While pandemic disruptions created a rush to move to M4.0, MLC’s latest Factories of the Future survey finds those plans have often been struck with a reality check.
On the long, winding, and sometimes grueling journey toward digital transformation, manufacturers may often feel they are attempting a Sisyphean task. A successful pilot launches but never scales. A strong business case is made for a new technology, but the C-suite is reluctant to invest. Initiatives falter under the weight of talent shortages or change-resistant business cultures.
It’s little wonder that it takes time to move the M4.0 needle in a meaningful way. But results from the MLC’s latest Factories of the Future survey indicate that some progress is happening – if not holistically, at least in a partial sense.
Fervor Gets a Wake-Up Call
One of the most interesting findings of this survey was the impact of COVID-19 on the pace of M4.0 adoption. Prior surveys conducted by the MLC overwhelmingly revealed that manufacturers were hastening the tempo of their digital investments in the wake of the pandemic. However, respondents to this survey were almost evenly divided between those saying adoption had accelerated (30%), decelerated (32%), or had not changed (35%) (Chart 3).
Likely this is because while manufacturers had a great need to implement technology solutions to address the myriad challenges the pandemic brought about, the enthusiasm for many of those plans has been met with some cold business realities. These could be shortages in tech-proficient talent, the inability to obtain technology due to supply issues, and/or the need to invest capital in other areas of the business, especially as costs have risen for raw materials, shipping, and other essentials.
The enthusiasm for M4.0 may be held up by talent shortages and higher costs for raw materials, shipping, and other essentials.
Getting Plans in Place
Overall, most manufacturers give themselves a low to mid-level grade on their M4.0 maturity – somewhere between a 3 and a 7 on a scale of 1 to 10 (Chart 1). But when compared to results from the 2021 version of this same survey, fewer respondents said they were defining a roadmap and more said they had moved to experimenting with a range of small-scale pilot projects (Chart 2).
Formal plans for adopting technology and programs to support them are still a work in progress for most. When it comes to M4.0 roadmaps, the largest percentage of respondents – 33% – said that those formal roadmaps were still under development (Chart 4).
Change management programs, proven to be essential to the long-term success of any M4.0 plan, also are in varying states of creation and implementation. Most respondents (40%) said that they were currently defining their change management process and training programs for M4.0 (Chart 5). Meanwhile, 10% said those programs were only in place for M4.0 leaders, and 15% said they had no plans to introduce such a process at all – both positions that could put any M4.0 progress at significant risk.
Areas of Transformation
Functionally, customer support appears to have made the most strides in M4.0 adoption, with 12% rating themselves as advanced in this area (Chart 6). In the same survey last year, just 4% of respondents assessed themselves at this same level. Production and assembly and equipment maintenance/installation also had a large number of respondents putting themselves at the intermediate stage of M4.0 adoption at 59% and 50% respectively.
Many manufacturers are making strides in supporting all of these functional technology initiatives with a robust network – 20% say that their plant floors are extensively networked and IP enabled now, with 58% expecting they will be at that level in two years’ time (Chart 7). Trailing that is digitization for production and assembly processes, with 52% having done so partially at this time and 44% anticipating those efforts will be extensive in two years.
Lacking or incomplete change management and training programs could put any M4.0 initiatives at significant risk.
The near-term future for factory management is also anticipated to be significantly more collaborative, with 28% anticipating there will be greater emphasis on incorporating employees, customers, and suppliers in management processes, up from 10% who say their factories are managed that way currently (Chart 8).
Digital Twins, AI Lead the Way
More manufacturers are keen to take advantage of the promise offered by AI, machine learning, digital twins, and the digital thread. 43% of respondents say they have machine learning in use currently, with another 27% planning to bring it online in the next two years (Chart 9). Examining specific use cases for AI, the most common area for deployment is production optimization followed by equipment maintenance and service (Chart 10).
The biggest jump for planned usage comes for digital twins, with 32% planning to implement that technology in the next two years, on top of the 25% who say they are using them now (Chart 9). 15% say they will be using digital twins extensively in two years, and 34% say they will be using them partially (Chart 11).
Other studies have noted the groundswell for digital twin investment, including a study from Deloitte that estimates digital twins’ global market will reach $16 billion by 2023. Another from Research and Markets indicates that roughly half of executives plan to use digital twins in their operations by 2028. Manufacturers see usage for digital twins in virtual prototyping, process optimization, quality management, and analysis of product performance, among others.
Inherent with all of this digitization is an increased opportunity for cyberattacks, and many manufacturers find themselves in a perilous security position. Just 19% have a fully formed cybersecurity program that includes workforce preparedness plans, employee training, and routine drills to simulate a cyberattack (chart 13). This is likely why 57% of respondents say that their company’s plant floor systems and assets are only partially secure against cyberattacks (chart 12).
