Industry 4.0, Supply Chain 4.0

Transcription

1 Nomura Research Institute (NRI) India Industry 4.0, Supply Chain 4.0 Evolution of India Make In India, Smart Factory of the World 10 th December 2015 Rajiv Bajaj VP & Partner Nomura Research Institute (NRI) India Pvt Ltd

2 Introduction We are living in VUCA times. The fast pace of change and turbulent times are placing increasing demands on corporates and their management teams Difficulty in forecasting, different scenarios New business models, startup disruptions Industry 4.0, Big data, Smart mfg etc Customer/ Supplier expectations Volatile Global currency flows, Exchange rates Global commodity & asset prices Global liquidity, FII flows Equity, debt markets, interest rates Ambiguous Uncertain Global geo political environment M&A, JVs, Alliances Internal human resources engagement Technological changes, IT, Digitization, IOT Complex Political changes, Policy uncertainty Competitor strategies, Disruptions External environment, War on terror Global geo political environment, Govt changes Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 1

3 Introduction We at Nomura Research Institute (NRI) believe companies and their leaders can convert the VUCA challenge into a positive opportunity V Volatility U Uncertainty C Complexity A Ambiguity Vision Understanding Clarity Action Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 2

4 Next Frontier in Manufacturing Collaboration Companies in Germany have collaborated and launched Industry 4.0 as next generation manufacturing system Four Industry Revolutions 1784 First Mechanical Loom 1870 First Production Line 1969 Emergence of PLC Uses electronics and IT to achieve further automation of manufacturing Follows introduction of electrically-powered mass production based on the division of labour Follows introduction of water- and steam-powered mechanical manufacturing facilities 18 th Century Early of 20 th Cen. 1970~ Present Industry 4.0 Based on Cyber-Physical Systems Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: NRI analysis based on interviews and various materials. 3 time complexity

5 Next Frontier in Manufacturing Collaboration Next gen smart manufacturing/ industry 4.0 is driven by evolution of internet of things/ M2M communication, data analytics and smart devices Shop Floor to Top Floor an interconnected world data, voice, video, etc. Business Systems, ERP Supply Chain Smart Factory Distribution Center Customer Smart Grid Machine Builders Copyright 2010 Rockwell Automation, Inc. All rights reserved. Transformation of IT-connected manufacturing to optimized and sustainable plant and supply networks Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: Bosch, Siemens, NRI analysis based on interviews and various materials. 4

6 Next Frontier in Manufacturing Collaboration Siemens Industry 4.0 architecture demonstrates collaboration and smart integration of hardware & software systems Siemens Industry 4.0 HW, SW Lineups at different levels Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: Siemens 5

7 Next Frontier in Manufacturing Collaboration In order to pursue cyber physical systems (CPS) development, leading players are changing their closed/ legacy systems to more open Industry 4.0 Concept Customer Catering to advanced customers Logistics Globally integrated supply logistics Adaptation Technologies Consortium among German mid / small firms Digital Engineering Platform [Cyber Physical System] Purchasing Global sourcing of Parts, materials To cater to 5.0 billion Market Business Sustainability Resource Capability HR Global HR Education program Learn-strument Development Global engineering Production Network of Global factories Mobilization Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: NRI analysis based on interviews and various materials. 6

8 Next Frontier in Manufacturing Collaboration Leading companies like Bosch are creating new business model through convergence between product development, manufacturing & logistics Smart Factory Concept of Industry 4.0 [Bosch] 1 Customer involved 5 Fine & agile production & logistics Customer integrated engineering Resilient Factory Development Process Detection & Integration [Physical Environment] Adaptive Logistics 2 Flexible & Agile Networked Production Up-cycling Local Communication Communication Services Predictive Technology 3 Self managed factory networking Maintenance Marketplace 4 Flexible trading element technology Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: Bosch Software Innovation 7

9 Introduction Make in India - Vision A Major New National Program. Designed To Facilitate Investment. Foster Innovation. Enhance Skill Development. Protect Intellectual Property. And Build Best-In-Class Manufacturing Infrastructure An increase in manufacturing sector growth to 12-14% per annum over the medium term. An increase in the share of manufacturing in the country s Gross Domestic Product from 16% to 25% by To create 100 million additional jobs by 2022 in manufacturing sector. Creation of appropriate skill sets among rural migrants and the urban poor for inclusive growth. An increase in domestic value addition and technological depth in manufacturing. Enhancing the global competitiveness of the Indian manufacturing sector. Ensuring sustainability of growth, particularly with regard to environment Sectors: Auto, Auto Components, Aviation, Bio Technology, Chemicals, Construction, Defence Mfg, Electrical Mch, Elec Systems, Food Processing, IT & BPM, Leather, Media & Ent, Mining, Oil & Gas, Pharama, Ports, Railways, Renewable Energy, Roads Highways, Space, Textiles Garments, Thermal Power, Tourism Hospitality, Wellness Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 8

