As manufacturing and engineering companies react to the current trends, we look at DHL’s top four industry transformations it expects to see by 2025.
With the ways in which manufacturing and engineering companies are producing and operating changing, in terms of product life cycle, customer demand and increased product variety, production processes are needing to become more intelligent.
With technology evolving at an enhanced rate, we are entering into a fourth industrial revolution (industry 4.0). While Manufacturing and engineering may not see the same levels of automation as some industries, the basic principles of intelligent production will become increasingly more prominent.
DHL comments that in the German manufacturing sector, industry 4.0 will drive productivity by 5-8% in the next 10 years, creating 390,000 new jobs and increasing investments by US$269bn. Frost and Sulivan sees more than 50% of participants across industries, expect that design and production processes will be fully digitalised in the next five to 10 years.
While manufacturing and engineering companies are taking important steps towards cleaner and greener manufacturing, DHL predicts a more widespread use of these approaches within the sector by 2025.
The areas in which sustainable manufacturing affects is vast, ranging from green product design, product lifecycle management, eco-efficient processes, fuel efficient machines, fuel efficient vehicles, green purchasing and sustainable organisation culture.
Forward thinking companies within the sector are using renewable energy energy efficiency and sustainable products, as well as establishing cradle-to-cradle concepts.
The industrial production sector alone is responsible for roughly 30% of the world’s energy consumption, most of which is provided by fossil fuels. Until 2030 it is predicted that the renewable energy share could increase from 11% (2010) to at least 15% if new deployment options are discovered it could jump as high as 26%.
For the long-term future, DHL predicts a shift from end-of-pipe solutions toward a focus on product lifecycle and integrated environmental strategies.
New business models
As customers demand more value, core markets become saturated and product margins come under pressure, companies are changing their business models to reflect these challenges.
DHL has seen a shift towards more service-based business models emerge. Currently, service-type activities already make up 30-55% of the manufacturing employment.
The development of such services is often considered less risky and less costly than the development of new products. DHL reports that maintenance can make up 50% of a company’s revenue. Slowly over the next few years business models will shift from B2B to a B2B2C model, whereas traditional manufacturers focused on manufacturing and managing capacity.
New collaboration models
With the constantly changing industry environment, DHL predicts that companies will rethink their relationships along the value chain, leading to more collaboration with suppliers and providers.
Often quoted as the blueprint for the future of the manufacturing industry, the automotive industry is a sector that is showcasing the best practices within this area.
While manufacturing and engineering have started to apply this concept, it is predicted that the industry is still 10 to 15 years behind the automotive industry. The adoption of this approach will be vital in future innovation, with these innovations often being the product of a collaboration between two unrelated companies such as IT and manufacturing.
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