Takeaways from the Philippine Firms in the Era of Digital Transformation
Department of Trade and Industry – Competitiveness and Innovation Group (DTI CIG) webinar
MANILA – Department of Trade and Industry – Competitiveness and Innovation Group (DTI CIG) presented “Philippine Firms in the Era of Digital Transformation”, a 4-hour webinar streamed on Facebook Live, held September 2, 2020.
“The Fourth Industrial Revolution (4th IR) is ushering a period of unprecedented transformation of enterprises across the world. Various advanced technologies are enabling firms to digitalize their operations to enhance and sustain their productivity and competitiveness, especially during this time of pandemic.”
But how prepared are Philippine firms to undergo digital transformation?
What opportunities and challenges will they be facing in this journey?
How can they improve their readiness to adopt Industry 4.0 technologies?
Industry 4.0. Involves concepts, tools, and applications that complement a smart embedded system of machines able to communicate with each other and with people while performing autonomous tasks.
- Artificial Intelligence (AI) – brain
- Data and connectivity – nervous system
- Cameras and sensors – five senses
- Automation and robotics – arms and legs
Main tools: cyber-physical systems (CPS), Industrial Internet of Things (IIoT), big data and cloud computing, autonomous robots, simulation and visualization models, additive manufacturing, and cyber security.
The rise of digital industries. In:
- 2011 – Only 1 of the top 5 companies in Standard and Poor’s 500 Index was technology-based
- 2017 – All top 5 companies Standard and Poor’s 500 Index (worth USD 3.3 trillion) were technology-based
- 2030 – Digital industry will increase annual margin potential by more tha USD 1.4 trillion. The largest absolute gains will be in automotive, the largest sector, followed by machinery, aerospace, and rail.
All is expected to produce a USD 16 trillion increase in GDP, 55% of which will result from productivity enhancements, consumer personalization, and a higher quality of services. While 57% of GDP gains will stem from the consumer impact of AI.
Value of digital industry
- demand forecasting and intelligent pricing
- flexible production and mass customization
- smart purchasing and outsourcing
- R&D efficiency and product launch
- improved production performance and smart maintenance
- plant network optimization
- production planning and dispatching automation
- next-generation inventory and quality management
E-Commerce, a game changer for the manufacturing industry. E-commerce in manufacturing is not simply another digital tool business, rather is a platform that enables manufactures move away from their traditional business models and embrace a digitally connected ecosystem of customers, internal teams, data and systems that they manage through a single platfrom.
- Bring content and commerce together
- Gather data for continuous loop of improvement, innovation, and efficiency
- Empower sales representatives
- Become customer-focused.
Digital business models. A form of creating value based on the development of customer benefits using digital technologies. The aim of the digital solution is to generate a significant advantage for which customers are willing to pay.
Characteristics of digital business models:
- use of digital technologies
- digital business innovations
- customer acquisition and distribution based on digital channels
- customers willing to pay for the digital services
Digital transformation. Technological use cases that could help companies gain knowledge or critical technology that are major drivers in the field of Industry 4.0 and can be considered as standard guide towards digitalization. Those cases could, among others, be the following:
- additive manufacturing
- human-robot collaboration
- automated guided vehicles
- pick-by-X technologies
- real-time KPI cockpit
- data-based quality control
- vertical and horizontal integration
Present global ranking of the Philippines from UNIDO Competitive Industrial Performance
Philippine readiness for the future of production
Smart Manufacturing Maturity Index
Technology Adoption in Philippine Manufacturing Enterprises.Ms. Rafaelita M. Aldaba presented: “Strengthening the Future-readiness and Resilience of Philippine Industries in the Age of Distruption.”
Industry 4.0 Technologies: an opportunity for Philippines to upgrade into digital industrialization
- Industry 4.0 Technologies is an opportunity for PH to upgrade into digital industrialization
- Most Philippine industries are still transitioning from Industry 2.0 to 3.0, some are taking steps towards digitalization and smart manufacturing
- New technologies drive inclusive, resilient, and sustainable industrial development – artificial intelligence, machine learning, big data, analytics, cloud computing, IoT, advanced robotics, and additive manufacturing.
- Inclusive Innovation Industrial Strategy (IIIS)
- Embrace Industry 4.0. Use and adapt new technologies to strengthen competitiveness and sustainability of industries.
- Innovate SMEs and Startups. Prepare SMEs for Industry 4.0. Link together startups and SMEs.
- Integrate Production Systems. Link manufacturing with agriculture and services. Participation in global value chains.
- Companies must begin digital transformation ASAP. Innovate, integrate into digital economy, industry clusters and global collaboration.
- Ease of Doing Business. Simplification of processes and automation. Power, logistics, and infrastructure.
- Upskill/Reskill Workforce. Use and adapt new technologies. Upgrade education curricula. Skills training programs and improve digital skills. Academe/training programs to adapt programs to meet the demand for talent created by industry 4.0 and bridge the gap between basic research and commercialization.
- Government-academe-industry collaboration to make the most of the advantages brought about by technological developments: financial support, trainings, etc.
- Innovation and Entrepreneurship Ecosystem. Build startup system. Promote research commercialization. Creation of new products, services, and business models.
- Priority industries are mostly from manufacturing, agriculture, fishery, forestry, services, public utilities; new technologies and innovation. Particularly the industries that are sub-categorize as: electrical and electronics, chemicals, shipbuilding, IT BPM, technology products – smart cities, mobility solutions, online health, and education, tool & die, iron & steel, agri-business, transport, logistics, and construction, digital economy, aerospace parts, furniture, garments, creative, tourism, and climate change.
- National Technical Education and Skills Development Plan for 2018-2022. By creating s conducive and enabling environment and prepare workers for the challenges of the 4IR. Thus:
– active participation of industries in assessment and certification
– rationalize TVET delivery system
– institute mechanisms to address rapidly changing jobs
– address skills requirements not yet covered by TVET sector
– development of 21st century soft skills
- Creating new products or solutions with technology building blocks like voice recognition, AI, AR, robotics, 5G connectivity, and IoT.
– smart buildings and smart home technology: interconnected products and services, ML and AI efficiency gains through predictive analytics, predictive maintenance, and proactive operation.
– digital health: personal health wellness technology products, smart watches, lighter health wearables, more precise sensors, therapeutic systems addressing chronic diseases, telemedicine solutions, and AI-assisted diagnoses.
– e-gaming:gaming market driven by Nintendo switch, hybrid console, console and PC gaming software, mobile gaming, immersive audio and advanced communication capabilities, cloud gaming platforms, gaming accessories market.
– smart assistants: voice assistants embedded in TV sets, cars, home appliances, smart home devices, and home robots.
– vehicle technology- connected car technology: flying cars, self-driving cars, multimodal transportation,and electrification.
– resilient technology: disaster preparedness/mitigation, cyber security, renewable energy.
– audio, video, and edtech
With Industry 4.0, industries can be made more efficient and scalable, leapfrog to inclusive, resilient, and sustainable industrial development.
Digital transformation is expected to improve in the Philippines within the next five years. DTI-CIG concluded that, sound and effective policies and programs are needed to enhance the level of preparation of Philippine firms’ digital transformation. As PH shift towards Industry 4.0, the government sector need to ensure that no enterprise especially MSMEs or region is left behind,
United Nations Industrial Development Organization (UNIDO). Sustainable Development Goal 9, Industry, Innovation, and Infrastructure
UNIDO Industrial Development 2020
Manufacturing Enterprise Solutions Association.
DTI – Competitiveness and Innovation Group
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