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Silloo: Hello, everyone. This is Silloo, welcoming you to a new episode of the EY Tech Trends podcast, where we look at the most important issues that India Inc needs to know in its digitization journey. Today, we are discussing the new trends shaping “Industry 4.0.” And we have with us Harsh Kumar, who is a Consulting Partner at EY India and focuses on the digital and emerging technology space. Harsh will help us deep dive into how Industry 4.0 is revolutionizing the way companies manufacture, improve, and distribute their products. Harsh, would you throw some light today on the key technological changes that the COVID-19 pandemic brought into the manufacturing sector?

Harsh: First of all, Silloo, thank you for having me over and giving me this opportunity to share my perspective in this important space for India Inc. The impact of COVID-19 on the manufacturing sector has been significant, especially in the production and supply chain and logistics areas. Something which was not visible earlier in manufacturing, like work from home and hybrid work options, has actually become a reality and has reduced the administrative cost. RPA (Robotic process automation) adoption is also increasing significantly and automating repetitive tasks. There are a bunch of activities happening now, like smart manufacturing, real time inventory tracking, condition-monitoring systems, predictive maintenance of assets and tracking their health. The supply chains have seen a lot of digital interventions to make them agile, responsive and cost efficient. Some of the leading players are actually implementing digital twin simulations for testing and in other areas.

The auto sector has always been leading with robots to enhance productivity, safety and quality. Many businesses have become technology driven companies. In fact, some manufacturing businesses are shifting their focus to becoming technology companies, and we have seen some examples in the past as well. According to Allied Market Research, the digital manufacturing market will register a CAGR of close to 16.5%. That is a jump from US$276 billion in 2020 to US$1,370 billion by 2030.

Silloo: That is very insightful, Harsh. Moving on, what are the current key challenges in smart manufacturing?

Harsh: It is a very important aspect from an implementation perspective. In my opinion, there are five major challenges that cut across data ingestion, OT connectivity, cybersecurity, capex related to implementation, and definitely the technical skills needed to do this kind of implementation. 

OT connectivity issues predominantly are due to port compatibility, multiple communications protocols and network issues. Many of our Indian factories also have ancient OT systems. Cybersecurity is a very major issue because unprotected OT systems, old assets and IT security ignorance create easy targets. These issues have a powerful impact on project implementation and can derail the implementation timelines. 

We also face data ingestion challenges due to old OT devices that only support one-way communication. These devices generate high volumes of data, which is difficult to segregate and handle. The cost is quite significant. 

One of the major issues that cannot be ignored is having the right skills. In fact, it is being predicted that 65% of the job roles that exist today in the US will not be there even 10 years down the line. There is a bunch of new roles with a lot of emphasis on digital. And that is a clear indication of the skill scarcity which this industry will face globally. 

Silloo: Do you think our factories are 5G ready?

Harsh: 5G is supposed to bring in a major transformation in manufacturing. But are we ready yet? The answer is yes and no. 5G will enable high intensity and ultra-low latencies for machine-to-machine protocols. It will support bandwidth-heavy technologies like computer vision, AI, AV/VR, and digital twin technology and their implementations. It can, and it will, help in real-time prediction and detection of defects and damages. This, as per IHS Market estimates, will be worth US$13 trillion globally across industries by 2035. 

The world’s leading manufacturers of equipment (OEMs) are trying to set up 5G compatible equipment. The ground reality is that in the Indian manufacturing sector, the pace of digital revolution is yet to pick up speed. In some of the areas where these factories operate, only 2G and 3G are available. So, a lot also depends on the way enterprise-level 5G gets rolled out. A lot of our factories have come up in remote areas and rollout for an enterprise phase of 5G is still in a deployment phase. The crucial area, as I mentioned earlier, Silloo, would be cybersecurity because the higher speed and the smoother access controls with 5G will actually increase the attack surface. If there is a lack of cybersecurity awareness, these threats will increase manifold.

There will be stiff competition between the leading telecom players who have spent a lot buying 5G spectrum. The capex and opex costs for a 5G implementation in a factory setup are still to be seen in terms of absorption and business case. In my view, the leading Indian telecom players are really ramping up their deployment plans and they have done pilot rounds to try and make sure that the enterprise business adoption is high. In fact, some have conducted several pilots with utility companies, manufacturing companies, in agriculture, media, retail, healthcare, and other sectors with various simulations from edge computing, AR, VR, cloud, and other areas. They have tried to be diverse. So, this is a very interesting space to watch.

Silloo: That is great. Harsh, which sectors do you think are currently experimenting with digital twins?

Harsh: Silloo, this is something which is emerging, and emerging at a very fast pace. Let me start with a basic definition. A digital twin is a virtual representation of a physical asset, a person, or a process. It comprises data collected from multiple sources with a layer of behavioral insights derived from this data and realization. Traditionally, heavy capex-based industries were using these, for instance, flight simulators, deep-sea oil rig testing, and power plant simulators. Now this technology is becoming more pervasive and therefore closely entwined with Industry 4.0 across industry verticals. 

The digital twin technology helps in reducing time to market and wastage, and in enhancing quality and sustainability. In certain areas, this has helped improve customer experience. All these points will add to the top line and bottom line. In manufacturing, it is getting evaluated and used for product development – high-precision connected tasks, energy management. People are experimenting very strongly with AR, VR, troubleshooting, maintenance, debottlenecking, and in other areas. It is being used across industries: healthcare, supply chain areas, logistics, and even consumer durables. A global toothpaste manufacturer has already deployed it. 

A markets research study estimates that the market for digital twins was close to US$4 billion in 2019 and will see a CAGR of 37% to 38% to reach $35 to $36 billion by 2025.,

Silloo: Right. And how will simulations and emulations influence the factory settings?

Harsh: Silloo, digital twin can be applicable at a component level. You can look at it at an asset level, at the production line system, or at a process level completely. You can play it depending on how you want to do it. Obviously, the spectrum would be from small to large. OEMs are assimilating machine parameters digitally in a virtual environment to test the performance and output, which is reducing the time to market, installation and commissioning time, and also reducing the probability of failure during the initial run of those operations. Most importantly, the operations team, which is going to absorb this technology or equipment, or this entire process setup, can be trained at site through virtual simulation training, which ensures higher safety, better production, and more uptimes during operations. The concept can be extended across the entire production line or to a set of processes. And you can simulate both material and machine parameters to try and see how best to enhance the throughput and reduce the downtimes in an assembly line or shop floor.

Silloo: Great! Thank you very much for joining us today, Harsh. I thoroughly enjoyed the interaction and I am sure our listeners will also derive great value from the insights and information that you have shared with us. 

Harsh: Thank you, Sillo. 

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