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Sustainability at Scale: 18 New Factories of the Future Drive Impact in the 4IR

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The World Economic Forumwelcomes 18 new factories to its Global Lighthouse Network of advanced manufacturers that are showing leadership in applying the technologies of the Fourth Industrial Revolution to drive operational and environmental impact.

Now with 44 factories, the network, established in 2018, serves as a platform to develop, replicate and scale up innovations, creating opportunities for cross-company learning and collaboration and for setting new benchmarks for the global manufacturing community. The goal of this community is to share and learn from best practices, support new partnerships and help other manufacturers deploy technology, adopt sustainable practices and transform their workforces. A new white paper, “Global Lighthouse Network: Insights from the Forefront of the Fourth Industrial Revolution,” published today, outlines some of the main findings and impacts.

The 18 new factories bring increased diversity to the network, with new countries, including Brazil, Japan and Singapore, as well as new industries, including semiconductors and agricultural equipment. Almost one-half of the new lighthouses are end-to-end factories, driving value outside the four walls of the factory to effect change throughout their value chains.

The new lighthouses are:

Asia

Baoshan Iron & Steel (Shanghai, China): This 40-year-old factory adopted digitization early. Its extensive implementation of artificial intelligence and advanced analytics has allowed it to maintain its industrial competitiveness in the digital era, creating value of $50 million.

Foton Cummins (Beijing, China): Foton Cummins has self-deployed internet of things and artificial intelligence throughout its end-to-end product life cycle in its design, production and after service. By doing so, it has improved product quality and customer satisfaction by 40%.

GE Healthcare (Hino, Japan): This GE factory, with more than 30 years’ experience of lean manufacturing, used Fourth Industrial Revolution technologies to transform into digital lean manufacturing. This has resulted in achieving the next level of performance, for example, cutting costs by 30% and reducing cycle times by 46%.

Haier (Shenyang, China): The Haier Shenyang refrigerator factory is an example of a user-centric mass customization model. Achieved by deploying a scalable digital platform that connects end-to-end with suppliers and users, it has improved direct labour productivity by 28%.

Hitachi (Hitachi, Japan): By leveraging a range of industrial internet of things technologies and data analytics in engineering, production and maintenance operations, Hitachi Omika Works has reduced the lead time of core products by 50% without undermining quality.

Infineon (Singapore): Enabled by a digital backbone and people development, Infineon has used data, advanced analytics and automation in its manufacturing plant and supply chain network to reduce direct labour costs by 30% and improve capital efficiency by 15%.

Johnson & Johnson DePuy Synthes (Suzhou, China): This site has scaled up standardized digital solutions developed in other Johnson & Johnson sites to drive performance improvements, including increasing productivity by 15%.

Micron (Singapore): This semiconductor fabrication facility has integrated big data infrastructure and industrial internet of things to implement artificial intelligence and data science solutions, raising product quality standards and doubling the speed at which new products are ramped.

Procter & Gamble (Taicang, China): This young site leveraged Fourth Industrial Revolution technologies to build the first lights-off operation in P&G Asia and connect its E2E supply chain. It increased productivity by 2.5x, boosted its production agility enabling e-commerce growth and improved employee satisfaction.

Weichai (Weifang, China): Weichai digitally transformed its entire end-to-end value chain to accurately understand customer needs and reduce costs. Powered by artificial intelligence and internet of vehicles, it shortened its R&D cycle by 20% and improved operating costs by 35%.

Europe

AGCO (Marktoberdorf, Germany): By combining digital solutions with intelligent line design, AGCO/Fendt can manufacture nine series of tractors – ranging from 72 to 500 horsepower – on a single assembly line with a batch size of one. This has increased productivity by 24% and reduced cycle time by 60%.

GSK (Ware, UK): This pharmaceutical site has applied Fourth Industrial Revolution technologies throughout its manufacturing operation, exploiting advanced analytics and neural networks to use existing datasets. It has improved line speed by 21%, reduced downtime and increased yield, delivering an overall equipment effectiveness improvement of 10%.

Henkel (Düsseldorf, Germany): Henkel has developed a cloud-based data platform that connects more than 30 sites and more than 10 distribution centres in real time. This helps meet growing customer and consumer expectations on service and sustainability, while achieving double-digit cost and inventory reductions.

