The Factory of the Future

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Across the world and for many decades, the

Laboratory for Machine Tools and Production
Engineering (WZL) of RWTH Aachen University
has stood for successful and forward-thinking
research and innovation in the area of production
engineering. In six different work areas, research
activities not only relate to fundamental theories
and findings but also to the application of findings
in an industrial context. Furthermore, practical
solutions are worked out for the purposes of
rationalizing production.
The Factory of the Future

Daniel Küpper, Kristian Kuhlmann, Sebastian Köcher, Thomas Dauner, and

Peter Burggräf

December 2016
AT A GLANCE

In the factory of the future, manufacturers will improve production by applying new
design principles, implementing digital technologies, and integrating processes
across the value chain. Such steps will reduce total conversion costs by up to 40%.
Flexibility, quality, speed, and safety will also be enhanced.

Industrial Companies Recognize the Opportunity

Production managers from leading industrial companies have high ambitions to
enhance their factories by implementing elements of the factory of the future, but
they are struggling to build momentum. Of more than 750 respondents, 74% said
that their company has implemented or plans to implement elements of the
factory of the future within the next five years, but only 25% said they achieved
their related targets last year.

Making the Vision a Reality

Industrial companies should focus on three dimensions: plant structure, plant
digitization, and plant processes. They also must address topics related to three
enablers—strategy and leadership, employee skills, and IT infrastructure—to make
this vision a reality. Finally, manufacturers must develop an implementation
roadmap and a multistep approach to tailor it to the company’s starting point.

2 The Factory of the Future

N ew technologies are profoundly changing industrial production, giving
rise to “the factory of the future.” What will the factory of the future be like
with respect to its structure, technologies, and processes? What enablers will
manufacturers need in terms of strategy and leadership, employee skills, and IT
infrastructure to make it a reality?

The Boston Consulting Group recently conducted a study that addressed these
questions. The study focused on a global survey of more than 750 production man-
agers from leading companies in three industrial sectors: automotive (which in-
cludes suppliers and original equipment manufacturers, or OEMs), engineered
products, and process industries. The goals were to define a vision for the factory of
the future in 2030, assess the benefits, and create a roadmap for implementation.
Our research partner was the Laboratory for Machine Tools and Production Engi-
neering at RWTH Aachen University.

We found that industrial companies have high ambitions to enhance their facto- Industrial companies
ries—85% of respondents believe they can benefit from implementing elements of have high ambitions
the factory of the future. But they appear to be struggling to build momentum. to enhance their
Among survey respondents, 74% said that their company has implemented, or plans factories—85% of
to implement (within the next five years), elements of the factory of the future, but respondents believe
only 25% said they achieved their related targets last year. When we looked at the they can benefit from
participants’ responses by industrial sector, the results were consistent with the implementing
overall findings. Furthermore, we found that German companies are the most ad- elements of the
vanced: 47% of respondents said they have developed their first concepts for the factory of the future.
factory of the future. However, even among German companies, nearly 1 in 5 said
that they are not yet prepared to introduce the related technologies.

Many manufacturers have started to selectively implement elements of our vision

for the factory of the future. Below, we provide many examples of these efforts,
most of which are being piloted on a small scale in specific areas of the plant. In or-
der to realize our vision, manufacturers must apply these advances comprehensive-
ly throughout their plants and across an integrated value chain.

We analyzed how conversion costs and manufacturing costs would be affected ten years
after starting implementation. We found that total conversion costs will be reduced by
up to 40%. (See Exhibit 1.) Total manufacturing costs will be reduced by up to 20%, de-
pending on the material costs. Manufacturers will also capture the benefits of enhanced
flexibility, quality, speed, and safety. Over a ten-year period, a company’s cumulative
investments to capture these benefits will amount to 13% to 19% of one year’s revenue.

