Release Time:2024/1/26 Number Of Clicks:478

McKinsey recently released an interesting report entitled as “Is industrial automation headed for a tipping point?”.

As we perceive, factories are moving in a more automatic and autonomous direction, software definition and AI drives are sweeping the workshop, and many of the devices are becoming more like smartphones with robotic arms. Not only are factory produced products such as mobile phones, watches and cars... are becoming smarter, in a sense the factory itself can be seen as a "product" and each factory can use other factories "packaging" good advanced processes and experience. 

The report analyzes two scenarios that try to reveal the most likely path of industrial automation in the future: improvement, change, and how companies respond.

Scenario 1: Reform (More than 15 years)

Slow adoption of technology trends, in continuity with past speed of change; standardization at a slow pace; innovation (eg, low-code/no-code and digital twins) being utilized only for specific use cases and industries.

Scenario 2: Revolution (5~10 Years)

Disruptive adoption of technology leading to a data analytics–driven and software-driven shop floor with proactive adoption of new business models, widespread use of cloud, and a semi-closed ecosystem with a central and adaptable platform.

From the perspective of business model, the hardware and software used in the factory will adopt the X-as-service model, paying according to the usage, thus reducing the risk and cost of the factory to try new automation technology. From a talent perspective, manufacturing companies need more specialized new digital transformation jobs to handle new industrial automation systems.

Despite the steady growth of industrial automation over the past few decades, the market structure has seen little change, which McKinsey believes is accelerating due to the emergence of disruptive technologies and the migration of the manufacturing landscape, labor shortages and ESG.

The vision of smart manufacturing will certainly come true, but McKinsey does not say whether it will take five to 10 years or more than 15 years.

The four mainstream categories of suppliers in the market: Internet giants, traditional automation enterprises, software providers and professional participants, will partially develop dynamically based on their own advantages. Their long board and short board are obvious, as shown in the figure below, dark for the long board, as the ability drops, the color gradually lighter.

To strengthen their weaknesses, Internet giants need to expand their knowledge in the industrial sector and establish partnerships with mature automation vendors and system integrators. Traditional automation companies may consider improving the ratio of IT capabilities and strengthening their advantages in cloud platforms, software and the Internet of Things through mergers and acquisitions or ecological collaboration.

 

No matter which situation we go, we can be prepared, and the coming period will be a good time for us to layout. So McKinsey has proposed some potential action plans for industrial automation companies after 2023:

 

— Review automation portfolio strategy. The purpose of this would be to assess the impact of potential automation scenarios on the most important parts of their businesses, including their product portfolios. M&A opportunities should be a part of any strategy discussion.

 

— Create new automation businesses. With the automation market in flux, there is a case for creating a brand-new stand-alone automation business in an intrapreneurial setting resembling a start-up.

 

— Boost the commercial strategy. It may be possible to redefine the commercial strategy and sell more by switching the approach or the channel or by making other changes.

 

— Develop new revenue streams. It might be possible for automation providers to create new products, supported by analytics. The new products could revolve around predictive maintenance, or they could involve a move to an as-a-service business model.

 

— Roll out AI technology to support automation. Automation providers should consider using AI technologies, including generative AI, to develop new automation products in areas such as digital twins and low-code/no-code robots.

 

"bold hypothesis, cautious verification”, there is no certainty in the world, receiving uncertainty is our common practice. Technical developments and new competitors are altering the shape of the industrial automation market.

 

While no one can say for sure how it will play out, there are definite steps that all automation players can take now to position themselves for the future. It’s about making selective bold moves while preserving options. The companies that manage this feat in the coming years will be the ones that lead the way in industrial automation.