Manufacturers will be pressing ahead with their M4.0 investments as they expand their digital deployments in operations, a new MLC survey reveals.

Despite economic uncertainty, manufacturers are moving ahead with digitizing plant and factory floor operations and are anticipating significant progress in doing so by 2025.

This is one of the key findings of the Manufacturing Leadership Council’s new survey on Smart Factories and Digital Production (formerly called Factories of the Future) that was conducted in January. The survey was designed to assess how manufacturers are utilizing digital technologies across their production plants and factories, what technologies they expect to invest in to further their digitization plans, what benefits they expect from digital transformation of their operations, the challenges in achieving those benefits, and the potential impact of digital transformation on the industry’s competitiveness.

Here are the key findings. Selected graphs from the survey follow.

Economic Outlook and Impact on M4.0 Investments

Manufacturers’ outlook for the U.S. economy in 2023 is a mixed bag, with 38% expecting a recession to occur later this year. But 23% expect moderate growth in the economy and no recession, while 16% expect inflation to ease and growth to rebound in the second half (Chart 1).
The economic context, however, does not appear to be constraining Manufacturing 4.0 investments. Fully one-third of survey respondents said they expect M4.0 investments to increase this year, while another 51% said they expect investments to continue unchanged (Chart 2).

Status of Digital Adoption

The focus of M4.0 efforts has shifted to broader deployments, with 33% reporting that they are currently implementing M4.0 company-wide, compared with 24% last year. There was also a slight uptick in those implementing single M4.0 projects, to 17% this year from 15% last year (Chart 4).
The shift to more significant deployments is also reflected in the stage of digital adoption by functional area. For example, the percentage of those reporting an advanced stage of digital adoption in production and assembly operations rose to 16%, from 9% last year. Those reporting they had reached an advanced stage in equipment maintenance operations rose to 13%, from 8% in 2022 (Chart 5).

Measuring Digitization

End-to-end or extensive digitization of a variety of factory-related operations is still aspirational at most companies, but intentions over the next couple of years are very strong, with some areas anticipated to experience exponential progress.
By 2025, for example, nearly 10% of respondents expect to have their full factory operations completely digitized end-to-end, compared with none reporting so today. Even more pronounced in terms of intentions is plant floor equipment maintenance and service operations. By 2025, 42% expect to have extensive digitization of this process in place, compared with only about 5% today (Chart 7).
Similar anticipations of extensive digitization – rising to double digits by 2025 from single digits today – are evidenced in production/assembly (45% in 2025, compared with 9% today; Chart 8), IP-enabled plant floor networking (60%/25%), integration of plant floor equipment data with quality systems (39%/4%), and integration of design and production processes (32%/9%).
Outside the four walls, integration with suppliers and customers is also slated for significant adoption. Today, only 4% say they have extensively integrated production functions with customers and suppliers, but by 2025, 26% expect to have done so (Chart 9).

Factory Organization and Management

Very few manufacturers, only 3% according to the survey, expect their factory operations to be run autonomously. The overwhelming sentiment, by 88% of respondents, is that the future state of factory models will be a hybrid of humans and machines, incorporating elements such as robotics, digital production systems, and digital processes (Chart 10).
Nevertheless, there is considerable agreement that future factories, with the aid of AI and machine learning technologies, will be self-managing and self-learning facilities. Sixty-three percent of respondents partially agree with this characterization, and another 14% fully agree with it (Chart 11).
In assessing their technical security level against potential cyberattacks, 57% of respondents said they felt partially secure, while 30% said totally secure. Only 9% indicated they felt vulnerable to attack (Chart 12).

M4.0 Technology Usage

The survey assessed the current and planned usage of 21 technologies, all of which are in use to some degree today by respondents. The five technologies which garnered the highest percentages of those saying they planned to use them by 2025 are smart planning and scheduling tools (54%), digital twins (53%), adaptive process control technologies (50%), digital threads (47%), and machine learning and AR/VR technologies (both at 49%).
AI also had a strong showing in terms of planned usage by 2025, with nearly 36% of respondents expecting to use the technology within the next two years. By 2025, the most desired applications of AI are in production optimization, equipment maintenance and service, and in distribution, logistics, and inventory management (Chart 13).

