Introduction Our 2017 research1–Smart Factories: How can manufacturersrealize the potential of digital industrial revolution– found that theinvestments that manufacturers are making in smart factories areset to deliver benefts of up to $1,500 billion over the next fveyears. Investment levels varied widely between industries, but itwas notable that automotive was one of the most bullish sectorsin this domain.We were keen to understand whether this enthusiasm has ledto tangible success. Drawing on the 220+ auto executives wesurveyed last year, we surveyed a further 100 executives. Ouranalysis has some signifcant fndings and implications for theautomotive industry: 1. Smart factories could add up to $160 billion annually to theglobal auto industry as productivity gains by 2023 onwards. 2. The automotive industry is the most enthusiastic about smartfactories – it is making larger investments and setting highertargets for its digital manufacturing operations than anyother sector. 3. However, few automotive manufacturers have translated thisenthusiasm into real progress –42% of smart factory initiativesare struggling and the digital maturity of their manufacturingoperations is below par.4. Those that are making the best progress invest 2.5 times morethan the companies that are struggling. Additionally, they areinvolving their leadership teams, developing their talent, andinvesting in the right areas. By the “right areas,” we mean thosesmart factory components that are critical for the future, suchas manufacturing intelligence and predictive maintenance.5. More manufacturers could make a success of this opportunityif they follow in the footsteps of a cohort we call the “digitalmasters.” This is a group that, in particular, has manufacturingoperations functioning at a high level of digital maturity. 2Automotive Smart Factories 3 Our analysis reveals that smart factories could add an extra$160 billion of productivity gains annually to the globalautomotive industry by 2023 onwards (see Figure 1). Based on our survey, automotive industry executives expectaverage productivity growth in smart factories to average 30%by 2023:The industry expects to have 24% of its factories as “smart”operations in this time period. This will lead to increasedproductivity to the value of $160 billion globally, which isaround 7% of total annual industry value.2Capgemini believes that as many as 50% of automotivefactories have the potential to be smart factories by 2023.3In this optimistic scenario, the annual value from smartfactories to the industry reaches $344 billion (15% ofindustry’s global annual revenues as of 2017). The size of the smart factory prize:$160 billion by 2023 onwards Figure 1. Smart factories are expected to add up to $160 billion to the global auto industry. Factors A. Expected productivity gain per factory by 2023 onwards30% 24% 7% $2,290 billion $160 billion B. Expected number of factories to be smart by 2023 onwards C. Absolute gain on productivity (A x B) D. 2017 industry revenue E. Estimated productivity gains (C x D) by 2023 onwards Scenario based onindustry estimates Source: Capgemini Digital Transformation Institute Smart Factory Survey 2017–18, Capgemini Digital Transformation Institute analysis. We took a detailed look at the impact of smart factories onthe fnancials of large automotive manufacturers. Our analysisconfrms that the auto companies stand to make substantialproductivity gains by 2023. This will help them achieve break- even on smart factories within a year of those operationsreaching full potential. We have assessed the fnancial impact of adoption for anaverage automotive Original equipment manufacturer (OEM)and an average automotive supplier from the global top ten,based on annual revenue. The top-ten OEM category has anaverage annual revenue of $158 billion (as of 2017) and anoperating margin of 6%:In the scenario shown in Figure 2, where the smart factoryadoption rate is expected to be 24% (as per our survey), webelieve that automotive OEMs would be able to increasetheir operating proft by up to $4.6 billion – a 50% increasefrom the current levels. For a top-ten supplier, this gainwould stand at $1 billion. This jump would result from a 30%productivity gain and 0.5%–7% reduction in operationalcosts of logistics, material, and administration owing toSmart factories can help a top-ten global automaker earn an additional $5 billion inoperational proft 4Automotive Smart Factories 。。。。。。