Report Summary

For developed and developing manufacturing economies alike, networked manufacturing—which uses data flows to drive better communication, co-ordination, and control in and around manufacturing—has the potential to secure competitiveness. Making use of such information flows promises greater production flexibility and a host of other benefits. This report, written by the Economist Intelligence Unit and sponsored by Siemens, discusses the promise of networked manufacturing, the conditions that may enable a successful shift to networked manufacturing, and the potential economic impact of digital production. The report is also available here in German and Chinese translations.

Date Published: April 7th 2014

Why read this report

  • Digital production offers manufacturers vital flexibility. It may enable manufacturing of small volumes and customised production. In turn, this has the potential to offer manufacturing companies greater flexibility to respond to the market. At the same time, networked production promises greater efficiencies.
  • The shift towards networked production is just beginning. So far, there is little agreement among manufacturers and policy makers on how to shift towards digital production, and few companies have taken steps to adopt digital production.
  • Among the conditions that enable a successful shift to networked manufacturing are freedom of trade and freedom of information across borders. Robust communications networks, technical standards and data security are further pre-requisites. Not least, workforce skills are a key requirement. Policy makers can help to foster an environment conducive to digital manufacturing by focusing on these pre-requisites.
  • Whilst governments have a number of policy levers at their disposal, they cannot drive the shift to digital manufacturing alone. Many of the pre-conditions for networked production need to be provided in concert with efforts among stakeholders in industry, education, research, and other fields.
  • Networked production offers manufacturing industries in developed nations the opportunity to enhance their competitiveness by becoming more flexible and more efficient. Equally, digital production represents an opportunity for developing nations to maintain or enhance their levels of competitiveness as their cost advantage diminishes in the face of rising labour costs.
  • Experts forecast that networked manufacturing will drive productivity, but they say that it is unlikely that the shift to next-generation networked production will lead to significant declines in employment. Historically, they point out, gains in manufacturing productivity have had a positive impact on the economy and on job creation.
Networked production will make manufacturing more decentralised and more flexible.It will emphasise the need for good infrastructure because it will require just-in-time deliveries, and it will require excellent communication between the plants.
Rudolf van der Berg, information economist and policy analyst, Organisation for Economic Co-operation and Development

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