What's Preventing Industry 4.0 from Taking Hold? - IndustryWeek

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Contributed by Steve Boughton

Industry 4.0 is a decade in the making yet is still seemingly out of reach for many manufacturing organizations. Why are so many middle-market companies still failing to take advantage of innovations that are seen by others as entry-level? Before we can answer these questions, we must agree on defining Industry 4.0 or risk adding to the confusion. And this is half of the problem – Industry

4.0 can be whatever you want it to be, driven by your perceived needs as a manufacturer or as a technology provider with the latest enterprise solution.

For our purposes, we will define Industry 4.0 in practical terms – as a technology toolbox. And like any toolbox, it is filled with everyday tools (like a hammer) and highly specialized. Industry 4.0 toolbox contains IIOT sensors, Artificial Intelligence, Augmented Reality, Big Data, Advanced Robotics, AGVs, wearables, additive manufacturing, and much more. However, no matter the tool, we can likely agree the common theme is a desire to digitize data, harness it in real-time, and use it to drive improvements in agility and resiliency that could not otherwise be achieved. An “augmentation of the possible,” if you will.

In IndustryWeek’s most recent survey, only 40% of large companies have a long-term Industry 4.0 strategic roadmap in place. And that figure is only 18% for firms with revenues of less than $1b. So, it is little wonder technology adoption rates are so low – with a lack of enterprise direction, manufacturing professionals are left to figure it out for themselves, and then wrestle for funding and support with Finance and IT. Misconceptions thrive, and soon there is a belief digital advancement equates to an expensive, resource-heavy E2E transformation. In reality, some basic steps can be made inside the four walls of facilities, with a strong and rapid ROI.

FOCUSING ON THE FUNDAMENTALS

Before continuing a conversation about Industry 4.0, let us go right back to the “Why?” Are today’s manufacturing goals any different from those of prior decades? The fundamental objectives inside a plant remain the same:

1. Health and safety of personnel
2. Best possible quality
3. Optimized throughput
4. Engaged and productive employees
5. Cost optimization
6. Effective supply and demand planning

In simple terms, we want to see tangible, quantifiable, extraordinary business, and operational results that transition the organization into a top quartile performer. Every business improvement initiative is designed to impact positively on one or a combination of these fundamental goals. If Industry 4.0 gives us the technological toolbox to accelerate progress and improve business performance, why do so many companies lag in adoption?

THE HURDLES TO CHANGE

We have already touched on the biggest hurdle – a lack of strategic vision at the enterprise level. Industry 4.0 is “too big to handle,” leading to acceptance of the status quo. From the perspective of most senior leadership, the legacy equipment and systems do their job, and we can find sufficient marginal improvements around the edges without additional investment. This is likely not the feeling on the manufacturing floor. The result is many organizations do not seek to grasp the opportunity presented by individual elements of Industry 4.0. Taking a bite-sized approach and building a plan around the fundamentals could be a simple first step.

Financial investment is a key requirement, and technology gridlock can easily become a major hurdle. The fear of OT/IT cost and complexity is understandable. A perceived need to invest in new and expensive software systems and hardware infrastructure is common. Not to mention the seemingly high organizational costs of implementation – potential production disruption, resource drain, or the risk of getting stuck in the “pilot trap.” Poor definition of outcomes, initiatives are driven by IT, and not Operations are likely to fail.

Advancement does not necessarily require massive investments in new ERP and IT infrastructure. There will be a level of investment, but the keyword is an investment. Too many organizations fail to build the right business case for change and instead focus only on cost. Picking the right tool requires clarity and understanding of both qualitative and quantitative, measurable benefits. Simply installing sensors to capture real-time and accurate OEE measurements can have immediate and significant impacts with a highly desirable ROI measured in months, not years. Assuming the data is properly leveraged by operators and supervisors.

Of course, in too many instances, people are not ready for change. The fear of change is very real on the front line. The “lights out” factory does not need operators on the shop floor. But how real is that objective for most organizations today? People tend to jump first to the worst conclusions. Handled poorly, technology is seen as a path to unemployment. Handled well, technology can be welcomed as an enabler – yes, this will require a certain amount of upskilling (and therefore investment). Still, if better-trained operators can focus on value-added activities rather than reactive observation, it is a very different change conversation.

