Manufacturers make strides toward better agility and connectivity, but getting small businesses on board is necessary for global economic stability.
Industry 4.0, also known as Manufacturing 4.0, is not marketing jargon, a buzzword, or a prediction to grab your attention. Instead, it’s a ground reality of modern factories and makes assembly lines smarter and more efficient.
The current industrial revolution is characterized by trends and technologies that erase the differences between the physical and digital realms. However, unlike prior industrial revolutions, this one is not about replacing existing factory mechanics but overcoming barriers through rapidly advancing disruptive technologies like big data processing, AI, ML, IoT, and digital twins. According to The Global Survey on the ‘State of Industry 4.0, 51% of participants have well-defined corporate priorities to enable Industry 4.0.
Industry 4.0 is about automating legacy manufacturing practices with IoT, AI, cloud computing, and analytics. While these certainly have the highest impact on manufacturing paradigms, other technologies like factory simulation, robotics, AR, 3D printing, and blockchain are bound to change the way we imagine factories. Enterprises are no longer shying away from keeping up with the times, and vendors support them with off-the-shelf solutions.
Businesses are now improving their manufacturing operations and their time to market while making the workplace safer and more productive.
With that, they can now develop processes and systems that are both agile and connected. With the help of these solutions, businesses are now improving their manufacturing operations and their time to market while making the workplace safer and more productive. Consequently, it also lowers their carbon footprint and improves their customer experiences simultaneously.
For all practical purposes, this movement is the confluence of data, connectivity, and intelligence that, in turn, support industrial growth and profitability by creating more agile production environments. Every aspect of the supply chain, starting from sourcing to production and logistics, collaborates and shares information in real-time. This has increased productivity, resilience, and a more flexible business structure.
Why Are Companies Adopting Industry 4.0?
While evolving consumer expectations and advancing technologies certainly led to a paradigm-shifting production process, the primary objectives that drive enterprises to adopt Industry 4.0 technologies are no different from the goals that drive any business decision. According to a survey conducted by Informa on behalf of Jitterbit, below are some of the leading rationales behind Industry 4.0 adoption:
- Improving workforce productivity
- Automating production procedures
- Integrating manufacturing and supply chain arms
- Improving asset tracking and management
- Speeding up time to market on new products
- Speeding up financial decision making
- Elevating customer experiences
The effects of Industry 4.0 are quite widespread and far-reaching and yet reflect evolution rather than disruption.
Impact of COVID-19 on Industry 4.0 Adoption
Industrial digitization faced its biggest challenge in the dawn of 2020. Given the safety concerns since the start of the pandemic paired with the most notable economic crisis in recent times, businesses across the globe were forced to take extraordinary measures. While the main goal was to protect their people from the virus and prevent supply chain disruption, we have seen massive developments in the digital space (as well as their adoption in the industry at large), which have brought data-driven operations to the forefront.
A prime example could be data fueling vaccine discovery, compliance, acquisition, and rollout. During vaccine production, digital twins, for instance, helped understand in real-time exactly what was happening during the production process and what needed to be optimized. We can monitor complex operations and predict how they would play out under different circumstances using factory simulation.
In many ways, COVID-19 turned out to be an inflection point for Industry 4.0 adoption. It tested the movement’s maturity, and now businesses can pinpoint the things that were thought to be important in the pre-pandemic era but are no longer relevant. For instance, businesses previously prioritized customization in production, which has lost some importance to customers except for within a few sectors like electronics and computing.
At the same time, the advent of the pandemic made room for widespread adoption of automation and robotics on the factory floor to keep employees safely distanced. Augmented reality was also critical in setting up lines quickly, just as simulation helped create a virtual layout of factories to help make changes to lines and ramps.
Bringing Small Business on Board
While the COVID-19 pandemic has been catalytic in hastening the shift toward automation at a global scale, it caught many digitally unschooled small and medium enterprises on the backfoot. However, industrial automation has been accelerating across sectors in the aftermath of the pandemic, given its unmistakable positive impact on operational procedures. Now, businesses of all sizes need to engage in this transition.