The Boston Consulting Group • RWTH Aachen University 3

 Exhibit 1 | The Factory of the Future Promotes Efficient Operations

IMPACT ON CONVERSION COSTS1

AUTOMOTIVE Total2 40

Component manufacturing 50

Press shop 30

Body shop 25

Paint shop 25

Final assembly 50

ENGINEERED Total
PRODUCTS 40

PROCESS Total
INDUSTRIES 25

0 10 20 30 40 50
Outer range of impact Impact (%)

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen
University, 2016 Factory of the Future Study.
Note: The full effect will be achieved approximately ten years after the start of implementation; the net effect
assumes moderate inflation (1% to 2%).
1
Conversion costs are the manufacturing costs less material costs.
2
The total is the weighted average across all plant shops.

In this report, we focus on automotive suppliers and OEMs. In recent decades, such
companies have been the leaders in implementing innovations in production to im-
prove efficiency. Their initial efforts to implement the factory of the future help to
illustrate the use cases and improvement opportunities and serve as a model for
other industrial manufacturers.

What Is the Factory of the Future?

The factory of the future is a vision for how manufacturers should enhance produc-
tion by making improvements in three dimensions: plant structure, plant digitization,
and plant processes. We discuss the elements of each and provide selected examples
that illustrate how leading automotive suppliers and OEMs are testing new concepts.

Plant Structure
The plant structure of the future has a more flexible, multidirectional layout, with a
modular line setup and environmentally sustainable production processes. Respon-
dents to our survey from the automotive industry expect plant structure to be im-
portant in the factory of the future: 86% said this dimension would be highly rele-
vant in 2030, compared with 43% who think it is important today.

•• Multidirectional Layout. The factory of the future deploys a multidirectional

layout in which products are placed on driverless transport systems and individ-

4 The Factory of the Future

 ually guided through production by communicating with production machinery.
The Audi R8 manufacturing facility in Heilbronn, Germany, does not have a
fixed conveyor. Instead, driverless transport systems, guided by a laser scanner
and radio frequency identification technology in the floor, move the car bodies
through the assembly process. Such systems enable assembly layout changes to
be made quickly.

•• Modular Line Setup. The plant structure of the future has interchangeable line
modules and production machinery that can be easily reconfigured. Toyota is
setting up “simple and slim” production lines in factories in Mexico and China.
The automaker will use a modular conveyor, which is built on the factory floor
instead of in a pit, giving workers greater flexibility in changing the length of the
line and in moving the line-side equipment.

•• Sustainable Production. The factory of the future is designed for ecologically

sustainable production, including the efficient use of energy and materials.
Webasto has equipped its facility in Arad, Romania, with LED lighting and
an active nighttime cooling system, thereby significantly reducing energy
consumption.

Plant Digitization
Manufacturers are increasingly using digital technologies. Of automotive respon-
dents, 70% said that plant digitization would be highly relevant in 2030, compared
with 13% who think it is important today. Companies are enabling smarter automa-
tion and promoting efficiency in various ways.

•• Installing Smart Robots. Robots can perform more complex tasks than human
workers can. Robots can also collect information from each work piece being The plant structure of
produced and automatically adjust their actions to its characteristics. Changan the future has
Ford has installed flexible industrial robots on a “body in white” welding line. interchangeable line
The company plans to use the robots’ functionality, together with a body- modules and
framing system, to process six models on a single welding line, performing a production machinery
changeover to accommodate different models within 18 seconds. that can be easily
reconfigured.
•• Using Collaborative Robots. Robots can collaborate with humans without
protective fences. In the power train preassembly at Volkswagen’s plant in
Wolfsburg, Germany, a collaborating robot supports workers by tightening
screws that are difficult for them to reach.

•• Implementing Additive Manufacturing. Manufacturers are implementing 3D

printing of tools and components. To build the Rolls-Royce Phantom, BMW has used
3D printing in series production to create more than 10,000 parts, such as plastic
holders for center lock buttons as well as for electronic parking brakes and sockets.

