A version of this article was published on Business Green.
The forthcoming industrial strategy white paper will set out the government’s plan to boost productivity and drive growth across the economy. If it is to be a success, it needs to grapple with two fundamental changes to the business environment.
First, it will have to address the transition towards a low carbon and resource efficient economy. Businesses increasingly face resource constraints and rising carbon prices. Equally, they know there is a huge low carbon economic opportunity. A successful industrial strategy will need to support them to be more resource resilient and futureproof so they can continue to be competitive.
Second, UK businesses need to anticipate the disruption to their sector of digital technologies, otherwise known as ‘industry 4.0’. The UK is a global leader in many of these technologies, but slow domestic uptake is limiting the economic benefits they can bring to UK businesses.
Ingredients for a competitive UK economy
Environmental and technological drivers are pushing in the same direction by helping businesses deliver more with less input. So they should be addressed together to achieve the government’s overriding industrial strategy goal: greater productivity. Focusing on where digital technologies can drive positive environmental outcomes will help to make businesses more competitive while (or rather, by) reducing their environmental footprint.
Intellisense’s Optimisation as a Service programme has delivered a 15 per cent increase in energy efficiency and a 7.5 per cent yield improvement at the KazAtomProm uranium mining site in Kazakhstan. This programme helps asset intensive industries optimise their resource use with a combination of internet of things (IoT), analytics and artificial intelligence technology. This is just one example of how UK businesses could boost their resource productivity by cutting material, energy and water, which constitute 50 per cent of the costs of the average manufacturing firm, compared to labour costs at only ten per cent. Adding digital technologies to the business toolkit, ranging from IoT to blockchain, can enable greater resource efficiency: improved connectivity, data analysis and flexibility can help to identify and realise these ‘invisible’, and potentially transformational, energy and resource productivity opportunities and enable new business models that capture more value from resources.
Where can the UK benefit?
Our analysis shows the UK is well placed to benefit from resource efficiency enabled by digital technology. In an initial scoping study, funded by Innovate UK, we mapped existing and potential digital technology applications that help to improve resource efficiency across the UK. We looked at seven technology groups, from IoT to artificial intelligence, and considered which applications the UK could excel at; the sectors that could benefit from technology; and the points in the value chain where resource efficiency can contribute to a business’s overall productivity.
We found opportunities for digital technologies to boost resource efficiency at different points along the value chain, across high and low productivity sectors and the places the industrial strategy is prioritising (the table below summarises some of the key opportunities).
Linking technology uptake and resource efficiency brings wins all round. Businesses could achieve greater resource efficiency and add to the bottom line; technology providers would increase demand for their products through innovation in solutions that meet low carbon and resource efficiency needs; and the transition to low carbon and resource efficient manufacturing would help to build competitiveness and keep manufacturing jobs in the UK.
How do we unlock the revolution?
While the UK has all the necessary elements for this resource revolution, including world leading research and innovation centres and a thriving digital technology sector, poor consideration of resource priorities in technology innovation and uptake will undermine the its ability to compete globally. Building on our initial analysis, Green Alliance is planning to launch a Tech Task Force in partnership with leading businesses and Tech UK. This will focus on the interventions needed to enhance the UK’s ‘industry 4.0’ capability to deliver low carbon and resource efficient growth.
Government policy is essential, particularly to exploit the most transformational opportunities that go beyond the individual business unit, requiring systems change or supply chain collaboration. The Tech Task Force’s job will be to build business insights on specific opportunities in the UK, strategies to enable them and integrate them into the policy thinking around industrial strategy, infrastructure and innovation policy. It’s an exciting prospect that the digital revolution could catalyse a resource revolution and that the UK could be at the heart of it.
[Image: Manufacturing by Cathy from Flickr Creative Commons; Technology icons from Research NXT, The Noun Project and Seeking Alpha]