Select your location
A majority of component manufacturers (80%) plan to improve their level of automation by the end of this decade.
Top AI use-cases, including feature recognition in CAD and quality deviation detection, are emphasized as future differentiators in manufacturing software.
Most manufacturers (65%) prefer bundled software solutions, valuing the ease of use and integrated benefits they provide for operations.
In the world of component manufacturing, the drive toward automation and digitalization is transforming how companies operate. But what does this shift really look like, and how can manufacturers harness it to stay competitive?
In a recent study, Sandvik Manufacturing Solutions, in collaboration with EY-Parthenon teams, surveyed 341 component manufacturers across North America and Europe to explore their largest challenges, their journey toward automation and their preferences for manufacturing software.
The study explored the automation journey and key challenges faced by component manufacturers, utilizing a framework adapted from autonomous driving to assess and advance manufacturing maturity. This approach enables a deeper understanding of the current manufacturing landscape, allowing for strategic insights into the next steps, as outlined in the first report derived from the study.
Building on this foundation, the study dives deeper into the digital thread of manufacturing. What are the most important criteria when selecting industrial software? What key integrations should be considered? How is software delivered and hosted, and what are the key AI use cases? A second report based on the study explores these questions, offering a look into the preferences and strategies that are shaping the future of manufacturing software.
As we present these findings, we invite you to consider the broader narrative of automation in manufacturing. From the details of the shop floor to the decisions in the boardroom, these reports offer a window into the ongoing evolution of an industry at the crossroads of gradual automation improvements and disruptive technology change.
Manufacturing automation levels provide insights into improving production efficiency.
Component manufacturers are confronted with two pressing challenges that they must navigate to remain competitive: a landscape of complex customer demands and a diminishing skilled workforce due to post-pandemic retirements. In this critical moment, the key to their success lies in strategic automation and a commitment to upskilling employees. This approach will determine which companies will thrive, shaping the future of production in terms of efficiency and cost-effectiveness, particularly within the US and EU markets.
To tackle this, EY-Parthenon teams and Sandvik Manufacturing Solutions have developed a model based on the six levels of autonomous driving, detailed in the first report inspired by the study — Six levels of component manufacturing automation. Borrowing from the Society of Automotive Engineers (SAE), this framework served as the basis for analysis to understand where component manufacturers currently stand in terms of automation maturity and to explore their ambitions for advancing toward a more automated and data-driven future.
In the report, we outline six levels of manufacturing automation, each representing a stage of technological integration:
Level 1 represents companies that lean heavily on manual processes, with basic system support for their human workforce.
Level 2 introduces assisted systems, where automation begins to support production, albeit at a limited cell level.
Level 3 moves to semi-automated operations, with manufacturing software aiding in resource planning and optimization, while operators maintain control.
Level 4 escalates to highly automated processes, where automation extends across multiple cells, and digital twins provide optimization insights.
Level 5 sees the widespread adoption of robotics, offering a fully automated and integrated system that adapts in real time.
Level 6 envisions “lights-out” production, a fully autonomous factory environment, driven by digital components that require no human presence on the production floor.
Read the report — Six levels of component manufacturing automation
Where do manufacturers currently stand?
In the survey, manufacturers were asked to self-assess their production sites. The results show an industry in transition, with a substantial number identifying with Levels 2 and 3 — signifying a move toward more automated systems, yet with many still on the cusp of deeper integration. Interestingly, a notable portion are at Level 3, where semi-automation is in place, but full connectivity across production cells remains the next ambition.
How EY-Parthenon can help
Size appears to play a role in automation maturity, with larger companies generally reporting higher levels of automation. As companies progress through the automation levels, the complexity of customer requirements emerges as a growing challenge, underscoring the need for robust data connectivity and system integration to enhance efficiency and cost-effectiveness.
