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From Steel to Smartphones, Meet the World Economic Forum’s New Factories of the Future

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BMW Group, Regensburg Plant, Germany

The World Economic Forum today announces the addition of seven new factories to its network of “Manufacturing Lighthouses”, state-of-the-art facilities that serve as world leaders in how to successfully adopt and integrate the cutting-edge technologies of the Fourth Industrial Revolution.

The Lighthouses join a group of nine others, which were unveiled in 2018. All were selected from an initial list of 1,000 manufacturers based on their successful implementation of Fourth Industrial Revolution technologies in ways that have driven financial and operational impact.

The wider purpose of the community is to help overcome the practical challenges being experienced by industries in advanced and emerging economies when upgrading technology. Earlier work by the Forum identified that more than 70% of businesses investing in technologies, such as big data analytics, artificial intelligence (AI) or 3D printing, fail to move beyond the pilot phase. In response to this, all Lighthouses in the network have agreed to open their doors and share their knowledge with other manufacturing businesses.

The new Lighthouses represent a range of industries and geographical locations, with four factories located in Europe, two in China and one in the Middle East. Importantly, the list also contains a medium-sized business, the Italian-based Rold. One frequent challenge highlighted by businesses is that they lack the scale and resources to implement advanced technologies cost effectively.

The new Lighthouses are:

BMW Group (Regensburg Plant, Germany): This car plant manufactured approximately 320,000 vehicles in 2018. By using the custom BMW internet of things platform, it incurred time and cost, but the result has been cut the time to deploy all new applications by 80% leading to, among other things, a significant reduction in logistics costs and 5% reduction in quality issues.

Danfoss, Commercial Compressors (Tianjin, China): This factory makes compressors for refrigerators, air conditioning units and other products. By using its full digital traceability system and digital tools such as smart sensors, visual inspection, auto monitoring system etc. to improve quality control, it has improved labour productivity by 30% and decreased customer complaints by 57% within two years.

Foxconn (Shenzhen, China): “Lights off factory” – This factory, which specializes in components for smartphones and other electrical equipment, boasts a fully automated manufacturing process with machine learning and AI driving auto optimization of equipment, smart self-maintenance and real-time status monitoring in smart production. Its Fourth Industrial Revolution-first approach has resulted in efficiency gains of 30% and lowered its stock cycle by 15%.

Rold (Cerro Maggiore, Italy): This 240-employee business makes locking mechanisms for washing machines and dishwashers. As the only SME in the Lighthouse network, its use of Fourth Industrial Revolution technologies such as smart watches, rapid prototyping and digital dashboards has helped improve turnover by between 7% and 8%.

Sandvik Coromant (Gimo, Sweden): This producer of cutting tools and solutions has created a digital thread through its production processes that has significantly raised labour productivity. One example is its ‘touchless changeover’ which allows design patterns to be changed automatically, even during unmanned shifts.

Saudi Aramco Uthmaniyah Gas Plant (Uthmaniyah, Saudi Arabia): The giant’s gas processing plant has become a leader in a number of Fourth Industrial Revolution technologies including the use of Advanced Analytics and Artificial Intelligence solutions via Saudi Aramco Fourth Industrial Revolution Center, the use of drones to inspect pipelines and machinery (cutting inspection times by 90%) and wearable technologies such as digital helmets that help workers cut the time it takes to make inspections and repairs.

Tata Steel (IJmuiden, The Netherlands): This plant of 9,000 employees is putting its people first, creating an Advanced Analytics Academy to help workers come up with solutions to reduce waste, and improve the quality and reliability of production processes. This work has resulted in a significant improvement in financial results.

The Lighthouse programme has been conducted in collaboration with McKinsey. In conjunction with the expansion of the network, the Forum today also publishes a white paper, Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing, which showcases findings from the project to date.