10 Made in India Vision India manufacturing companies should create the right mix of cost, performance & innovation as the made in India smart factory of the world value proposition India Value Proposition High Performance High Technology Industry 4.0 Cost Scale Limited Reliability High Precision High Quality Flexible Smart Mfg High Innovation High IT Integration Scale, Robust Frugal Engineering/ R&D Cost Performance Innovation Local Market + Export Hub Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 9

11 Manufacturing in India India frugal engineering & solution mindset can help in development of lower cost models for emerging markets Frugal Engineering Example Product Development Local Needs No More, No Less product development High Speed Digital development enabling less prototypes Light Asset Using ESOs to reduce capital investments Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 10

12 Implications for MNCs in India Leveraging India not just as market but as R&D hub/ Export hub, MNCs can stabilize the Indian business even in volatile FX and market conditions Make in India Value Proposition for MNCs New three challenges towards the 3rd biz model Growing domestic market with 1.2 B people Domestic Sales 1 Capturing New Indian Middle Class - The middle class is expanding from Tier1 to Tier 2 - Mid priced products matching local needs - Acquiring low cost production and sales channels through M&A Global R&D base Service Export 2 Utilizing Frugal Engineering - Towards the global R&D hub for emerging markets (design, development) - Proactive utilization of ESO (Engineering Services Outsourcers) Export base for Other Emerging Countries Product Export 3 Exporting from India to ROW - Market needs are similar to that of India - Possibility to leverage Indian human network - Government support for exports to Africa Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 11

13 Made in India Value Proposition - Example Indian machine tool players can leverage their understanding of Indian customer requirements an lead via Smart Frugal Indian Machines Machine Attributes and Indian Companies Value Proposition Performance Very low Low-Mid Mid High Simplicity Simple Complex Robustness Economies of scale Robust/maintenance-friendly Fragile/laborious to maintain High volume Medium volume Low volume Smart Frugal Indian Machine Automation Low Cost Automation Automation Full Integrated Automation Design & Footprint Lean TPM Friendly Medium Large Size, Loaded with Features Pricing Low price Medium price High price/premium India Value Proposition Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source RBSC ACMA IMTMA Study 12

14 Manufacturing MNCs in India Success Examples Taking BRIO and diesel engine platform developed in EU as basis, AMAZE was developed with limited efforts, reducing its cost for development Maximizing the utilization of existing platforms BRIO BRIO AMAZE Platform Existing platform used as it is Upper Body Upper-body development based on Indian consumers needs Diesel Engine System Engine Developed in European Market Engine Developed for Indian Market Downgrade the emission performance Increase displacement to match with tax exemption program Copyright(C) Nomura Research Institute, Ltd. All rights reserved. Source: Honda 13

15 Made in India Vision Indian automotive industry vision X growth Collaboration is key to success Automotive Industry Vision 2026 [Revenue Size] Units: USD Billion FY FY26 Component - Aftermarket Component - Export OE - Exports Component - Domestic OE - Domestic Government (Central, State, City) Institutions, Trade Agencies, Financial Institutions Roads Railways Ports Aviation OEMs Suppliers Logistics Service Providers Consultants, Advisors, Project Managers Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 14

16 Make in India Vision Clearly we will see OEMs, Suppliers, LSPs upgrade their activities &/or pursue new activities 1 Doing same things better Return Current activity Upgraded activity Industry 4.0 Supply Chain Doing newer things Time Automotive Industry Return Current activity New activity Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 15 Time

17 NRI India Vision & Promise We look forward to working closely with our clients to move from ive VUCA to +ive VUCA V Volatility U Uncertainty C Complexity A Ambiguity Vision Understanding Clarity Action Rajiv Bajaj rajiv.bajaj@nri.com VP & Partner Nomura Research Institute, India Mobile Copyright(C) Nomura Research Institute, Ltd. All rights reserved. 16