zapp2photo - stock.adobe.com
Manufacturing has long been considered as one of the most lucrative use cases for 5G technologies and a study from ABI Research is predicting that the market for 5G cellular connections in manufacturing will reach US$10.8bn by 2030, at a compound annual growth rate of 187%.
In its 5G and edge networks in manufacturing application analysis report, the analyst stated that 5G and edge computing constitute a technological leap that heralds a significant transformation of business models for all industries, including manufacturing and associated Industry 4.0 verticals. But it noted that before anyone has visions of a cash bonanza, to capture the value at stake ecosystem stakeholders will first need to evaluate how to measure the impact of 5G and edge deployments.
“The current Industry 4.0 digitisation discourse centres around conventional financial metrics (for example, return on investment, net profit and cash flow) as the yardstick to measure 5G and edge computing effectiveness. But these metrics are financial measurements to gauge profit and do not lend themselves to the factory floor,” said ABI Research senior analyst Don Alusha.
“Therefore, Industry 4.0 ecosystem entities must consider an alternative set of measurements that look at how 5G and edge deployments aid manufacturing in establishing operational rules to run a plant. They are throughput, inventory and operational expense for the incoming flow of capital, capital located inside and capital going out, respectively.”
The analyst expressed confidence that the three measurements would enable Industry 4.0 partners such as ABB, Bosch and Siemens to institute a direct connection between 5G’s utility and what takes place on the factory floor. It added that, in turn, they would be able to use that connection to find a logical relationship between daily plant operations and the overall company’s performance, and only then would Industry 4.0 verticals have a basis for knowing the real benefit of 5G and edge computing.
“Furthermore, equally important is the ability to measure risk when looking to adopt 5G and edge technology assets. Discussions on new technology adoption have always been based on an assessment of risk and reward,” added Alusha. “If the reward is truly compelling, adopters will take the risk. 5G and edge offer unprecedented commercial opportunities, but they inherently constitute new technologies and therefore there is a risk attached.”
In its study, ABI found that continued attempts to keep up productivity growth, increase process automation to meet changing client demands, and the need to establish a reliable supply chain that spans multiple geographies were forcing manufacturers to be more flexible and thus investigate technologies such as 5G.
“To understand the importance of supply chaining and its significance in terms of competitive advantage, one need not go any further than Walmart,” Alusha pointed out. “Walmart is the largest retailer in the world (Amazon being second) and it does not produce a single item. All it ‘makes’ is a hyper-efficient supply chain. The capacity, reliability, high-quality service and speed provided by 5G and a hyper-converged edge compute can optimise operations for a super-efficient supply chain.”
Overall, ABI said that with greater reliability and data speeds that will surpass those of 4G networks, a combination of 5G and local edge compute would pave the way for new business value. It said it expected commercial benefits to accrue along three broad aspects: agility and process optimisation; better and more efficient quality assurance; and productivity improvement.
“The implications for solution providers such as Ericsson, Huawei, Nokia and ZTE are that they must enhance their ‘value add’ by complementing their deep technical expertise with business expertise, including vertical industry knowledge, new functional expertise (sales, marketing and accounting), and solution design and consulting expertise tailored at niche use cases,” Alusha concluded.
Read more about 5G
- Chip giant hits throttle on communication solutions designed to enhance road safety and facilitate smart transportation systems, including support of automated driving.
- GreenLake cloud-native technologies from HPE and Aruba designed to help telcos build and deploy 5G networks and better integrate with Wi-Fi 6 networks.
- Verizon Business links up with science and technology research body to explore opportunities for 5G to impact national security, energy efficiency and advance science in the US.