Comment: Putting factory-based production in the spotlight

Factory-based production has long been a key driver of the UK economy and onboarding advanced technologies and achieving digital transformation are crucial to the delivery of the government’s new industrial strategy. But are manufacturers prioritising investment in digital capability and Industry 4.0 technologies?

The manufacturing sector is a key contributor to the UK economy, and its role is evolving all the time. The sector currently contributes about 10 per cent of UK GDP and employs around three million people, which represents about 10 per cent of the country’s workforce. The sector also accounts for almost half of all UK exports and attracts a high level of private sector investment in R&D activities.

The government’s decision to implement a new industrial strategy - Invest 2035 - is well timed and coincides with a global trend for reindustrialisation as countries focus on reshoring for reasons of national security, and driving manufacturing-led growth.  By playing to our strengths and encouraging private sector investment in fast-growing subsectors such as clean energy, life sciences, aerospace and EV manufacturing, the UK can boost productivity and drive competitiveness at the same time as improving economic resilience.

Critical to the delivery of manufacturing-led growth is investment in advanced technologies – specifically, Industry 4.0 technologies, AI, robotics and big data. In the UK and Europe, Siemens is promoting the importance of utilising AI and developing digitally enabled smart factories to support manufacturers in reducing waste and optimising production processes. However, key barriers to investment remain such as a lack of skilled people capable of applying advanced technologies and significant financial pressures, which could be putting some manufacturers off investing in systems that could help them to reduce waste and streamline efficiency across the end-to-end value chain.

While many large manufacturers have completed digital transformations and embraced AI, automation and Industry 4.0 technologies, SME manufacturers have been slower to adapt. New government incentives in the form of subsidised loans and enhanced tax relief to encourage more investment in advanced technologies and other efficiency-driving initiatives could help to drive change in this vital area of the economy.

Understanding where to start is crucial to the uptake of advanced technologies and a stepwise approach is needed. It is important to get core processes right at the outset and it makes sense to focus on areas that are ripe for simplification by reducing waste and streamlining processes. Investing in the development of digital twins that provide a virtual representation of the end-to-end value chain, or the factory floor, can help to identify other efficiency-driving opportunities. These digital twins also allow decision makers to trial ‘what if’ scenarios and simulate the use of advanced technologies before any investment is required.

Underpinning any investment in advanced technologies is a fundamental need for data understanding. For example, access to reliable customer demand data could allow manufacturers to streamline procurement and inventory management and ringfence working capital for investment purposes. Using IoT-enabled smart sensors to gather data across the value chain can help to bring real-time running data to the fore and ensure that decision makers are reacting to live, accurate information. A recent survey by Ubisense found that more than three-in-five manufacturers (62 per cent) have embraced IoT technologies in their manufacturing or assembly processes – a positive sign that data understanding is increasing across the sector.

One key factor that could further accelerate digital transformations and encourage take up of advanced technologies is greater government and industry collaboration. The industrial strategy green paper has been widely welcomed; particularly its aim to provide sufficient direction to industry to encourage investment in growth-driving sectors, but could more be done? As well as targeted incentives for investment in advanced technologies, the government could extend support to manufacturers to enrich the skills base through upskilling and training initiatives.

Investing in advanced technologies could seem a high-risk activity for manufacturers, many of whom have been forced to assimilate increased costs and are operating on low margins. Disruption caused by multiple supply chain shocks and geopolitical factors have made it more difficult for businesses to plan ahead. However, investing to remain competitive is a necessity and using data-based insights intelligently to improve efficiencies across the end-to-end value chain could bring significant rewards.

Paul Cooper is a director and industrial manufacturing specialist at Vendigital