Manufacturers will be pressing ahead with their M4.0 investments as they expand their digital deployments in operations, a new MLC survey reveals.

Despite economic uncertainty, manufacturers are moving ahead with digitizing plant and factory floor operations and are anticipating significant progress in doing so by 2025.

This is one of the key findings of the Manufacturing Leadership Council’s new survey on Smart Factories and Digital Production (formerly called Factories of the Future) that was conducted in January. The survey was designed to assess how manufacturers are utilizing digital technologies across their production plants and factories, what technologies they expect to invest in to further their digitization plans, what benefits they expect from digital transformation of their operations, the challenges in achieving those benefits, and the potential impact of digital transformation on the industry’s competitiveness.

Here are the key findings. Selected graphs from the survey follow.

Economic Outlook and Impact on M4.0 Investments

Manufacturers’ outlook for the U.S. economy in 2023 is a mixed bag, with 38% expecting a recession to occur later this year. But 23% expect moderate growth in the economy and no recession, while 16% expect inflation to ease and growth to rebound in the second half (Chart 1).
The economic context, however, does not appear to be constraining Manufacturing 4.0 investments. Fully one-third of survey respondents said they expect M4.0 investments to increase this year, while another 51% said they expect investments to continue unchanged (Chart 2).

Status of Digital Adoption

The focus of M4.0 efforts has shifted to broader deployments, with 33% reporting that they are currently implementing M4.0 company-wide, compared with 24% last year. There was also a slight uptick in those implementing single M4.0 projects, to 17% this year from 15% last year (Chart 4).
The shift to more significant deployments is also reflected in the stage of digital adoption by functional area. For example, the percentage of those reporting an advanced stage of digital adoption in production and assembly operations rose to 16%, from 9% last year. Those reporting they had reached an advanced stage in equipment maintenance operations rose to 13%, from 8% in 2022 (Chart 5).

Measuring Digitization

End-to-end or extensive digitization of a variety of factory-related operations is still aspirational at most companies, but intentions over the next couple of years are very strong, with some areas anticipated to experience exponential progress.
By 2025, for example, nearly 10% of respondents expect to have their full factory operations completely digitized end-to-end, compared with none reporting so today. Even more pronounced in terms of intentions is plant floor equipment maintenance and service operations. By 2025, 42% expect to have extensive digitization of this process in place, compared with only about 5% today (Chart 7).
Similar anticipations of extensive digitization – rising to double digits by 2025 from single digits today – are evidenced in production/assembly (45% in 2025, compared with 9% today; Chart 8), IP-enabled plant floor networking (60%/25%), integration of plant floor equipment data with quality systems (39%/4%), and integration of design and production processes (32%/9%).
Outside the four walls, integration with suppliers and customers is also slated for significant adoption. Today, only 4% say they have extensively integrated production functions with customers and suppliers, but by 2025, 26% expect to have done so (Chart 9).

Factory Organization and Management

Very few manufacturers, only 3% according to the survey, expect their factory operations to be run autonomously. The overwhelming sentiment, by 88% of respondents, is that the future state of factory models will be a hybrid of humans and machines, incorporating elements such as robotics, digital production systems, and digital processes (Chart 10).
Nevertheless, there is considerable agreement that future factories, with the aid of AI and machine learning technologies, will be self-managing and self-learning facilities. Sixty-three percent of respondents partially agree with this characterization, and another 14% fully agree with it (Chart 11).
In assessing their technical security level against potential cyberattacks, 57% of respondents said they felt partially secure, while 30% said totally secure. Only 9% indicated they felt vulnerable to attack (Chart 12).

M4.0 Technology Usage

The survey assessed the current and planned usage of 21 technologies, all of which are in use to some degree today by respondents. The five technologies which garnered the highest percentages of those saying they planned to use them by 2025 are smart planning and scheduling tools (54%), digital twins (53%), adaptive process control technologies (50%), digital threads (47%), and machine learning and AR/VR technologies (both at 49%).
AI also had a strong showing in terms of planned usage by 2025, with nearly 36% of respondents expecting to use the technology within the next two years. By 2025, the most desired applications of AI are in production optimization, equipment maintenance and service, and in distribution, logistics, and inventory management (Chart 13).

