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Factories of the future call for responsible scaling that prioritizes planet and people

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The World Economic Forum announces today the addition of 13 new sites to its Global Lighthouse Network, a community of 103 world-leading manufacturing facilities and value chains using Fourth Industrial Revolution technologies to increase operational performance and environmental sustainability.

Local manufacturing and supply chain resilience are crucial in the current geopolitical context, as organizations strive to engage their workforces and sustain operations amid international unrest and economic headwinds. There are also new pressures to maintain sustainability commitments and accelerate the transition towards renewable energy, while addressing more immediate energy market disruptions.

Members of the Global Lighthouse Network are applying advanced technologies to increase supply chain resilience, augment green measures and boost workforce engagement while bolstering productivity. The result: 66% of lighthouses made sustainability improvements by reducing consumption, resource waste and carbon emissions, and 82% increased productivity.

Three lighthouses with outstanding environmental footprint reductions are gaining the additional designation of Sustainability Lighthouses. These global leaders are gaining momentum in achieving their sustainability pledges and greater operational competitiveness by realizing the potential of Fourth Industrial Revolution technologies in operations.

A new report, The Global Lighthouse Network Playbook for Responsible Industry Transformation,outlines how manufacturers are effectively scaling Fourth Industrial Revolution technologies and achieving all these results at once.

“As the world grapples with many challenges, it is remarkable to see how lighthouses are yielding sustainability benefits while achieving business goals, which we call eco-efficiency,” said Francisco Betti, Head of Shaping the Future of Advanced Manufacturing and Value Chains, at the World Economic Forum. “We need them to continue illuminating the way forward for the global manufacturing community by shaping a responsible future of manufacturing that works for people, society and the environment.”


Enno de Boer, Partner, McKinsey & Company and Global Lead of its digital manufacturing work, added: “The 103 lighthouses show how digital technologies drive value chain resilience, growth, and environmental and people sustainability. In the past, sustainability and resilience have often come at the cost of efficiency, but that is no longer true. Companies now have a digital playbook and tech tools at their disposal to make their operations more flexible, more agile and more sustainable. With these tools, they can amplify human capability, achieve sustainability breakthroughs and accelerate technological innovation – the recipe for smart manufacturing.”


The latest cohort of lighthouses will be officially presented at the Global Lighthouse Network Lighthouses Live event, which will feature chief executives and global manufacturing leaders focused on scaling digital solutions across their production networks to drive operations towards carbon neutrality and boost workforce engagement. The event will be livestreamed on 6 April 2022 (14.00-15.15 CET) here.

The 3 new Sustainability Lighthouses are:

The Janssen Pharmaceutical Companies of Johnson & Johnson (Cork): Janssen Sciences Ireland Unlimited Company has been long supporting regional initiatives for sustainability improvement and now enabling the corporate 2030 pledge of carbon neutrality. Through Fourth Industrial Revolution-enabled real-time release, adaptive process control and other sustainability efforts, the site has optimized its processes and reduced carbon emissions per kg of product by 56%, while the site footprint has expanded by 34% to meet growing business needs.

Schneider Electric (Le Vaudreuil): Schneider Electric Le Vaudreuil has implemented industrial internet of things (IIoT) sensors connected to digital platforms, unlocking data to optimize energy management by 25%, reduce material waste by 17% and minimize CO2 emissions by 25%, with the objective to be net-zero carbon by 2025, without offset and ahead of the global Schneider Electric pledge. The smart factory is equipped with a zero-reject water recycling station connected to cloud analytics and monitored by an artificial intelligence (AI) model to predict process drifts, leading globally to 64% in water reduction.

Western Digital (Penang): Western Digital achieved a reduction in energy by 41%, water consumption by 45% and material waste by 16% through a vertically integrated smart factory. Fourth Industrial Revolution technologies, such as internet of things (IoT) sensors, digital twin modelling, analytics powered plant management system and lights-out automation with machine learning, increased their sustainability impacts, while the site grew 43% (Compound Annual Growth Rate) in the last four years. This concerted effort enabled the Malaysia Green Building Index (GBI) certification for the site.

The 13 new lighthouses are:

Europe

The Janssen Pharmaceutical Companies of Johnson & Johnson (Latina): Janssen Latina has been deploying Fourth Industrial Revolution solutions that deliver faster, competitive and agile launches of new products and quality release, led non-conformance reduction by 30% and product release lead time optimization by 84%, while reducing energy costs by 10% and logistics labour costs by 72%.

