12 Sep Industry 4.0 Benefits and Spinoffs: We Want Proof!
Everybody is talking about the Fourth Industrial Revolution these days.
However, only a few seem to understand how to translate the promises of Industry 4.0 into tangible benefits.
As a manufacturer, you have most likely already faced one or several of these challenges:
- Distribution channels and profit margins are collapsing as a result of the fierce competition from online sales
- It keeps getting harder to find qualified manpower
- Products are being standardized faster than ever before
Still, it’s one thing to say “Yes” to 4.0 Digital Technology, and quite another to come up with a plan in order to deploy it within your organization.
You also know that the status quo is not an option in this era of uncertainty, when the potential threat of losing the competitive race is ubiquitous.
The following fact has been widely documented: A large number of businesses, despite their hard work in the manufacturing sector, are slow to integrate Fourth Industrial Revolution technologies in order to reap the economical, financial and strategic benefits they provide. To accelerate the adoption of Industry 4.0, the World Economic Forum, in partnership with McKinsey & Company, published earlier this year (2019) the results of a study conducted across 1,000 manufacturing companies.
Their first finding – Those businesses that successfully made the shift embraced three major technology trends, which are:
- Artificial Intelligence
- Flexible Automation
This allowed them to differentiate themselves in the marketplace, and to transform their manufacturing facility to 4.0 on a large scale. In addition, the study shows that the Fourth Industrial Revolution is not only available to large organizations, but can also be implemented by medium-sized businesses. It is therefore showing up in emerging economies as well as developed countries.
Amongst the key distinguishing characteristics of this type of business, the study identified a marked interest for human capital development. Instead of replacing their employees by machines, the companies studied are putting effort into transforming the work, and as a result are eliminating repetitive tasks and focussing on the most productive ones.
It has also been highlighted that these same companies prefer radical changes over incremental improvements. They are ready to engage in open collaborative innovation systems, which can include the business community, universities, governments and social organizations.
Another characteristic is their ability to optimize their existing infrastructure, therefore achieving a significant impact with minimal equipment replacement.
Finally, the report from this gigantic study identifies the key determining factors involved in the adoption of the 4.0 factory, which are:
- A decision-making process supported by Big Data: Decisions are not driven by hypothesis, but are instead based on very large amounts of data.
- The democratisation of technology on the shop floor: Factory technology is transforming the way people work, and operators are now able to develop their own applications and solutions to simplify and automate their tasks.
- The adoption of “agile” work methods: The leaders in this space are implementing new ways of using the Fourth Industrial Revolution within an agile working methodology, which allows them to execute proof of concepts in short timeframes, to improve their solution based on the results, and to rapidly move from the pilot stage to deployment at scale.
- The implementation of new business models: Fourth Industrial Revolution technologies allow the leading companies to develop new business models that complete and/or disrupt the traditional value chain and business process.
Despite of this evidence, many entrepreneurs may prefer to rely on real-life examples and the advice of their peers. It is quite normal to be looking for proof that the benefits and spinoffs promised by Industry 4.0 are real.
The good news is that some of our leading manufacturing companies have already succeeded in achieving their transformation. We need to follow in their footsteps because they are at the forefront of Industry 4.0 adoption.
Here are two Nubik customers who have successfully transformed their business, which I will use to illustrate the point of this article:
- A manufacturer relying on custom to-order production and the ultimate customer experience
- Penetrate new markets thanks to Marketing Automation
- Custom on-demand production using an automated manufacturing process that is connected to the ERP system which is connected to CRM
- Shorten the sales cycle, increase product offering knowledge and grow account penetration
- Foster customer loyalty by offering an extraordinary client experience
- Understand customer behavior patterns and perform preventative maintenance thanks to IoT
- The next step will be a purchasing portal to make the customer experience even easier!
- A manufacturer relying on production automation, artificial intelligence and real-time visibility on customer needs and production capacity
- Automate the factory to minimize the impact of the shortage of manpower and compete with countries enjoying lower labor costs
- Use artificial intelligence to manufacture a consistent and predicable product
- Penetrate new markets with Marketing Automation
- Link production capacity and product availability with sales and delivery forecasts
- Increase profit margins within a restricted production context
- Quality management: reduce response time and improve collaboration
Of course, there are several best practices that must be developed by companies who want to follow in these footsteps and undertake their own digital transformation.
Still according to the McKinsey & Company study, there are four abilities that facilitate the transformation, which are:
- An articulate Fourth Industrial Revolution strategy: Have a Fourth Industrial Revolution strategy linked to the creation of a fundamental commercial value which is clearly articulated and communicated, and has been validated throughout the business.
- IoT architecture to scale up: Own an IoT architecture designed for expansion and interoperability. All the information flows into a central data pool and the interfaces between applications are standardized.
- Reinforce capabilities by acquiring new competencies: Smart factories allow every employee to learn the basics of new digital use cases and an efficient and fluid way to implement them. In addition, the leaders invest in the abilities of their workforce, ensuring that their teams have access to digital translators, IT/OT integrators and change management experts.
- Engage the workforce: Management is modelling the change process by clearly communicating a story of change through various channels, and ensuring that every employee feels engaged in the journey.
All these theoretical concepts are indeed very useful. Nevertheless, most manufacturers need concise, tangible and easily actionable details on how to evolve their organization. At the end of the day, many are worried they will stay stuck trying to answer an endless series of questions, such as:
- How ready is my organization to undertake the digital transformation?
- How prepared are we for Industry 4.0?
- Or simply, where do we start?
By choosing to work with a partner who has helped other manufacturers achieve a successful digital transformation, you are already taking a giant step in the right direction! This is our credo.
By Stéphane Poirier, Marketing Director for Nubik