M4.0 Opportunities and Challenges

The chief challenges manufacturers identified in implementing their M4.0 plans remain largely the same as they have been over the past handful of years. Top of the list this year were data and systems integration (49%), the need to upgrade legacy equipment (at 48%), and the lack of skilled employees (38%) (Chart 14).
The most sought-after benefits from M4.0 are also repeats this year. Better operational efficiency topped the list this year (59%) followed by better decision making (51%) and cost reduction (50%) (Chart 15).
Just over half of respondents (50.5%, down from 53% last year) opined that M4.0 would provide their companies with a unique competitive advantage, as opposed to just table stakes (46%), but a notable increase occurred in the number of respondents saying that M4.0 would be a game-changer for the industry (61%, up from 56%) in 2022 (Charts 16,17). M

Part 1: STATUS OF DIGITAL INVESTMENT AND ADOPTION

1. Mixed Bag on Economic Outlook for 2023

Q: What is your company’s outlook for the economy in 2023?

2. Majority Sees M4.0 Investments Continuing Despite Economy

Q: How does your company’s outlook for the economy translate into M4.0 technology investments for 2023?

3. The State of Digital Maturity

Q: How would you assess the Manufacturing 4.0 digital maturity level of your manufacturing enterprise? (Scale of 1-10, with 10 being the highest level of digital maturity)

4. Companywide M4.0 Implementations Increase

Q: Which activity best describes the primary focus of your company’s M4.0 digital efforts today?

5. Production/Assembly Most Advanced with M4.0

Q: At what stage of M4.0 digital adoption are the following functions in your company

6. Level of M4.0 Integration With Business Strategy

Q: How far has your company’s Manufacturing 4.0 strategy been integrated with the overall company business and manufacturing strategy? (Scale of 1-10, where 10 is fully integrated)

Part 2: MEASURING DIGITIZATION

7. Only a Fraction See Full Operational Digitization by 2025

Q: To what extent are your factory operations fully digitized end to end today, and what do you anticipate they will be by 2025?

8. Big Gains Seen in Production/Assembly Digitization by 2025

Q: To what extent are your production/assembly processes digitized today and what do you anticipate they will be by 2025?

9. Much Progress Foreseen in Integrating with Customers by 2025

Q: To what extent are your production functions electronically integrated with customers and suppliers today and what do you anticipate they will be by 2025?

Part 3: FACTORY ORGANIZATION AND MANAGEMENT

10. Hybrid Human/Machine Factory Model Expected

Q: What is the expected future state of your factory model?

11. But Self-Learning/Managing Facilities Also Foreseen

Q: Thinking about the impact of technologies such as AI and machine learning, to what extent would you agree or disagree with the following statement: “Tomorrow’s factory will evolve to be a self-managing and self-learning facility.”

12. Cyber Defenses Seen as Secure by Strong Majority

Q: As factories become increasingly networked and digitized, how would you rank your company’s technical security level against potential cyberattack/disruption to plant floor systems and assets?

Part 4: M4.0 TECHNOLOGY USAGE

13. Smart Tools, Digital Twins Highest on 2025 Plans

Q: Where does your company stand in regard to the following technologies in its production operations?

Part 5: M4.0 OPPORTUNITIES AND CHALLENGES

14. Data Issues, Legacy Equipment Are Top Challenges

Q: What do you feel are your company’s primary roadblocks to implementing your M4.0 strategy in your production operations? (Select top 3)

15. Better Operational Efficiency, Decision Making Are Chief Benefits

Q: What are the most important benefits and opportunities your company hopes to realize from embracing M4.0 in your production operations? (Select top 3)

16. Slight Majority See M4.0 Conferring Unique Advantage

Q: Do you believe that M4.0 digital adoption will create a unique competitive advantage for your company or is it merely table stakes to remain in the game?

17. Strong Majority Sees M4.0 as Game-Changer for Industry

Q: Ultimately, how significant an impact will M4.0 technologies have on the manufacturing industry?

About the author:

David R. Brousell is the Co-Founder, Vice President and Executive Director of the Manufacturing Leadership Council,

Survey development was led by Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.

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Manufacturers see data’s massive potential to improve operations, predict disruptions, and bring about new revenue streams, but realizing that promise continues to be a work in progress.

