The metaverse in manufacturing
OUTLOOK | May 25, 2022
Authored by RSM US LLP
Metaverse has been a buzzword in 2022, and while much of the buzz has targeted the individual consumer, many companies and executives are looking to understand what it means for their business. Meta CEO Mark Zuckerberg envisions that “the metaverse will reach a billion people, host hundreds of billions of dollars of digital commerce, and support jobs for millions of creators and developers.”
As of now, the opportunities are still largely unexplored, though they are coming into clearer focus. For manufacturing companies, there are simple and more complex ways to leverage the metaverse that in time could offer tremendous possibilities. Middle market manufacturers should accelerate technology investments needed for today’s digital world to take advantage of the opportunities that the metaverse may bring tomorrow.
Demystifying the metaverse
In its simplest form, the metaverse is an immersive, interactive medium where digital representations of people interact with each other and objects in a digital life that is in many ways similar to our physical life. The hype around the metaverse is evidenced by its market size, which reached $478 billion in 2020, according to Bloomberg. (This market size generally takes into account social media ads, gaming, augmented reality and virtual reality hardware, and gaming software, services and ads. Given that we are in the early days of the metaverse, its market value varies based on its definition.)
And the metaverse’s popularity is expected to grow with recent acceleration by the global pandemic and technologies such as blockchain, cloud computing and 5G. In fact, Bloomberg Intelligence predicts the value of the metaverse market will grow to as much as $800 billion by 2024. And while it is difficult to imagine how something that does not yet fully exist could offer such a substantial market opportunity, the question is not whether the metaverse will be significant, but rather when and for whom.
"Digital twins were first introduced over two decades ago, but with the rising popularity of the metaverse, the simulation environment will be given a renewed life."
Impact on manufacturing
The manufacturing metaverse potentially takes digital transformation and Industry 4.0 to a whole new level. It goes beyond bringing machines online via Internet of Things (IoT) devices or building digital platforms, and rather begins with a digital-first model for what are today inherently physical processes and operations.
Creating a virtual representation of a physical object, like a digital twin, allows manufacturers the unprecedented ability to see how something performs in real time and predict how it may perform in the future. Digital twins were first introduced over two decades ago, but with the rising popularity of the metaverse, the simulation environment will be given a renewed life. While digital twins are virtual replicas of existing products, machines or plants, the metaverse does not require connection with physical assets. Simulations in the metaverse provide the ability to test endless scenarios for respective ecosystems to choose the best strategy for the organization.
Continuous simulations would offer manufacturers access to real-time data to understand current situations and environments and how they may affect operations, the supply chain, and resource needs in the future. In addition, such metaverse simulations would allow organizations to generate alternative processes or contingency plans to further optimize and automate their facilities. These environments could improve collaboration for product development and testing for sustainable solutions that reduce cost and waste. Additionally, the metaverse could be an instrumental tool in workforce training by enhancing worker efficiency and safety, as well as serving as a proving ground to enhance the customer experience.
While we expect the metaverse to have a large impact across industrial sectors, automotive is certainly where we have seen some early traction. Companies are able to simulate a car’s behavior digitally in different conditions, such as weather shifts and the presence of other vehicles, to improve use and safety. BMW is leading the way, having implemented a virtual-factory strategy and built digital twins at over 30 different factories. Its strategy includes the training of robots, promoting design collaboration across different countries, and replicating entire production lines to ensure performance before expansion. The industrial metaverse has had not just a positive impact on the organization; it has been transformational.
While the industrial metaverse can provide a broad range of benefits, entering it won’t come without challenges. First, manufacturers, especially in the middle market, will need to update legacy technology infrastructure and incorporate digital capabilities. The pandemic has accelerated technology investments by enabling increased efficiencies, productivity and agility, but middle market manufacturers still lag behind their larger peers. Capital goods spending is already on the rise, so the time is ripe for companies to assess which technologies they can invest in now to better equip themselves for a future in which the metaverse has a larger presence.
Further, to adopt the metaverse, embracing new, advanced digital technologies such as virtual reality headsets or haptics will require companies to make sufficient investments going forward. This enhanced interaction with next-generation systems through artificial intelligence will be instrumental in connecting the virtual and physical worlds and require specialized talent to manage and operate. An already shrinking talent pool within manufacturing—representing nearly 6% of the 11.3 million open jobs in the United States per the March report from the U.S. Bureau of Labor and Statistics—means companies in the sector will need to upskill their workforce for the evolution of the metaverse ecosystem.
Moreover, executives will need to equip their leadership teams and employees to overcome the mental digital divide they might experience given that the metaverse is generally a new concept. Teams will need to start accepting virtual inputs in order to fully benefit from the metaverse.
Middle market insight
Manufacturers, especially in the middle market, will need to update legacy technology infrastructure and incorporate digital capabilities. The pandemic has accelerated technology investments by enabling increased efficiencies, productivity and agility, but middle market manufacturers still lag behind their larger peers.
Just the beginning
While some companies were initially slow to begin their digital transformation journeys—leveraging technology to transform how we work and interact with their environments, products and services—businesses are now racing toward a future very different from the one they were originally designed to operate in. Though we do not know what the future holds for manufacturing once the metaverse becomes mainstream, we know the goal will be to balance the limitations and benefits of physical and digital worlds to optimize their intersection.
As with any new technology adoption, organizations exploring the industrial metaverse will face hurdles; however, companies that embrace solutions intended to close the gap between physical and digital will have a competitive advantage and be in a stronger position to revolutionize their factory floors.
This article was written by Katie Landy and originally appeared on 2022-05-25.
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