Lorenzo Veronesi
Lorenzo Veronesi (Research Manager, Manufacturing Insights EMEA)

After a virtual hiatus due to the COVID-19 pandemic, the 75th edition of Hannover Messe this year took place in a physical format, with everyone connecting face-to-face again. To get a sense of perspective, during the four-day event, from May 30 to June 2, 2,500 exhibitors (last year: 1,800) presented their products and innovations to 75,000 visitors and 15,000 online attendees (last year: 90,000 registered participants).

Interestingly, even though there was a downsizing compared to pre-pandemic years, this was mostly on the industrial automation/factory technology side. IT/digital companies’ presence was in full force, showing how much IT is driving factory transformation — and where the value really lies.

Presentations and discussions covered all the “usual suspects” — Industry 4.0 megatrends such as AI, IT/OT integration and security, robotics, emobility, logistics 4.0, additive manufacturing, hydrogen and net-zero.

Now that we have all recovered from “Hangover Mess”, these are my key learnings:

  • Last call: full steam ahead, the 4th industrial revolution is finally

This may sound odd, considering how the term “Industry 4.0 ” has been pumped up over the years, but even after more than a decade since industry 4.0 concepts were first outlined, we have never witnessed such eagerness to innovate shop floors. Why? Because the “accelerated disruption” that the manufacturing industry is going through is providing the pressure to innovate.

A strong contributor to this is that a lot of technologies have been proven extensively in PoCs and early-learner implementations and are now finding their way to scale. Interestingly, our research shows that only around 30% of global manufacturers in Europe think they are mature in their factory initiatives — so there is plenty of room for improvement.

  • Sustainability is the catalyst for transformation.

Escalating energy and raw material costs, regulatory requirements and customer demand are bringing sustainability to the forefront. Last year, sustainability was a key topic. This year, it was the key topic.

Sustainable businesses must run with sustainability principles in mind. In the past, we have talked about “lean being green”. Reducing energy consumption, material waste, rework and reverse logistic costs caused by quality issues, and fixing suboptimal supply chain networks, all contribute to higher business performance and greener operations at the same time.

Sustainable companies can also strengthen their market position by catering to more demanding end markets and becoming part of sustainability-driven value chains. IDC predicts that by 2026, 60% of G2000 companies will use sustainability KPIs and data as primary operational control parameters, compared with less than 20% in 2021.

  • We need to solve the data problem.

The journey towards environmental excellence brings together technologies and capabilities that enable companies to become net-zero through improved end-to-end horizontal and vertical transparency. One of the biggest challenges here is the “data conundrum” — how to leverage a large and varied set of data spread across the organisation.

As data resides in multiple repositories, simply gathering and classifying the required data is a significant challenge. Manufacturers are striving to turn industrial data into business value, establishing shop floor to boardroom data streams. This means collecting, aggregating, contextualising, analysing and distributing data and information to achieve real-time visibility in the most granular way. Getting IT/OT integration right is essential for this bottom-up data fabric to be a true source of value.

On top of that, we see a move from B2B to S2S (system to system). Reinforced by the need to comply with ESG targets (particularly around SCOPE 3) and the need to achieve more real-time coordination, value chains are turning into value networks and industry ecosystems are becoming a new way to generate value.

A core pillar for this is data exchange, but this requires trust above all else, followed by the right platforms, infrastructures and applications to support the relevant use cases. Potentially, we see an evolution towards the creation of exclusive “social networks” of enlightened companies. This could significantly shape the industry in the future. Initiatives such as International Data Space, CatenaX and Estainium Network are showing the way forward.

Adding Value — From Traditional to Digital

Manufacturers have long aimed for operational and product excellence to optimise their customer experience. We believe that most manufacturers out there deliver great products with fine-tuned processes.

But we see an issue here. Adding value in the traditional source-make-deliver is next to impossible in some sectors. Suppliers do not deliver, there are no containers available for shipments, manufacturing costs are booming, factory networks are disrupted, inflation is biting, distribution channels are failing — and everything can’t be pushed on to the customer in the form of higher prices.

The solution? If there is no other way forward, we need to find another type of “forward”. This means creating value somewhere else. This does not mean giving up on the manufacturing process, of course. It means starting to leverage strong manufacturing roots to create new sources of value, for example in the digital world.

We see companies moving to data sharing and trading, operational and IT IP resell, new digital product creations, outcome-based business models, the metaverse. In other words, changing to be ready for change.

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