BrazilA.T. Kearney hosts summit on the future of production in Saudi Arabia
A.T. Kearney in the Middle East has in conjunction with Saudi think-tank Al-Aghar Group released the first of its insight papers into the Fourth Industrial Revolution and its impact on the future of production in Saudi Arabia, derived from a recent summit featuring prominent local industrial and technology leaders, policymakers, and academics.
The convergence of a number of rapidly emerging technologies, most notably artificial intelligence, robotics and automation, the Internet of Things and enterprise wearables, 3D printing, and virtual or augmented reality, Industry 4.0 – or the Fourth Industrial Revolution (4IR) – is set to have a profound impact on just about every facet of life across the globe.
Since 2015, the global strategy and management firm A.T. Kearney has partnered with the World Economic Forum (WEF) to examine the potential impact of 4IR on the future of production, along with the implications for business enterprises, the workforce, and national and global economics, with a view to promoting technological innovation and sustainability – from a social, environmental and economic perspective.
In conjunction with independent Saudi think-tank the Al-Aghar Group, and the firm’s own research foundation the Global Business Policy Council – which earlier this year established a dedicated National Transformations Institute in Dubai in response to the social and economic reforms sweeping the GCC – A.T. Kearney recently hosted a summit in Saudi capital Riyadh bringing together a cross-section of industry leaders, policymakers and researchers for a series of presentations and roundtables on 4IR and the future of production in the Kingdom.
With speakers and panelists including Prince Turki Bin Saud Mohammed Al-Saud, President of the King Abdulaziz City for Science and Technology (KACST), and Imbrahim M. Babelli, Acting President of the government’s Centre for Strategic Development, along with A.T. Kearney’s Mauricio ZuaZua and Andreea Zugravu as the firm’s lead and secondee for the WEF Future of Production initiative, and Dubai-based Vice President of the Global Business Council Rudolph Lohmeyer, the discussions centred on the most crucial issues and opportunities for the Kingdom as to production with the advent of 4IR – pegged at a potential economic worth of SAR 1 trillion by 2030 (nearly US$270 billion).
Referring to the Manufacturing, Engineering, Warehousing, Logistics & Transport, and Retail and Trade sectors – together totaling more than 30% of Saudi Arabia’s GDP and upwards of 3 million jobs – the SAR $1 trillion (~ +4% GDP) ‘Production’ potential as breakdown is comprised of both direct impact (SAR 100 billion) and broader indirect cumulative economic benefits up to a worth of SAR 880 billion by 2030, with productivity gains (SAR 320 billion) in the wholesale and retail (SAR 400 billion overall) and manufacturing (SAR 385 billion in total) sectors the largest drivers.
Debates, however, continue as to the human and social impact of 4IR, with concerns for the further concentration of capital and widespread job losses. In a recent report on the future of jobs in the Middle East, McKinsey & Company estimated that already 45% of existing jobs in the GCC could be automated with currently available technologies, equivalent to 20 million full-time jobs and $366 billion in wages, and including 4.5 million jobs and $146 billion. Here, the participants at the A.T. Kearney summit sought to identify the foundations required to shape and develop an inclusive and sustainable future 4IR production system for the Kingdom.
From the discussions, four key areas of suggested focus emerged; enhancing 4IR awareness and governance; supply chain localisation to capitalise of additive manufacturing; fostering the development of local start-ups and small and medium enterprises to attract inbound skills and investment, and; building a culture of experimentation and innovation. There were, however, several strategic challenges also identified if Saudi Arabia is to realise its potential, including issues around human capital and skills development, basic innovation infrastructure, and existing barriers for smaller enterprises.
A.T. Kearney, in its Shaping the Future of Production partnership with the WEF, states; “Disruptive technologies are transforming global production systems and unleashing a new wave of competition among both producers and countries… Just as we look back at the invention of the spinning jenny, steam engine or the assembly line as turning points in history which changed society, the economy and environment, our descendants are likely to look back on today’s technological advances as the start of a new industrial revolution. We require new forms of collaboration to learn, where we can, from the past and demonstrate foresight for generations to come.”
Just recently, A.T.Kearney's new Global Managing Partner Alex Liu spoke of the firm's intention to continue expanding in the Middle East, stating that the region was one of the consultancy's fastest growing "in terms of revenues, in terms of people and in terms of breadth and quality of our client relationships.”
