Leveraging the Industrial Metaverse for Digital Transformation in Manufacturing

Current state and prospects of the Industrial Metaverse.
The Industrial Metaverse and Its Impact:

The metaverse represents the latest in a long line of digital transformation innovations, with the potential to revolutionize people’s work and lives. While the ‘communications metaverse’ has provided immersive experiences which expand how individuals interact within the social and entertainment space, its application in the industrial realm—essentially the ‘industrial metaverse’—brings a completely unique expression of value add, transforming real-world business processes and operations into digital form and, in turn, accelerating efficiency and innovation.

Figure 1: Defining the Industrial Metaverse

The industrial metaverse provides a virtual reality space that replicates the real world, enabling real-time simulations and the technology to test multiple scenarios. Its key characteristics are seamless data integration and advanced simulation capabilities. As an example, a digital twin is a digital counterpart of a physical asset or process rendered in a virtual space. A digital twin can replicate assets and processes that come from a variety of industries – ranging from manufacturing to energy, construction, or even transportation - allowing for real-time monitoring, scenario testing and optimization. Risk management, streamlining of product development time and predictive maintenance are already areas to see the positive impact of these new technologies. A digital twin can optimize processes by predicting urgent maintenance needs or identifying bottlenecks in manufacturing lines. In addition, visualizing an entire supply chain in a virtual space facilitates rapid decision-making and risk management. The industrial metaverse is also beginning to serve as a tool for sustainable decision-making, helping to reduce the environmental impact of industry by visualizing resource consumption and emissions, leading to more environmentally friendly operational planning.

While both the industrial metaverse and smart factories are prime examples of the evolution of digital technology in manufacturing, EY makes a distinction between them. Smart factories focus on optimizing specific production processes, primarily using IoT, AI, and robotics to quantify and optimize operations in actual factory production lines. Smart factories also enable real-time monitoring and analysis of production data, contributing to productivity improvements and quality assurance. The added value of smart factories lies in the consistent quality, speed and flexibility that result from the continuous focus to enhance output. In contrast, the industrial metaverse harnesses technology to mimic the real world in a digital format, enabling more advanced forecasting and testing activities. It offers a "human interface," allowing for immersive 3D environments to recreate workflows, training processes and design decisions. Analysis within a 3D space also enables multi-faceted visualization of products and processes for a more detailed analysis based on larger data volumes. Preliminary simulations and tests can also allow manufacturing industries to trial various scenarios and make a preemptive start to address potential issues.

Benefits of the industrial metaverse:

The industrial metaverse offers several advantages, including:

• Efficient risk management: Early-stage simulations during product development can identify potential issues, enabling companies to manage risks efficiently in the product development and production processes.
• Advanced training: Virtual reality-based practical training accelerates skills development for new hires or inexperienced workers, offering realistic operations in the safety of a simulated environment.
• Addressing current labor shortages: The industrial metaverse enables remote operation of physical equipment in real-time, alleviating issues of labor shortages.
• Sustainable economic activities: The industrial metaverse assists planning to minimize environmental impacts, such as optimizing energy consumption and reducing waste, by quantifying environmental loads and simulating them in virtual space.
• Streamlined product development: Using digital twins at every stage of the engineering process can shorten development time and reduce costs, allowing for early detection and correction of specific component or process issues before they spread to other areas.

Mr. Masato Komiya, CEO of d-strategy, inc. and Special Associate Professor at Tokyo International University, commented: "The fields most likely to be affected are construction, manufacturing, and healthcare. Dassault Systèmes, Autodesk, PTC, Siemens, and ANSYS (collectively known as DAPSA) are very present in construction and manufacturing. We need to become users and make maximum use of existing platforms from these companies. Functionally complete platforms offer the means to extract maximum performance while keeping new investments to a minimum. Different fields require unique approaches, yet there is a common need to effectively utilize existing platforms for overall optimization. This is an important step in realizing the industrial metaverse."

Japanese companies should also recognize emerging business opportunities for overall optimization and, as yet, not fully leveraged scenarios. For example, while Building Information Modeling (BIM) is widely used in the design field of construction, there will be room in future for more effective applications in construction and maintenance management. Providing user-friendly tools for small and medium-sized enterprises may also be a promising avenue for exploration. This type of approach will backfill any gaps and contribute to the success of the industrial metaverse. In the healthcare sector, Japan is already leading the way, with the pioneering presence and influence of companies like Holoeyes, Dental Prediction, and JOLLYGOOD+.

Given the innovation shown by these industry actors, Japan has the potential to become a new hub for the industrial metaverse.

Challenges in implementing the industrial metaverse:

While the industrial metaverse holds potential for productivity and efficiency gains in manufacturing, several challenges stand in the way of its successful implementation:

• Technology investment and talent development: Introducing the metaverse requires advanced technical capabilities. There is a need for both investment in new technologies such as AR, VR, AI, and 5G, and securing and training talent in their use.
• Data security: The metaverse generates vast amounts of data, which become critical intellectual assets for companies. Security measures to prevent information leakage are crucial.
• Improving user experience: Expertise in design and usability to develop user-friendly and understandable interfaces is key to maximizing the benefits of metaverse adoption.
• Addressing social impact: Companies must also respond to societal changes and impacts, such as shifts in work styles due to the normalization of remote work, and the digitalization of education.
  