Sanofi (Paris): With the ambition to accelerate saving generation, Sanofi embarked two years ago on a digital and analytics transformation of its procurement operations. To date, it has built and deployed six products – data platform, should-cost modelling and input-cost monitoring, smart tender analytics, supplier performance tracker and cockpit – that have delivered 10% savings on addressed spent and transformed the way of working.

Teva Pharmaceuticals (Amsterdam): Global Procurement is the main contributor to Teva’s ambitious Gross Margin Improvement Program and contributes to the Free Cash Flow target, delivering three times historical Cost of Goods Sold (COGS) savings by the end of 2024. To achieve this, Global Procurement implemented Fourth Industrial Revolution technologies within 1.5 years, increased labour efficiency by 30%, upskilled its workforce and optimized cross-functional processes to break down silos. It is leading the way in Fourth Industrial Revolution technologies at Teva.

Asia

BOE Technology Group (Fuzhou): To pursue premium product market share with high-quality expectation, BOE Fuzhou has widely adopted AI and advanced analytics in a fully automated production system to achieve best-in class quality excellence, equipment efficiency and energy sustainability with a new product yield ramp-up period shortened by 43%, cost per unit reduced by 34% and output increased by 30% without major capex investment.

Bosch Automotive (Changsha): Facing a 20% labour wage increase, year-over-year 10%+ price reduction request from customer and high fluctuation in customer orders, Bosch Changsha implemented 45 Fourth Industrial Revolution use cases with automation and AI to increase competitiveness, maintained the market position with 100% NEV (new energy vehicle) customer portfolio penetration and reached carbon neutrality.

Haier (Zhengzhou): Facing a booming market for water heaters and increasing requirements of high-end products and services, Haier Zhengzhou, leverages big data, 5G edge computing and ultra-wide band solutions to build a close connection with suppliers, plants and customers. This has sped up order response lead times by 25%, increased production efficiency by 31% and improved quality performance by 26% from 2020 to 2021.

Johnson & Johnson Consumer (Thailand) Ltd. (Bangkok): Facing agility, profitability and cost to serve challenges, Johnson & Johnson Consumer Health site in Bangkok adopted Fourth Industrial Revolution technologies, such as collaborative supply chain control tower, computational fluid dynamics, AI energy optimization and advanced data analytics on logistics. The value chain delivers 47% revenue growth with 25% inventory reduction, and it reduced 43% end-to-end supply chain lead time, 42% productivity improvement and 20% carbon footprint optimization.

LG Electronics (Changwon): Facing growth of its product portfolio complexity by 70%, rising quality expectations from customers and labour shortages, LGE redesigned an old factory in Changwon, South Korea, into a digital plant leveraging flexible automation, digital performance management and AI to improve productivity by 17% and field quality by 70%, while reducing inventory by 30% and energy consumption by 30%.

Midea (Jingzhou): Due to consumer expectations with higher product complexity, Midea Jingzhou, as a 30-year-old factory, adopted flexible automation, IoT and AI at scale to transform the manufacturing system, increase labour productivity by 52%, reduce production lead time by 25% and eliminate 20% utility consumption per unit.

Midea (Hefei): Targeting domestic high-end product segments and oversea market expansion, Midea Hefei Laundry Appliances widely deployed AI and IoT technologies across end-to-end value chains to form a faster response and higher efficiency supply chain, which resulted in a lead time reduction by 56%, customer report defect rate reduction by 36% and labour productivity improvement by 45%.

Procter & Gamble (Guangzhou): To meet 45% increased e-commerce demands, P&G Guangzhou leveraged AI, flexible automation and digital twins to integrate multi-systems across its value chain to serve omni-channel consumers. This increased the responsiveness of their supply chain with 30% reduction of inventory, 15% reduction of logistics cost and 99.9% on time delivery within three years.

Schneider Electric (Hyderabad): Facing changing customer demands and a 54% business growth, Schneider Electric implemented Fourth Industrial Revolution technologies such as IIoT infrastructure, predictive/prescriptive analytics and AI deep learning. This has resulted in reduction of field failure by 48% and lead time by 67%, while manufacturing efficiency improved by 9%.

