November 26, 2012 – A new report from GE finds that enabling internet-connected machines (the industrial internet) to communicate and operate automatically can bring substantial efficiency gains. Were the industrial internet to boost annual productivity growth by 1 to 1.5 percentage points in the States (with partial diffusion to the rest of the world, and considering the power of compounding over the next 20 years), it could add $10-15 trillion to global GDP… about the current size of the U.S. economy.
Written by GE’s chief economist, Marco Annunziata, and GE’s director of global strategy & analytics, Peter C. Evans, “Industrial Internet: Pushing the Boundaries of Minds and Machines”, concludes the industrial internet will “help eliminate hundreds of billions of dollars of wasted time and resources by combining internet-connected machines, product diagnostics, software and analytics to make business operations efficient, proactive, predictive, and strategically automated”.
“The full potential of the industrial internet will be felt when the three primary digital elements—intelligent devices, systems and automation—fully merge with physical machines, facilities, fleets and networks,” said Annunziata. “When this occurs, the benefits of enhanced productivity, lower costs and reduced waste will propagate through the entire industrial economy.”
To achieve these benefits, the authors say there must be significant investment to rapidly transfer new software and diagnostic technologies into manufacturing equipment. Equally important will be developing a strong talent pool including new roles that combine mechanical and industrial engineers into ‘digital-mechanical engineers’.
The report showcases both industry waste and the industrial internet opportunity:
The global cost of healthcare inefficiency is at least $731 billion per year. A 1% improvement in efficiency would lead to $63 billion global healthcare savings over 15 years.
Globally, $1.9 trillion is spent annually on energy. Just a 1% savings per year in power generation is equal to $20 billion annually; $300 billion in over 15 years.
Globally, transportation logistics costs are estimated to be $6 trillion per year, or about 10% of global GDP. The commercial transportation system accounts for $300 billion of this total. Industrial internet applications can reduce commercial transportation asset and operations management costs by 10%, yielding $5.6 billion per year in savings. The total cost of waste in airline operations today is $284 billion per year. In the aviation industry, a 1% reduction in jet fuel use from the industrial internet could yield about $30 billion in fuel savings over 15 years.
CLICK HERE for more information and to view the full report.