State of Smart
Manufacturing Report:
Automotive Edition
The challenges and opportunities of new technology for the automotive industry
This report is based on the responses of 197 managers and executives from automotive manufacturers, automotive supply manufacturers, and electric vehicle manufacturers in 13 countries.
The th annual edition of the State of Smart Manufacturing report surveys
the broadest audience yet, probing deeply into global manufacturing. This report has expanded in scope from previous years, with quadruple the number of respondents, across 13 of the top manufacturing countries; 25% of whom work for firms with over $1B in revenue. Participants, who hold positions from management up to the C-suite, responded to questions that reveal the current state of technology in manufacturing, the biggest challenges, and the future of the industry.
This report from Rockwell Automation, in association with Sapio Research,
includes a technology adoption plan alongside the research findings to help you turn insights into action.
WHAT IS SMART MANUFACTURING?
Smart Manufacturing is the intelligent, real-time orchestration and optimization of business, physical, and digital processes within factories and across the entire value chain. Resources and processes are automated, integrated, monitored, and continuously evaluated based on all available information as close to real time as possible.
MESA International
I N T R O D U C T I O N
8th Annual State of Smart Manufacturing Report: Automotive Edition 02
AN EVOLVING INDUSTRY IN PURSUIT OF QUALITY
INTRODUCTION
Few sectors have had to evolve as much as the automotive industry over the past few years. Between shifts in consumer demand, supply chain disruption, microchip shortages, and the continuing fallout of the COVID-19 pandemic, this evolution has hardly been straightforward.
Challenges to Profitable Growth
Manufacturers in the automotive sector identified the need to balance quality with profitable growth as their number one internal challenge in both 2022 and 2023. 43% of automotive manufacturing leaders believe this was their biggest internal obstacle in 2022 and 40% expect this to continue in 2023.
Additionally, respondents highlighted two critical workforce-related challenges. Onboarding new employees (39%) and worker retention (38%) ranked in the top five concerns around growth in 2023, indicating that workforce is critical to the industry’s growth.
Looking forward to 2023, more automotive manufacturers (54%) are concerned about raw material shortages than last year, while inflation (47%) remains a key issue.
Q. What do you see as the biggest internal/external obstacle(s) to your organization’s growth next year (calendar year 2023)? Select top Base: 197
03
INTERNAL
Deploying and integrating new technology
Worker retention/knowledge retention
Organizational information/data silos
Onboarding new employees
Balancing quality and growth
EXTERNAL
Shortage of skilled workers
Supply chain disruption
Impact of COVID-19 pandemic
Inflation
Raw material/microchip shortage/prices
Industry Obstacles and Outlook
8th Annual State of Smart Manufacturing Report: Automotive Edition
Still, the biggest obstacles remain external. In 2022, the impact of the pandemic ( 49%) and raw material shortages (such as microchips) ( 45%) were cited as the top external obstacles to growth.
INTRODUCTION
When asked how they intend to mitigate these risks, the number one response
59% are mitigating internal risks by adopting technology with 50% doing the same for external risks, which both ranked high among all industries. Similarly, when asked how they intend to drive positive business outcomes, the number one response was by “increasing automation.”
31% of automotive manufacturers either plan to or have already invested in AI and machine learning technologies, which is expected to continue growing as more use cases develop along with ease of use applications.
For all automotive manufacturers, it’s clear that the #1 goal remains focused on consistency of quality in the face of workforce-related disruptions, while maintaining profitable growth.
TECHNOLOGY’S
ESSENTIAL ROLE
“Minimizing costs and Improving quality are the number one drivers for the acceleration of digital transformation.”
Catalysts for Digital Transformation
Minimize costs
Improving quality
43%
42%
Overall equipment
effectiveness (OEE)
Boosting production
Keeping up with competitors
Adapting to new
regulations and standards
Meeting the needs of the rapidly
changing consumer behavior
Ensuring sustainable practices
Reducing downtime
Agility/adaptability/keeping
up with evolving markets
Supply chain disruption
40%
37%
36%
36%
35%
35%
32%
29%
8th Annual State of Smart Manufacturing Report: Automotive Edition
Q. Which of the following do you feel is creating the need to accelerate digital transformation in your organization? Select top 5 Base: 197
04
43%
GENERAL ATTITUDES TOWARD TECHNOLOGY
The automotive industry is no stranger to technology. On average, automotive manufacturers invest 23% of their operating budget on technology, which aligns with the average of all industries taking part in this survey. This investment includes cloud technologies (32%) and cybersecurity (30%), along with 41% investing in automation on the plant floor.
SECTION 2: GENERAL ATTITUDES TOWARD TECHNOLOGY
8th Annual State of Smart Manufacturing Report: Automotive Edition
05
Q. Which of the following areas does your organization plan to invest in as a result of disruption over the last 12 months (COVID-19, major weather event, supply chain interruptions, society, etc?) Select top 5
34%
32%
38%
Cloud technology
36%
Automated process enforcement
Supply chain planning
30%
Cybersecurity
41%
Plant floor automation
Automation of business processes
23%
of operating budget
is spent on technology
Planned Investments
to Mitigate Disruption
SECTION 2: GENERAL AUTOMATED TECHNOLOGY
THE IMPACT OF PROCESS AUTOMATION
64% of businesses are using software to automate processes and 54% of leaders are increasing automation to address labor shortages.