Unilever (Dapada): Driven by the need to accelerate the pace of innovation and speed of response to consumer demand while augmenting cost competitiveness in an increasingly challenging market, and acting on sustainability goals, Unilever Dapada deployed digital, automation and AI-ML across its end-to-end value chain to shorten product development lead time by 50%, reduce manufacturing cost by 39% and energy by 31%.

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Global CEOs Commit to Collective Action on Cyber Resilience

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For the first time, leading oil and gas stakeholders are calling for industry to come together to stop harmful cyberattacks.

The action is in response to major security breaches in the past two years that have highlighted the vulnerability of critical infrastructure. At the World Economic Forum Annual Meeting 2022, 18 companies have come together to take a Cyber Resilience Pledge, in recognition of the fact that much more collective preparedness is needed.

The pledge aims to mobilize global commitment towards strengthening cyber resilience across industry ecosystems. Organizations endorsing the pledge commit to collaborating and taking collective action on cyber resilience. Launched with the support of organizations engaged in the World Economic Forum’s Cyber Resilience in Oil and Gas initiative, the pledge seeks to empower organizations to take concrete steps to enhance cyber resilience across their industry.

The organizations that have taken the pledge are: Aker ASA, Aker BP, Aramco, Check Point Software Technologies, Claroty, Cognite, Dragos, Ecopetrol, Eni, EnQuest, Galp, Global Resilience Federation, Maire Tecnimont, Occidental Petroleum, OT-ISAC, Petronas, Repsol and Suncor.

“First endorsed by key CEOs in the oil and gas value chain, the Cyber Resilience Pledge is a landmark step as it signals recognition of the complexities of building a cyber-resilient industry ecosystem and a commitment towards collective action to achieve it,” said Alexander Klimburg, Head, Centre for Cybersecurity, World Economic Forum. “The World Economic Forum Centre for Cybersecurity is proud to have led this effort in conjunction with our partners. We look forward to scaling the pledge to other industries in the future.”

The pledge promotes a shift towards a resilience-by-design culture, ecosystem-wide, cyber-resilience plans and greater collaboration between players.

“As the world deepens its digital footprint, cyber threats are becoming more sophisticated,” said Amin H. Nasser, CEO of Saudi Aramco. “But one company, working alone, is effectively like locking the front gate while leaving the back door wide open.” Companies must work together if they want to truly protect the critical energy infrastructure that billions of people around the world depend on.

Cyberattacks on the Colonial Pipeline in the United States in May 2021 and on European oil facilities in February 2022 forced the facilities to operate at limited capacity, causing huge economy and society-wide disruptions.

Common, industry-wide, cyber-resilience practices are essential, said Robert M. Lee, CEO and Co-Founder of Dragos. “As our world becomes more digitally connected it is imperative, especially for our industrial and operational technology, to ensure our infrastructure’s secure and safe operation.”

“The oil and gas industry is going through a digital revolution that has been a catalyst to the energy transition and sustainability. Cyber resilience is key in this revolution, as staying ahead of vulnerabilities is fundamental to our business. The pledge is a step further by developing a collective effort to embed cyber-resilience and a cyber-risk aware culture across the energy industry,” said Felipe Bayón, CEO of Ecopetrol.

“The pledge advances Galp’s commitment to joint action on managing cyber risks and protecting cybersecurity of critical energy infrastructure, by creating awareness and a unified stance on cyber resilience in the global energy sector,” said Andy Brown, CEO of Galp.

“Petronas upholds the safety of its people, assets and the environment as our utmost priority, including reinforcing better cyber security and safety practices. Petronas is committed to and fully supports the World Economic Forum’s Cyber Resilience Pledge and its principles in safeguarding our ability to deliver energy responsibly and securely,” said Tengku Muhammad Taufik, CEO of Petronas. “In this respect, we believe that addressing the risks and enhancing cyber resilience is critical as the oil and gas industry embraces greater digitalization to capture valuable opportunities in this digital era.”

The Forum will continue to promote the pledge across multiple industry ecosystems with the objective of facilitating the implementation of the cyber resilience principles.

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New Initiative to Build An Equitable, Interoperable and Safe Metaverse

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The World Economic Forum announced today a new initiative, Defining and Building the Metaverse. The initiative brings together key stakeholders to build an economically viable, interoperable, safe and inclusive metaverse. Research suggests that the metaverse is expected to grow into an $800 billion market by 2024.

