Digital operations to drive smart manufacturing

A leading global automotive component manufacturer wanted to convert five of its plants, located in five different countries, into smart factories. In 2018, the management decided to embark on this transformation journey on its own but soon faced roadblocks. The initial analysis by PwC after being engaged in 2019 revealed multiple findings:

  • Inconsistent technology and business processes across the plants globally – a large part of these being manual
  • Lack of benchmark key performance indicators across functions and plants
  • Disjointed Operational Technology (OT) and Information Technology (IT) systems, some of which were home-grown; high rate of defects in finished goods; high unplanned machine failure
  • Some plants had a low reliability factor due to the age of assets

PwC’s Digital Operations team prepared a complete blueprint for the digitalisation of the five plants using an ‘India-first approach’. SMEs from across multiple competencies designed a ‘unified technology framework’ by combining various Industry 4.0 technologies. Three plants have gone live in the last two years and have seen significant improvement in Key Performance Indicators (KPIs) (e.g. Overall Equipment Effectiveness (OEE), Defect Rate (DR), Mean Time To Repair (MTTR), Mean Time Between Failures (MTBF), supply chain efficiency) across the value chain. This indicates that it is imperative for companies to identify the exact business problem to reap greater benefits from a digital transformation programme.

In the manufacturing sector, organisations are adopting new technologies to ensure machine-to-machine connectivity, human-machine communication and automation. Advanced solutions that leverage Artificial Intelligence/Machine Learning, deep learning and other technologies are building greater autonomy in machines and essential functions and processes. Digitalisation is driving innovation and significant improvements in efficiency. In addition, it is generating data across the value chain that is helping businesses build new age products and IoT-enabled services.

However, the pace of digital transformation has not been very rapid, with a mere 54 factories having joined the World Economic Forum’s Global Lighthouse Network of most advanced manufacturing sites in the last three years.1 We hope that these lighthouse organisations will lead to faster propagation of Industry 4.0 in the larger manufacturing community, driving operational and environmental impact.

In our experience, industries move through four stages of increasing maturity when expanding the capabilities and effectiveness of their ecosystems – Digital Novice, Digital Follower, Digital Innovator and Digital Champion.

Digital Operations and Smart Manufacturing

Four stages of digital maturity and sector-wide status

In the Digital Operations Study conducted a couple of years back, PwC interviewed 1,155 manufacturing executives in 26 countries. Based on the survey results, we developed an index that ranks companies by their digital operations maturity. The study revealed that only 10% of global manufacturing companies across sectors are Digital Champions, while almost two-thirds have barely or not yet begun the digital journey.

The approach of our Digital Operations team is outcome-focused, reliable and adaptable. The overall digital transformation journey comprises vision, strategy, design and implementation. We believe in partnering with our clients on the digitalisation journey, which starts with strategy formulation and continues till benefit realisation from successful implementation. The typical benefits would include:

Revenue growth

Revenue growth (1.2–1.4x)

Cost optimisation through

Cost optimisation through

  • Efficiency improvement (OEE enhancement 12–14%)
  • Quality enhancement (8–10% Parts Per Million (PPM )improvement)
  • Optimised material sourcing (global procurement avenues, savings in supply chain cost)
  • Reduction in operations (5–8%) and maintenance cost (10–15%)
Enhanced operations

Enhanced operations

  • High-process automation (10–20% Full Time Employee (FTE) optimisation)
  • Better visibility and control (paperless factory, decision support system)
  • Risk predictions and real-time mitigation (predictive models).

Note: The percentage ranges are based on our experience and may vary based on client baselines.

In the Indian context, faster adoption of technology in manufacturing has become a critical requirement following the outbreak of the COVID-19 pandemic. Organisations that adopted technology were able to react better and faster to the crisis. The term ‘smart factory’ is no longer just a buzzword, and Indian manufacturers have already embarked on the digital transformation journey. But there is long way to go, and agility and scale of implementation are key factors to ride the Industry 4.0 wave. A robust roadmap and digital vision are the first steps on this journey.


1. These 10 new 'Lighthouse' factories show the future of manufacturing is here

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