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The global smart manufacturing market size was USD 204.95 billion in 2019 and is projected to reach USD 506.33 billion by 2027, exhibiting a CAGR of 12.2% during the forecast period.
The growth of the market is primarily driven by the rising and increasing demand for these manufacturing solutions in different industries such as chemicals, medical devices, automotive, and manufacturing, among others. The rising advancements in 4IR is projected to drive the market in the forthcoming years. In addition, the rising preference for connected supply chains and knowledge-based manufacturing that are equipped with advanced sensing, control, simulation, and modeling capabilities are anticipated to drive the growth of smart manufacturing.
Key market players are focused on new product launches to gain a competitive edge and expand their product portfolio. For instance, in June 2020, Hexagon’s Manufacturing Intelligence division launched its wide range of innovative smart factory solutions at the International Machine Tool and Manufacturing Technology Exhibition (IMTEX) 2020 India. It is designed to assist enterprises with digital transformation and boost productivity in their business operations.
Demand for Smart Manufacturing has Increased Drastically as COVID-19 Tally Soars
COVID-19 has affected the manufacturing sector globally in the past several months. The pandemic has impacted overall supply chains and production processes. The pandemic is expected to create a huge financial impact on the advanced manufacturing sector, especially to those that highly depend on skilled workers. Looking at the situation, manufacturing companies are shifting their focus on advanced technologies such as 3D printing, artificial intelligence, Industry 4.0, industrial automation, and others to reduce the COVID-19 impact on their businesses. The post lockdown scenario has enabled the manufacturing industry to deploy innovative technologies, that will, in turn, reduce production costs.
Companies are also leveraging AI-enabled platforms such as IoT, digital twin, smart robots, and others to monitor real-time production at the manufacturing plants. This significantly reduces the need for employees and workers onsite, thereby supporting the social distancing mandates to fight COVID-19. Also, increasing investment by key players and the government is expected to drive the market during the pandemic. For instance, in July 2020, SK Telecom Co., Ltd. launched a subscription-based smart manufacturing solution for SMEs that optimizes equipment maintenance and helps them to overwhelm the financial slowdown caused by the coronavirus pandemic.
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Increasing Penetration of Industrial Internet of Things (IIoT) Technology to Drive the Market.
One of the emerging trends for the market is the shifting focus of enterprises towards the deployment of industrial internet of things (IIoT) technology. The implementation of IIoT assists to save maintenance costs, energy costs, and improve workforce productivity. Organizations are adopting IIoT solutions for manufacturing operational intelligence, enabling asset monitoring, remote servicing, predictive maintenance, and remote monitoring. The increasing number of industrial IoT connections will foster the digitization and connectivity among enterprises. According to GSMA Intelligence, the number of industrial IoT (IIoT) connections will reach up to 13.8 billion units globally by 2025.
Key players in the market are involved in partnerships to enhance their market presence. For instance, in July 2018, Alibaba Cloud partnered with Siemens to foster the industrial Internet of Things (IIoT) technology in China. In addition, government strategies such as Make in India, Smart Cities Mission, Saudi Vision 2030, the Industrial Value Chain Initiative (IVI), and Made in China 2025 among others will play an important role in fostering the market growth.
Increasing Adoption of Industrial Automation in the Automotive Industry to Aid Market Growth
Major players in the automotive industry such as BMW, Audi, and others are focused on adopting industrial automation solutions to increase production capabilities and efficiency. The adoption of automation solutions is reducing human errors in the production process. The smart factory solutions also help organizations to reduce the manufacturing cost along with increased production capacity and improved product quality. Further, the rising spending in industry 4.0 projects by countries such as the U.S., China, U.K., and others, is expected to propel the market growth. According to PricewaterhouseCoopers (PwC), global spending on Industry 4.0 technology is expected to be USD 907 billion per year through to 2020.
High Initial Cost to Inhibit Market Growth
To implement smart manufacturing platform, the high upfront investment is required to set up maintenance architecture and infrastructure. Also, vast venture capital funds are required to deploy these solutions at an enterprise-scale, that is likely to hamper the market growth. The operation and setup processes are much more complex, expensive, and also require enormous resources. Although smart factory solutions are beneficial in the long-term, deployment cost is extremely expensive, especially for SMEs, which in turn, is expected to impede the market growth during the forecast period. In addition, issues relating to government standards, uncertain regulatory compliance, the requirement of new skills, and data security concerns are expected to limit industry growth.
