While 5G has hit the ground running with telco companies and consumers, and smart transportation prepares for its arrival, its link to edge computing will be one to watch over the next decade. 5G in manufacturing will grow from its current annual revenue of under $1 million to a near $11 billion technology by 2030.
5G and edge computing will signify the transformation of business models across numerous verticals, including manufacturing and associated Industry 4.0 verticals. The promise that 5G and edge computing holds for Industry 4.0 is to create digital enablement and real-time data processing, in contrast to higher latency networks that may cause manufacturing delays considered problematic for industrial plants.
Focus on Production, Not Financials
To capture proper value, ecosystem stakeholders will first need to evaluate how to measure the impact of 5G and edge computing. As is the case with many sectors, success in manufacturing is predicated on conventional financial metrics (e.g., ROI, net profit, and cash flow). However, these metrics are used to gauge profit and revenue and do not directly lend themselves to the factory floor. Therefore, the Industry 4.0 ecosystem must consider alternative ways to measure how 5G and edge deployments can help manufacturers establish operational rules to run an optimally efficient plant. They include throughput, inventory and operational expenses for incoming flow of capital, capital located centrally, and outgoing capital, respectively.
Industry 4.0 partners such as ABB, Bosch, and Siemens can then apply a direct connection between 5G’s utility and what takes place on the factory floor. This synergy can result in finding a logical relationship between daily plant operations and overall company performance. Only then will Industry 4.0 verticals have a basis for determine the true benefit of 5G and edge computing.
Risk vs. Reward
Equally important is the ability to measure risk when looking to adopt 5G and edge technology assets. Discussions on new technology adoption have historically been centered around an assessment of risk and reward. If the reward is compelling, adopters are willing to take the risk. The marriage of 5G and edge computing can offer unprecedented commercial opportunities, and while introducing new technologies, can also bring significant risk.
New Business Growth and Value via the Supply Chain
Maintaining productivity growth, increasing process automation to meet changing client demands, and perhaps more importantly, the need to establish a reliable global supply chain are all obstacles manufacturers cite in their need to be more flexible. Wal-Mart is currently the most prominent case study in the importance of supply chaining and its significance with respect to competitive advantage. It is the world's largest retailer and does not produce a single item, relying on 5G and a hyperconverged edge compute. The increased capacity, reliability, speed and high-quality service helps optimize operations for a superefficient supply chain.
The commercial benefits of a 5G and edge compute combination will occur along three broad aspects: agility and process optimization, better and more efficient quality assurance, and productivity improvement. The implications for providers such as Ericsson, Huawei, Nokia and ZTE are that they must enhance their value add by complementing their technical expertise with business expertise. This would include vertical industry knowledge, new functional expertise (sales, marketing, and accounting), and solution design and consulting expertise tailored at niche use cases.
To learn more, our 5G and Edge Networks in Manufacturing report outlines and determines all of the factors for smart manufacturers to gauge the benefit of 5G and edge computing in the factory floor. It is part of our 5G Core & Edge Networks research service, which includes research, data, and ABI Insights.