•• Employing Augmented Reality. The use of augmented reality, such as through

smart glasses, enables employees to see information as an overlay on their visual
field. This assistance is especially helpful in, for example, assembly, maintenance,
and logistics. At a plant in Germany, Volkswagen provides 3D smart glasses to
logistics workers to facilitate order picking.

The Boston Consulting Group • RWTH Aachen University 5

 •• Applying Production Simulations. Manufacturers are using real-time, 3D rep-
resentations of production to optimize processes and material flows. The 3D sim-
ulation of material flows at Faurecia enables more flexible responses to changes
and allows operators to visualize workflows prior to adjusting the production line.

•• Developing Immersive Training Sessions. Training methods have been

developed that use 3D simulations to help workers learn in a realistic environ-
ment. Mercedes-Benz has developed virtual assembly lines with digital models
of the vehicle and assembly components. Employees use an avatar in the virtual
environment to analyze the best way to perform an assembly task.

•• Implementing Decentralized Production Steering. Companies are using

advanced technology to enable communication among work pieces, machines,
and people, thereby creating autonomous production processes. Bosch is
By using new developing tools that detect their location in the plant. On the basis of a tool’s
digital technologies, location and the information it receives about the exact position of a work
manufacturers are piece, the tool automatically loads the appropriate program to perform a
taking lean specific action. For example, a screwdriver adjusts its torque to tighten screws on
management to a given work piece.
the next level and
exploiting its full •• Using Big Data and Analytics. Manufacturers are using applications to auto-
potential. matically analyze large amounts of data. To produce cylinder heads at its plant
in Untertürkheim, Germany, Mercedes-Benz uses predictive analytics to exam-
ine more than 600 parameters that influence quality.

Plant Processes
By using new digital technologies, manufacturers are taking lean management to
the next level and exploiting its full potential. Indeed, our survey results indicate
that optimizing plant processes will be even more important in the future: 97% of
automotive respondents said lean management would be highly relevant in 2030,
compared with 70% who said it is important today. Two key elements of lean man-
agement that are being further enhanced by digital technologies are customer cen-
tricity and continuous improvement.

•• Customer Centricity. Manufacturers are gaining a better understanding of

customer needs by, for example, applying big data analytics to obtain insights
into how customers use products. Companies are, in turn, using these customer
insights to improve their product designs and production processes. Companies
are also envisioning using new technologies to allow customers to provide input
regarding the production of their vehicle. According to Daimler, customers will
be able to request last-minute modifications, such as a change to a vehicle’s
color while it is in route to the paint shop.

•• Continuous Improvement. Manufacturers are using a wide variety of new

technologies to perform more value-adding activities and to continuously
improve production processes. Bosch has implemented software that analyzes
data about its production of fuel injectors in real time. The software monitors
process adherence and recognizes trends. It automatically transmits information
about deviations to operators, allowing them to improve the process accordingly.

6 The Factory of the Future

A Fully Integrated Value Chain
In the factory of the future, the value chain—made up of suppliers; component
manufacturing; press, body, and paint shops; final assembly; and the customer—will
be fully integrated, blurring traditional boundaries. (See Exhibit 2.) Throughout the
value chain, manufacturing will be facilitated by the comprehensive integration of
IT systems and the availability of all required production data. Within a company,
this integration will strengthen connections across R&D, production, sales, and oth-
er functions. For example, Continental Tire has accelerated product testing by set-
ting up a research and production facility in which all machinery is fully integrated
using sensor systems and software. Such integration will also be possible outside a
company’s boundaries, creating real-time connections with suppliers and custom-
ers. An OEM’s press shop, for example, will be able to adjust the pressing parame-
ters for a specific coil on the basis of data provided by the supplier. Customers will
be able to view the production of their vehicle in real time and request last-minute
changes. Of automotive respondents, 87% said that integrated value chains will be
relevant in 2030. These respondents overwhelmingly recognized the benefits: reduc-
ing costs as well as improving production flexibility, quality, and speed.