TURN THINKING ON ITS HEAD

We need to create a new and practical conversation, not one focused on the technology but one which considers broader business needs and the organization. If the coronavirus pandemic has taught us anything, we need to build organizational agility and resiliency. As a leader, ask yourself if you can drive these six steps inside your plant or organization.

1. Develop a Digital Vision

Make an honest assessment of where you are today and then look out 1, 3, and 5 years.

What do you want the organization to achieve?
What is the ecosystem you want to create?

If this vision is linked to the business strategy and objectives, not technology buzz, then it is more likely to get the C-Suite commitment. Five years is a long way out, and certainly, technology and business conditions will change, but you can plan with a higher degree of certainty in the nearer term. It is crucial Operations has a high degree of input to guide the need/solution conversation. It is important to frame this vision around the desired future state outcomes enabled by the technology toolbox.

2. Prioritize Your Outcomes & Build a Roadmap

Clarity of outcomes is essential, and these must be built out at the business level. Otherwise, you will fail to build the case for change. If Step One is “think big,” then Step Two is “focus small.”

Where are the areas you want to see an immediate impact?

Think smaller than the plant level – perhaps it is a single machine or production line. If you want to establish a “Smart Factory” in two years, build it in incremental steps that can be scaled quickly. Do not start with an “end to end” solution encompassing sales, customer service, and logistics that might stretch resources and risk failure.

3. Harness the Power of Your People

It is crucial to prioritize your people during any change management program. Make them an integral part of the process and show them how the right tools and information, in their hands, is a win-win. They will not be replaced by machines but instead will get better visibility of how to drive efficiency. Build the right culture that celebrates the full advantage of the technology. By making the data available in a user-friendly format, they get meaningful information and real-time actionable insights that will make them more efficient in their job. And do not forget to reward them for doing so.

4. “Right Fit” the Technology

Choose the right tools that align with your roadmap. This is how you avoid jumping on the latest trend, but instead focus on the right type and investment that will help achieve your immediate goals. Look for solutions that integrate with your legacy equipment and software systems. Beware of solution providers that can automate the factory floor but cannot give you the actionable functionality layer without costly new middleware and systems. The right business case and route to strong ROI rely on a measured, incremental approach.

5. Get the Decision-Making Framework Right

The right technology is crucial, and focusing on your people is a given, as discussed earlier. But to make the people-technology equation work, you need to ensure you have the right Decision-Making Framework in place (your Management Operating System).

What data do you want to collect, and how will that be interpreted to support the KPIs that drive the business? Are they the right measures, and do any KPIs compete across functional groups?

It is important to break down any silos of information and drive an automated, digital, and accurate picture. The technological solution alone cannot solve misunderstandings between the shop floor and the top floor. Worse, if the technology is installed on top of an inefficient Management Operating System, then you risk baking in and compounding problems.

6. Determine How to Measure the Impact and Celebrate Progress

Determining an accurate ROI can be a challenging task, which causes challenges in developing the business case. Collaboratively develop the mechanism to track activities clearly and evaluate measurable results. These results may be both quantitative and qualitative. An OEE improvement is easily observed with the right tools and should feed directly into an uplift in throughput. Machine monitoring should impact predictive maintenance modeling and a reduction in unplanned downtime. Both examples have defined financial benefits. However, the human impact is likely more difficult to measure. An improved sense of empowerment for an operator may turn into a better attitude, reduced turnover, and absenteeism. Whatever the impacts, they all need to be built into the business case and ROI equation – it is those successes will enable you to continue your digital journey.

CHANGE IS WITHIN REACH

Wherever you are on a technology journey, there is always another step to take. Perhaps you are in the starting blocks, ready to embrace change. Perhaps you are much further along and ready to make investments in advanced elements of Industry 4.0. Either way, the end goals are largely the same. Done well, an Industry 4.0 implementation that is right for you can generate a raft of data and insight to manage the business better and drive company competitiveness.

