5G Private networks are a more attractive business proposition in manufacturing compared to other industries. A more comprehensive range of valuable use cases ripe for commercial exploitation holds the promise of revenue realization besides cost reduction.
The payback period for manufacturing is up to five years shorter than in other industries. According to ABI Research, the expected average period for earning positive returns for all enterprises is 2034 or 2035 (for investments committed in 2020), while it is 2030 for manufacturing.
A recent survey by Capgemini underscores the importance of 5G for industrial companies. For three-quarters of industrial companies, 5G is the key to realizing their overall digital transformation goals in the next five years, and a third of them consider it worthwhile to pay for a private license or have already done so. Indeed, industrial companies see more value in private networks than public networks and are willing to pay significant premiums for them! For example, they are willing to pay sixteen percent more for machine-type communications than public network providers assume they will and eighteen percent more for enhanced mobile broadband.
How do manufacturing companies expect to recoup the higher fixed costs for 5G private networks?
Benefits of Private Network deployments
The manufacturing industry has experimented and scaled a broader range of use cases with private networks. For example, Volkswagen initiated the construction of private industrial 5G mobile networks in 122 of its factories in Germany starting in 2020. As a result, it migrated to automated ultrasound inspections of door welds, including real-time data transfers to an IT system. Upon completion of the deployment, the company expects annual cost savings of approximately €3 million.
Overall, a digital inspection of facilities with high-fidelity cameras productivity increases quality testing throughput by 50% and detection of defects by 90%.
Downtime is a costly source of production loss in manufacturing plants—one in three manufacturing plants want this problem to be solved with urgency. For example, the estimated cost of downtime in automotive industries is up to a million dollars an hour.
Private networks are significantly improving the operational effectiveness on factory floors of manufacturing plants. For example, Nokia switched from Wi-Fi to 5G for private networks to increase efficiencies in internal logistics aided by AGVs (Automated Guided Vehicles). As a result, it saved time to reconnect equipment when outside the coverage area of Wi-Fi manually, and it realized a 40% increase in operational equipment effectiveness (OEE) and a 30% increase in efficiency.
Inspection and maintenance of sprawling facilities at manufacturing sites are low-hanging fruits for private 5G networks. KPN, a Dutch telecommunications company, installed UHD cameras on a 5G network to scan 99,000 miles of Shell’s pipelines and lowered inspection costs by ten to twenty percent with the help of predictive maintenance. Uptime and productivity increased by 10 percent and asset life by 20 percent.
Augmented Reality (AR) and Virtual Reality (VR) are increasing workers’ productivity significantly. First-time troubleshooting by field staff has increased by 20% to 40% for technicians while reducing injuries by 5% to 15%. Faster responses to potential breakdowns of equipment, with remote support by experts aided by AR/VR, reduces downtime by up to 10% to 35%, scrap and rework by 15% to 25%, and assembly time by 20% to 50%.
Revenue Realization from private networks
5G private networks, together with Internet of Things, changes the business model for manufacturers. Instead of merely supplying equipment with uncertain uptime, they can supply equipment as a package of services on-demand. Rolls-Royce is an early pioneer of this model and guarantees uptime aided by remote monitoring with sensors and earns recurring revenue from automated maintenance services.
Another source of revenue generation is the flexibility in manufacturing needed for customized products. 5G networks create the environment for rapid aggregation of data from the Internet of Things, especially video data, which helps to reconfigure collaborative robots to adapt to market changes.
Private networks and vendor innovation
Private networks are providing a hospitable environment to lend flexibility to manufacturing processes for product innovation. Hitachi has a platform to afford flexibility to production environments by speeding up workflow changes to adapt to fleeting demands of markets for customized products. It is co-creating teleoperations technology with the Georgia Institute of Technology controlled with minimal participation by remote workers. Using 4K optical sensors and video analytics to correct any malfunctions by robots, the job changes for robots happen automatically instead of without manual intervention by workers. Ericsson delivers dedicated private networks.
BMW has collaborated with m3connect GmbH to create an internal automated logistics system in the environment created by its 5G private network, which can transfer large volumes of data with low latencies. As a result, multiple AGVs in the plant can communicate with each other and autonomously steer their courses synchronously.
Samsung experimented with high precision manufacturing at its semiconductor plant in Austin, with a private network, in collaboration with AT&T. The plant was bedeviled by a high turnover of workers who had to be trained in complex manufacturing methods. By using X-Reality applications, it could instruct and train workers just-in-time to complete their tasks. Private networks were needed for low latency communication of instructions workers in real-time and for the bandwidth required for augmented reality applications.
Deutsche Telekom foresees a dominant role in managing private 5G telecom networks in Germany, except for large enterprises with in-house competence or have partners who do, especially for industrial campuses. It seeks to offer a portfolio of public network slices and private networks to meet a range of telecom services to its clients with or without network slices.
Conclusion
The manufacturing industry has progressed well beyond testbed use cases that are commonplace in other sectors. Instead, it has started to scale the initial test cases. The evolution to more complex deployments, such as synchronized movement of AGVs, is likely to set in motion a virtuous circle of innovative use cases that will lower costs and speed up product development.
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