are in the United States, despite its many manufacturing facilities. Dr. Enno de Boer, McKinsey Partner & Global Leader for Manufacturing and a key researcher in 4IR manufacturing at scale, has highlighted this in contrast to China, which has eleven lighthouses and produces double the U.S. output. How can the United States manufacturing sector capitalize on its powerful assets, infrastructure, and economy to realize the full potential?

The U.S. has several factors working in its favor. One is a culture of entrepreneurship characteristic of the U.S., which rewards risk-takers and those willing to try new things. The success stories of GLM members reveal that it is essential both to invest in infrastructure and pay attention to the workforce. This means providing adequate upskilling and training for existing workers, as well as hiring the right people for new kinds of work.

The question of how the U.S. manufacturers can accelerate scaling 4IR transformation more broadly was front and center as more than 49 leaders from organizations in the sector convened at the McKinsey & Company Experience Studio in New York City in early February for a Global Lighthouse Network CxO Workshop, close on the heels of the World Economic Forum’s Annual Meeting in Davos. The gathering, focused on “Sparking the Fourth Industrial Revolution in U.S. Manufacturing,” was hosted by de Boer along with Francisco Betti, Head of Shaping the Future of Advanced Manufacturing and Production for the World Economic Forum.

Featuring multiple industry-leader panels, the CxO Workshop explored how leading manufacturers in the Global Lighthouse Network are using opportunities presented by the Fourth Industrial Revolution to create new business models and end-to-end connected value, while transforming their manufacturing and supply chains at scale. Through discussion of use cases and approaches related to both productivity and sustainability goals, the panelists explored how organizations have transformed their workforces while keeping people at the center of their transformations.

The World Economic Forum’s Francisco Betti offered a recap of four key messages emerging from Davos: First, that sustainability is of utmost concern; this was a topic of high priority from both within and outside of companies. Second, the future of manufacturing is about people, meaning companies must continue to transform their workforces alongside technology. The third was that the transformation journey must take an inclusive approach with small-medium sized enterprises (SME) in their ecosystems. Finally, that the Global Lighthouse Network presents a unique opportunity on two levels—both to add more Lighthouse sites and to help other organizations learn from it to drive sustainability at scale.

When manufacturers keep people at the center as they make intentional business decisions, they can achieve the elusive success that characterizes the 44 current member organizations of the Global Lighthouse Network. A recurring theme was the importance of ensuring worker engagement in the transformation journey. But how is that achieved and measured? Laura Rocchitelli, CEO of Elettrotecnica Rold (Electronics; Nerviano, Italy) and the only representative on the Lighthouse panel of an SME organization, emphasized the importance of preliminary training before the implementation of new technology initiatives. “The secret is to understand that training must come before technology. So, in our facilities, we decided three or four years ago to train people to better understand the meaning of the data that we are now collecting. Otherwise, if you install technology into plants without letting people know the meaning, it is useless.”

Rocchitelli also explained that in terms of measuring workforce engagement, the evidence is both qualitative and quantitative. “Qualitatively, it’s something you feel all over the company, because everyone can understand the aim and the goals,” she explained. “But we think we can also have a quantitative measurement, because we are trying to collect information from people who are on the shop floor, and from their suggestions, we can develop new changes in our products and processes, or our equipment.”

That inclusivity element Rocchitelli referred to suggests the investment in upskilling is more than just pragmatic. This was echoed by Karl Bream, VP Strategy, Portfolio, and Alliances at Nokia, as he described the sort of pride and energy that surrounds worker upskilling. “Digital transformation means we must embrace change. For us, upfront education has been the key ingredient to our success. We were thinking ahead, empowering our teams with re-tooling strategies. The people that were with us in traditional roles are now the people developing apps. It’s been rewarding to see how proud our people are of their new abilities. As a result, I would rate our people change as the true success, alongside productivity and efficiency. It hits you as a human when you see that.”

Just as Lighthouses have been intentional about transforming their workforces, they have likewise focused on strategic, purposeful development and deployment of digital infrastructure. According to Dr. Dirk Holbach, Senior Vice President for the Laundry & Home Care division of Henkel (Consumer Goods; Düsseldorf, Germany), an appropriate digital infrastructure is key to success. “Once you have this infrastructure, you can leverage it. Our focus has never been to establish one site to be the best…but we’ve gone application by application and once we see that it’s working, we want to roll it out in 12-18 months everywhere where it makes sense. We have been creating a network all connected to this digital backbone…connected to analytics...we have all factories and distributions connected.”

By combining a deliberate, business-driven approach to prioritizing use-cases and technology implementation with a human-centric focus on workforce development and transformation, companies can realize a powerful return on investment (ROI) and realize new possibilities. “The more you do this, the more you have a network effect. You build on existing applications, so you can leverage the entire platform,” explained Holbach. According to Bart Talloen, VP Innovation & Insights, Global Supply Chain for Johnson & Johnson “The big ROI is that through this whole technology innovation journey, supply chain is seen by the business as a competitive advantage. It is supply chain that makes, for example, broad healthcare access and patient-specific medicines and personalized orthopedic implants possible.”

These types of successful approaches will be key to U.S. manufacturers realizing the full potential of 4IR transformation at scale, and the sector is well-positioned to do so. Lou Rassey, Founder & CEO of Fast Radius (Additive Manufacturing; Chicago, USA), one of only three U.S. Lighthouses, offered encouragement and an optimistic perspective about the future of manufacturing here. “There’s a perception that manufacturing is dark, dirty, and dangerous compared to what’s new. But it’s important to create incentives for investment in what is now possible in manufacturing. There is an unprecedented amount of innovation taking place in our industry, and these tools are at our disposal. Let’s find ways to create optimism about that possibility.”

McKinsey’s de Boer urged attendees to consider the sustainability mandate that emerged from the Davos summit, along with the exciting potential the 4IR holds for transformative change at scale—particularly in the context of upskilling the workforce. He emphasized that SME’s are key, as they comprise the majority of workers in the U.S., and issued a call to action among manufacturing leaders here.

“The Global Lighthouse Network is inclusive, and it’s all about leadership. The Lighthouse of today is the standard of tomorrow. We need to ensure that people have the right skills for this. It’s an obligation. It’s not too late, but let’s not wait.”

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