High-profile ransomware and other attacks at big companies have garnered plenty of headlines, and they can be devastating to smaller companies that lack the resources to successfully emerge from such a setback. While money is often the primary motive behind these attacks, other bad actors can include corporate spies and sometimes even less-than-ethical competitors. While digital investment will be increasingly necessary for competitive advantage, manufacturers must simultaneously address the critical need for improved security.
The Challenges Within
While cybersecurity is a risk most often presented from outside, internal challenges also present themselves on the road to M4.0. The need to upgrade legacy equipment tops the list (59%), followed by a lack of skilled employees (53%) and access to adequate budget for such investments (39%) (Chart 14).
Despite these persistent and pervasive issues, manufacturers still see the tremendous opportunity that comes with embracing M4.0. Among the top benefits that respondents see from this transformation, respondents cited better operational efficiency (67%), better decision-making (49%), greater speed and flexibility (47%), and cost reduction (42%) (chart 15).
Manufacturers see usage for digital twins in virtual prototyping, process optimization, quality management, and analysis of product performance, and more.
Additionally, when asked about the necessity of M4.0 adoption, it’s close to an even split between those who view it as a unique competitive advantage (53%) vs. those who see it as table stakes for staying in the game (47%) (Chart 16). And for its overall impact, 56% view it as a game changer and hallmark of a new era (56%), while fewer feel that it is significant, but not transformative (39%) (Chart 17).
While the disruptions of the last two years may have spurred the desire to more quickly realize the factory of the future, the realities of such an ambitious undertaking have gotten no less daunting. Those who persist are likely to find greater rewards, but the road for getting to the M4.0 promised land continues to be anything but easy. M
Part 1: CURRENT STATUS OF M4.0 ADOPTION
1. Self-Assessment Puts Companies at Mid-Range for M4.0 Maturity
Q: How would you assess the M4.0 maturity level of your manufacturing enterprise?
2 More Manufacturers Experimenting with M4.0 Pilot Projects
Q: Which activity best describes the primary focus of your company’s M4.0 efforts today?
3 Near-Even Split on Pandemic’s Effects for M4.0 Adoption
Q: What effect has the COVID-19 pandemic had on your company’s adoption of M4.0 in its plants or factories?
4 M4.0 Roadmaps are in Development or Partially Implemented
Q: Has your company created a formal M4.0 roadmap to help guide the transition to digital platforms?
5 M4.0 Change Management Programs are Largely a Work in Progress
Q: At what stage is your organization with a change management program association with M4.0?
Part 2: FUNCTIONS AND TECHNOLOGY INVESTMENT
6 Customer Support Has Made Biggest M4.0 Gains
Q: At what stage of M4.0 adoption are the following functions at your company?
7 Production Digitization, Plant Floor Connectivity Will Grow
Q: To what extent are the following digitized or enabled
today vs. what you anticipate in 2 years’ time?
8 Most See Future Factories as Becoming More Collaborative
Q: How would you characterize how your factories/plants are managed today and what is the primary way you anticipate they will be managed in the next 2 years?
9 Digital Twins, Digital Thread Lead the Way in Top 10 Future Tech Investments
Q: Where does your company stand regarding the following technologies?
10 AI’s Leading Impact Seen in Production Optimization
Q: What do you see as the most immediate application for AI in your company today and in 2 years’ time?
11 Digital Twins to Become More Commonplace
Q: To what extent is your company using digital twin technologies now and what do you anticipate will be the extent in 2 years’ time?
Part 3: CYBERSECURITY RISKS
12 More than half say plant floor is only partially secure from cyberattack
Q: How would you rank your company’s technical security level against potential cyberattack / disruption to plant floor systems and assets?
13 Majority have employee cybersecurity training in place or underway
Q: What is your level of workforce preparedness in the event of a cyberattack/disruption to plant floor systems and assets?
Part 4: CHALLENGES AND OPPORTUNITIES
14 Legacy Equipment, Lack of Skilled Employees are Primary Challenges
Q: What do you feel are your company’s primary roadblocks to implementing your M4.0 strategy?
15 Efficiency, Decision-Making Lead for Reasons to Embrace M4.0
Q: What are the most important benefits and opportunities your company hopes to realize from embracing M4.0?
16 Slight Majority see M4.0
Adoption as Competitive Advantage
Q: Do you believe M4.0 adoption creates a unique competitive advantage or is it merely table stakes to remain in the game?
17 Most See M4.0 as a Manufacturing Industry Game Changer
Q: Ultimately, how significant of an impact will M4.0 have on the manufacturing industry?
Penelope Brown is the Content Director for the Manufacturing Leadership Council.
Survey development was led by Penelope Brown, with input from the MLC editorial team and the MLC’s Board of Governors.