Automotive Industry Goes All-In on Smart Factory Technologies

Automakers will need to make significant investments in new tech.

When it comes to adopting advanced manufacturing technologies, the automotive sector is ahead of its peers—with plans to accelerate investment in these cutting-edge tools.

In fact, automakers are anticipated to increase investment in smart factories by over 60 percent in the next three years, according to a report by Capgemini Research Institute. Auto companies are hoping that by transitioning to smart factories they can capitalize on $160 billion annually in productivity gains by 2023. Technologies include advanced automation, cloud computing, 5G networking, virtual assembly technologies, autonomous vehicles, remote maintenance portals, cobots and drones, and 3D printing.

The report claims that automotive companies could already achieve significant productivity boosts with existing smart technologies—for example, Mercedes-Benz has deployed data analytics to create self-learning and self-optimizing production systems to reduce rejection rate on key components by a factor of four.

But while carmakers are enthusiastic about adopting new technologies, only a few have actually implemented these changes. By the end of 2022, only about 24 percent of the sector’s factories will be smart, and less than half have invested more than $250 million in smart factories.

“Automotive companies have progressed better on their smart factory initiatives in the last two years and clearly plan to increase the pace of adoption from here,” said Markus Winkler, global head of Capgemini’s Automotive Sector. “However, to get there, auto firms must address gaps in the talent pool, technology strategy and organizational commitment to deploy at scale, and realize the full benefits offered by smart factories.” Winkler said that carmakers must also make several operations ”smart,” including operations, asset management, supply chain and service management, if they are to fully benefit from the potential that these technologies promise.

BMW integrates AI into its production line.

“There are three primary reasons why we took up the smart factory initiative,” said Seshu Bhagavatula, president of New Technologies and Business Initiatives at Indian automaker Ashok Leyland. “The first is to improve the productivity of our old factories through modernizing and digitizing their operations. The second is to deal with the quality issues that are difficult for human beings to detect. And the third is to incorporate made-to-order or mass-customization capabilities.”

The auto sector is taking the move to smart technologies seriously, even if it’s lagging behind on execution. In the last 18 to 24 months 30 percent of factories have been converted to “smart” operations, an improvement over the 24 percent that automotive executives committed to in 2017-18.

Read more about cutting-edge factory technologies at ABB RobotStudio Adds 3D Printing Capability.