Maggie Slowik (Senior Research Analyst, IDC Manufacturing Insights)

5G connectivity will play a particularly important role in enabling the next normal in manufacturing, as it has unique capabilities that enable manufacturers to use data — including machine, plant, product, and environment data — more effectively than ever before. 5G promises unprecedented opportunities to strengthen connectivity, low latency, and the ability to capture large amounts of data within the factory and, more importantly, at every step of the value chain.

Recently, however, it’s been everything but easy for manufacturing. The industry has been one of the most heavily impacted by COVID-19, resulting in abrupt shutdowns, stalled production, loss of productivity, ruptured supply chains, and revenue declines.

Despite the severity of the crisis and anticipated new waves of the pandemic, our research shows that manufacturing has maintained its focus on innovation. In IDC’s COVID-19 Impact Survey, Wave 6 (fielded in June), 56% of European manufacturers said that introducing new innovative business models is part of their 2020 road map, and nearly 70% said they are willing to take advantage of competitors’ weaknesses and capture market share.

These figures show that the industry sees digitalization as a way to enhance its competitive advantage.

Journey to the Next Normal: It’s All about Transforming

In the past seven to eight months, our team has spent a lot of time talking to manufacturers in our community to understand how they have dealt with the first wave of disruption. During the early stages of the pandemic, initiatives were focused on learning how to manage contact tracing, supplier risk assessment, cash flow modeling, and remote working.

More recently, the industry has had to switch gears to deal with the recession. In this phase, manufacturing companies have to rebuild new capabilities to change their way of working in accordance to the new market requirements arising from the disruption caused to both demand behavior and their supply capability.

A new set of skills will be needed to drive higher operational agility and leverage real-time demand intelligence and process visibility.

After this period, markets will eventually settle into a new, post-pandemic normal, which will only partially resemble the world as we knew it. There are three key post-pandemic European manufacturing trends to watch:

  • 39% of survey respondents said their operating models will need to be digitally enabled to take into account more automation and contactless solutions
  • 38% of manufacturers said their supply chains will become more diversified to deal with future disruption
  • 37% said business models will need to be extended to include new ecosystems

Technology Will Be Key to This Transformation

This business transformation and transition to the next normal wouldn’t be possible without the help of digital technologies. The good news is that in the midst of the COVID-19 crisis, we’re still seeing strong investment intentions, especially around technologies such as robotics, machine learning, analytics, and IoT — indicating just how serious manufacturers are about their transformation.

We often get asked how 5G fits in to this, and to what extent manufacturing even needs it.

Role of 5G in Enabling the Next Normal

5G networking will help the manufacturing process become a more automated operating environment; here are three examples of use cases that describe this new way of operating:

  • Intelligent automation. The pandemic has underscored the importance of robotics as an integral element of the data-driven approach to ensure flexibility and resilient operation, enabling manufacturers to stay productive even during social distancing and lockdown. 5G connectivity will help robots achieve faster and more synchronized behavior, enabling the completion of even more complex tasks.
  • Quality assurance. Manufacturers are accountable for product quality and traceability, and that pressure is only increasing. With 5G and edge computing, large volumes of data can be analyzed in near real time and can enable new methods of AI-driven inspection and testing for shop floor workers. This will minimize human error, reduce cost, increase productivity, and, more importantly, ensure higher-quality products.
  • Supply chain transparency and tracking. Inventory can be tracked and located quickly, enabling manufacturers to maintain greater visibility of their products through their journey with the help of 5G networks. Not only does this reduce product loss, but it can also improve the customer experience. The other advantage of 5G’s low latency is that advanced analytics could be used to optimize routes throughout the supply chain.

Why Invest in 5G Now?

According to Wave 12 of the IDC COVID-19 Impact Survey (fielded in September), 29% of European manufacturers said their spending on 5G products and services will increase 29% in 2021 over 2020. This highlights the importance of not delaying and instead pushing ahead with 5G investments, in preparation for a new era of manufacturing.

After all, 60% of manufacturers agree that communication technology such as 5G will help them operate an effective digital enterprise and achieve business resiliency.

 

To find out how IDC can help clients identify and size the vertical opportunities for 5G and build strategies to turn the capabilities of 5G into new services that can drive their customers’ ongoing digital transformation, please get in touch with Maggie Slowik.

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