For each plant shop in this integrated value chain, automotive respondents provided
insights into what they considered will be the most important elements in the di-
mensions of plant structure, plant digitization, and plant processes. (See Exhibit 3.)

Component Manufacturing
Component manufacturing will benefit from greater flexibility and improved work-
ing conditions. For example, 80% of automotive respondents cited the relevance of
decentralized production steering and, in particular, the automated adjustment of
machine parameters in the factory of 2030. Nearly all of these respondents pointed
to flexibility improvements currently arising from communication between ma-
chines and products. When producing camshafts, ThyssenKrupp assigns each one a In the factory of the
Data Matrix code comprising product data. The production machines scan each future, the value
camshaft’s code and make appropriate adjustments to their parameters prior to ex- chain will be fully
ecuting manufacturing tasks. Additionally, more than 70% of respondents noted integrated, blurring
that additive manufacturing (commonly known as 3D printing) will be relevant to traditional
component manufacturing in 2030. The main applications cited for additive manu- boundaries.
facturing today are not only the creation of prototypes but also the printing of tools
and spare parts.

Press Shop
The press shop will benefit from improved equipment effectiveness. Of automotive
respondents, 93% cited the relevance of predictive maintenance in 2030. In fact,
most respondents have implemented, or plan to implement within the next two
years, their first applications of predictive maintenance. Schuler has developed ro-
bots that not only move parts along the press line but also monitor the condition of
components and signal to workers if a replacement is required. Fraunhofer IWU is
conducting research to determine how to enable a press to take corrective measures
on the basis of information it receives about a raw material’s specific characteris-
tics. Energy efficiency is expected to be relevant in 2030 by 85% of respondents.
Škoda Auto will recover energy released during pressing by installing press lines
that consume up to 15% less energy, compared with conventional systems.

The Boston Consulting Group • RWTH Aachen University 7

Exhibit 2 | The Factory of the Future Is a Fully Integrated Plant
VALUE CHAIN ELEMENTS OF THE PLANT SHOPS SUPPORT
SYSTEMS
Fully connected supply chain
Suppliers

Decentralized Smart robots Modular line setup

production
steering

Component
manu-
facturing
Digital plant
logistics

Smart presses Predictive Additive manufacturing

maintenance

Press shop

Modular line setup Smart robots

Production
simulations

Body shop

Energy efficiency

Big data
and analytics

Assistant
Paint shop systems

Decentralized
production steering Data-driven quality control

Multi- Smart robots

Modular line setup
Final directional
assembly layout

Fully connected supply chain

Data connectivity Coil RD tag Component
Customer
Augmented Intelligent Mobile Mobile interface to
reality machinery machinery production

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University, 2016 Factory of the Future Study.
Note: RFID = radio frequency identification.

8 The Factory of the Future

 Exhibit 3 | Key Elements Along the Automotive Value Chain in the Factory of the Future

VALUE COMPONENT
CHAIN MANUFACTURING PRESS SHOP BODY SHOP PAINT SHOP FINAL ASSEMBLY

Elements that are expected to be highly relevant in 2030 (% respondents)

Modular 92 Energy 85 Modular 92 Energy 85 Modular 92
PLANT line setup efficiency line setup efficiency line setup
STRUCTURE
Flexible 61 Multidirectional 80
equipment1 layout
Predictive Decentralized
Smart robots 85 Smart robots 85
maintenance 93
Smart robots 85 production 80
steering
Decentralized Smart Production Big data Decentralized
production 80 presses 85 simulations 81 and analytics 72 production 80
PLANT steering steering
DIGITIZATION Decentralized
Digital plant 79 Production Advanced 69 Digital plant 79
logistics simulations 81 production 80
steering painting logistics

Additive Digital plant 79 Big data Automated Augmented 65

manufacturing 72 logistics and analytics 72 quality control 69 reality

Lean 97
management2 New technologies will enhance lean management 67
PLANT
PROCESSES
New technologies will make lean management obsolete 7

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University, 2016 Factory of the Future Study.
1
Flexible equipment includes flexible presses for highly functional and rare parts as well as 3D printing for parts with complex structures.
2
Lean management is expected to be relevant throughout the value chain.