Despite this increased use of technology, 85% of automotive manufacturers expect to maintain or even increase their current workforce.
42% expect to repurpose their existing workforce and 27% believe they’ll actually hire more workers as a result of technology adoption, indicating that technology can both address current issues and catalyze growth.
Process automation ranked as the highest ROI investment among automotive manufacturers.
85% of automotive manufacturers expect to maintain or grow employment as a result of technology adoption
Technologies with the Biggest ROI
Process Automation
Automated mobile robots and automated guided vehicles
Machine Integration
Machine Learning/Artificial Intelligence
Industrial Internet of Things (IIoT)/Internet of Things (IoT)
Cloud/Saas
RPA (Robotic Process Automation)
Voice Recognition/Natural Language Processing (NLP) Technology
3D printers/additive manufacturing
Sensor/RFID/Geo Tagging
Augmented Reality, Mixed Reality, Virtual Reality
Cameras/Scanner/Drones
Wearables
5G
Generative Design
Digital twins (i.e., digital replicas synchronized with physical assets)
Blockchain
Cobots (Collaborative Robots)
Facial Recognition
31%
25%
25%
22%
21%
21%
20%
17%
17%
16%
16%
15%
15%
13%
11%
11%
11%
10%
9%
8th Annual State of Smart Manufacturing Report: Automotive Edition
Q. Which of these technologies that your company has invested in had the biggest ROI over the last 12 months? Select top 5 Base: 192 *Options masked through those selected 'already invested' in Q11.
ADOPTING SMART MANUFACTURING
The automotive industry is well aware of the potential of smart manufacturing and 97% of automotive manufacturers believe smart manufacturing is very important to the future success of their business.
Nearly half of respondents (49%) are actively using smart manufacturing right now.
Of those who have not yet invested in smart manufacturing, over half (51%) plan to adopt within the next 12 months.
Specifically, automotive manufacturers are interested in smart manufacturing initiatives for production monitoring (60%), quality management systems (QMS) (52%) and manufacturing execution systems (MES) (49%).
This data may indicate that automotive manufacturers see an opportunity to leverage incremental, lower initial cost and less resource-intensive smart manufacturing solutions – like production monitoring – that provide strong value and quick time to payback and ROI. They can then reinvest that ROI in their next adoption step, which may be a QMS or MES, allowing them to scale in a cost- and resource-conscious way.
Q. Which of the following smart manufacturing initiatives / systems has your company adopted or plans to adopt? Select one per row Base: 197
Advanced Analytics
31%
Enterprise Asset Management (EAM)
32%
Asset Performance Management (APM)
36%
Computerized Maintenance Management System (CMMS)
37%
Enterprise Resource Planning (ERP)
42%
Industrial IoT (IIoT)
44%
Supply Chain Planning (SCP)
44%
Manufacturing Execution System (MES)
49%
Quality Management System (QMS)
52%
Production Monitoring
60%
SECTION 3: ADOPTING SMART MANUFACTURING
8th Annual State of Smart Manufacturing Report: Automotive Edition 07
SECTION 3: ADOPTING SMART MANUFACTURING
THE ROI
OF SMART MANUFACTURING
When asked why businesses are adopting smart manufacturing, the top reason cited by leaders is to reduce cost (37%) with ‘improving quality’ a close second (32%).
In practice, 35% of these businesses report that smart manufacturing has helped mitigate issues with deploying and integrating new technologies. Additionally, 29% believe that smart manufacturing has helped them to keep pace with market transformations and to mitigate the lingering impact of the pandemic.
Smart manufacturing initiatives involving enterprise resource planning (ERP), manufacturing execution systems (MES), Industrial IoT (IIoT), and quality management systems (QMS) ranked as the top solutions for ROI.
Q. Which of these obstacles have your current smart manufacturing initiatives helped to mitigate? Select all that apply
*Only asked if 'Already adopted' or 'Plan to adopt' was selected at Q21.
Base: 196
Where has smart manufacturing helped the most?
Deploying and integrating new technology
35%
Keeping pace with market transformations
29%
Impact of COVID-19 pandemic
29%
Product quality / Balancing quality and growth
28%
Inflation
26%
Shortage of skilled workers
26%
Supply chain disruption
24%
Cybersecurity risks (e.g., ransomware, phishing)
24%
8th Annual State of Smart Manufacturing Report: Automotive Edition 08
SECTION 3: ADOPTIONS MART MANUFACTURING
BARRIERS TO ADOPTION
Manufacturers in the automotive industry are certainly adopting new technologies rapidly, but that’s not to say it’s happening without friction.
48% of businesses report a lack of skills to manage smart manufacturing initiatives as the biggest barrier to adoption, while 46% report employee resistance to new technologies as the biggest barrier.