Data could be described as the lifeblood that enables the digital enterprise. In the 18-plus months that the COVID-19 pandemic has been roiling supply chains, forcing once-live interactions to go virtual, and necessitating remote work and collaboration, manufacturers have seen the immense value of using data to keep operations going and make better-informed decisions. It isn’t hard to imagine a far worse scenario if this once-in-a-generation disruption had happened in a time of less (or no) digital maturity.

But while former IBM CEO Ginni Rometty once said that big data is the new oil, a more apt comparison might be that data is like sunlight – in infinite supply, unyielding, quite often blinding. But it can also be illuminating, shedding light on former dark spots by improving transparency and visibility, enabling businesses to grow and thrive.

Manufacturing data mastery is in its tween years for most enterprises – certainly past its infancy, but still awkward and gawky and not quite fully formed. It is often unclear who is responsible for data strategy, what the data strategy is, or what data is actually worth to an organization. But manufacturers also say data has helped them to grow their productivity, lower their costs, boost efficiency, and improve quality.

These findings and others from the MLC’s new M4.0 Data Mastery Survey provide insights on where manufacturers are on their journey to harness the power of data and its revolutionary promise.

Where Improvement is Needed

Most manufacturers rate themselves as just average at their organizational data skills, and they struggle not only to collect the right data but also to interpret it. Fifty-eight percent said that their company had just a moderate ability to collect data that is meaningful and impactful for their business needs (Chart 11). More than a quarter ranked themselves as low in this area.

It is often unclear who is responsible for data strategy, what that strategy is, or what organizational data is actually worth.

But data collection is not the greatest struggle. Even more respondents said they had room for improvement in terms of finding insights from that data, with 75% ranking their organizations as only somewhat capable in their ability to analyze their manufacturing operations data (Chart 12). In this area, 11% of respondents said their organizations were not capable of this type of analysis.

Furthermore, a gap remains between the effort to collect and sort data and the effort to apply insights and create value from that data. Almost a third said they expend greater than 80% effort in gathering and organizing data vs. the effort expended to analyze and apply insights from the data (Chart 8).

Other stumbling blocks to utilizing data to a greater extent speak to the unwieldy tangle that manufacturers often find when undertaking data projects. This includes a lack of systems to capture the data (46%), followed by data inaccessibility (43%) and a lack of skills to effectively analyze data (39%) (Chart 16).

However, for what they are able to collect and analyze, more often than not organizations are leveraging that data to make informed decisions. Forty-eight percent say that their organization makes data-driven decisions frequently, while 18% say that they make data-driven decisions constantly (Chart 13).

Tools of Collection and Analysis

Digging a bit deeper into organizational data tactics, 79% said their shop floor systems are the primary source of manufacturing data, followed closely by ERP systems at 77% (Chart 6). This may not be surprising given the near-ubiquitous nature of those technologies within many manufacturing facilities.

What could be a trend to watch, though, is the growing use of edge computing systems (18%) and even embedded systems in products (12%). The former shows that manufacturers are taking advantage of faster networking technologies to process and store data closer to where it is produced and consumed, while the latter could hold promise for monitoring product lifecycle and performance, in addition to sustainability by making products more efficient and reducing materials usage and waste.

“Manufacturing organizations have serious governance issues to address, such as having a formal plan and somebody ultimately in charge of data management.

But among those emerging technologies lie some old faithful ones. CPA favorite Microsoft Excel is still the leader as the manufacturing data analysis tool of choice 34 years after its initial release, with 71% of respondents saying they use it (Chart 9). Meanwhile, AI is making inroads in its use for analysis, with nearly a third saying they are using in-house AI systems (28%), and others using cloud AI systems (12%) or an external AI partner (8%).

The Fundamental Flaws

Assigning value to data is an elusive undertaking for many manufacturers. Of those who do, most measure it by impact on operational performance (44%), as it is likely the easiest way to see the results of manufacturing data projects (Chart 1). But nearly as many admitted that their organization has no measure for data value (42%), a somewhat troublesome finding given the time, resources, and effort that go into data collection and analysis.

It’s difficult to determine if this is merely an oversight, or if reliable models just haven’t yet been developed to assess ROI, but this will be an important and necessary undertaking for manufacturers to make impactful data-led decisions. The good news is, though, that executives appear motivated to take on this pursuit, as 40% of respondents said data collection, management, and analysis were included as part of annual objectives for company executives (Chart 3).