“Lighthouse factories are found in companies large and small, in all industries and regions. Rather than replacing operators with machines, lighthouse factories are transforming work to make it less repetitive, more interesting, diversified and productive. Rather than staying within the factory walls, Lighthouses build a broad innovation system with business, government and civil society. Beyond local pilots, Lighthouses create value and resilience through the supply chain, and agility and responsiveness for customers. Technology, deployed wisely in our manufacturing and production system, can create a better, cleaner world. We hope this network can be a source of inspiration to help break out of productivity stagnation and deliver the maximum positive benefit for society,” said Helena Leurent, Head of the Shaping the Future of Production System Initiative at the World Economic Forum.

“These 16 Lighthouses represent a turning point. We are now seeing the start of the second phase, as Fourth Industrial Revolution technologies are penetrating the core of all industries, and our platform of 16 Lighthouses is the clearest sign we have,” said Enno de Boer, Partner and Head of McKinsey’s Global Manufacturing Practice, which collaborated with the Forum on the project. “However, these leaders have a two-year head start ahead of companies that are still sorting out how to scale. We are running the risk that the value creation will be centered around a few ecosystems, rather than disseminated across entire industries. The race has clearly started.”

The extended network of “Manufacturing Lighthouses” will be officially presented at the World Economic Forum’s Annual Meeting 2019, taking place on 22-25 January 2019 in Davos-Klosters, Switzerland, and convening under the theme, Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution.

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Technology for Social Good in India

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From using drones to plan water supply schemes in hard-to-reach locations, to deploying satellite imagery for enhancing land usage, or using mobile phones to track children’s health, technology is changing the way we live. The World Bank is supporting several interventions where new-age technology is being used for social good, giving a new tool to policymakers to improve governance and the quality of our lives

Making farmers resilient

Digital applications are helping farmers in Bihar and Madhya Pradesh make faster and better decisions on crop planning based on weather conditions, soil and other indicators

This $12.67-million Sustainable Livelihoods and Adaptation to Climate Change project that started in 2015 has so far empowered more than 8,000 farmers to adopt climate resilient practices.

Prioritizing interventions

Satellite images taken from a height of 900 km in Karnataka capture crucial data like land use as well as land cover, groundwater prospects, and soil characteristics. When this data is fused with rainfall patterns and literacy rates, it helps experts and communities to prioritize action plans such as those for soil and water conservation

Geographic information system (GIS) technology can also map nutrient deficiencies in the soil, which helps with crop planning.

The Karnataka Watershed Development Project, known locally as Sujala, covered over half a million hectares of land in seven predominantly rain-fed districts in Karnataka between 2001 and 2009 and was the first to deploy the use of satellite remote sensing and GIS mapping effectively over a large area.

Supplying Water in Challenging Terrain

Shimla city in Himachal Pradesh gets water once every two days for a few hours, while bulk water is pumped over 1,400 meters, creating a high cost of service

To tackle this, drones have been used to click high resolution images in high altitudes and challenging topography in World Bank’s Shimla Water Supply and Sewerage Service Delivery Reform Project. This, along with GIS technologies, has helped the state government prepare a 24×7 water supply model for the city that addresses issues such as pressure management, transmission and distribution networks, and identifying illegal connections.

Tracking health

All across India approximately 150,000 Anganwadi workers are using smartphones to track growth and nutrition in children. Photos of the hot lunch served to the children at health and nutrition centers, for example, can now easily be shared with block, district and state-level officials.

“It’s easier to work with mobiles than registers,” confessed an Anganwadi worker in Madhya Pradesh.

The World Bank has so far invested about $306 million in nutrition through the ICDS Systems Strengthening and Nutrition Improvement Project.

In Chhattisgarh, a mobile based application called Nutri-Click provides real time, need-based, one-on-one counseling on appropriate nutrition and care practices to pregnant women and caregivers and mothers of young children and their family members.

The program has so far helped over 4000 pregnant and lactating women

Digitizing Medical Records

Doctors in 36 public hospitals in Tamil Nadu can now access, collect and analyze critical health data for quick and timely interventions with the click of a button. The system also helps with retrieval of manual records as well as maintenance and management of medical equipment, making the entire process transparent and convenient.