At this early stage, the metaverse can develop in many ways, depending on research, innovation, investment and policy. The new initiative convenes more than 60 leading technology and other sector companies alongside experts, academics and civil society to accelerate the development of governance and policy frameworks for the metaverse and strengthen economic and social value creation opportunities.

The initiative will focus on two key areas. The first area of focus is the governance of the metaverse, how the technologies and environments of the metaverse can be developed in safe, secure, interoperable and inclusive ways. The second will focus on value creation and identify the incentives and risks that businesses, individuals and society will encounter as the metaverse comes to life. The initiative will also outline how value chains may be disrupted, industries may be transformed, new assets could be created and rights protected.

“The Defining and Building the Metaverse initiative provides the industry with an essential toolkit for ethically and responsibly building the metaverse. This will help ensure that we can fully harness this vital medium for social and economic interconnectivity in an inclusive, ethical and transformative manner,” said Jeremy Jurgens, Managing Director, World Economic Forum.

Stakeholder views

“The metaverse is at an early stage in its development. Done well, the metaverse could be a positive force for inclusion and equity, bridging some of the divides that exist in today’s physical and digital spaces. That’s why the Defining and Building the Metaverse initiative will be so valuable. It mustn’t be shaped by tech companies on their own. It needs to be developed openly with a spirit of cooperation between the private sector, lawmakers, civil society, academia and the people who will use these technologies. This effort must be undertaken in the best interests of people and society, not technology companies,” said Nick Clegg, President of Global Affairs, Meta Platforms, Inc.

“The metaverse is the next inevitable step in the evolution of the internet but will require comprehensive collaboration between all ecosystem stakeholders to make it an open, safe and secure environment. As such, this Forum initiative is a robust start to addressing the key technology and policy fundamentals to enable the metaverse to fulfil its boundless potential,” said Cher Wang, Founder and Chairwoman, HTC Corporation.

“While the metaverse is in its nascent stage, we believe it has the potential to deliver enhanced connections for everyone. As an industry it is incumbent upon all of us to ensure this new paradigm is developed in a way that is accessible for everyone, puts the needs of people first, enhances human connection and is developed securely with trust built in by design. It is for this reason that we are proud to participate in this cross-industry collaborative body that will define the standards for the metaverse,” said Brad Smith, President and Vice-Chair, Microsoft Corporation.

As part of Sony Group, our goal is to get closer to people, and Sony Interactive Entertainment approaches the Metaverse with the mission to further imagine the ‘best place to play.’ We envision a virtual world that will captivate our fans, excite global creators, and bridge these two vast communities in bold new ways. Now, with an anticipated growing community of users engaging within the Metaverse, governance is a critical and shared responsibility of all its participants. An accessible, safe, and inclusive Metaverse will require new ways of thinking and democratization as well as strong commitments from all involved,” said Stephanie Burns, SVP, General Counsel, Sony Interactive Entertainment.

“At Magic Leap, we are excited about how technologies like augmented reality will transform the way we live and work, especially in growing fields like healthcare, manufacturing and the public sector. To realize the potential of these technologies, a thoughtful framework for regulation that protects users and facilitates future innovation is required, supported by all stakeholders, including businesses, consumers, government, NGOs and academia,” said Peggy Johnson, CEO of Magic Leap, Inc.

“As a company that has inspired and developed generations of kids through physical play, we are uniquely positioned to help develop kids in the digital worlds of tomorrow. As the metaverse evolves, it is reshaping how people meet, play, work, learn and interact in a virtual world. To us, the priority is to help create a world in which we can give kids all the benefits of the metaverse – one with immersive experiences, creativity and self-expression at its core – in a way that is also safe, protects their rights and promotes their well-being,” said Julia Goldin, Chief Product and Marketing Officer, The LEGO Group.

“The rapid advancement and adoption of the metaverse will create unforeseen complexities in terms of governance, ethics, social and industrial effects. Thus, the need for collective intelligence to anticipate, analyse, design, experiment on and constantly revise governance measures and frameworks will be crucial. It will be an honour for us from CJ Group to make contributions along with dedicated and leading colleagues from around the world to the World Economic Forum’s metaverse initiative,” said Dr. Cha Inhyok, Chief Executive Officer, CJ Olive Networks & Group Chief Digital Officer, CJ Corporation.