Body Shop
Automotive companies are using new technologies to promote greater flexibility in
the body shop. More than 80% of automotive respondents said that smart robots
and production simulations will be relevant in the body shop in 2030. Already,
automotive manufacturers are using smart robots that communicate with the car
body and adjust their actions in response to the information received, while simula-
tions assist in the planning and configuration of the shop’s layout. For the body
shop that builds the Jeep Wrangler, Kuka and Microsoft have developed an intelli-
gent system that not only connects all robots but also monitors their wear and tear.
Magna has implemented a simulation program developed by Siemens that facili-
tates digital planning and replicates body shop processes, such as the interaction of
up to six robots.

Paint Shop
The paint shop will benefit from technologies that improve energy efficiency and
the quality of the paint job. Of automotive respondents, more than three-quarters
said that energy efficiency will be relevant in the paint shop of 2030. For example,
in its Leipzig factory, Porsche currently uses waste heat from a nearby biomass
power plant to provide a carbon-neutral supply of up to 80% of the paint shop’s
heat requirements. Nearly three-quarters of automotive respondents noted that big
data and analytics will be relevant. Most automotive companies have already start-
ed to use big data in the paint shop. The goal is to analyze data to identify the fac-
tors that cause variances in paint jobs and thereby improve quality.

The Boston Consulting Group • RWTH Aachen University 9

 Final Assembly
Final assembly will benefit the most from a more flexible, multidirectional layout. In-
creasingly, automotive companies will have to offer a wider variety of car models to meet
higher customer expectations and government regulations; a multidirectional layout will
enable producing a wider variety while maintaining high production output. More than
90% of automotive respondents expect a modular line setup will be relevant in final as-
sembly in 2030, with the flexible and cost-efficient replacement of line elements seen as
especially important. For example, Toyota is introducing smaller and more flexible lines,
leading to reduced line investments. Eighty-five percent of respondents cited the rele-
vance of smart robots in final assembly. Companies are hoping for advancements in
robotics that would allow these devices to take on tasks requiring high precision. And
more than 75% of respondents noted that digital plant logistics will be relevant. This can
be used, for example, to automatically replenish workstations with preassembled parts.

With respect to plant processes, lean principles will be important throughout the
value chain in 2030. Two-thirds of automotive respondents expect that new tech-
nologies will enhance lean management and the continuous improvement of pro-
duction processes. The use of production simulations, for example, will enable man-
ufacturers to increase “pull” in production, thereby reducing waiting times and the
work in progress. Augmented reality (for example, smart glasses) will support opera-
tors in executing assembly and maintenance activities by displaying operating proce-
dures. By analyzing production data with advanced big data algorithms, manufactur-
ers will gain a significantly better overview of each production step, allowing them
to continuously improve production processes. Only 7% of automotive respondents
expect that new technologies will make lean management obsolete.

The Three Enablers

To realize the vision of the factory of the future, auto manufacturers must address
The strategy for topics related to three enablers: strategy and leadership, employee skills, and IT in-
implementing the frastructure. Companies must make the factory-of-the-future strategy an integral
factory of the future part of their corporate strategy and adapt their leadership styles to new ways of
must be anchored in working. Manufacturers also must focus on building a workforce with the new set
the overarching of skills required for performing technology-centered production tasks. Finally, com-
company strategy. panies must install IT infrastructure that supports connectivity throughout the val-
ue chain while ensuring the security of data.