The $110.3 million Tamil Nadu Health Systems Project was active in five Tamil Nadu districts. A second phase will now aim to cover another 222 hospitals across the remaining 25 state districts.

e-Governance

In 164 municipalities in Karnataka, property owners are now able to calculate their property taxes online; 10 million birth and death records are now online and searchable; and over 390,000 citizen complaints were lodged over 10 months—98 percent of which were redressed.

Through the Karnataka Municipal Reforms Project, municipal revenues have increased while interface between citizens and local administrations has vastly improved.

Vocational Training

World Bank’s Vocational Training Improvement Project has helped digitize activities such as admissions, examination management, and certifications in Industrial Training Institutes (ITI) under the National Council of Vocational Training.

The portal provides detailed records from more than 13,000 public and private ITIs across the country, including data related to courses offered, admissions, examinations, placements, etc.

So far more than 150,000 e-certificates to past trainees have been issued, and over 2 million certified trainees have received online certificates, saving time and effort.

World Bank

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Innovative smartphone app to improve rainwater harvesting in Africa

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It is now possible to calculate the amount of rainwater that can be harvested from the roof of houses thanks to a new smart phone app developed by UN Environment and the United Nations Educational, Scientific and Cultural Organization.  

The app, a first of its kind, is based on actual meteorological data collected from weather stations across Africa. The data is specific to locations closest to the weather stations, which the app presents as the nearest city. 

Promoting rainwater harvesting is becoming increasingly important to ensure greater water security. It offers an adaptation strategy to climate change, providing an opportunity to store rainwater under increasing conditions of high rainfall variability.   

Rainwater harvesting can also improve livelihoods of women and children by reducing time spent on fetching water: women still spend 16 million hours a day collecting water in 25 sub-Saharan countries.

 It can improve household sanitation and health with an improved drinking water source. Rainwater harvesting also contributes to food security, providing water during dry seasons for small-scale agriculture. Although not every single drop of rain can and should be harvested, rainwater is still an underutilized water source in Africa.

 The lack of water is a real challenge across Africa. On average, a person needs eight glasses of water (2 liters) per day. According to the Vital Water Graphics report by UN Environment and GRID Arendal, “more than 2.8 billion people in 48 countries will face water stress or water scarcity conditions by 2025. An area is experiencing water stress when annual water supplies drop below 1700 m3 per person”. 

In many such countries, rainwater can be harnessed easily for domestic and agricultural use. Harvested rainwater can also benefit the environment and ecosystem when used to enhance groundwater recharge and restore vegetative cover. The low cost of rainwater harvesting technologies can be a more attractive investment option in rural areas compared to investing in a main water supply system.   

The new app demonstrates opportunities for rainwater harvesting. For example, a person in Turkana county in Kenya can enter her location (Kenya, Lodwar), the length and width of the roof of the house (in metres), the number of family members, and the quantity of water used per day. The app returns the estimated amount of rainwater that can be harvested, and the quantity of water for a family. It also proposes the size of the rainwater harvesting system as well as its estimated cost. Simple sketches showing rainwater systems and how to recharge groundwater are also included in the app. Rainwater harvesting systems can be easily constructed using appropriate technology and locally available materials.  

Rainwater can be collected in relatively simple ways. Rainwater that falls in ditches, on rooftops or on other surface areas is collected in storage facilities, such as water tanks or ponds. This water is stored and used for domestic and agricultural purposes. There are also other ways of rainwater harvesting, such as storing it in the ground where it can be used as groundwater for human consumption or for nature. 

Ann Kiria, chair of a young women’s group in Kajiado in Kenya said, “water harvesting has benefited our community where women have played a key role in constructing water tanks. With the knowledge we have acquired, building a water tank to harvest rainwater is no more out of reach”. 

Currently the smart phone application is available for Android (Play Store) system for free.  You can download it by searching for RWH Africa Interactive Tool. 

A web version is also available at http://www.rainwaterharvesting.africa. An IOS (App Store) version will follow soon.

