COVID-19 is changing our future by dramatically accelerating the digital transformation of our economy and society. It is affecting all areas of our lives – from healthcare, education, and social ties, to work, shopping, finance, insurance, etc. Online business meetings and conferences will be replacing much of the international travel, many office buildings will become redundant, while lessons, lectures, doctor visits, dates and even weddings and funerals will be routinely held online.

I would like to focus my remarks on the effects of COVID-19 on manufacturing facilities and supply chains:

Distributed supply chains are not as attractive and efficient as they once seemed – rare events can really disrupt them, and not in a good way. Countries and firms demand more resilient supply chains, including additional capacity closer to home in case of a major disruption, so as not to depend on political decisions of other countries.

Manufacturing facilities must become much more flexible and resilient to disruptions, and allow for remote monitoring, remote management, and better business continuity, once disrupted. This is demanded not only by the manufacturers, but also by their customers, investors, creditors, and insurers. As a result, an extensive digitization of the shop floor, including its integration with all the other systems is becoming essential rather than nice to have. It provides the necessary first layer of high-quality data, upon which another layer of insight generation, decision support, and control of production processes – all in real time – must be superimposed. Such systems must become an order of magnitude better than what exists today.

These imply that COVID-19 is also likely to accelerate the adoption of digital technologies in manufacturing and supply chain management, which until now was lagging behind other sectors. Relevant technologies include big data collection from the shop floor without disturbing the operations, using advanced sensors and novel data platforms, to create digital replicas of the processes. Advanced artificial intelligence (AI) and machine learning (ML) tools detect inefficiencies, future problems, and anomalies, including cyber threats. Distributed systems, such as industrial 3D printing and remote manufacturing add to the mix, but require much more sophisticated data handling and communication, and a higher level of cybersecurity. Many such technologies (Industry 4.0) will be needed in newly constructed manufacturing facilities; however, they can also support the digitization of brownfield operations, substituting OPEX (operating expenses) for CAPEX (capital expenditures).

Israel, the Startup Nation, is well-known for its cybersecurity and AI/ML, computer vision, sensors, and complex systems integration capabilities; their innovative combinations are essential for Industry 4.0 solutions, which explains why Israel – a country with a very small manufacturing sector – plays such a disproportionate role in the Fourth Industrial Revolution, helping create smart, resilient and agile industries around the world.

Start-Up Nation Central – a nonprofit organization promoting Israeli tech innovation – facilitates this process by helping large corporations connect to the Israeli Industry 4.0 sector. We see first-hand that more and more corporations realize that a much faster adoption of Industry 4.0 solutions is essential to keeping their competitive edge in the post-coronavirus era.

Explore Industry 4.0 solutions on Start-Up Nation Finder.

Prof. Eugene Kandel is the CEO of Start-Up Nation Central, a nonprofit organization dedicated to strengthening Israel’s innovation ecosystem and connecting the world’s government, business and NGO leaders to the people and technologies in Israel that can help them solve their most pressing problems. He is also an Emil Spyer Professor of Economics and Finance at the Hebrew University of Jerusalem. Prof. Eugene Kandel holds a BA and an MA from the Hebrew University, and an MBA and a Ph.D. from the Graduate School of Business at the University of Chicago. Prof. Kandel’s primary areas of academic expertise are Financial Markets and Financial Intermediaries. His research is published in the world’s leading finance and economics journals. Prof. Kandel was actively involved in the 1997 redesign of the Nasdaq trading rules. Prof. Kandel served as Editor and Associate Editor of several leading finance journals. He is a member of the Center for the Study of Rationality at the Hebrew University, a Research Fellow of the Center for Economic Policy and Research in London, and a Fellow of the European Corporate Governance Institute. He is the founder of the Center for Financial Markets and Institutions, and of the MA program in Finance and Financial Economics, both at the Hebrew University. Between 2009 and 2015, Prof. Kandel served as the Head of the National Economic Council in Israel’s Prime Minister’s Office and the Economic Adviser to the Prime Minister, and played a central role in all the major decisions on economic policy. Prior to that, he advised governments, corporations, financial institutions, and NGOs; served on the Israeli Antitrust Court; and chaired investment committees of pension and provident funds in Israel.

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