But manufacturing organizations have other serious governance issues that also must be addressed, such as having no formal plan for data management or having nobody ultimately in charge. Four out of 10 respondents said that their company had no corporate plan, strategy, or formal guidelines for how data is collected and organized across the enterprise (Chart 2), an almost-astonishing number at a time when manufacturers are making significant investments in digital technologies to build connected operations.

“In today’s algorithm-driven world, manufacturers must pay heed to data accuracy, quality, and fidelity.

Manufacturers continue to take a scattered approach to governance and control over data, though many have a head of IT or combined IT/OT team ultimately in charge of data governance and strategy (Chart 4). However, 12% said that no one has data governance responsibility at their organization, a glaring issue that must be addressed at any company that wants to stay competitive in the long run.

Trusting the Data

One of the oldest idioms in computer science lexicon is garbage in, garbage out, meaning that flawed input data will result in flawed output data. In today’s algorithm-driven world, manufacturers must pay heed to the accuracy, quality, and fidelity of the data they are using for all-important business decisions. But it’s nearly an even split between manufacturers who check for that accuracy – 49% saying they do vs. 46% saying they complete no such checks (Chart 10).

Whatever leads those manufacturers to believe they can trust their data, there is no question that data is driving much-improved decisions – 94% said the use of data has helped their company make better decisions, though just 35% say it has helped them to make faster decisions (Chart 15).

To underscore the views that manufacturers have on data’s value for competitiveness, there is little room for debate that most see it as a requirement. Seventy-five percent said that data mastery will be essential for future competitiveness, with 25% saying it will be supportive for competitiveness – and not one single respondent saying that it will have no impact at all (Chart 17).

There is little question that manufacturers see the immense value that data can bring to their businesses. As organizations grow their data competency, they will seek to move past simply monitoring and collecting data to unlocking the insights and predictive ability that will be essential to future competitiveness. But until those organizations address the fundamentals of data mastery, they are likely to feel more growing pains along the road to that promising tomorrow. M

Part 1: CORPORATE DATA GOVERNANCE & ORGANIZATION

1. Many Organizations Have No Measure for Data Value

Q: How do you measure the value of the data in your organization? (Select one)

2. Many Organizations Lack Formal Data Collection Guidelines

Q: Does your company have a corporate-wide plan, strategy, or formal guidelines for how data is collected and organized across the enterprise, including manufacturing operations? (Select one)

3. For Many, Data Mastery is an Executive Objective

Q: Is data collection / management / analysis included in some way as part of the annual objectives for company executives? (Select one)

4. CIOs, IT Teams Largely Responsible for Data Governance

Q: Who is responsible for data governance and strategy in your organization? (Select one)

5. Cost Savings, Quality Top List of Business Objectives

Q: What are your key business outcome objectives for embarking on manufacturing data projects today and what do you expect your primary objectives to be in 2 years’ time? (Check top three for Now and top three in 2 years)

Part 2: DATA COLLECTION & ANALYSIS TACTICS

6. Shop Floor Systems, ERPs are Primary Data Sources

Q: What are the primary sources of your manufacturing data today? (Check all that apply)

7. Pandemic Makes Supply Chain Analytics a Priority

Q: Has capturing and analyzing certain types of data become more important to your organization in the wake of the COVID-19 pandemic? (Check all that apply)

8. Gap Lies Between Data Collection and Application

Q: What is your estimate of percent effort to gather and organize data relative to the percent effort to analyze, derive insights, and apply those insights to creating value from that data? (Select one)

9. MS Excel Still Leads as Data Analysis Tool

Q: What systems do you use to analyze the manufacturing data you collect? (Check all that apply)

10. Checking Up on Data Accuracy, Quality

Q: Does your company have a process to verify the
accuracy and/or quality of the raw data before decisions are made on it? (Select one)

Part 3: ORGANIZATIONAL DATA MASTERY

11. Matching Data Collection to Business Needs

Q: How would you rank your company’s ability to collect the right data the business needs from your manufacturing operations?

12. Data Analysis Sees Room for Improvement

Q: How would you rank your company’s ability to analyze the data from your manufacturing operations?

