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Digital tech report contributes to £147 million research funding boost for UK’s manufacturing sector

Published on October 12th 2023

A Cambridge Industrial  Innovation Policy report on the impact of adopting digital tech in the manufacturing sector contributed to a UK government funding boost of £147 million to support investments in digital manufacturing research.

The challenge

There have been many predictions made about the potential economic impact of the digital revolution on manufacturing and the wider economy. The forecasts point to a potentially disruptive effect of digital technologies across all aspects of industries – from the way in which products are made, the types of jobs manufacturers can provide, and the functionalities offered by digitally enabled products and services.

In keeping with this outlook, the Made Smarter Review for the UK government in 2017 projected that adopting digital technologies in the UK industry could lead to a 25% increase in productivity by 2025. However, these evaluations were almost entirely focused on future predictions, mainly based on rough macroeconomic projections and survey data. Very few countries had published data on the real impact of digitalisation across their national economies, and there was a lack of availability and analysis of such evidence.

UK Research and Innovation (UKRI) sought evidence for inclusion in their business case for investments in digital manufacturing technology research under Wave 3 of the government’s Industrial Strategy Challenge Fund (part of the government’s 2017 Industrial Strategy). Their objectives were twofold: first, to learn from other countries and identify potential lessons the UK could apply, and second, to explore the economic impact of digital transformation initiatives and how they were measured.

The approach

To understand the potential impact that could be achieved in the UK if similar initiatives were created, UKRI engaged the expertise of the Cambridge Industrial Innovation Policy team (CIIP) and senior academics from the Institute for Manufacturing (IfM) to evaluate the evidence on the real-world impact of digital manufacturing.

The outcome was the report: “The Practical Impact of Digital Manufacturing: Results From Recent International Experience”, which delved into how digitalisation technologies were actually being implemented in key manufacturing countries and examined the outcomes for the companies adopting them.

Through this analysis, the aim was to identify both the expected and observed results of digitalisation in manufacturing, drawing on real-world examples from various regions around the globe. The comprehensive study provided valuable insights to support UKRI’s case for investment and help shape effective strategies for digital transformation in the UK manufacturing sector.

To do this, the team developed a common framework to collate and compare data from across different countries and different types of organisations. The study also identified which activities are being prioritised for digitalisation investments by manufacturing firms and where the business value is being created. Much of the data was drawn from small and medium-size enterprises (SMEs) from key manufacturing countries such as China, France, Germany, Korea, Japan, Singapore, the US and Canada.

The team identified over 1,000 use cases from across these economies and selected 200 companies (all participating in government-backed initiatives supporting digitalisation) for closer study. In each of these 200 cases, the team examined the business areas being prioritised, the types of digital applications companies were using, and the benefit they reported from digital adoption.

The report was presented to UKRI leads building the case for investment in the Made Smarter Innovation challenge, including the interim Challenge Director.

The impact

Thanks to the report, CIIP made a significant contribution by examining the actual impact achieved by manufacturers worldwide when they implemented digital applications and solutions across their operations, with a particular emphasis on small and medium-sized enterprises (SMEs). This analysis offered strategic insights that could inform future policies to support digital manufacturing in the UK.

“By focussing on real-world outcomes, the evidence gathered provided UKRI with key evidence for inclusion in their business case, which was successfully awarded £147 million investment for ‘Made Smarter’, announced in autumn 2018.”

Dr Carlos López-Gómez, Cambridge Industrial Innovation Policy

Crucially, the evidence gathered from the study provided UKRI with key evidence for inclusion in their business case to inform investments in digital manufacturing technologies. UKRI went on to successfully secure a substantial £147 million investment for the Made Smarter Innovation Challenge, which focuses on the development and research in emerging industrial digital technology.

The initiative covers a wide spectrum of activities, including conducting practical research in dedicated research centres, supporting the growth of start-ups through accelerator programmes, expanding successful endeavours in innovation hubs, and ultimately refining and implementing these technologies through collaborative research and development initiatives.

“When developing the business case for the Made Smarter Innovation challenge we identified some substantial knowledge gaps in our understanding of the international landscape.  We were keen to learn from the approaches adopted by other countries and explore the economic impacts they had generated.  Cambridge Industrial Innovation Policy provided us extremely important evidence on these points, on a fast timescale, which supported our successful business case.”

Katie Daniel, Deputy Director Partnerships, UKRI-EPSRC

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