Strategy and Leadership

Manufacturers must include their strategy for implementing the factory of the fu-
ture as an element of their overall company strategy and put in place organization-
al structures that promote rigorous governance. Of automotive respondents, 35%
see issues relating to the organization as a major challenge. Companies must ad-
dress three organizational requirements:

•• The Strategy and Roadmap. The strategy for implementing the factory of the
future must be anchored in the overarching company strategy. Approximately
one-third of automotive respondents see the factory-of-the-future strategy as a
major challenge. Many companies lack a strategic vision to guide a structured
implementation process.

10 The Factory of the Future

•• Governance. To realize their vision, manufacturers must put in place organiza-
tional structures (such as clear responsibilities for steering and coordinating all
efforts related to the factory of the future) and define the processes required to
ensure that their factory-of-the-future strategy is translated into implementation
actions. Approximately one-third of automotive respondents see governance
as a major challenge, with the main issues being a lack of communication
among departments, unclear responsibilities, and insufficient management
commitment. To successfully
transition to the
•• New Leadership Styles. Automotive respondents say that an advisory leader- factory of the future,
ship style will be more important in the factory of the future, while an authori- manufacturers need
tarian style will be less relevant. Transformational and group-oriented leader- to develop an
ship will also gain in importance. approach to training
and qualifying
Employee Skills workers.
Although the greater use of robotics and computerization will reduce the number of
jobs in assembly and production, the number of manufacturing jobs requiring skills
in IT and data science will increase. Approximately 50% of automotive respondents
said that they expect to employ more workers with IT skills, and approximately 25%
expect the number of IT employees will increase by more than 10%. (See Exhibit 4.)
Approximately one-third of respondents expect to need more workers with compe-
tencies in maintenance and quality control, while about 25% expect to need people
with production planning and logistics skills. These additional staffing resources will
be needed to respond to the insights provided by the trove of new data available.

Recognizing that they need to adapt their workforce to the factory of the future,
38% of automotive respondents see employee skills as a major (“big” or “huge”)
challenge. (See Exhibit 5.) To ensure that their workforce evolves appropriately,
companies must focus on building technical and social competencies. They also
must implement new approaches to qualify their employees and ensure that the
right skills are in place.

•• Technical Competencies. Manufacturers need to strongly focus on technical

skills and backgrounds when training or hiring employees. Automotive respon-
dents expect that capabilities in IT, electronics, and “mechatronics” (combined
mechanical, electronic, and IT skills) will be more relevant in 2030, while purely
mechanical skills will be less relevant.

•• Social Competencies. The pace of change in the factory of the future means
that workers must be willing and able to continuously learn new skills. Rather
than primarily performing repetitive tasks, they will often be called upon to
solve problems as members of interdisciplinary teams. More than 90% of
automotive respondents see each of the four key social competencies—learning
capacity, teamwork, responsibility, and problem solving—as relevant for 2030.

•• Training and Qualification. Manufacturers cannot expect workers to build the

necessary technical and social competencies on their own. To successfully
transition to the factory of the future, manufacturers need to develop an
approach to training and qualifying workers. Most automotive respondents in

The Boston Consulting Group • RWTH Aachen University 11

Exhibit 4 | Automakers Expect to Need More Workers with IT Skills

RELATIVELY
FEWER RELATIVELY MORE
EMPLOYEES NO CHANGE EMPLOYEES

IT skills

Maintenance skills

Quality control skills

Production planning skills

Logistics skills

Supply chain management skills

Total1

0 10 20 30 40 50 60 70 80 90 100
Respondents (%)
At least 21% fewer employees will be needed 1%–10% more employees will be needed
11%–20% fewer employees will be needed 11%–20% more employees will be needed
1%–10% fewer employees will be needed At least 21% more employees will be needed
No change

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University, 2016 Factory of the Future Study.
1
The total is the weighted average of the responses for the six categories.

our survey (53%) cited further training of employees as the main route to
building the required skills. Significantly fewer cited hiring new employees (29%)
or reeducation (18%).

