How businesses can drive growth through Industry 4.0

Matteo Mancini, senior partner based in our Singapore office, explains the concept of ‘lighthouses’, McKinsey's collaboration with the World Economic Forum on the Global Lighthouse Network, and the opportunities business leaders can capture to effectively utilize Industry 4.0 technologies.

What is a lighthouse? Since 2018, the World Economic Forum, in collaboration with McKinsey, initiated the Global Lighthouse Network project. This network aims to identify companies across sectors and geographies that have been able to scale up Industry 4.0 solutions to achieve both financial and operational performance growth, as well as environmental sustainability.

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Fifteen companies have recently been added to the network. Out of these, eight were in Asia; leading to a total number of 32 companies in the region. This makes Asia the leading region in the network, and places it at the center of the Industry 4.0 revolution.

What are the key takeaways from these lighthouse organizations

Out of the 69 lighthouses that we have to date across the globe, we’ve identified that 64 percent of them have been able to drive growth by adopting Industry 4.0 solutions. In all those cases, with little to no capital expenditure, these lighthouses were able to unlock capacity and grow by coupling some of the technology solutions together with a much more flexible production system.

For example, in Indonesia and at Petrosea, the company faced challenges by having its operations in a remote location. But by applying Industry 4.0 solutions such as remote dispatch tracking, drone surveillance, and real-time monitoring of performance, they've been able to move from a loss-making to a profitable mine in less than six months.

How should leaders think about the future of manufacturing in Asia?

Impact at scale can only be achieved with the right people, with the right expertise, and the right incentive. A common thread across all the different lighthouses is that they put people at the center of the transformation. And that is what helps unlock the full potential of the technology that has been deployed.

So for example, leaders have been coming up with training and upskilling programs to ensure workers are well-connected to the transformation ongoing on the ground. For example, at HP in Singapore, where they were facing labor shortages and increased product complexity, they moved from a highly manual and reactive type of work to more digitized and automated work. This reduced the overall manufacturing costs, but was also able to increase productivity and quality.