13. Data Leads More Decisions, More Often

Q:How often would you say your organization makes data-driven decisions? (Select one)

Part 2: DATA-DRIVEN OUTCOMES & CHALLENGES

14. Data Boosts Productivity, Lowers Costs

Q: How has the increase in manufacturing data
helped you to improve your manufacturing organization? (Check all that apply)

15. Quality, Speed of Decision-Making Improves

Q: How has the use of data affected your
company’s decision-making? (Check all that apply)

16. Data Capture, AccessRemains an Obstacle

Q: What are the most important challenges or obstacles hindering your organization from making more data driven decisions? (Check top three)

17. Most See Data Mastery as Essential to Competitiveness

Q: Looking forward, how important do you think mastering manufacturing data will become to your competitiveness as a future business? (Select one)

Survey development was led by Penelope Brown, with input from the MLC editorial team and the MLC’s Board of Governors.

The pandemic has spurred a paradigm shift in cultural transformation as manufacturing companies have leveraged M4.0 to accelerate digital adoption, collaboration, innovation, and integration across their enterprises, reveals the Manufacturing Leadership Council’s latest M4.0 Cultures survey.

By Sue Pelletier

It’s undeniable that the COVID-19 pandemic has caused massive disruption in the manufacturing environment over the past year. Supply chain disruption, already a growing problem pre-pandemic, became more acute as different areas of the world shut down to slow the spread of the virus. Some manufacturers pivoted to retool their factories to supply much-needed personal protective equipment (PPE) and other COVID-necessitated supplies, while others struggled to keep shop floor workers safe and learned on the fly how to manage employees who suddenly had to work remotely.

The impact on manufacturing cultures has been significant. The results of the Manufacturing Research Council’s latest M4.0 Cultures survey reveal that the abrupt shifts and continued disruptions of the COVID-19 crisis have driven leaders to sharpen their focus on M4.0 and accelerate adoption across everything from enterprise connectivity and corporate collaboration, to functional integration and innovation, and to start redefining what health and safety should mean for their employees in the future.

What’s more, while some of the workforce cultural changes, such as PPE and masking for front-line employees, may be temporary, the survey results clearly indicate that a major shift toward an M4.0 culture that is digitally enabled, collaborative, innovative, and data-driven is not only underway more rapidly than ever before, but is also here to stay.

There will continue to be a few bumps in the road ahead, of course. While corporate cultures are increasingly becoming more customer-centric and collaborative, the journey toward M4.0 is still a work in progress for many companies as concerns about the costs and ROI of M4.0 transformation, along with getting full buy-in from both employees and leadership, stubbornly continue to impede the progress of cultural changes. But it is clear that the COVID viral firestorm has made manufacturers acutely aware of the need to continue along that M4.0 journey. With many saying the recent changes in their corporate culture will now be permanent, it’s clear that they are already beginning to see the results, from improved morale and a more efficient workforce, to more productive and innovative operations. And those are exactly the kinds of benefits that will spur them to continue to overcome any remaining hurdles.

“Manufacturers now believe that the M4.0 paradigm shift that has accelerated over the past year has led to permanent changes that will have a lasting impact on their organizations for many years to come.”

Culture Change Accelerates During COVID

While it might be expected that the pandemic’s disruptions could have slowed the adoption of digital M4.0 plans, that turned out not to be the case. As leadership teams have intensified their focus on M4.0 over the past year (Chart 2), more than half said they have accelerated both enterprise connectivity and M4.0 technology adoption since COVID-19 hit (Chart 1). Corporate collaboration initiatives also sped up for more than 50% of companies, with ramped up functional integration strategies and faster innovation processes also reported by more than 40% of survey respondents.

While COVID has clearly had a significant impact on many areas of corporate culture, one of the key takeaways from the survey is that these are not quick fixes to patch operations until the crisis passes. The results make it clear that manufacturers now believe that the M4.0 paradigm shift that has accelerated over the past year has led to permanent changes that will have a lasting impact on their organizations for many years to come.

For example, one of COVID’s biggest impacts on corporate culture has been an increased use of digital collaboration tools and platforms, which a full 79% ranked as “significant” (Chart 3). An overwhelming 85% said this change is likely to be permanent. Another change spurred by the pandemic that the majority expect to become permanent is the shift toward increased focus on disaster preparedness and crisis management.

Other significant changes slated to become permanent fixtures in corporate culture for many include more regular and open top-down communication with employees, more collaboration between teams who did not previously work together, and an increased sense of purpose and shared values among working teams. Improved employee feedback and communication from the bottom up, while not as widely instituted, is a change almost half of those who have made improvements plan to make permanent.