M4.0 Opportunities and Challenges

The chief challenges manufacturers identified in implementing their M4.0 plans remain largely the same as they have been over the past handful of years. Top of the list this year were data and systems integration (49%), the need to upgrade legacy equipment (at 48%), and the lack of skilled employees (38%) (Chart 14).
The most sought-after benefits from M4.0 are also repeats this year. Better operational efficiency topped the list this year (59%) followed by better decision making (51%) and cost reduction (50%) (Chart 15).
Just over half of respondents (50.5%, down from 53% last year) opined that M4.0 would provide their companies with a unique competitive advantage, as opposed to just table stakes (46%), but a notable increase occurred in the number of respondents saying that M4.0 would be a game-changer for the industry (61%, up from 56%) in 2022 (Charts 16,17). M

Part 1: STATUS OF DIGITAL INVESTMENT AND ADOPTION

1. Mixed Bag on Economic Outlook for 2023

Q: What is your company’s outlook for the economy in 2023?

2. Majority Sees M4.0 Investments Continuing Despite Economy

Q: How does your company’s outlook for the economy translate into M4.0 technology investments for 2023?

3. The State of Digital Maturity

Q: How would you assess the Manufacturing 4.0 digital maturity level of your manufacturing enterprise? (Scale of 1-10, with 10 being the highest level of digital maturity)

4. Companywide M4.0 Implementations Increase

Q: Which activity best describes the primary focus of your company’s M4.0 digital efforts today?

5. Production/Assembly Most Advanced with M4.0

Q: At what stage of M4.0 digital adoption are the following functions in your company

6. Level of M4.0 Integration With Business Strategy

Q: How far has your company’s Manufacturing 4.0 strategy been integrated with the overall company business and manufacturing strategy? (Scale of 1-10, where 10 is fully integrated)

Part 2: MEASURING DIGITIZATION

7. Only a Fraction See Full Operational Digitization by 2025

Q: To what extent are your factory operations fully digitized end to end today, and what do you anticipate they will be by 2025?

8. Big Gains Seen in Production/Assembly Digitization by 2025

Q: To what extent are your production/assembly processes digitized today and what do you anticipate they will be by 2025?

9. Much Progress Foreseen in Integrating with Customers by 2025

Q: To what extent are your production functions electronically integrated with customers and suppliers today and what do you anticipate they will be by 2025?

Part 3: FACTORY ORGANIZATION AND MANAGEMENT

10. Hybrid Human/Machine Factory Model Expected

Q: What is the expected future state of your factory model?

11. But Self-Learning/Managing Facilities Also Foreseen

Q: Thinking about the impact of technologies such as AI and machine learning, to what extent would you agree or disagree with the following statement: “Tomorrow’s factory will evolve to be a self-managing and self-learning facility.”

12. Cyber Defenses Seen as Secure by Strong Majority

Q: As factories become increasingly networked and digitized, how would you rank your company’s technical security level against potential cyberattack/disruption to plant floor systems and assets?

Part 4: M4.0 TECHNOLOGY USAGE

13. Smart Tools, Digital Twins Highest on 2025 Plans

Q: Where does your company stand in regard to the following technologies in its production operations?

Part 5: M4.0 OPPORTUNITIES AND CHALLENGES

14. Data Issues, Legacy Equipment Are Top Challenges

Q: What do you feel are your company’s primary roadblocks to implementing your M4.0 strategy in your production operations? (Select top 3)

15. Better Operational Efficiency, Decision Making Are Chief Benefits

Q: What are the most important benefits and opportunities your company hopes to realize from embracing M4.0 in your production operations? (Select top 3)

16. Slight Majority See M4.0 Conferring Unique Advantage

Q: Do you believe that M4.0 digital adoption will create a unique competitive advantage for your company or is it merely table stakes to remain in the game?

17. Strong Majority Sees M4.0 as Game-Changer for Industry

Q: Ultimately, how significant an impact will M4.0 technologies have on the manufacturing industry?

About the author:

David R. Brousell is the Co-Founder, Vice President and Executive Director of the Manufacturing Leadership Council,

Survey development was led by Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.