As the world is moving towards industry 4.0, India will have to move with it. This will mean that we have to adopt and adapt new technologies in our manufacturing right through our supply chains. Industry aims to boost the contribution of the manufacturing sector from 15% to 25% of GDP, in the near future. In order to support this growth, India will need an ecosystem comprising tier 1, tier 2, as well as tier 3 suppliers, with a high level of efficiency, flexibility, and quality focus.
By using Digital technologies to combine the virtual and real world of production, industries can master the ever-growing challenges in their highly dynamic markets. Digitalisation promises lower costs, improved production quality, flexibility and efficiency, shorter response time to customer requests and market demands, and also opens up new and innovative business opportunities.
The integration and interplay of product lifecycle management (PLM), factory automation and digitalisation which forms the basis of Industry 4.0 will be the key to the sustainable progress of the manufacturing sector, equated as the future of manufacturing (FOM).
Industry 4.0 will result in new ways of creating value and novel business models. It will transform the design, manufacturing, operation and service of products and production systems. Connectivity and interaction among parts, machines, and humans will make production systems as much as 30% faster and 25% more efficient and elevate customisation to new levels. Digitalisation will majorly impact and redefine the 'productivity' criteria and measure owing to digital real-time supply chain, digital product definition and digitally crafted and run production lines.
The Digital Enterprise Software Suite provides an integrated portfolio of Industrial Software and Automation solutions for the discrete industry. This allows product manufacturers, machine and line builders to integrate and digitalise their entire value chain - including their suppliers. It is already a reality, and companies are pursuing its benefits and opportunities through digital transformation, which requires seamless integration of big data along the entire manufacturing value chain.
Digitalisation must be a top management priority on two levels: On one hand, companies need to align what they offer to reflect Industry 4.0 and add digital solutions and services to their portfolio. On the other hand, they must undergo transformation and gear their internal processes to meet the requirements for digitalisation. In India, while some of the large businesses have been quick to transition into this digital world, majority of the Small and Medium Enterprises (SME) in the manufacturing sector are yet to put these digital technologies to work.
SMEs are the backbone of industrial development. The contribution of small scale Industry has been remarkable in the industrial development of the country. It has a share of 40% in industrial production. 35% of the total manufactured exports of the country are directly accounted for by this sector. In terms of employment generated, this sector is next only to agriculture employing approximately 36 million people.
Despite SMEs occupying majority share of the industry, they currently face multiple issues that are hindering their growth. The most critical issue for SMEs is continuous quality improvement, scope and scale. Some of the major factors responsible for this are extensive manual interventions in processes, interrupted flow of data and lack of skilled manpower. There will be a sustainable development of manufacturing only when the SME sector participates in with upgraded technology and skills.
Through Digitalisation, SMEs can enhance efficiency to fight scale, reduce cost of production, minimise manufacturing defects, and shorten production time. With this, they can not only meet international quality standards but also strengthen their position as competent suppliers for the global market.
There are already some examples especially in the automotive sector of Indian enterprises who have used modern technology to improve their competitiveness. Since the last 4 decades, the advancement of the automobile industry has facilitated the growth of a sizeable ecosystem of SMEs. Catering to the automotive industry, their standards lifted and their quality went up. Furthermore, they invested in their manufacturing processes and now the same SMEs are supplying to multiple automotive companies.
Apart from partnering with our customers in their journey towards Digitalisation, Siemens India also inaugurated its showcase digitalised Low-voltage Switchgear factory at Kalwa in 2017. The upgraded factory using Siemens' own Digital Enterprise technology is the most advanced switchgear manufacturing facility in India and is in sync with Government's 'Make in India' and 'Digital India' initiatives.
Here, all the data is transformed into a digital format. This is a completely digital workshop that starts at the level of product R&D all the way through manufacturing simulation and then building the manufacturing facility from the optimised and simulated product and plant data. This is what makes it unique.
The globally-benchmarked factory is capable of producing more than 180 variants in one line at the rate of one product every nine seconds. Products at the plant communicate with machines and all processes are optimised for IT control, resulting in a minimal failure rate.
The production methods deployed at the plant are expected to be a standard for small and medium-sized manufacturing units in India, achieving a visionary model for the future of manufacturing: end-to-end digitalisation where the real and virtual worlds merge in "Digital Factory".
Indian manufacturers have the unique opportunity to blend the availability of advanced manufacturing technologies with low cost of labour to create extraordinary competitive advantage. The need of the hour for SMEs is to take a lead in adopting new technologies and make it an integral part of their business strategies. Those that are successful in understanding the power of digitalisation and harnessing it across their businesses will lead this new wave of growth.
(The author is MD and CEO, Siemens India)
(This is the second column in a three series article on digitisation and manufacturing by the author, stay tuned to this space for more.)