Change management is therefore a key component of successful technology adoption, in particular when technology adoption adds new growth opportunities for employees. Adoption also remains a challenge as shown by the 26% of automotive manufacturers that cite technology paralysis – an inability to decide between solutions – as one of their main obstacles to overcome.
In spite of these barriers, businesses in the automotive industry are increasingly relying on technology to overcome their biggest internal and external obstacles.
26%
of automotive manufacturers
hampered by technology paralysis
Q. What are the barriers to adopting smart manufacturing? Select top 5
*Only asked to those using or actively evaluating smart manufacturing solutions
Base: 168
Barriers to Smart Manufacturing Adoption
Lack of skill set to manage smart
manufacturing implementation
Employee resistance to technology
adoption and change
48%
46%
43%
39%
38%
36%
35%
34%
33%
31%
Lack of skill set to take advantage of
smart manufacturing technology
Lack of knowledge on smart
manufacturing technology and benefits
Difficult to replace/upgrade legacy systems
Cost/Expense
Misalignment between business objectives
and smart manufacturing objectives
Lack of clear definition of smart
manufacturing value/ROI
Leadership's resistance to change
No sustained leadership support
8th Annual State of Smart Manufacturing Report:
Automotive Edition
09
SUSTAINABILITY AND ESG
AS A MEANS OF DIFFERENTIATION
Even amidst external challenges like inflation, supply chain issues, and labor shortages, the automotive industry remains committed to improving its overall impact on the planet.
97% of auto manufacturers and suppliers report having sustainability and ESG initiatives in place.
49% pursue sustainability and ESG initiatives as a competitive differentiator. Never before have we seen such a large percentage of automotive manufacturers calling out sustainability and ESG as a competitive differentiator.
New and potential regulations along with consumer demand are especially influential for automotive manufacturers - so much so that they view their policies and the actions around those policies as a way to differentiate from the competition.
Improving efficiencies (41%) and environmental concerns (41%) ranked 2nd as motivations for ESG and sustainability programs. Manufacturers are paying closer attention to the value they are delivering to both the business and society.
49%
A competitive differentiator (to win business from customers who have supplier requirements)
41%
To address potential environmental issues before they arise
35%
To build our presence in the community
33%
It’s good for the bottom line
31%
To address social inequalities that may suppress talent in the workforce
30%
A desire to do good
22%
Pressure from investors
8th Annual State of Smart Manufacturing Report: Automotive Edition 10
Q. Which of the following drives or motivates your organization to pursue ESG/sustainability? Select all that apply
Base: 192
*Only asked to those with some form of ESG program already in place
CONCLUSION
35%
21%
Fosters a collaborative environment
Improve efficiencies
CONCLUSION
LOOKING FORWARD
Leaders in the automotive industry face a complex collection of external economic challenges as well as a critical moment of change management internally.
44% are relying on automation to help their business transform over the next five years with 41% also relying on improving their use of data analytics. This will remain a challenge with 35% of data in the auto industry still going unused.
Looking ahead, the tangible return on investment of existing smart manufacturing initiatives and the industry’s motivation to leverage it for success will likely continue the digital transformation journey for many as automotive leaders look to increase profitable growth in 2023 and beyond.
Driving Improvements Over the Next 5 Years
Increased automation 44%
Better use of data analytics 41%
Automated process enforcement 40%
ESG/sustainability program/policies 39%
Increased use of Artificial Intelligence/Machine Learning 38%
Leveraging new/emerging market opportunities 35%
Adopting smart manufacturing software 34%
Increased training and employee programs 32%
Adopting cloud technology 32%
Adopting supply chain planning software 31%
Q. How do you plan to drive positive business outcomes over the next five years?
*Only asked to those using or actively evaluating smart manufacturing solutions Base: 197
EIGHTH ANNUAL State of Smart Manufacturing Report
A global view of today’s challenges and tomorrow’s opportunities to harness technology for greater resiliency, agility, and sustainability
To see how the wider manufacturing industry is using technology to move forward, read the complete State of Smart Manufacturing Report.
8th Annual State of Smart Manufacturing Report: Automotive Edition11
DEMOGRAPHICSAND FIRMOGRAPHICS
Industry Sector
Annual Revenue(US Dollars)
100%
Auto, Auto Tier
Supplies, EV
Region
APAC
Europe
North America
52%
31%
17%
What is your annual business revenue? (Aggregated Revenue)
What industry do you work in? Select one
In which country do you currently work? Select one
Base: 197
29%
23%
14%
19%
14%
$10 million -
$149 million
$150 million -
$499 million
$500 million -
$999 million
$1 billion -
$10 billion
$10 billion+
8th Annual State of Smart Manufacturing Report: Automotive Edition
Q.
Q.
Q.
DEMOGRAPHICS AND FIRMOGRAPHICS
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Publication INFO-BR028A-EN-P March 2023 Copyright © 2023 Rockwell Automation, Inc. All Rights Reserved. Printed in USA.
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