Latin America

Groupe Renault (Curitiba, Brazil): Renault Curitiba approached Fourth Industrial Revolution technologies with a focus on improving employee accountability and E2E connectivity, engaging its workforce and developing a connected ecosystem throughout value-chain players including dealers, customers and workers. Results include improving its productivity by 18%, without major capital deployment.

MODEC (Rio de Janeiro, Brazil): Leveraging advanced analytics for predictive maintenance, a digital twin of its process plant, and a proprietary data platform to accelerate development and enable the exponential scale-up of new algorithms across oil production vessels, this offshore facility has reduced downtime by 65%.

Middle East

Petkim (Izmir, Turkey): This 35-year-old petrochemical facility embarked on a digital journey to drive value creation. Self-developed artificial intelligence algorithms optimize process and product pricing by analysing billions of production scenarios, resulting in an earnings before interest and taxes improvement of more than 20%.

Unilever (Dubai, UAE): In a drive to improve cost competitiveness, a local entrepreneurial team established a factory data lake and developed and deployed at scale Fourth Industrial Revolution use cases. With limited investment and in a short period of time it achieved a cost reduction of more than 25%.

North America

Johnson & Johnson Vision Care (Jacksonville, USA): Vision Care has digitally connected its value chain end-to-end from suppliers to consumers, as well as implementing reconfigurable manufacturing, to achieve double-digit cost reduction and sales growth.

Shared Learning Journey

“Not only does the Global Lighthouse Network celebrate leaders and best practices in effective technological deployment, but more important, it also creates a shared learning journey for the industry to accelerate the transition to the future of manufacturing,” said Francisco Betti, Head of Shaping the Future of Advanced Manufacturing and Production, World Economic Forum. “This transition must focus on sustainability and efforts dedicated to reskilling and empowering people.”

The Global Lighthouse Network is managed in collaboration with McKinsey & Company.

“The 44 lighthouses are trailblazers in the Fourth Industrial Revolution. Manufacturing is often the starting point for innovating a new, company-wide operating system powered by the latest technology to achieve new levels of sustainability, agility, speed-to-market, and productivity. The value doesn’t stop at the factory door: instead, lighthouses find impact across the entire end-to-end value chain, from suppliers through to customers. This year, we believe the Global Lighthouse Network has found the secret sauce to overcome pilot purgatory and generate impact at scale. Moreover, by now the frontrunners have two to three years’ head start compared to their peers. That should set off alarm bells for all manufacturers that are still busy trying to prove technology’s value instead of using technology to change the way they work,” said Enno de Boer, Partner and Head of McKinsey & Company’s Global Manufacturing Practice.

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Artificial intelligence: Tackling the risks for consumers

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Artificial intelligence and automated decision making processes can pose certain threats to consumers. Find out how the European Parliament wants to protect them.

What is artificial intelligence and why can it be dangerous?

As learning algorithms can process data sets with precision and speed beyond human capacity, artificial intelligence (AI) applications have become increasingly common in finance, healthcare, education, the legal system and beyond. However, reliance on AI also carries risks, especially where decisions are made without human oversight. Machine learning relies on pattern-recognition within datasets. Problems arise when the available data reflects societal bias.

Artificial Intelligence in decision-making processes

AI is increasingly involved in algorithmic decision systems. In many situations, the impact of the decision on people can be significant, such as access to credit, employment, medical treatment, or judicial sentences. Automated decision-making can therefore perpetuate social divides. For example, some hiring algorithms have been found to be biased against women.

How to protect consumers in the era of AI

The development of AI and automated decision-making processes also presents challenges for consumer trust and welfare. When consumers are interacting with such a system, they should be properly informed about how it functions.

The position of the Parliament
In a resolution adopted on 23 January, the internal market and consumer protection committee urges the European Commission to examine whether additional measures are necessary in order to guarantee a strong set of rights to protect consumers in the context of AI and automated decision-making.

“We have to make sure that consumer protection and trust is ensured, that the EU’s rules on safety and liability for products and services are fit for purpose in the digital age,” said German Greens/EFA member Petra De Sutter., chair of the internal market and consumer protection committee.
Next steps

MEPs will vote on the  resolution in mid February. After that it will be transmitted to the Council and the Commission. The Commission should present its plans for a European approach to AI on 19 February.

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APEC Advances Digitization of the APEC Business Travel Card

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Officials from APEC member economies break new ground in digitizing the APEC Business Travel Card scheme, seeking to modernize the process and make it easier for cardholders in the region to travel with the development of a mobile application.

