ABI Forecasts 5G in Manufacturing CAGR at 187%
March 30, 2020
and edge computing constitute a technological leap that heralds a
significant transformation of business models for all industries,
including manufacturing and associated Industry 4.0 verticals. The
market for 5G cellular connections in manufacturing is expected to reach
US$10.8 billion by 2030, at a Compound Annual Growth Rate (CAGR) of
187%, finds ABI Research.
“But, to capture the value at stake, ecosystem stakeholders will first
need to evaluate how to measure the impact of 5G and edge deployments,”
says Don Alusha, Senior Analyst at ABI Research. The current Industry
4.0 digitalization discourse centers around conventional financial
metrics (e.g., return on investment, net profit, and cash flow) as the
yardstick to measure 5G and edge computing effectiveness. But these
metrics are financial measurements to gauge profit and do not lend
themselves to the factory floor. “Therefore, Industry 4.0 ecosystem
entities must consider an alternative set of measurements that look at
how 5G and edge deployments aid manufacturing establish operational
rules to run a plant. They are throughput, inventory and operational
expense for the incoming flow of capital, for capital located inside,
and for capital going out, respectively,” Alusha explains.
These three measurements enable Industry 4.0 partners (e.g., ABB, Bosch,
Siemens) to institute a direct connection between the 5G’s utility and
what takes place on the factory floor. In turn, they will be able to use
that connection to find a logical relationship between daily plant
operations and the overall company’s performance. Only then, will
Industry 4.0 verticals have a basis for knowing the real benefit of 5G
and edge computing. “Furthermore, equally important is the ability to
measure risk when looking to adopt 5G and edge technology assets.
Discussions on new technology adoption have always been based on an
assessment of risk and reward. If the reward is truly compelling,
adopters will take the risk. 5G and edge offer unprecedented commercial
opportunities, but they inherently constitute new technologies and
therefore there is a risk attached,” says Alusha.
attempts to keep up productivity growth, increase process automation to
meet changing client demands, and the need to establish a reliable
supply-chaining that spans multiple geographies are forcing
manufacturers to be more flexible. According to Alusha, “To understand
the importance of supply chaining and its significance in terms of
competitive advantage, one need not go any further than Wal-Mart.
Wal-Mart is the largest retailer in the world (Amazon being second) and
it does not produce a single item. All it “makes” is a hyper-efficient
supply chain.” The capacity, reliability, high-quality service, and
speed provided by 5G and a hyperconverged edge compute can optimize
operations for a super-efficient supply chain.
With greater reliability and data speeds that will surpass those of 4G
networks, a combination of 5G and local edge compute will pave the way
for new business value. Commercial benefits will accrue along three
broad aspects: agility and process optimization; better and more
efficient quality assurance and productivity improvement. “The
implications for solution providers such as Ericsson, Huawei, Nokia and
ZTE are that they must enhance their “value add” by complementing their
deep technical expertise with business expertise including vertical
industry knowledge, new functional expertise (sales, marketing, and
accounting) and solution design and consulting expertise tailored at
niche use cases,” Alusha concludes.