It’s the era of Industry 4.0. Are you on board?

Detail of a rusted machine

Uncertainties swirling around the global markets necessitate going beyond spreadsheets into the realm of advanced scenario modeling. This will help answer the ‘what if’ questions spanning topics as diverse as blanket import tax, export block of crucial materials or natural resources, or even the standoffish stance of a country blocking major navigational channels or flying corridors.

Well prepared or ill equipped — which half are you?

Our market research indicates that nearly 50% of business leaders consider their planning processes and supporting technology unable to handle today’s demands. Nearly as many say that while getting information from their business intelligence (BI) systems takes too long, it takes even more time to produce a reliable set of plans they are confident of executing.

Even if people were given advanced planning technology to replace hundreds of spreadsheets, their trust in machine-generated plans and outcomes is tinged by their past experience that is useless in the era of rapid technological and ever-changing political events.

The age of smart factories

In machine, real and virtual, you will have to trust if you don’t want to be left behind. What will push your business forward is Industry 4.0. If you haven’t heard of it, you’re likely to be skeptical of what may seem as yet another empty catchphrase. Have a closer look at it and you will realize that Industry 4.0 is gathering force and it needs to be carefully monitored as it will upset the manufacturing world as you know it.

Industry 4.0 should be viewed as the next phase in the digitization of the manufacturing sector. It results in seamless movement between the virtual world of research and design, and the real world of agile execution of the design into the real product, even if that product will require multiple iterations within compressed production-decommissioning cycles. The key to successfully operating in such compressed cycle of ‘virtual + real’ is to analyze all available data and formulation of scenarios for each subsequent release of your products and services.

Organizations are missing on the necessary analytical skills as old ways of thinking prevail over real-time, data-driven decision making. Even if the executives sense their organization lacks the ability to interpret data and perform required business maneuvers, they’re even more averse to question the ‘old hands’ on their analytical methods and advice for tactical and strategic moves.

Strategies to digitalize your planning office

What new data points will you need to consider to redesign your operations to be more efficient and attuned to the shifting markets? Read on.

1. Jobs replaced by robotics

Any job that is reasonably predictable is at risk of disappearing as it is a consideration for full automation. For this reason, even if there’s a slightest hint of a job getting lost to full automation within a few years, your company will have no chance to attract anybody to fulfil it.

China, often flogged by other industrialized nations for using cheap labor to undercut cost of manufacturing is at the forefront of robotization. In 2015, it exceeded the volume of robot purchases for all European markets combined (68,000 vs 50,100 units). Estimates are suggesting continuous increases by an average of 30% between 2016 and 2019 to more than 400,000 units in 2019. This will represent 40% of worldwide sales of industrial robots.

North American manufacturers are not asleep at the switch either. The U.S. is currently the world’s fourth largest single market for industrial robots. Approximately 36,000 units are installed every year, obliterating positions for manual laborers. This means that your previous KPI assumptions on productivity, cycle times, unit costs and speed of order execution will need to change. It’s the same for workstation design practices, work space requirements, workstation re-supply practices, etc.

2. Business models buffeted by volatility 

The traditional manufacturing business model is changing and new models are emerging with higher frequency. Some 80% of manufacturers expect new competitors to enter the market within each typical corporate planning cycle.

With the convergence of ‘virtual + real’, one of the important threats to a modern manufacturer is uncontrolled innovation at the edges of the core products done by unassociated third parties. If you want to harness all of that creativity around your products, you will need to consider data produced by networks of ‘ecosystems’ (where your business is providing partners with resources, start-up assistance, and technology integration know-how to help build companies around your own technologies) and ‘platforms’ (capability of your own dissimilar products exchanging services, and information via predefined data streams).

What’s the solution to surviving industry 4.0 and ensuring the longevity of your business in a fast-paced world? Find out in Part 2 tomorrow: Updating your planning strategies to Industry 4.0.


This post is an excerpt of ‘No world left for old style manufacturing‘ on LinkedIn.