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Solution Segment to Grow at Faster Pace during 2020-2027
Based on the component, the market is divided into solutions and services. Among them, the solution segment is expected to hold the largest market revenue share during the smart manufacturing market forecast period. This growth is due to the rising adoption of industrial software solutions such as manufacturing execution system (MES), robotic process automation (RPA), supervisory control and data acquisition (SCADA), and others across the manufacturing industry. The services segment is expected to witness a significant CAGR during the forecast period. The growth is attributable to the rising adoption of artificial intelligence (AI) & cloud-based services and the need for smart factory service providers & deployment expertise.
Cloud-based Deployment is Likely to boost the Manufacturing Industry
Based on the study, the deployment segment is categorized into on-premises and cloud. The on-premises segment is likely to have maximum market revenue share. Increasing investments in this manufacturing platform by major players are expected to drive the market. The cloud segment is anticipated to exhibit the highest CAGR, owing to the rising adoption of cloud-based manufacturing solutions.
Adoption of Smart Manufacturing Solutions among Large Enterprises to Boost the Segment Growth
Based on enterprise size, the market is segmented into small & medium-sized enterprises (SME’s) and large enterprises. The SMEs segment is expected to grow at a higher CAGR during the forecast period. SMEs are focused on integrating cost-effective smart manufacturing-related information & digital technologies (SMIDT) such as cloud, artificial intelligence (AI), and others, in their business operations. The large enterprises are expected to hold a higher market share during the forecast period. A smart factory solution has allowed large enterprises to increase operational efficiency and to gain better customer experience.
Discrete Industry to Lead the Market During the Forecast Period
Based on industry, the market includes the discrete industry and process industry. The discrete industry is expected to hold the dominant share during the forecast period. Under the discrete industry, the automotive industry holds a major share in terms of revenue owing to the rising adoption of advanced robotics and industrial automation technologies. The process industry segment is expected to register a significant growth. This growth is owing to the rising adoption of industrial automation and the increasing importance of cost reduction & energy efficiency services.
North America Smart Manufacturing Market Size, 2019 (USD Billion)
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Geographically, the global market is divided into five regions, including North America, Asia Pacific, Europe, Middle East & Africa, and Latin America.
North America is expected to dominate the market by capturing maximum share during the forecast period. The growth in this region is attributable to the increasing investments in smart factory projects. For instance, in June 2019, Telefonaktiebolaget LM Ericsson invested around USD 100 Mn for the deployment of the fully automated smart factory in the U.S.
The market in Asia Pacific is expected to display an impressive growth trajectory owing to the increasing spending and investments in the intelligent manufacturing industry by the solution providers. According to the IoT Council, the China-based manufacturing organizations' spending on the internet of things (IoT) is expected to be around USD 127.5 Bn in 2020.
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Europe holds a significant position in the market in 2018, owing to the presence of a robust automotive production industry. The Middle East and Africa and Latin America regions are estimated to grow at a considerable rate. The advent of technological advancement and the growing penetration of 5G is expected to drive the market in these regions.
Rockwell Automation, Inc. Emerged as a Prominent Player with Strong Portfolio in Smart Manufacturing Solutions
Key manufacturers such as ABB Ltd., Siemens AG, General Electric, and others are proactively strengthening their market position by upgrading their existing product lines to cater to the different manufacturing and industrial applications. Rockwell Automation, Inc. develops and offers information technology services, industrial automation power, and control products. The company’s operating division includes control products & solutions and architecture & software. End-user organizations are embracing the company’s smart factory technology to augment their manufacturing processes and their workforce for higher efficiency and performance.
May 2019 – Rockwell Automation, Inc. launched an advanced artificial intelligence (AI) module – “FactoryTalk Analytics LogixAI” for Industry 4.0 and smart manufacturing. This launch will help industrial workers to predict production glitches and improve processes.
The smart manufacturing market research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the advanced market in recent years.
An Infographic Representation of Smart Manufacturing Market
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Value (USD Billion)
Component; Deployment; Enterprise Size; Industry and Geography
By Enterprise Size
Fortune Business Insights says that the global smart manufacturing market value stood at USD 204.95 billion in 2019.
By 2027, the market size is expected to reach USD 506.33 billion.
The market is expected to grow at a CAGR of 12.2% in the forecast period (2020-2027).
Within components, the solution segment is expected to lead the market during the forecast period.
The increasing adoption of industrial automation in the automotive industry is one of the key drivers for market growth.
ABB Ltd., Siemens AG, General Electric, Mitsubishi Electric Corporation, and Robert Bosch GMBH are the top companies in the market.
The discrete industry segment holds the major market share
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