The APEC Business Travel Card (ABTC) scheme facilitates short-term business travel within the APEC economies by streamlining the entry process at ports of entry within the region. Approved applicants are issued with a card that serves as the entry authority to fully participating economies.

“We continuously seek to improve the system and make it easier and more secure for cardholders to travel around the region,” said Kimberlee Stamatis, Convenor of the APEC Business Mobility Group who oversees the scheme.

The mobile application will include security features such as user verification, the use of watermarks and disabling of screenshots within the mobile application to ensure authenticity of the cardholder.

“Additional security features for the mobile application further hinder fraudulent replication and misuse, and protect the personal details of APEC Business Travel Card holders,” she added.

Additionally, the mobile application will provide cardholders and airport officers real-time information on the status of the travel card. Cached information will also be accessible for a period, in the event that the holder is not able to go online while they are traveling.

“The service will be offered to new applicants from fully participating economies, and we are exploring ways to enable existing cardholders to request the mobile application when they apply for a card renewal, which is required every five years,” Stamatis explained.

Further discussions are underway to ensure that the mobile application caters to the needs of both cardholders and airport officials. The APEC Business Mobility Group will work on the pilot version of the application with the expectation to launch it in November 2020, during APEC Economic Leaders’ Week in Malaysia.

Depending on member economies’ preference for either the mobile application or physical card, the service is expected to be ready for use in early 2021.

Nineteen APEC economies are fully participating members to the ABTC scheme: Australia; Brunei Darussalam; Chile; China; Hong Kong, China; Indonesia; Japan; Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; the Russian Federation; Singapore; Chinese Taipei; Thailand; and Viet Nam; Canada and the United States are transitional members.

Transitional members’ cardholders will not be able to use the mobile application, however, their existing processes will remain unchanged.

The APEC Business Travel Card scheme reduces travel costs between APEC economies by 38 percent. Businesses pay 27 percent less in application fees and 52 percent less in immigration processing.

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Preparing Dushanbe for a New Digital Era

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 “Preparing Dushanbe for a New Digital Era” was the theme of a workshop held on February 4th and hosted jointly by the Government of the Republic of Tajikistan, the Hukumat of Dushanbe City, the State Unitary Enterprise (SUE), “Smart City Dushanbe” under the Hukumat of Dushanbe City, and the World Bank. Participants included leading Korean experts in the field of digital transformation and smart cities, as well as high-level Government representatives of the Republic of Tajikistan, development partners, the private sector, and civil society. 

“Living in the era of digital transformation has many benefits and challenges. As this is a high priority for us, we are expanding our work with development partners on digital transformation. South Korea is the first country that comes to mind as an example of best practices and expertise in the deployment of smart cities and the ability to increase the vitality of urban areas. For us, Korea’s experience gained during almost three decades of building smart cities is extremely valuable,” said Yusuf Majidi, Deputy Minister of Finance of Tajikistan. 

Smart city technologies allow city officials to interact directly with both the community and city infrastructure, and to monitor what is happening in the city and how it is evolving. ICT is used to enhance the quality, performance, and interactivity of urban services, reduce costs and resource consumption, and increase interaction with citizens. Smart city applications allow for better management of urban flows and enable real-time responses. In doing so, a “smart city” increases the efficiency of public services provided by city authorities, uses scarce resources more effectively, and improves citizens’ quality of life. 

“In this process, the Government is an enabler and a regulator, but digital transformation and smart cities can only be delivered with the active participation of the private sector, and by ensuring tangible benefits for the private sector,” added Jan-Peter Olters, World Bank Country Manager in Tajikistan. 

The keynote speaker was Dr. Jong-Sung Hwang, Master Planner, Busan National Pilot Smart City, and Lead Researcher at the National Information Society Agency (former Chief Information Officer of Seoul), who shared the Republic of Korea’s extensive experience in developing smart cities. Oleg Petrov, Senior Digital Development Specialist at the World Bank, provided an update on the proposed Digital CASA Tajikistan project and its role in supporting the Government to build the foundations for a digital economy and the “Smart City Dushanbe” initiative.

This event was a key milestone in developing the Smart City initiative in Tajikistan, a key element of the Digital Economy 2040 Concept and Digital CASA Tajikistan Project. The World Bank confirmed its commitment to providing support to Tajikistan in building the required infrastructure to increase Internet bandwidth and speed, support the required adjustment and modernization of the institutional telecommunications environment, and develop the most critical applications aimed at increasing the efficiency and transparency of public services.

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