The APPMA’s first Digital Lunchtime Series 'Investing in Resilience' session kicked off on Friday with a keynote discussion by Francisco Betti, head of Advanced Manufacturing for the World Economic Forum, who gave a global perspective of manufacturing as the new engine of growth.
In this, the first session of three, Betti, with smart manufacturing and Industry 4.0 evangelist, John Broadbent, unpacked the complexity faced by manufacturing companies to deliver ever-increasing sustainability goals, achieve continued efficiency and leverage the opportunities presented by Covid and future crises.
Betti began the session by discussing with Broadbent where Australia fits in to what he calls “the structure of production,” which he believes provides the key capabilities that every nation should be investing in if they want to thrive and play a major role in the future transitions of manufacturing.
These capabilities, and more, were documented in the World Economic Forum's Readiness for Future Production report on the manufacturing companies in the world.
Honing in on the Australian market, Betti pointed out that while Australia operates on a small scale of the current production base, it is performing quite well within these structures of production.
“The foundational elements that are required for [Australia] to be a success are probably already in place, which may [provide] a competitive advantage within the global map,” he said.
In terms of the disruption that Covid has caused on value chains, Betti believes that it has forced companies to rethink their manufacturing and supply chain strategies and has the potential to provide new opportunities. He says that it has also forced many global companies to look at new locations to increase their production as they diversify and change their manufacturing strategies.
Betti believes that Australia could have a significant competitive advantage now, because of its strong performance and structures of production, as well as the fact that it has a lot of land with a relatively small population compared to other economies.
Source: The World Economic Forum's Readiness for the Future of Production Report
“If you look at the Australian economy today, 70 per cent is probably around services and the rest is commodities. Manufacturing represents less than 1 per cent. So, realising the potential, understanding how global balances have shifted, requires a strategic decision of the sectors Australia [needs] to go for,” he said.
In reply to Broadbent’s question on how Australia could move from its manufacturing status of ‘high potential’ into a position of leadership on the global map, Betti said it would be beneficial for the country to select sectors in which there is immediate competitive advantage to attract at least part of the global share.
He also pointed out the importance of sustainability in manufacturing, saying, “You cannot think about the future of production which is not sustainable – it is becoming a major driver of management strategy and a competitive advantage, because consumers are going to be demanding more and more products that have been sustainably sourced.”
Betti then went on discuss how manufacturing companies could adapt to mega trends and prepare for future global threats such as climate change, a volatile global economy and fragile geopolitical conditions.
He said the emerging fourth industrial revolution has also presented opportunities for growth, pointing out the how the exponential rate in which technology is transforming operations and driving efficiency, productivity and growth is opening up thousands of opportunities for companies.
“These mega trends have been affecting operations for the past three to five years and when combined with Covid, you have a perfect storm – a stress test that we have never seen before.”
Source: The World Economic Forum's Readiness for the Future of Production Report
Betti cited a survey taken from April 2020 of over 500 C-level executive CEOs from manufacturing companies. Over 80 per cent of these executives acknowledged that the disruptions they were faced with were unprecedented and admitted that they were affecting both demand and supply, which added new levels of complexity.
“What was realised was that the concept of 'just in time' didn't allow manufacturing companies to respond or come up with alternative solutions when part of the world was totally cut off and disconnected from global value chains [during Covid],” said Betti, revealing that companies that had adopted mass manufacturing technologies before the crisis were able to navigate the crisis in a more successful way.
Betti believes that these mega trends will continue, and will be affected by change.
“If you look at what has played out this year, it is fair to assume that the crises will be happening more often and have further consequences,” he said, advising that companies should accelerate the adoption of advanced manufacturing technologies and move into a mindset of continuous adaptation to build resilience and cope with future disruptions.
“Countries such as Australia, who are performing pretty well on the drivers of production, need to bring in new levels of flexibility and agility and create an end-to-end supply chain visibility,” he suggested.
In closing, Betti discussed the World Economic Forum’s Global Lighthouse Network – a community of manufacturers that show leadership in using fourth industrial revolution technologies to transform factories, value chains and business models, for compelling financial and operational returns.
According to Betti, 69 manufacturing lighthouses have been identified from different industry sectors, and have embarked on a joint learning journey to share insights and experiences and incubate new partnerships.
“The result of this is that we have over 110 user studies and applications that demonstrate where companies can learn and leverage from, for their own transformation,” said Betti, who believes that the greatest value lighthouses bring to the industry is the way they leverage digital technologies to set new benchmarks for the global manufacturing community.
“These benchmarks are a source of inspiration and set the next bar in what every manufacturing company should be aspiring to achieve.
“That said, we have not found the factory of the future – it is a continuous journey of evolution,” he concluded.
The next session in the three-part series, taking place on Thursday 23 September, is on cyber security, with David Owen, partner, Cyber Risk Advisory, Deloitte. For your free registration, click here.
