Innovation can be measured by setting new rules, not just following old ones.
Global guidelines are two words that probably mean everything and nothing to readers. Intuitively, we all know what they mean. A ‘global’ guideline is just that – a gold standard process and/or an established codification for the world to follow in whatever discipline it relates to.
We see and understand such global standards every day—probably to the point of not even noticing them: websites with the “HTTP” prefix, everyday measures of length and mass in meters and kilograms, or international dialing codes on our phones.
Simple then? Well, yes and no. As commonplace as standards such as these are, we have become used to them. There are many examples of areas without a global guideline or best practice.
ESG is a term that is front of mind with the global business community, yet competing taxonomies exist. In accounting, there are the contrasting GAAP standards (rules-based) and IFRS (principles-based). Idealistically, the world economy would be less turbulent with a global single currency—with zero FX risk. Instead, we had 180 currencies across 195 countries at the last count.
Suddenly, the notion of a global guideline is not so straightforward—and establishing one is more of an achievement than one first realizes. Moreover, it is even more of an achievement when emerging markets, which have had less influence historically, are core to a global standard. Generally, developed economies have been the first to utilize technologies or scale industries and set the rules.
This dynamic is now changing. Emerging markets such as the Middle East – full of fresh thinking and without the straitjackets of legacy industries – can ‘leapfrog’ more established markets and are increasingly leading innovation.
A timely example is manufacturing – a sector enjoying a New Age of technology. A digital manufacturing revolution, inspired in the Middle East, is taking place with warehouses transitioning from ‘physical to digital’ – being populated with (digital) inventory and (digital) spare parts available for production – literally – at the click of a button.
The energy sector, one of the world’s major industries, is positively exposed to this revolution. Global energy companies experience annual ‘unnecessary losses’ of c. $30 billion from old-style physical inventory management, not to mention the CO2 emissions from shipping parts across the world rather than ‘localized,’ on-demand, digital production. This makes digitized inventories and the on-demand manufacturing of spare parts a high priority for the planet as well as energy company balance sheets.
Energy companies—including the GCC’s oil majors—are demanding the latest cutting-edge innovation to produce parts locally, and Middle Eastern national industrial strategies are focused on the same goal for their wider manufacturing sectors.
In a decade or so, up to 80% of spare parts manufacturing will likely be done this way – rendering traditional legacy models obsolete. Like all revolutionizing industries, the commercial trickle suddenly becomes a torrent as the new de facto standard becomes commonplace.
This brings us back to the global guidelines. Once it is understood that traditional industries can be transformed in a handful of years and that the demand for digital manufacturing of spare parts is ready and available, how does the industry optimally proceed? What is the global best practice?
A world-first guideline – a milestone in the digitization of industrial spare parts – has been recently announced. Involving one of the world’s leading industry standard setters (DNV), customer insight from the energy sector, and MENA’s largest digital manufacturer (Immensa) – the global guidelines cover crucial details in the digital manufacturing revolution.
They include (i) how to assess a physical part for digitizing, (ii) converting physical parts into digital twins, and (iii) how on-demand manufacturing should be used for rapid delivery and high-quality standards.
To the casual audience, these details may rank alongside how international dialing codes are allocated or website prefixes are classified. However, such details define best practices in vital global industries. They give a rigor and structure that encourages more market participants, which is vital from an environmental perspective.
We’ve seen how some mainstream industries lack global standards. The fact that the digital manufacturing of spare parts now has a standard is significant for momentum. Geographically, the Middle East is leading technical innovation in a sector (manufacturing) that is a bellwether for economic vitality and at the heart of Industry 4.0, as well as the rules that govern it.
From being rule followers and playing catch-up, to leading innovation and helping set new rules. As role models go, that is an inspiration for all emerging markets.