Monday, June 18, 2018

Digital transformation society and Bangladesh

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The greatest economic shift human civilization has ever known in the Fourth Industrial Revolution. This shift affects manufacturing, a sector that accounts for 70 percent of global trade. In economic terms, the digital transformation affected consumer markets first.

Physical products, for example, were replaced by digital versions that offer better capabilities and greater convenience and were cheaper in most cases such as instead of traditional phone calls, we began using Skype and WhatsApp; instead of buying CDs, we started using iTunes and then Spotify.

Instead of transferring money through paper-based transactions, we began using digital payment services such as PayPal, Klarna and Swish etc. The digitalization is not only replacing a physical product with a digital one but also it's using digital technologies to enhance the physical world.

Industrie 4.0 enables manufacturers to create a "digital twin" of the entire manufacturing environment. Manufacturers can design, simulate, and test sophisticated products in the virtual domain before making the first physical prototype, before setting up production lines and before starting actual production. Once everything works in the virtual world, the results are transferred to the real world.

This seamless integration in so-called cyber-physical systems - that's the giant leap we're seeing today. And with the integration of new technologies such as 3D printing and artificial intelligence into industrial processes, the possibilities are expanding even further.

There are four benefits such as speed, efficiency, flexibility, and higher quality. At world's largest industry fair, which is taking place in Hanover, at the Siemens booth, it was lined up some great examples: How Industrie 4.0 revolutionizes aircraft production.

Why the lawn at FC Bayern's football stadium is always in top condition, Siemens' open, cloud-based operating system for the Internet of Things. How Stora Enso uses our Digital Enterprise solutions in Skoghall and China to be the best-in-class supplier in the global fiber industry.

Clearly, the question is no longer whether Industrie 4.0 will happen. It's already happening here in Sweden, even faster than in many other countries. It's happening in Germany and all over the world. Therefore, the question is rather who will be the great shapers (and shakers) of this transformation.

The digitalization should not only be a boon for large companies like Siemens, SKF, Stora Enso, Scania, or Volvo, but also for others. Small and medium-sized suppliers need to benefit as well. We operate in ecosystems that include customers, suppliers, research institutes, service providers and companies big and small. We can use digitalization to strengthen these ecosystems.

The McKinsey Global Institute recently published a study on the future of work. One outcome: In advanced economies such as Germany and Sweden, up to one third of the workforce may need to change professions by 2030. Worldwide, up to 375 million workers could be affected - what a gigantic number, accounting for 14 percent of the global workforce! "Qualifying," and especially "requalifying," people will be even more important than it is today. Lifelong learning will become standard practice. Our countries, including our societies, will have to adapt.

At Siemens, we call this "Business to Society." So, we say: a company that does not serve society should not exist. Business to Society is also about employment. I'm convinced that creating and securing jobs is a value in itself because it strengthens the societies we live in.

Today, 386,000 people work for Siemens. That's more people than at Facebook, Google/Alphabet, Apple and Microsoft combined! And its spend 500 million euros a year on professional training in order to keep professional skill sets up to date.

Many manufacturers are eyeing the possibility of "dark factories," factories without any human workers. You can simply turn off the lights and close the door, leaving the robots to furiously work nonstop. For example, Changying Precision Technology Company might be the model for the future of manufacturing. Its mobile phone factory used to employ 650 workers.

Now it needs just 60. The company eliminated 90 percent of its human workforce and replaced it with 60 robot arms. The results are mind-blowing. Productivity increased 250 percent, while product defects decreased 80 percent. The robots run 10 production lines that are going 24/7.

Specific skilled worker need to drive I4.0 technology for low cost countries such as Bangladesh, India, Sri Lanka, Pakistan, China, Nepal, Korea, Nigeria. The Labour Force Survey in Bangladesh showed that 41 percent of the 56.7 million workers in the domestic labour market had no education at all and 23 percent had not completed primary education. Thus almost two-thirds of the work force had no education or less than five years of primary education. (BBS, Labour Force Survey 2010). 

Remittances from more than 10 million citizens abroad are very important for driving our economy and majority of them are unskilled. Saudi Arabia has been the largest source of remittances for us, followed by UAE, Qatar, Oman, Bahrain, Kuwait, Libya, Iraq, Singapore, Malaysia, the US and the UK. These countries are already started to adopt I4.0 technology to optimized production cost which will be replace our foreign labour due to lack of skill.

In order to bridge the skill gaps that exist, several initiatives have been undertaken by BRICS (Brazil, Russia, India, China and South Africa) Nations. India has established National Skill Development Corporation (NSDC), Sector Skill Councils and National Skill Qualification Framework (NSQF) while Russia undertook the 'Skill Development for Industrial Growth' for Strategic Initiatives to bridge the gap between industry's skill demand and supply for further strengthen the smart industry links. China has joined hands with Germany through Sino-German Collaboration to accelerate its skill development program.

Bangladesh has enormous success story of industrial revolution since last two decades, the key strength of this success story is low labour cost. Currently, RMG accommodates direct employment around 4.5 million people (BKMEA), 70 percent of whom are female majority. Different studies are showed about 40 percent workers are unskilled at the functional-level of RMG and Textile manufacturing units.

The GDP of Bangladesh is derived by service sector (56.46 percent), industry sector (28.77 percent), agriculture sector (14.77 percent) based on survey 2016 est..The average employment of Agriculture, Industry, Service to total employment are 58.89 percent, 12.39 percent and 25.36 percent respectively.

We live in exciting times. The high percentage of unskilled worker in domestic market will be affected directly or jobless due to revolution of automation through I4.0 in these major sectors. To face the upcoming challenges with digital transformation, re-skilling or up-skilling will be required as a first economic growing country to make them ready for the new requirements by 2030.

The government should take initiative to establish national skill work force development programme, otherwise we will lose foreign remittance as well as domestic job market due to lack of technical know-how people.

The challenges ahead are great, but the opportunities are even greater. It's up to us to ensure that this revolution will benefit our companies, our economies, and above all, our societies. It's up to us to shape the world of tomorrow. It's up to us to make a difference!

The writer is Deputy General Manager of MJL Bangladesh Limited

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