Connected Devices, Robotics &Artificial Intelligence Building the Digital Factory

Technology’s disruption of manufacturing, logistics, healthcare and retail is here. The economic reality for many of these industries is that five years from now companies in these industries likely will operate more successfully with fewer workers not more than they have now. This productivity gain will come from the use of connected devices, robotics and artificial intelligence.

Accenture estimates by 2020, there will be more than 50 B connected devices in use around the world, all converging to create huge new markets. In the next several years, revenues are expected to reach many billions of dollars in each sector including the industrial internet, connected home solutions, connected car services and connected health. Companies around the world are increasing their use of robots. The global average for industrial robots per 10,000 manufacturing workers grew from 66 in 2015 to 85 in 2017 according to a study from the Information Technology and Innovation Foundation. The United States ranked seventh with 200 industrial robots per 10,000 workers in this study.

Nations from Japan to South Korea to China are adopting public policies and devoting resources and tax credits to companies who are modernizing and utilizing technology to make their business more efficient. As an example, the Chinese Robotics Industry Development Plan (2016–2020), part of its Made in China 2025 initiative, promotes domestic robot production and sets a goal of expanding robot use by such companies tenfold by 2025, and the Chinese Guangdong province will supposedly invest 943 B yuan (approximately $135 B) to help firms carry out “machine substitution” according to ITIF. While economists continue to debate the impact on employment for connected devices, automation and robotics, no one can question whether these devices will make companies more efficient and need more electricity.

McKinsey estimates 686,000 computer software, programming and support jobs will be created by 2030 from AI and automation. MarketWatch determined there will be a $98 B value for the global robotics industry by 2024 driven by future expansions into manufacturing, logistics, health care and service industries. Industrial robots have become smarter, faster, and more affordable, and have developed advanced capabilities, such as sensing, dexterity, memory, and trainability. By 2020, the global industrial robot market is expected to reach $41 billion according to the Robotics Industry Association. Advanced industrial robotics have been chiefly pioneered and deployed by the automotive industry, particularly Japanese carmakers such as Toyota, followed closely in their wake by European and North American counterparts. 69 percent of all industrial robot orders in North America were made by automotive OEMs but, by 2014, that figure had eroded to 56 percent, offset by increasing shares by other industries including food and beverage, consumer goods, life sciences/pharmaceutical/biomedical, and metals industries again according to the Robotics Industries Association and they say there are currently 230,000 robots now in use in U.S. factories.

Five years from now manufacturing and logistics facilities will operate very differently. They will have higher wage, higher skilled employees but fewer of them than exist today. Today’s manufacturing and logistics facility will be impacted by technology transforming today’s manufacturing and logistics facilities where automation will be commonplace.