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Web Exclusive | April 2019

Manufacturers face countdown to gain competitive advantage from Industry 4.0

Siemens Financial Services (SFS) has released a new research paper which focuses on digital transformation in the manufacturing industry stating that the key point is ceasing to be one of ‘whether’ to invest in transformation, but rather ‘when’.

Research from SFS has found that the potential financial value of digitalisation is estimated to be between 6.3 per cent and 9.8 per cent of total annual revenue by 2025. In most marketplaces, early movers (first 50 per cent of players) to invest in new technologies or business models, are those that will be able to make the most of this competitive advantage. For the “laggard” half of the market, investment in the new technologies or models is still required. The research found that 70-80 per cent of large companies has implemented a significant pilot project for Industry 4.0 production solutions, compared to 40-50 per cent of small and medium enterprises (SMEs).

Respondents to the research from Siemens Financial services estimate that the “tipping point” – defined as when 50 per cent of the global manufacturing community will have substantially converted to Industry 4.0 production platforms – will be reached within the next 5-7 years for larger manufacturers and 9-11 years for SME manufacturers.

Challenges to implementing digital transformation tend to pivot around the issue of finance. These include understanding the commercial benefits of Industry 4.0, knowing that there will be a reliable return-on-investment, and paying for Industry 4.0 technology at a rate lower than or matching the expected commercial gains, making the investment sustainable. The financing techniques that enable sustainable digital transformation are becoming known as “Finance 4.0”. These techniques cover the full range of requirements, from the acquisition of a single digitalized piece of equipment to financing a whole new factory, to even acquiring a competitor.

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