While industry 4.0 is being evangelized as a digital transformation for manufacturing industry and supposedly taking them to a different level of evolution, driving the adoption of these concepts across the organization remains a challenge. It is widely believed that the difficulty is not in the technology side but in the leadership and cultural side. Another perspective is that while companies want to test out things before going full speed, the providers offer too many products or variations of services, in the end prolonging the decision-making process and stalling the adoption.
The above may present a grim picture but at the same time many companies across the world are witnessing that adoption of Industry 4.0 technologies bringing significant rewards. Such advanced technologies enable companies to achieve operational excellence, build long-term resilience and gain sustained competitive advantage. This has come to the fore more than ever during the disruptions caused by the Covid -19 pandemic.
A global survey of more than 400 companies, conducted by McKinsey revealed that about 94 percent of respondents could keep their operations running because of their Industry 4.0 practices. Also, 56 percent respondents highlighted that undertaking digital transformation was essential to how they responded during the crisis. Companies that have not made progress on digital transformation journey were pushed to review their operational strategies and refocus on Industry 4.0 capabilities.
Key adoption challenge and mitigation
The yearly global survey of manufacturing companies, conducted by McKinsey, indicate that there is a rising trend of companies remaining stuck in “pilot trap” when it comes to Industry 4.0 implementation. 70 percent of participants were facing this problem in 2017 which has increased to 74 percent in 2020. In order, to break free from the trap companies need to: have a better understanding of their pressing problems, develop focused point of view on which technologies could address them, and finally define a clear vision of the company’s desired future.
Fortunately, there are now additional resources available to companies looking to break free from this trap. The Smart Industry Readiness Index (SIRI) is one such resource, created by the Singapore Economic Development Board (EDB) in partnership with a network of leading technology companies, consultancy firms, government bodies, and industry and academic experts. SIRI comprises a suite of frameworks and tools to help manufacturers (regardless of size and industry) start, scale and sustain their digital transformation journeys. It evaluates companies on the following elements:
- Processes – This includes operations, supply chain and product lifecycle
- Technology – Automation, Connectivity, and Intelligence
- Organization – Talent readiness
SIRI is now endorsed as a standard assessment by World Economic Forum (WEF) and is delivered by a worldwide pool of certified assessors. It has been used by more than 500 company sites across 15 countries, serving as guide on the digital journey of industrial companies, and in some cases acting as a catalyst for adoption of Industry 4.0.
SIRI includes a clear definition of various levels of industry 4.0 maturity thus enabling companies to set their aspiration by benchmarking what the best-in-class looks like and comparing their position vis a vis peers in their industry.
Examples of Industry 4.0 Opportunity Prioritisation
A semiconductor plant in Singapore used SIRI to investigate new dimension of Industry 4.0 not considered previously. Based on the finding it implemented advanced analytics-enabled scheduling and dispatching that increased personnel efficiency by 50 percent. It also implemented a manufacturing tower which eliminated rework and an IoT-enabled manufacturing which reduced material cost by 10 percent.
A healthcare company that had large differences in operational effectiveness across multiple manufacturing sites used SIRI to surface site-specific issues and opportunities. It found that in some locations, limited digital integration and manual data transfers pulled them backwards, while others lagged in using advanced analytics to visualize shopfloor performance. The results also highlighted the need of workforce training for internal capability building.
A Latin American pharmaceutical company used SIRI to evaluate the industry 4.0 maturity of their plants. The company had previously implemented, at many of their sites, a lean transformation model for carrying out their change initiatives but had not explored tech-enabled operational transformations. The evaluations offered a comprehensive view of smart-industry potential, which helped company leaders prioritize their efforts around the business.
Conclusion
In conclusion, being digital is no longer a luxury but has become a necessity for manufacturers. A lot of early adopters of industry 4.0 are already realising the benefits of their investments. For the uninitiated, it is very critical to develop a right approach and support (regardless of their size and sector) for the digital transformation journey. This will help align digital efforts to strategic business opportunities which can pave the way to achieve real scale at an accelerated pace.
Original Article: Industry 4.0 adoption with the right focus