Small and medium enterprises play a demanding role in most developing economies. Around 40% of the Indian workforce depends on SMEs for their livelihood as they contribute about 45% of the country’s manufacturing output and 40% of its export. Internationally, they represent close to 90% of all businesses, contributing 46% of the private nonfarm GDP in a country as developed as the USA.
If small and medium businesses miss the global automation experience, it will further amplify the existing economic chasm.
Thus, it’s safe to say that SMEs are a focal point in framing enterprise policies. However, SMEs face numerous challenges in adopting the recent technological advancements, such as insufficient capital, a lack of skilled workers and a lack of technical expertise. These businesses need support from the industrial ecosystem and the government to overcome in order to keep up with the evolving digital environment.
- Leveraging Big Data Analytics: Industry 4.0 has opened flood gates to data that needs to be stored and harnessed so that SMEs can reap the benefits of digitization. In addition, larger industrial associations need to provide business analytics at scale to SME vendors to create a larger impact and help them reduce their expenses.
Information asymmetry is a major challenge the SME sector faces. It prevents credit flow and the only way around it is to offer analytics on data points pooled from relevant sources. Credit is necessary for sustaining and expanding a business. There’s a growing need to reduce the massive credit gap in the SME sector and, at the same time, introduce links to e-commerce and social media for increased exposure.
- Educating and Training SMEs To Build Capacity: Both the employer and the employees of an SME need to bridge the gaps in their digital skills. The practical way to go about it is to update the mainstream education system so that it keeps up with the evolving technologies. We also need to emphasize digital skill development campaigns to empower the youth and budding entrepreneurs. By institutionalizing this attempt, countries across the globe can build a more skilled and digitally equipped workforce.
- Providing Quality Infrastructure to SMEs: There’s a connectivity gap between SMEs and quality IT infrastructure and the need for data security that must be addressed to allow them to move with agility. Until now, some smaller businesses have ignored or rejected even the concept of emails and websites for their business. As for relatively larger industries, it’s time for them to reap the cost advantages of cloud services and more, and all of this needs to be actively supported and pushed by the industry leaders.
If SMEs miss the global automation experience, it will further amplify the existing economic chasm. But, on the other hand, if these businesses transform their manufacturing processes by leveraging Industry 4.0 technologies successfully, we can expect to see relentless value creation on top of sustainable growth.
True Value of Manufacturing 4.0
Adopting the technologies of Industry 4.0 is a primary agenda for boardroom meetings as it can go a long way toward streamlining operations, reducing unnecessary costs, and making smarter and more resilient products. Yet, no matter the benefits, businesses must always pinpoint their objectives and the challenges of adopting a certain technology. While a fix for a problem almost always exists, it’s about being diligent about its practicality.
While the fourth industrial revolution has brought advanced technologies to the mainstream, it remains to be seen whether businesses pursue a balance in value.
In its essence, the developments seen on the factory floor are in the domain of connectivity. Due to machine intelligence and transparent data usage, companies have been able to gain a deeper insight into their operations. And just as implementing it required extensive planning, it is necessary to adopt strategies by engaging all teams, including finance, engineering, and supply chain. Starting production with a minimum viable product is the way to go. It must run its due course in the market, demonstrate its benefits, and prove its worth as it develops further.
In all practicality, the exercise needs to take small, measured steps to make manufacturing as efficient as possible.
Going Beyond Manufacturing 4.0
While the fourth industrial revolution has brought advanced technologies to the mainstream, it remains to be seen whether and how businesses pursue a balance in value. The idea is to maximize efficiency and growth while keeping environmental sustainability and social responsibility at the forefront. Manufacturers will have to implement agile execution principles to drive innovation as we look ahead. M
About the author:
Manoj Singhal is Executive Vice President and Global Head, Manufacturing Vertical at Birlasoft..