Geographically, there's a subtle distinction, with European companies more likely to consider themselves at least at Level 3 compared to their American counterparts — 75% versus 64%, respectively
For those approaching the most advanced automation levels, sustainability emerges as a concern, suggesting that a strong foundation in data connectivity and systems is necessary to tackle such sophisticated challenges effectively. It is important to recognize that these self-assessments may reflect a degree of optimism, as some companies might base their evaluations on their most advanced production lines rather than the average across their operations.
Related articles
Is your digital strategy fit for the manufacturing future?
Digital trends are propelling discrete manufacturers to reimagine their digital strategy for today and the future. Learn more.
Enablers to increase the level of automation
An overwhelming 80% of manufacturers are ready to take their operations to the next level. The goal? To move one level further on the automation ladder, with many setting their sights on even more ambitious advancements. The roadmap to this progression is underpinned by crucial enablers: state-of-the-art equipment, precise data collection and skilled staff trained to navigate the evolving landscape of manufacturing technology.
For those just beginning their automation journey, the emphasis is on acquiring the right shop floor equipment and investing in employee training. As manufacturers climb toward higher levels, the emphasis shifts to sophisticated data and software capabilities, with artificial intelligence (AI) emerging as a transformative force, particularly for those nearing the scope of fully autonomous operations.
Automation is a marathon, not a sprint. Strategic, incremental investments in automation are essential for manufacturers to meet changing customer needs and stay ahead in the long run.
Magnus Ellström
EY-Parthenon EMEIA Industrial Products Leader
This is a preview of the in-depth insights covered in the report, detailing the support and innovations that manufacturers need to realize their automation aspirations. Please read the full report here.
Discover component manufacturers’ software usage and preferences as they are automating their manufacturing
Following an understanding of manufacturing automation levels, the focus now shifts to the role of software as a catalyst for this advancement. The aim for many is to shape their entire component manufacturing process into a unified digital twin, capable of self-correcting adjustments. Yet, each company's route to this destination is unique, and every step forward must be supported by a solid business case.
The study uncovers a critical insight: as component manufacturing becomes more automated, the integration of processes becomes a key driver. Achieving a highly automated production flow, from raw materials to shipped products, is a transformative journey that hinges on an efficiently integrated digital thread.
Companies that establish an integrated digital data thread across the manufacturing process are likely to achieve competitive advantages. This goes both for users and providers of manufacturing software.
Emma Sandin
EY-Parthenon Director, Advanced Manufacturing & Mobility, Strategy and Transactions, Ernst & Young AB
Yet, steps taken toward this integrated reality are varied. Some companies are advancing, while others struggle to achieve a unified and automated workflow. The disparity raises the question: What steps can manufacturers take to ensure a unified and automated workflow?
The survey by Sandvik Manufacturing Solutions and EY-Parthenon teams, further detailed in the second report — Trends in manufacturing software usage — explores the critical factors in software selection and integration against the following questions:
What are the most important criteria when selecting industrial software?
What are the key integrations that maximize benefits?
How is the software delivered and hosted?
What are the key AI use cases in component manufacturing?
When manufacturers are selecting manufacturing software, key criteria are quality, ease of use, and innovative technology. Quality and accuracy are primary requirements as errors can lead to costly rework. Quality of service and support rank second, emphasizing the need for insightful advice to upskill employees — linking to the labor challenges highlighted in our first report. Ease of use stands third, reflecting the industry's need for intuitive solutions that accommodate varying skill levels.
Interestingly, brand reputation, competitive pricing and sustainability enablement rank lower when selecting manufacturing software. This suggests that manufacturers prioritize immediate operational impact over long-term considerations, although sustainability concerns are more pronounced among highly automated companies.
The study reveals that North American companies place slightly more emphasis on ease of use and ease of implementation compared to their European counterparts. Conversely, European companies prioritize innovative technology, as well as integration and customization possibilities, more highly.
How EY-Parthenon can help
Integration and hosting: key considerations
When it comes to software integration, the study reveals a preference for bundled solutions when they demonstrate ease of use and clear business benefits. However, the integration of different software solutions, particularly between computer-aided manufacturing (CAM) and simulation, verification and optimization (SVO) or product life cycle management (PLM)/CAD-to-CAM, is deemed essential for creating efficient workflows.
