McKinsey & Company today launched the Digital Capability Center (DCC) in Beijing. Founded in partnership with Tsinghua University, McKinsey’s Beijing DCC will help companies harness the powerful emerging technological changes—known collectively as “Industry 4.0”—that are disrupting industries across the world.

“Disruption is now a daily reality for companies in China, yet today’s world of rapid technological change also presents opportunities for business leaders,” said Joe Ngai, Managing Partner, McKinsey Greater China. “To realize the benefits of disruptive change, even the most successful organizations must continually reinvent themselves. McKinsey’s Digital Capability Center in Beijing, located at Tsinghua University, has been designed with this challenge in mind.”

Industry 4.0 describes four broad disruptions—increasing data availability and interconnectivity; analytics and business-intelligence capabilities, including artificial intelligence; advanced human-machine interactions such as cobots (a collaborative robot that interacts with humans in the workplace); and advanced production methods such as 3-D and 4-D printing—that will transform the entire life cycle of a business’s product, from customer orders to after-sales service.

In a recent McKinsey survey of 130 companies across sectors, close to 80% of Chinese manufacturers expect their company’s competitiveness will increase with Industry 4.0, compared with just 57% of US respondents, 50% of respondents in Germany, and 54% of companies in Japan.

However, Chinese manufacturers say they are less prepared than their counterparts around the world to push ahead with Industry 4.0 initiatives. Only 57% of Chinese players expressed readiness, compared to 71% of companies in the US, and 68% of German companies.  Notably, only 44% of Chinese state-owned enterprises report they are prepared for Industry 4.0.

The Digital Capability Center in Beijing is a model factory and digital technology showroom established by McKinsey in partnership with Tsinghua University, one of China’s leading academic institutions. The Center showcases cutting edge digital tools for end-to-end value chain transformations, provides a safe testbed for piloting digital technologies, and hosts experiential trainings for capability building.

The Center is comprised of two parts. On one floor of the Center, located on the campus of Tsinghua University, a 100m2 showroom displays disruptive technologies and digital modules across the value chain, such as product development, supply chain management, and procurement, allowing clients and students to experience the digital transformation journey of a manufacturer of gearboxes.

On another floor, a 650m2 model factory is equipped with digitized lean production lines to create impactful learning and experimentation opportunities through simulation in a real-life setting.

By providing a centralized location for developing ground-breaking solutions, supporting clients at each stage of their transformation journey, and offering customized training modules, the Digital Capability Center in Beijing aims to help manufacturers in China realize the vision put forth in China’s national “Made in China 2025” policy.

The Digital Capability Center in Beijing is one of five DCCs around the globe to help companies meet the demands of Industry 4.0, understanding that their needs and readiness vary by region and industry. In addition to Beijing, the DCC network includes facilities in Singapore, Aachen (Germany), Chicago, and Venice (Italy). Each center has been founded in partnership with a leading industry consortium, government organization, or research institution.

“The Digital Capability Center is a one-of-a-kind, China-tailored facility that showcases technology, provides trainings, and develops innovative solutions. Manufacturers can quickly learn how to put digital operations and smart manufacturing to work in their companies and see noticeable improvements in innovation and efficiency”, said Arthur Wang, Partner and co-leader of McKinsey’s Advanced Industries Practice in China.

Professor Li Shuangshou of Tsinghua University’s iCenter explains, “The key to smart manufacturing is talent. In the context of new industries and technologies, we must actively prepare and transform, as well as explore new training models for engineers. The DCC Beijing is fully integrated with Tsinghua University’s manufacturing disciplines, and offers a new platform for students entering industry.”

“Companies can immediately leverage the deep experience of McKinsey’s team of experienced technology and operations experts. Once a company has gone through the Digital Capability Center program, they will be prepared to roll-out what they’ve learned throughout their own operations network”, said Karel Eloot, Senior Partner and Co-Leader of McKinsey’s Operations Practice in Asia.

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