As 5G draws ever nearer, many businesses are asking themselves how they can apply the unprecedented power and capacity of the technology to their business models and leverage a performance advantage.
One industry where we see early benefits being realised is manufacturing. Indeed, according to KPMG research and analysis that we presented alongside Vodafone at Mobile World Congress this year, the manufacturing sector will be the first to significantly unlock the value of 5G, amounting to perhaps 5% of a typical manufacturer’s annual revenue. With manufacturing representing 11% of the UK’s Gross Value Added (GVA), this could be significant, not only for individual businesses but for the national economy as a whole.
So, how will this come about? The fact is that with current 4G, manufacturing is set up in a linear process: materials are ordered, machines are pre-set and managed by people, and they are often maintained according to estimated product lifetime, not always according to actual wear and tear. The result is a high potential for costly breakdowns and waste as well as a process that cannot easily respond to real-time changes in demand.
It is also a process that cannot easily accommodate the growing demand for customisation. At present, there is a trade-off between operational efficiency and the ability to customise goods according to individual demands. Customisation requires time to set up and brings high operational costs, eating into margins.
However, with 5G all this could change. We will see far more dynamic, self-regulating and self-adjusting processes that will translate into agility, speed and higher productivity. Smart sensors, enabled by 5G, will further drive automated processes, enabling machines to update themselves and initiate a new process when there is demand.
These smart sensors will also be able to assess the quality of components that are being manufactured in real time, reducing re-working requirements. Through a combination of AI-based planning, edge computing, high bandwidth with low latency, connected machines, AR-enabled workers and integrated logistics, 5G has the potential to transform the way manufacturers work.
Leading companies around the world are using IoT to bring operational technology (OT) and informational technology (IT) together for the first time. By creating a universe of connected things, they are able to:
This agile automation will apply to the manufacturing of all kinds of goods. Whether they are automotive components, electronic goods, clothing or textiles, 5G will create significant new value. The intelligent efficiency of processes will cut costs, reduce waste and enhance quality. Customers will benefit through greater personalisation, lower cost and faster speed of delivery – greater customer satisfaction should increase their likelihood to re-order and generate further sales.
5G and the fourth industrial revolution hold the potential to revolutionise the manufacturing process.” comments Stephen Cooper, Head of Industrial Manufacturing at KPMG UK. “Our conversations with clients highlight the need for C-suite manufacturers to take an informed, strategic approach, mapping out a clear journey towards transformation that will make the most of these innovative technologies and drive lasting performance improvement.
While manufacturing will, in our view, be the earliest significant beneficiary of 5G (to the tune of £469bn globally), it won’t be long before other sectors start reaping the benefits too. The technology, media and entertainment sectors are obvious candidates, as are mobility businesses – but we also believe less 'front-of-mind’ sectors such as mining will gain too. Here, the chief benefits are likely to be through reducing wastage in unnecessary maintenance or premature replacement of machinery, similar to the benefits we’ve described for the manufacturing sector. 5G-enabled sensors will be able to report when a component actually needs replacing, rather than when it is believed to be due. Maintenance costs could therefore be safely reduced and machinery lifetimes extended.
These are the kinds of transformational effects that 5G will enable for enterprise customers. We will have come a long, long way from the days when the next G of bandwidth essentially just meant slightly faster broadband speeds!