“The survey results clearly indicate that a major shift toward an M4.0 culture that is digitally enabled, collaborative, innovative, and data-driven is not only underway more rapidly than ever before, but is also here to stay.”

While widely implemented pandemic-specific health and safety shifts such as PPE and mask requirements are only planned to become permanent for a quarter of respondents, health and safety strategies are being extensively redefined and are going to mean much more than just accident prevention moving forward, said 61% (Chart 4). Seventy percent of those who shifted to remote and virtual work strategies also say they intend to enable at least some of their workforce to continue working from home in the future. This also reflects the increasing use of digital collaboration tools and platforms that make remote work feasible for many more employees, and which will continue to move companies toward creating a more empowered, collaborative, and responsive workforce for the future.

M4.0 Culture Moving into the Mainstream

The shift toward a more M4.0-based overall corporate culture is evident in the terms manufacturers now use to describe the current state of their corporate cultures, with customer-centric and collaborative topping the list. (Chart 5). What is clear, however, is that there is a strong belief that continued culture change will be essential in the digital age, with a substantial 71% saying they will need to continue to transform their cultures in the future to fully take advantage of all the M4.0 era offers (Chart 6). For example, 60% consider a move toward more data-driven decision-making should be on top of their change agenda, and more than half believe better integrated, more cross-functional teams would help drive future success. Increased responsiveness, more agile operations, faster innovation and time-to-market for new products, and even more of an emphasis on customer and supplier centricity are also likely to be key elements of necessary culture change (Chart 7).

Many of those changes are already underway. Thirty-seven percent now say they are either satisfied with their current culture or actively working to make the needed changes, up from 24% in 2019 (Chart 8). While these changes may be incremental, there are still many ongoing challenges to cultural transformation, with top concerns such as cost/ROI and a lack of leadership bandwidth/buy in dominating the list, followed by a lack of employee buy-in and no formal strategy.

Collaborative Cultures on the Rise

With almost unanimous agreement that a collaborative culture is either very or somewhat important to future competitiveness, and three quarters (74%) identifying it as necessary for competitive survival, it is evident that collaboration is top of mind for today’s manufacturers (Chart 10). While the immediate needs of dealing with the pandemic likely led to the slight rise in traditional command-and-control hierarchical structures in some organizations, from 30% in 2019 to 34% in 2021, only 14% of manufacturers predicted that this approach would still hold true two years from now. Even more telling is the rapid rise of those who describe their culture as collaborative, which went from 17% in 2019 to 26% in 2021, and is predicted to surge to a substantial 51% by 2023 (Chart 9).

The key enablers to achieve that desired collaborative culture, according to 61% of respondents, are M4.0 technologies and approaches (Chart 11). This is reflected in the significant increase in the adoption of digital threads across all company functions over the past two years. In manufacturing operations, for example, the use of digital threads shot up from 45% in 2019 to 70% of companies today, while supply chain digital threads are now being used in 50% of organizations (up from 35% in 2019), and further increases are evident in design and engineering, IT, and even in more customer-focused areas such as sales and marketing and customer service and support (Chart 12).

M4.0 Drives Faster Innovation

Innovation processes have also accelerated in many manufacturing companies over the last two years, with 25% saying they are continually developing new products and embracing change, up from just 19% in 2019. More than half aren’t far behind, defining their culture as “moderately innovative,” and being willing to experiment with new technologies, products, and services (Chart 13). Perhaps most importantly for the future though, almost three-quarters of companies now credit M4.0 technologies and approaches as key drivers to faster and more effective innovation in the years to come (Chart 14).

The source of ideas for these new products, processes, and/or business models has also shifted slightly since 2019, with suppliers kickstarting innovation for 47% of manufacturers, up from just 28% two years ago (Chart 15). External partners and academic and research institutions also are taking on an increasing role in innovation. But, that pales in comparison to the growing role of company employees, whom 86% of manufacturers now credit as the source for new ideas, compared to 74% in 2019.

“While many were already on the road toward M4.0 before the pandemic hit, COVID-19 proved to be a wake-up call that the time is now to start implementing the changes to corporate culture needed for today’s, and tomorrow’s, manufacturers.”

M4.0 Essential to Integration

The flattening of corporate hierarchies, the elimination of siloes, and the increase in communication and cross-function and cross-training in the workforce are resulting in an increasingly integrated business. More than a third of companies in the survey say they have already made significant changes to become more integrated, up from less than a quarter in 2019 (Chart 16).