“In these early stages of development of the metaverse, it is important to define the operating principles, standards and ways of working as we go forward. Frameworks that account for openness, interoperability and safety are fundamental to long-term sustainability and success of these shared ecosystems and communities. We look forward to contributing to the World Economic Forum’s committees for this new initiative,” said Nuala O’Connor, Senior Vice-President & Chief Counsel, Digital Citizenship, Walmart Inc.

“Animoca Brands is pleased to be a part of the inaugural metaverse initiative launched by the World Economic Forum and we look forward to a dialogue with our industry colleagues as we navigate the potential of true digital ownership in the open metaverse,” said Yat Siu, Co-founder and Chairman, Animoca Brands.

Taking active steps to form a strong foundation for metaverse development is one of the key tasks humanity has to fulfil this decade. We are proud to be part of the World Economic Forum’s metaverse group and give our insights and suggestions regarding these topics, particularly that of interoperability. We are keen to further develop decentralized ways to allow users the ability to move freely between virtual reality worlds and keep their digital identities and belongings truly theirs,” said Artur Sychov, Founder and CEO of Somnium Space.

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Growing Intra-Africa Trade through Digital Transformation of Customs and Borders

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The digital transformation of customs and borders in Africa could improve efficiencies in processes, such as administration at customs and borders, and yield trade gains on the continent of $20 billion a year. A new report by the World Economic Forum, Growing Intra-Africa Trade through Digital Transformation of customs and borders, launched today at the Annual Meeting 2022 in Davos, provides a pragmatic perspective on the non-tariff barriers in border and customs services that can be exponentially improved through digital transformation to increase intra-Africa trade.

The report, written in collaboration with Deloitte, is launched at the convening of the Forum Friends of the Africa Continental Free Trade Area (AfCFTA), a multistakeholder group that supports implementation of the goals set out by AfCFTA through public-private collaborations. The group comprises Paul Kagame, President of Rwanda,; Wamkele Mene, Secretary-General, of the African Continental Free Trade Area Secretariat; Patrice Motsepe, Founder and Executive Chairman, African Rainbow Minerals; and Jim Ovia, Chairman, Zenith Bank among others.

The AfCFTA implementation, which started in January 2021, has the potential to increase intra-African trade from its current 18% of total trade to 50% by 2030. It also has the potential to lift 30 million people out of extreme poverty. However, achieving its full potential depends on putting in place significant policy reforms and trade facilitation measures.

Kavitha Prag, Africa Lead, Enterprise Technology and Performance at Deloitte Africa, said: “The African Free Trade Area agreement can be a great catalyst for Africa’s growth and development, but its full realization hinges on the introduction of efficiencies, including the improvement of customs processes. Digital transformation of border posts and customs is thus a crucial and necessary step in the implementation of the protocol, especially for many of Africa’s landlocked countries.”

Various countries and the regional economic communities are making efforts to build better trade networks enabled by world-class logistics networks that can withstand recent supply chain shocks such as the COVID-19 pandemic and geopolitical tensions.

The report highlights insights from the Logistic Performance Index as well as key insights from case studies demonstrating the quantifiable value of digital reforms in countries such as Ghana, Kenya and Uganda. The paper is a call to action for more integrated digital reforms that can drive higher impact through public-private partnerships that sets the course for Africa’s post-pandemic recovery and growth.

“Even after tariffs are lowered, and simplified procedures put in place, the full benefits of the AfCFTA will not be realized unless non-tariff barriers to trade are also addressed,” said Chido Munyati, Head of Africa at the World Economic Forum. “Policy-makers can make a difference by implementing digital solutions.”

The report calls on the following policy support to enable digital transformation:

– Legislative support and acceptance that embraces new practices such as e-signatures or the use of drones to monitor cargo

– Buy-in from the various agencies that enable these operations to embrace digital reforms and embed them in their processes

– Take action based on demand-driven interventions that lead to higher adoption of rates by all organizations and position intra-Africa trade as more cost- and time-competitive

– Develop skills of services agents that can maximize the potential of the digital solutions

– Better co-ordination among AfCFTA members to establish Single Customs Territories

The World Bank notes that while African exports of goods and services have seen their fastest growth in the past decade, the volumes remain low at just three per cent of global trade. The bank says boosting intra-regional trade requires improvement of physical integration, such as cross-border energy, transport and connectivity infrastructure, strengthening cooperation by harmonizing customs rules and procedures, and facilitating business integration through regional electronic settlement systems, an electronic cargo-tracking system, and easing restrictions on services trade.

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