Germany’s automakers, auto suppliers, machinery companies, and machine tool builders have long been considered the world’s leaders in manufacturing in large part because of their ability to unlock the potential of software, sensors, networks, and electronic devices on their assembly lines. Now, they are pioneering a new phase of global digital manufacturing that will transform the key processes surrounding the manufacturing of everything from automobiles to trains, planes, machinery, and even kitchens.
By digitizing the processes that govern how a new idea is brought to production (such as R&D, product launch, and testing), sales to delivery (pricing, demand forecasting, order fulfillment), and factory maintenance (including the inventorying of spare parts), German manufacturers in the auto industry and elsewhere are already beginning to significantly improve their margins. By 2030, we estimate there is the potential for manufacturers worldwide to realize an estimated $1.4 trillion upside by taking a page from leading German manufacturers’ playbooks.
The majority of these gains will be realized from better management of pre- and post-production processes – the rest will continue to be derived from the actual manufacturing or production. What follows describes how German manufacturers in particular are rewriting the rules for industry globally on several fronts:
Idea to production: It used to be that every new car model required 20 extra hours of work driven by quality issues or purely unplanned changes that its designers and engineers required. Each new car costs the automotive OEM anywhere from a few to several hundred dollars in extra cost. With German automakers launching several new models in huge volumes every year these costs quickly add up to billions of dollars.