In today’s world, people are familiar with the benefits of the physical-to-digital transformation in economies and societies. We enjoy these benefits every day: from immediate access to financial services, connecting with people instantly across the world, or taxis arriving via an app interface without the need to hail drivers on the street.
The physical-to-digital experience is already embedded for many, and public discourse around digital transformation often focuses on familiar consumer-led sectors and case studies.
Less frequently discussed are non-consumer facing industries, such as manufacturing. To some, manufacturing may conjure images of assembly lines, grime and grease. The reality is we are in a New Age of Technology and a manufacturing revolution is taking place, which is just as exciting and groundbreaking as in the consumer-facing world – and which has major implications for regions such as the Middle East.
The UAE already has its ‘Make it in the Emirates’ campaign, with the Ministry of Industry and Advanced Technology prioritizing smart manufacturing as part of the national industrial strategy1. Saudi Arabia is looking to quintuple the industrial sector’s contribution to its GDP2. Aramco in Saudi Arabia launched the In-Kingdom Total Value Add (Akiva) program in 2015 to align with Vision 2030 and grow the industry by localizing the supply chain and production of goods, in turn boosting economic diversification, and creating jobs.
Advanced technologies such as digital warehousing and additive manufacturing (AM) are also being rolled out.
A digital warehouse (for a manufacturer) is a digital spare parts inventory with files and data securely stored, and available virtually at a click of a button. The cumbersome traditional method of a large inventory stockpile – expensively stored – in a big physical warehouse, is replaced by a far smaller physical footprint – while eliminating the risk of part obsolescence.
Additive manufacturing then allows companies to produce these digital spare parts on demand, and locally. Localized manufacturing decentralizes the supply chain, so companies can lower their maintenance downtime, avoid lengthy waiting times for replacement stock and meet changing demand in real-time (which improves customer relations!). Companies are equipped to circumvent any disruptions or constraints – including those arising from ongoing geopolitical issues – to ensure timely and secure supplies of parts.
The environmental benefits are significant too. Forget the days of vessels traversing oceans for weeks on end from different continents, or cargo planes pumping out emissions. Instead, the incremental environmental impact of local production is near zero.
Less than 1% of global manufacturing is currently done this way, but adoption has close parallels to the early days of the Internet. Just as people nostalgically look back on the days of going out to buy a physical music CD, where it is now streamed – within a decade or less – we will consider physical warehouses and non-digital manufacturing to be almost ancient.
Research by MHI and Deloitte on supply chain technology noted three out of every four surveyed supply chain professionals expect digital supply chains to be the predominant model in the market in the next five years, while also citing 3D printing as a major trend – predicting an 81% adoption rate within five years.
The shift is not a temporary one. Just as drivers never returned to horses and carts once they became used to superior automobiles – this is a permanent paradigm shift. As MHI and Deloitte note:
“Businesses are not just reacting to short-term challenges, but strategically positioning themselves for long-term success – leveraging digital technologies to make their supply chains more responsive and resilient. There is increasing recognition of the digital supply chain as a key driver of competitive advantage. Businesses continuing to invest and innovate in their supply chains are more likely to emerge as leaders in their respective markets, ready to meet the demands of the future.”3
What does this all mean for our economies, society, and the customer?
Like all innovation and systemic changes – the advantages are multiple and yet still not always immediately visible. What is clear is that agility and customer-centricity will increase. So too, eco-efficiency and sustainability as an operational advantage. Supply chain resilience will increase, and non-manufacturing countries/regions can now develop a new digital manufacturing expertise – fantastic for areas such as the MENA region – which can shift its national supply chain reality from unpredictable just-in-time inventory to local, self-reliant, just-in-time manufacturing.
Digitalisation goes beyond our smartphones – it touches everything we use and allows us to use what we touch with confidence it will work.
The manufacturing future is already here, and it is moving quickly!
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1https://moiat.gov.ae/en/make-it-in-the-emirates/sectors/advanced-manufacturing
2https://fastcompanyme.com/technology/is-industry-4-0-transforming-the-middle-east-regions-manufacturing-sector/
3MHI and Deloitte (2024). 2024 MHI Annual Industry Report – The Collaborative Supply Chain – Tech-Driven and Human-Centric. [online] og.mhi.org. Available at: https://og.mhi.org/publications/report – p.10.