•• Technology-Based Learning. The new generation of workers wants training

options that enable flexibility in terms of where and when instruction is avail-
able. Self-learning programs on mobile devices, not slide presentations in a
classroom, are the preferred way to obtain information. Automotive respondents
appear to recognize the need to offer innovative, technology-based learning.
They see learning by doing, e-learning, and immersive training using virtual
environments as more relevant in 2030. They see traditional training courses as
less relevant in 2030.

IT Infrastructure
One-third of automotive respondents see IT infrastructure as a major challenge.
Two related requirements must be addressed:

•• Cloud and Connectivity. Manufacturers need plant-wide connectivity infra-

structure (such as a wireless local area network) and technology to capture and
store production data. Respondents said that using private cloud services as a
central platform for data storage and software as a service will increase in
importance, but they are skeptical about using public cloud services. The two
main challenges for improving plant-wide connectivity are a lack of network
standards and poor network infrastructure.

12 The Factory of the Future

 Exhibit 5 | Respondents Recognize the Importance of Adapting Their Workforce
Change in relevance,
2016 vs. 2030 (% points)
EMPLOYEE Technical IT skills 95 +57
38
SKILLS competencies
“Mechatronical” skills1 90 +29
Respondents citing
skills as a challenge Electronic skills 88 +33
in 2030 (%)
Mechanical skills 55 19
Relevance in 2030 (% respondents)
Social Learning capacity 98 +33
competencies
Teamwork 98 +14
Responsibility 93 +14
Problem solving 90 +17
Relevance in 2030 (% respondents)
Training and Further training of
qualification employees 53 NA
New hires and recruiting 29 NA
Occupational reeducation
of employees 18 NA
Actions to prepare the workforce in 2030 (% respondents)
Technology- Learning by doing 83 +56
based
learning E-learning 80 +66
Immersive training 66 +59
Traditional training 32 7
Relevance in 2030 (% respondents)
Major challenge
Moderate or no challenge

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University, 2016 Factory of the Future Study.
Note: NA = not available.
1
Mechatronical skills are a combination of mechanical, electronic, and IT skills.

•• Data Security. Enhanced supply chain connectivity is essential, but safeguards

are required to ensure the secure exchange of data. Indeed, data security is a
major concern of automotive companies. More than 40% of automotive respon-
dents see data security as a major challenge, and about 30% cited concerns over
the uncertainty of data ownership.

Getting Started
BCG has applied the insights from the study to develop an implementation roadmap
for the factory of the future. (See Exhibit 6.) Each manufacturer must tailor the road-
map to its specific starting point. In most cases, manufacturers should focus on plant
digitization in the short to medium term, so as to avoid falling behind competitors
that are already implementing use cases for digitization. Changes to the plant struc-
ture should be pursued in the medium to long term, because these modifications af-
fect all equipment and the plant layout. Such changes are typically undertaken at the
same time that plants are overhauled or new product models are launched. For plant
processes, manufacturers should continuously implement new technologies to im-
prove processes and customer satisfaction as an extension of their current lean man-
agement agenda. Manufacturers should immediately launch efforts to put in place

The Boston Consulting Group • RWTH Aachen University 13

 Exhibit 6 | An Implementation Roadmap for the Factory of the Future
Short term Medium term Long term
2016–2020 2020–2025 2025–2030
PLANT Overall
STRUCTURE
Multidirectional layout
Modular line setup
Sustainable production

PLANT Overall
DIGITIZATION
Smart robots
DIMENSIONS

Collaborative robots
Additive manufacturing
Augmented reality
Production simulations
Immersive training sessions
Decentralized production steering
Big data and analytics
Value chain integration

PLANT PROCESSES Overall

STRATEGY AND Overall
LEADERSHIP
ENABLERS

EMPLOYEE SKILLS Overall

IT INFRASTRUCTURE Overall

Preparation (completed if pilots Implementation (completed if implemented Continuous improvement

occur in more than 50% of all plants) in more than 50% of all plants)

Source: BCG and the Laboratory for Machine Tools and Production Engineering at RWTH Aachen University, 2016 Factory of the Future Study.

the foundational enablers, because training current employees and hiring new ones,
as well as installing an IT infrastructure, are time-consuming efforts.