UN Environment

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Companies Are Saving to Transform as Digital Disruption Gains Momentum Globally

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As digital technologies continue to reinvent how businesses grow and operate, the associated risks and opportunities are prompting companies to expand their cost management strategies, according to Deloitte’s second biennial global cost survey, released today. The study, “Save-to-transform as a Catalyst for Embracing Digital Disruption,” shows that while traditional cost reduction methods are still crucial, many organizations are also investing heavily in transformative digital technologies to improve operating efficiency and cost savings while also boosting overall performance and competitiveness in an increasingly digital world.

Concurrently, as digital disruption emerges as an impetus for change, cost management remains a strong imperative globally. According to the survey of more than 1,200 global executives and business leaders, 71% are planning to undertake cost reduction initiatives over the next 24 months. Sixty-eight percent reported total reductions of 10% or higher, and nearly one-third (31%) have cost improvement targets above 20%. Eighty-one percent, however, report being unable to meet fully their cost reduction goals during the past year, 18 percentage points worse than in 2017, due to implementation challenges, lack of effective systems, and infeasible targets.

Digital disruption and cybersecurity rank as leading external risks
Demonstrating the significant role technology is playing in shaping cost management strategies, digital disruption soared to the top of the list as the biggest external risk according to respondents at 61%, up from just 6% in 2017. Digital disruption was surpassed only by another technology-related risk, cybersecurity, which at 62% ranks at or near the top of the risk list globally and in all regions except Latin America. Internally, reliability and functionality of information systems was identified as a top risk.

“In today’s highly dynamic and competitive landscape, digital disruption is changing how companies view every aspect of their business, including cost management practices,” said Omar Aguilar, principal and global strategic cost transformation leader, Deloitte Consulting LLP. “Deloitte’s study shows that businesses are now recognizing they must save-to-transform, using investments in digital infrastructure to drive dramatic improvements in future performance, efficiency and market position.”

Digital risks are spurring organizations to use cost reduction as a mechanism to fund technological transformation. Globally, the survey found that application of artificial intelligence (AI) and machine learning is expected to more than double from 25% to 63%. Findings also show similar growth is expected for automation (25% to 62%) and business intelligence (35% to 59%). Cloud continues to be the most widely implemented digital technology covered by the survey at 49% and is expected to remain popular due to its ability to tighten data security, as well as to reduce costs and improve productivity. However, all technologies in the survey are expected to be implemented at a level of 47% or higher over the next 24 months, signaling the widespread business impact of technology innovation.

Revenue growth is on the rise, but companies are cautious
The survey also found that companies are well-positioned to undergo this type of transformation, with 86% of respondents reporting increased revenue over the past two years. This optimistic outlook continues into the future, with the same number of respondents expecting revenue growth over the next 24 months as businesses around the world enjoy one of the longest periods of economic expansion in history.

Even with the optimistic outlook, however, forward-thinking organizations are taking a cautionary stance. Economic patterns are cyclical, and potential warning signs are starting to emerge. In particular, the survey data show a 97% increase in global respondents who are concerned about macroeconomic risk over the next two years, and a 20% increase in U.S. respondents who expect a significant reduction in consumer demand over the same period.

Shifting cost management from growth to transformation
Through years of historic economic growth, cost reduction has evolved into an essential tool to help businesses fund their required growth investments (saving to grow). Now, however, many companies are taking things even further, using digital cost solutions and infrastructure improvements. These include robotic process automation, cognitive technologies, business intelligence and cloud-based enterprise resource planning to lift their efficiency, performance, and competitiveness to a new level (saving to transform).

“The 2019 study shows that companies have an enormous opportunity to capitalize on current economic strengths and leverage cost management practices to transform and innovate their businesses,” said Jason Girzadas, managing principal, Deloitte Consulting LLP, Deloitte Global. “Our mission at Deloitte is to help organizations around the world implement these transformations and make their businesses more efficient and more successful, now and in the future.”

“Cost management practices and approaches have grown increasingly sophisticated over time, and digital solutions, although still maturing, now represent the most advanced level of cost management,” said Aguilar. “By harnessing the power of digital technology to streamline their cost structures and generate cost savings, companies can take full advantage of the latest digital innovations — becoming the disrupters, rather than the disrupted.”

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