European Manufacturers Are Failing to Effectively Leverage Smart Factory Technologies

Findings from a survey conducted for Fujitsu by leading European technology research organization teknowlogy|PAC¹ confirm that most manufacturers are still in the early stages of digital transformation. With the manufacturing sector currently undergoing an economic downturn, smart manufacturing could provide the impetus for growth – with 97 percent of manufacturers who have implemented the technology reporting positive results within three years.

Ranging from the Internet of Things and cloud computing to artificial intelligence, smart factory technologies help enhance efficiency and profitability, for example by enabling the efficient mass customization of products, and by using predictive maintenance to reduce unplanned downtime.

Johan Carstens, CTO Manufacturing and Automotive at Fujitsu for the Northern and Western Europe Region comments: “Today, the vast majority of manufacturers are still missing out on the actionable insights provided by smart factory technology. Only 28 percent are using this intelligence to support business decision making, although a further 29 percent expect to start doing so within three years. Our interpretation is that the digital manufacturing revolution is about to happen, but is being held back by cost, complexity and the lack of ability to analyze the data.”

Despite low widespread adoption, there is clear recognition within the manufacturing industry regarding the potential of smart factory technologies. Almost two thirds (63 percent) of companies plan to increase investments in the next three years, and only one in 50 companies plans to reduce its budget in this area.
Smart factory projects are still very early on in their smart factory journeys: 37 percent are still in the planning stage, a similar number (36 percent) are running some early pilots and 19 percent have live implementations that are delivering business benefits.

Most companies consider smart factories to be a key strategic objective
Fujitsu expects smart factory implementations to grow rapidly, since most companies consider smart factory initiatives to be a key strategic objective: 62 percent rate its importance between 7/10 and 9/10. However, technology implementations are complex and the majority of businesses are still in the early phases of implementation² . Today, only eight percent of businesses consider their smart manufacturing implementations to be at an advanced stage.

Despite this relative immaturity, businesses are reporting an encouraging return on investment. Not only have 44 percent of projects achieved ROI, but the returns have been rapid. Of manufacturers that have seen benefits, for almost half (45 percent) this occurred within less than a year, while for 52 percent, it took between one and three years.

Johan Carstens, CTO Manufacturing and Automotive at Fujitsu for the Northern and Western Europe Region adds: “It’s no longer enough for manufacturers simply to offer a range of standard options – we are seeing consumers increasingly demanding custom orders with a lot size of one, but for the same price. This is simply impossible to achieve via traditional manufacturing, but smart technologies make it possible – and as a consequence, first movers in the market are currently commanding a price premium. Manufacturers can move rapidly from proof of concept to commercial-grade smart factory rollout by choosing a trusted partner like Fujitsu, with deep experience of planning and deploying all aspects of these projects – with the end result being more effective leverage of the valuable data assets they are already generating.”

The survey found that the main challenges in implementing smart manufacturing include purchase cost (58 percent), building the business case (48 percent), the lack of skilled staff (47 percent) and the complexity of analyzing data (43 percent). To tackle these challenges, early adopters are working with software firms (92 percent) and IT service providers (90 percent).

Notes to editors
¹teknowlogy | PAC, part of the teknowlogy Group, surveyed IT and OT decision-makers at 204 European manufacturing companies with more than 500 employees, which have at least some Smart Factory initiatives in place. The study was conducted in May and June 2019. Interviewees were drawn from the UK, Central Europe (Germany and France), Southern Europe (Spain and Italy) and the Nordics (Finland, Sweden and Denmark). More information can be found here: https://www.fujitsu.com/global/solutions/industry/manufacturing/