To help manufacturers customize the implementation roadmap, BCG has devel-

oped a “health check,” which quickly assesses the current state of a company’s im-
plementation efforts. The results are then benchmarked against other plants, the
industry average, or peer groups to determine the starting point.

To understand how to address the points identified in the health check, company
executives and staff can participate in workshops on and demonstrations of ad-
vanced technologies at the model factories operated by BCG’s Innovation Center
for Operations (ICO). To identify use cases for examination, companies can apply
filters to BCG’s database of more than 200 examples of factory-of-the-future appli-
cations, sorting by applicability to specific industries as well as by the plant dimen-
sion or plant shop. ICO experts then discuss use case applications in detail with a
company’s plant team and evaluate a list of potential technology vendors to identi-
fy the opportunities, assess the expected financial and nonfinancial benefits, and
quantify the related implementation costs and required investment.

14 The Factory of the Future

A s the many examples presented in this report illustrate, manufacturers are al-
ready working with bits and pieces of our vision for the factory of the future.
However, achieving this vision will require much more than isolated implementations
of discrete use cases. Through the holistic application of new design principles and
digital technologies, leading manufacturers can intelligently coordinate all aspects of
their plant operations and integrate the value chain that runs from suppliers to end
customers. The first manufacturers to succeed in transitioning to full-scale adoption
will usher in a new era of industrial operations.

The Boston Consulting Group • RWTH Aachen University 15

About the Authors
Daniel Küpper is a partner and managing director in the Cologne office of The Boston Consulting
Group. He is the leader of BCG’s Operations practice in Germany and of the Innovation Center for
Operations. You may contact him by e-mail at [email protected].

Kristian Kuhlmann is a project leader in the firm’s Düsseldorf office. He is a member of the Op-
erations and Industrial Goods practices, with a focus on manufacturing. You may contact him by
e-mail at [email protected].

Sebastian Köcher is a consultant in BCG’s Munich office. He is a member of the Operations

practice, with a focus on manufacturing. You may contact him by e-mail at koecher.sebastian
@bcg.com.

Thomas Dauner is a senior partner and managing director in the firm’s Stuttgart office. He is the
global leader of the automotive topic and a member of the leadership team of the Industrial Goods
practice. You may contact him by e-mail at [email protected].

Peter Burggräf is a chief engineer of the Laboratory for Machine Tools and Production Engineer-
ing at RWTH Aachen University. You may contact him by e-mail at [email protected].

Acknowledgments
The authors would like to thank their colleagues Andreas Dinger, Konrad Eltz, Philipp Konecny,
Aclan Okur, Felix Pfeiffer, Jan Schlageter, and Bernhard Strack for their contributions to this report.
They would also like to thank David Klein for his writing assistance and Katherine Andrews, Gary
Callahan, Ellen Felder, Kim Friedman, Abby Garland, Gina Goldstein, Trudy Neuhaus, and Sara
Strassenreiter for their contributions to the editing, design, and production.

About BCG’s Innovation Center for Operations

BCG’s Innovation Center for Operations (ICO) demonstrates elements of the factory of the future
and actively supports companies’ efforts to transform. On the basis of more than 200 use cases,
ICO’s model factories provide direct insight into the future of manufacturing. The objective is to
make the factory of the future and its related benefits very tangible to key stakeholders and deci-
sion makers. These leaders can apply their practical knowledge to gain a clear understanding and
to identify company-specific areas in which to implement digitization use cases, as well as to define
their overall digitization strategy. By inspiring and enriching the capabilities of managers and entre-
preneurs, the ICO supports innovation processes that help companies tap into the full potential of
the factory of the future and thus to achieve, maintain, and strengthen a leading market position.

For Further Contact

If you would like to discuss this report, please contact one of the authors.

16 The Factory of the Future

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