Cloud hosting and SaaS models are on the rise, with larger companies favoring these flexible options. Yet, the preference for on-premises solutions remains strong, especially among smaller manufacturers. The challenge for vendors is to offer adaptable deployment options that cater to customer preferences, leveraging modern cloud technologies for faster, more secure and efficient operations.
AI use cases in manufacturing
Looking ahead, AI emerges as a transformative force, particularly in feature recognition and CAD/CAM programming, streamlining processes and enhancing quality control. The integration of AI within manufacturing software is predicted to become more prevalent, heralding a new era of competitive advantage for those who adopt it early.
As human creativity continues to be a vital component, generative AI stands ready to redefine productivity and operational methods. It offers a vision of a manufacturing landscape enriched with intelligence, adaptability and innovation.
Ready to dive deeper into the software that's driving automation forward? Our full report offers a detailed examination of the current trends and future directions in manufacturing software.
AI and software integration set to address future labor and production challenges in manufacturing.
After exploring the current levels of automation and the integral role of software, what is next for component manufacturing? Companies are facing a pivotal moment where the need for innovation meets the practicalities of production. They are navigating through a complex interplay of customer demands and a scarcity of skilled labor — a challenge that is consistently reshaping the industry regardless of company size or current automation level.
The march toward automation is in full swing, with many manufacturers situated between levels two and three, indicating a transition phase with significant room for growth. As they look to progress, they are mindful of the balance between the investment in automation and its tangible benefits, especially in environments where small batch sizes are the norm.
Similarly, integrations in manufacturing software use have emerged as a crucial element, especially where automation maturity is already high, directly addressing these central challenges. Bundled software packages are gaining favor, offering clear advantages and tighter integration — a reflection of the industry's desire for streamlined processes and efficiency.
The promise of AI remains prominent, with the potential to reduce learning curves and strengthen customer support. Yet, the industry's conservative approach to cloud adoption suggests a complex relationship with new technologies. There is a significant opportunity for software vendors to offer flexible solutions that cater to the industry's cautious yet evolving preferences.
AI represents a transformative opportunity in manufacturing, crucial for automating complex tasks, fostering creativity and addressing significant customer challenges to drive industry growth.
Summary
Automation is set to transform component manufacturing; as manufacturers increase their automation, they continually face new challenges. Key trends include a shift toward enhanced software and bundled solutions, with larger companies leading in automation maturity. The challenge ahead lies in integrating industrial software and upskilling the workforce to meet the demands of this evolving landscape.
How EY-Parthenon teams can help: enabling your future in manufacturing
EY-Parthenon teams bring a wealth of knowledge in technology and innovation, along with a vast network across various sectors, to help position your business for the future. EY-Parthenon resources and expertise are tailored to empower decision-makers to take confident and informed steps toward growth and efficiency.
Gain expert insights: Utilize our diverse tools and approaches for a personalized assessment that meets your manufacturing objectives and addresses your unique challenges.
Strategize for automation: EY-Parthenon teams can help guide companies in integrating hardware capabilities with advanced software solutions, ensuring a seamless transition into the era of industrial tech. Leverage our extensive tech expertise to create strategies that position your business as a leader.
Ready to navigate the future of manufacturing with EY-Parthenon teams? Irrespective of where you are on your journey, we can help facilitate your evolution, blending hardware, solutions and software to redefine what's possible.
Get in touch
Related articles
Is your digital strategy fit for the manufacturing future?
Digital trends are propelling discrete manufacturers to reimagine their digital strategy for today and the future. Learn more.
How can smart connected products change the way manufacturers operate?
Smart connected products offer industrial manufacturers new ways to generate revenue and cost efficiencies. Read more.
How can AI unlock value for industrials?
Five initiatives are explored for AI deployment by industrial companies to unlock real value, now and in the future. Learn more.
