The buzz around Industry 4.0 has moved from what some had earlier seen as hype to investment and real results today. Middle Eastern companies report they are making substantial investments and this is translating into increasingly advanced levels of digitisation and integration. 41% of survey participants from the region say they have already reached an advanced level of digitisation and integration and over 62% expect to be at such a level in five years’ time.
Compared to other countries around the world, that is an unusually high level of digitisation. Respondents may have a different understanding of what truly advanced digitisation looks like. It is possible that Middle Eastern companies may be setting the bar for ‘advanced’ somewhat lower than companies in developed economies where Industry 4.0 has a longer history. In most of the companies, we see an increased level of process automation. However, automation at the service level is still lagging. The aim is to go beyond operational efficiency towards service excellence both internal and external, deploying the technologies to address specific client service objectives, competitive differentiation and even to integrate with client/supplier processes.
Nonetheless, there is also strong evidence that many of the industrial manufacturing and transportation and logistics companies in the region truly are leaders. For example, some regional companies in the airline sector are developing world class digital capabilities in both customer experience as well as operations.
Industrial manufacturers are also well on their way. For example, a leading cable manufacturing company has already achieved an advanced level of digitisation in most plants. Over the past few years the company has invested close to 10% of their annual revenues in implementing various processes and value chain optimisation measures including:
Looking ahead, 62% of Middle East survey respondents expect to reach an advanced digitisation level in five years’ time. This lags behind the 72% reported globally. In part, this reflects the fact that sectors such as electronics and automotive that are setting much of the global pace don’t have a strong manufacturing presence in the region. Nonetheless, Middle Eastern companies will want to ensure that they maintain momentum.
In common with our global survey results, advanced digitisation and integration of the horizontal value chain, with suppliers, customers and other value chain partners, is progressing a little slower than with the vertical value chain. But, here again, the potential is immense even in sectors that are not immediately associated with the cutting edge of Industry 4.0.
In engineering and construction, for example, better availability of relevant information, rapid issue resolution, collaboration technologies with suppliers and customers, and collaborative working in the design, construction and operation of projects are among the key ways in which digitisation is improving efficiency and resource use. The transformative potential of Industry 4.0 is reflected in the high proportion (70%) of interviewees from the region reporting that they expect the highest levels of future digitisation and integration to be in the area of digital business models and product services. The potential can be seen in one of the region’s most important industries - petrochemicals. For chemicals companies, there is considerable scope to gather and leverage better knowledge about the chemical and physical properties of the product in the customers’ application and use that to customise products, improve collaboration and develop shared tools and services. Additionally, some chemicals companies are already exploring the opportunities that arise from a wider digital ecosystem in their product markets. They are looking at end-market outcome data and using it not just to inform product development, but also to provide value-added services to customers.
Global Industrial Manufacturing & Automotive Leader, Principal, PwC United States
Tel: +1 734-773-8902
Head of EMEA Industry 4.0 Digital Operations Team, PwC Middle East
Tel: +49 170 939 1263