As with collaboration, M4.0 technologies and approaches also are regarded as essential ingredients to successful integration, according to 69% of respondents (Chart 17). But when it comes to integrating IT and OT teams, there’s still some progress to be made. While more than half now have at least somewhat integrated OT and IT functions, up from 43% in 2019, only 16% say these areas are fully integrated so far (Chart 18).

Creating a more integrated enterprise remains challenging, however. Issues around effectively managing cultural/behavior change, having the leadership time and focus to change operations while still running the business, and developing the consensus needed for an implementable overall strategy, continue to be the most significant barriers to integration. However, the latest survey also suggests there also growing concerns over getting buy-in from heads of functional areas, understanding the benefits, and obtaining funding and resources to make it happen (Chart 19).

While many were already on the road toward M4.0 before the pandemic hit, COVID-19 proved to be a wake-up call that the time is now to start implementing the changes to corporate culture needed for today’s, and tomorrow’s, manufacturers. The key to future success will be to keep that momentum, born in many cases of necessity, going once the immediate crisis subsides. The role of M4.0 in that continued transformation now seems abundantly clear. M

Part 1: COVID-19 Impact

1 COVID-19 Has Accelerated M4.0 Transformation Across Multiple Areas

Q:What impact has COVID-19 had on your M4.0 transformation strategy in the following areas?

2 50% Say COVID-19 Has Also Increased Leadership Focus on M4.0

Q: What impact has COVID-19 had on your leadership team/management’s focus on digital/M4.0 transformation?

3 85% Expect Increased Use of Digital Collaboration Tools to Be Permanent

Q: What impact has COVID had on your corporate culture, and how long do you expect these impacts to continue?

4 Working Cultures Shifting to Remote, Safer Strategies for Employees

Q: What impact has COVID-19 had on your workforce culture, and how long do you expect these impacts to continue?

Part 2: Overall Company Culture

5 Corporate Cultures Increasingly Customer-Centric and Collaborative

Q: What term would you use to describe your company’s culture today?

6 Strong Majority Believe Culture Change Needed in Digital Era

Q: Thinking about the requirements of the digital age, does your company believe it needs to change its culture to embrace this new era?

7 Data-Driven Decision-Making & Functional Integration Top Culture
Change Agenda

Q:If a culture change is needed, which description would best capture what that change would encompass?

8 ROI Concerns & Leadership Bandwidth Remain Key Challenges to Change

Q: What are your company’s biggest challenges
to cultural change?

Part 3: Collaboration

9 51% Predict Collaborative Structures Will Dominate in 2 Years

Q: How would you describe your overall corporate structure today, and where do you expect it to be in 2 years’ time?

10 Three Quarters Say Collaboration is Essential to Competitiveness

Q: How important do you think a collaborative
culture is for competitiveness?

11 M4.0 Key to Enabling a Collaborative Culture

Q: Is there a clear belief that M4.0 technologies and approaches are key to enabling a more collaborative culture?

12 Extensive Adoption of Digital Threads Across All Functions in Last 2 Years

Q: Which of your company functions are connected to a digital thread to enable end-to-end data sharing and collaboration?

Part 4: Innovation

13 Three-Quarters Say They Are Already Moderately to Highly Innovative

Q:How would you describe your company’s current level of innovation?

14 Almost Three-Quarters Believe M4.0 is Key to Driving Innovation

Q: Is there a clear belief that M4.0 technologies and approaches are key to enabling faster and more effective innovation?

15 Increasing Role for Employees & Suppliers as Source of Innovative Ideas

Q: Where does your company source its ideas for new products, processes, and/or business models?

Part 5: Integration

16 More Than a Third Have Significantly Integrated Organizational Structures

Q: To what extent has your company made changes to its organizational structure in order to create a more integrated enterprise?

17 M4.0 Seen as Key to Enabling Integration

Q: Is there a clear belief that M4.0 technologies and approaches are key to enabling more integrated operations?

18 Increasingly Integrated OT & IT Teams in Last 2 Years

Q: How would you describe the level of
integration between your IT and OT teams?

19 Culture Change Remains Key Challenge to Successful Integration

Q: What are the most significant challenges to improving your company’s integration?

Survey development was led by Executive Editor Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.