Mr. Komiya of d-strategy, inc. described the benefits and challenges of the industrial metaverse as: "There are significant benefits in being able to collaborate beyond organizations and companies through simulations and visualizations even before implementation in the real world, as well as achieving consistent quality and flexible operations that can adapt to change. In addition, these benefits facilitate the digitalization of tacit knowledge in product design, line and process design and operations, allowing for the transfer of expertise from skilled workers to other employees, and making it easier to transfer operations from parent factories to emerging countries. Using digital twins to visualize know-how also enables the effective communication and sale of solutions to other companies. Digital twins have a cross-organizational impact and can significantly affect operations in the medium to long term. Japanese companies tend to make decisions based on short-term ROI, such as increased sales or reduced costs, and investment budgets are often allocated on an individual organizational basis. While there is a tendency to assume that current operations are sufficient, consideration must be given to whether current systems and operations can be maintained in the medium to long-term with an aging workforce and talent shortages. There should also be an assessment of generalized optimization beyond a focus on individual optimization of specific departments, encompassing design, production technology, manufacturing, and maintenance.

Strategies that take all of these factors into account are necessary for the future development of the metaverse. However, companies which successfully overcome these challenges will be able to seize new business opportunities."

How digital transformation need to evolve for the industrial metaverse to flourish

A clear long-term vision and purpose are crucial for companies implementing the industrial metaverse. This paradigm shift may fundamentally alter traditional business models, as new technologies merge with the future of business. Implementing the industrial metaverse requires a strengthening of IT infrastructure, upskilling staff, updating management philosophies and adopting cloud services. Executives must demonstrate leadership for these initiatives and ensure close collaboration between various departments and stakeholders. As a consequence, implementing the industrial metaverse requires not only the adoption of specific technology but also a strategic perspective for organizational transformation and future leadership.

In the following sections, we would like to introduce how the Ricoh Group is approaching digital manufacturing.

Transforming work styles:

Ricoh Group had been discussing work styles at its production sites even before the pandemic, and has developed both a corporate vision titled "Ricoh Production 2030" and a digital manufacturing strategy.

Figure 2:

In relation to digital manufacturing Mr. Naoki Okuyama from Ricoh's Digital Strategy Department commented that "We found the answer on the factory floor, where our typical production sites of the future will be classified in two broad categories, either 'automation' or 'human-robot collaboration.' If we take the example of mass production, such as smartphone manufacturing in China, this lends itself to automation and 'unmanned' operations which are more efficient from an investment perspective. On the other hand, Ricoh's production in Japan involves multi-variety, small-run production, which requires flexibility in production processes. However, production equipment that offers this degree of flexibility is neither easy to operate nor maintain, and the ROI is not always met. At domestic production sites, the need for production flexibility continues to justify the presence of human workers, but there are parallel concerns about human error and the issues of a declining birthrate and aging population. This is why we are creating a more worker-friendly production environment by utilizing collaborative robots."

Data infrastructure:

Digital twins function in conjunction with real-time data, which drives the creation of a framework for data collection, processing, storage and security. Data is collected from physical devices, processed using sensors and AI, and then organized and converted into useful information. Data is cleaned and preprocessed when necessary to ensure its integrity. The process uses structured and unstructured data, and governance structures are in place for data maintenance, access control and security measures. Collectively, these actions build practical and reliable digital twins, enabling diverse simulations and analyses. Mr. Taiki Saito, Group Leader at Ricoh Industries Co., Ltd.’s Printer Production Division, made the following statement: "When digitizing human-related data, it is crucial to collect data in a natural way without making people feel that their data is being taken. It is essential to gather information without disrupting the normal workflow of individuals." This represents an important approach to seamlessly integrating data collection within the natural actions and behaviors of people.

Technical skills and training:

The implementation of digital twins relies heavily on personnel with specialized knowledge and technical skills, which may include expertise in data analysis, modeling, programming, and other specific technologies. Appropriate training and continuous education therefore acquire greater importance in order to maximize the potential of employees. Ricoh Industry Co., Ltd. has undertaken a unique initiative for employee training which involves not just capturing the movements of workers but also scanning the entire workspace and recreating it virtually to visualize and simplify its understanding of the entire process. This enables employees to do more than merely memorizing work procedures: they can now understand the situation on the ground, which fosters an ability to optimize their work. Utilizing VR goggles, as seen in the images below, they are able to present an expert’s point of view in their training materials which has led to observable improvements in work efficiency. Employees can now have a virtual presence at the site in a realistic, immersive audio-visual experience. In this way, employees gain a more intuitive understanding of the advanced skills, procedures, and work environment for skilled workers, leading to an uptick in the speed to acquire new skills and, consequently, to the overall efficiency of the work process."

Sensors and IoT device:

Digital twins require real-time data to accurately simulate real-world movements. Strategic use of sensors and IoT devices is essential for effective data collection, providing real-time feedback from the physical world for precise digital twin operations.

The future of the industrial metaverse:

Any attempt to create a world that fully implements and utilizes the industrial metaverse is deeply intertwined with corporate digital transformation, and entails changes in organizational mindsets and skill sets. These changes also present opportunities for defining a vision for the future and objective setting, translating to concrete strategies such as establishing a data foundation.

However, challenges such as a shrinking labor force and rapid technological advances may also pose a threat to Japan's manufacturing industry, shaking the foundations of its long-standing advantages for quality and precision in its manufacturing techniques. Nevertheless, the advent of the industrial metaverse does present new opportunities. If Japan’s manufacturing industry chooses to fully leverage the potential of real-time simulation, risk prediction, and sustainable manufacturing, it can define the parameters of next-generation manufacturing. Integrating this technology into business models will enable manufacturers to map their own future. The industrial metaverse has the potential to reinforce Japan's competitive edge and its ability to deliver “Made in Japan” premium products to the world.

【Co-authors】

EY Strategy and Consulting Co., Ltd.
Technology, media and entertainment, and telecommunications (TMT) Sector
Shinichiro Hara - Associate Partner
Zhicheng Liang - Manager
Tetsuo Kan - Senior Consultant
Yuuno Sekimoto – Consultant

*Above ranks and affiliations reflect those at the time this article was published.