Manufacturing 4.0 techniques can fuel growth in Belgium

09 July 2015 Consultancy.uk

Manufacturing globally has been on the decrease the past fifty years, with Western Europe seeing a considerable decline in its share of activity. Yet manufacturing remains a key driver for middle income employment, as well as indirect employment creation. Belgium particularly has seen significant drops in manufacturing activity, with the wider economic consequences. According to Roland Berger, a move to manufacturing 4.0 techniques would present a way forward for the industry in Belgium.

The services sector has in the past 50 years enjoyed unrivalled growth, while the age old practice of manufacturing products has seen significant drop in activity – falling by over one-third since 1970s. Changes to manufacturing affected not merely the amount of production, but also its distribution globally, a recently released report from Roland Berger Strategy Consultants finds. In its report titled ‘Industry 4.0’, the firm focuses on the Belgian manufacturing sector.

Much of the manufacturing historically done locally in developed countries is more and more outsourced towards Asia. In 2011, the Asian region held 31% of global manufacturing, up from 8% in 1991. Particularly Western Europe was hit hard by these outsourcing practices, with its share of manufacturing dropping from 36% in 1991 to 25% in 2011. Manufacturing however, remains a key component in economic activity, with the sector tending to generate low, medium and high paying employment, compared to services that tend to generate either low or high paying position.

Evolution of numbers of FTEs per income level in Flanders

In Belgium the level of manufacturing has been hit hard by the changes in demographic around manufacturing, with manufacturing employment decreasing by 16% between 2001 and 2011. Particularly the middle income segment has been hit by losses, where a decline is seen of 1.7% between 2001 and 2012, decreasing from 513,000 to 422,000. On the other hand, high and low income jobs have increased by an annual rate of 1.8% and 0.9% respectively between 2001 and 2012. The danger, according to the consulting firm, is that there is a vicious cycle, with loss of capacity lowering investment confidence leading to lower capacity addition, iterated.

Resilient sectors
Not every manufacturing sector in Belgium has been as hard hit as others. Machinery, Food & Beverages, Pharma, Chemicals and Rubber & Plastic, but also the very diverse sector of Furniture and Jewellery continue to be resilient in response to wider economic transformations. The worrisome group contains production of Metals, Printing and Electrical equipment, which saw annual value decreases of around 4%. The distressed group has seen significant losses, and includes Textiles, Motor vehicles, Electronics and Petroleum.

Changes in added value and employment Belgian manufacturing

Manufacturing 4.0
The development of the Internet of Things has resulted in a wide range of new technological features that are set to transform a range of industries, including manufacturing. This transformation has been called ‘manufacturing 4.0’ by a number of players, including by the Boston Consulting Group which states that these digital technologies will lift manufacturing to new levels.

In its report, Roland Berger considers ways in which the digital technologies are set to make manufacturing easier in Belgium. By embracing the following positive additions to manufacturing, Belgian manufacturing may be able to stay competitive, and there by, avoid the vicious cycle.

Consultancy.uk provides a brief summary:

Smart Resource Management - Augmented operators - Self-optimised machines - Mass-customisation

Smart Resource Management will be enabled by real-time resource demand measurement and management in conjunction with supply of energy, raw materials, utilities, etc. Currently, even best-in-class companies measure and optimise their resources consumption only periodically.

Augmented operators are enabled by advanced human-machine interfaces that increase flexibility, productivity and quality for non-automatable operations.

Self-optimised machine networks are connected and intelligent machines and transportation vehicles that are able to improve performance autonomously.

Mass-customisation means that each individual product can be tailored to the requirements of the individual customer, without losing the efficiency of mass production. This is enabled by new production technologies such as additive manufacturing and multi-purpose machines.

Smart products - Continuous production - Virtual conception

Smart products will create added value for the customer through incorporation of embedded communication, storage and analysis capabilities. Products will be monitored continuously through sensors and chips to ensure consistent quality and thereby reduce waste.

Continuous production navigation will be possible based on internal and external data from interconnected partners. The availability of real-time data will increase the reactivity of the operations planning and steering and thus flexibility of production.

Virtual conception will improve the production processes and the product. Tools that integrate simulations of factory layout, material flows, operator ergonomic and resource consumption will reduce product development times, industrialisation time and facilitate step-change improvement.

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.

Outlook

Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”