Unlocking Infinite Possibilities Through Digital TransformationBy Alejandro Preinfalk | Wed, 03/23/2022 - 09:00
Generated by a global health and economic crisis, we find ourselves entering a stage of transformation in all areas. The world's population is already facing challenges, such as demographic growth – it is estimated that in 2050, the number of inhabitants will have increased by 30 percent – and climate change, which comes with extreme environmental changes, as well as an increasing number of natural disasters.
As a result, companies and industries are also facing many challenges, which lead to the need of adapting to this new reality while maintaining the highest levels of productivity, efficiency, quality and, more recently, resilience and sustainability. The good news is that all of this can be addressed and optimally achieved with state-of-the-art technology.
According to our company registers, three years ago, this adoption trend was already on the rise in Mexico, growing by an annual 8 percent, thus leading this trend in Latin America. In the time that I have been working for Siemens, in our different business units and in several countries, I have seen a series of transformations in our markets, but the speed and scale of evolution that we are experiencing at this moment is something I have not seen before. Today, Industry 4.0 is enabling a transformation that is also being accelerated by the pandemic.
In Mexico, the National Institute of Statistics and Geography (INEGI) reported that industrial production fell by 0.53 percent in June 2021, the third consecutive month of retraction and the biggest drop since May 2020. Although the second quarter of 2021 showed a slight recovery compared to the decline in 2020, industrial production has now entered a more moderate stage toward its new structural normality, according to the Institute for Industrial Development and Economic Growth (IDIC).
Digital transformation is essential for industrial production to expand, allowing factories and companies to achieve new levels of growth and resilience. Some companies have already taken this path toward digitalization and are experiencing its enormous potential, but in general, the levels of automation and digitalization are still low. A couple of years ago, they permeated only 30 percent of the manufacturing sector in Mexico.
Let me emphasize the benefits that the digital transformation can bring to the industry:
● An increase in productivity up to 25 percent, which in turn means that a product can reach the market in half the time it takes today, from its conception to its sale.
● Revenue could be increased by up to 9.8 percent per year.
● Companies can unlock potential savings of up to 20 percent in the maintenance phase of building operations. This is where 80 percent of its life cycle costs occur.
● The transportation sector can increase its operating capacity by 20 percent without having to build additional infrastructure, by introducing digital technology.
During the pandemic, we realized one thing: companies that had already ventured into Industry 4.0 were able to react much faster to the crisis than those that had not. For example, pharmaceutical companies were able to increase their production and release vaccines faster than ever, thanks to our Digital Enterprise solutions. They went from producing a few milligrams, to providing doses to vaccinate the whole world in record time. And why? Because of the digitalization and automation technology that they had already implemented. We empowered them to replicate their processes in factories around the world.
Another good example of how technology with purpose is capable of optimizing processes and leading to better outcomes is Adidas. This company transformed its production to make it faster and more personalized. A simulation software is used to design not only virtual models of footwear, but also their whole production process, allowing the company to see a preview before starting manufacturing. Although it may appear as a slight change in process, it actually has a meaningful repercussion, as it cuts costs by 40 percent and reduces the time between production and marketing by 30 percent, while improving energy efficiency.
Now let’s have a look specifically at the Mexican food and beverage industry, where 60 percent of all industrial breweries have implemented Siemens technology. This digital transformation paved the way to make Mexico the world's leading beer exporter in 2019. And, although digitalization and automation were big players in this, the key component was actually data.
Over 2,200 terabytes of information are gathered in a manufacturing plant in one month. This data must be generated, understood and then actually be used to exploit its full value. This can be achieved by combining the physical world (operational technology or OT) and the virtual world (information technology or IT), making it possible to retrieve an infinite amount of data, which in return opens the door to infinite possibilities for manufacturers.
According to Deloitte, the impact of Industry 4.0 occurs at three levels: Ecosystems, Organizations and Individuals. In the former, a complete change takes place in every stakeholder: suppliers, partners, clients, regulators, investors and third parties. As for Organizations, the ability to adjust and learn from data in real time can make them more responsive, proactive, and predictive. And on an individual level, Industry 4.0 has an impact on the work every employee does, as data and technology allow them to lead their businesses in new directions.
So, why not make the transition to digitalization, and start to gather, understand and use data to create benefits on all levels? Let’s expand our ecosystem by working together to make use of data and unlock its full potential. At Siemens, we believe that organizations are only truly capable of long-term success if they start implementing digital technology, tailored to their business needs. Only then, will manufacturing be more productive, efficient and sustainable.