Change does not have to be a massive, radical, revolutionary transformation to realize these benefits. Any good change management program comes in bite-sized, manageable stages. Rushing your people, who are instinctively reluctant in the face of change, will likely backfire and lead to a failed initiative.

Today’s call to action is to take that first (or next) step – build a 90-day plan around a specific plant, line, or machine – and accelerate your digital journey.

ARE YOU READY TO TURN YOUR POTENTIAL INTO REALITY?

Feel free to call Steve Boughton at (+1) 919-434-3143, or visit auderepartners.com to get started.

It seems counterintuitive to the traditional growth approach of dialing in your processes to improve your productivity and efficiency, but small and medium-sized manufacturers (SMMs) should be evaluating their current state and preparing to take paths based on their circumstances. If the COVID-19 pandemic has taught manufacturers anything, it’s that they have to be nimble and there will be additional opportunities.

According to a recent state of manufacturing survey of 215 senior leaders in manufacturing and related companies, 89 percent say their business has been negatively impacted by the pandemic (revenue decreases, price increases, supply chain issues, etc.). But 97 percent said the pandemic has created opportunities. To take advantage of opportunities during times of uncertainty, manufacturers need to have a plan for the unexpected.

Whether a manufacturer is fighting to stay open or is trying to keep up with a surge in new orders, the process for moving forward should be similar. After all, any significant change in business will disrupt processes and people and cause uncertainty. Manufacturers would be wise to level set from reactive to proactive and develop a strategic roadmap of “adoptability.”

This differs from a typical strategic plan, which is more of a long-term plan that defines company goals and the actions needed to achieve those goals. Today’s strategic roadmap should be flexible and revisited often, and it allows manufacturers to adapt to whatever circumstances come their way. They have to prepare for any uncertainty that will jump into their path so they can rapidly take advantage of opportunities.

Turning Responsiveness into a Growth Mindset

Manufacturers have learned to be more agile, whether in response to steel tariffs in 2002, lean principles to combat impacts of the Great Recession or, most recently, employee safety concerns at the onset of the pandemic and disruptions in supply chains and buying cycles.

Developing a strategic roadmap for adoptability requires a methodology, such as the Future State Optimization Program. This program begins with an assessment to clarify the current state and includes a traditional SWOT analysis (strengths, weaknesses, opportunities and threats), and the building of a flexible roadmap, which breaks down how a manufacturer should proceed and why. A major consideration is if the current environment is permanent or temporary. The process can make the future seem less daunting.

The analysis should include key areas of the business model, such as:

• Customers
• Management
• Workforce
• Facility
• Operations

The value of this process to the manufacturer is that it helps them prioritize, revise objectives and develop an action plan based on necessary responses to uncertainty. It converts uncertainty into, well, certainty.

Scenarios Provide Options and Cause for Urgency

A strategic roadmap of adoptability should not be a snapshot; it should be more of a movie, evolving over time. Manufacturers can ensure their plans have the most potential by creating scenarios for each of the key components from their analysis and adjusting as conditions change. What is the impact, and corresponding response, if:

• They lose key staff members.
• A customer significantly increases orders or they get a big new customer.
• They lose a supplier or access to a part or material.
• A core product increases or decreases in demand.

This exercise identifies potential challenges and different ways the company can overcome them. By proactively considering different scenarios, SMMs are more likely to be able to quickly capture opportunities or minimize significant risks and negative impacts. It also creates a mindset among company stakeholders regarding the need to adjust and respond to changing demand and market conditions. The uncertainty is replaced with the ability to focus on opportunities and rapidly respond as needed.

Examples of Rapid Response from Manufacturers

The pandemic has shown how a methodology such as the Future State Optimization Program is not an academic exercise. Many manufacturers have found themselves in rapid response mode, whether it was a forced pivot or they were presented with a short window of opportunity. Here is a sampling of pivots Kansas Manufacturing Solutions clients have recently made:

• Re-prioritization to Meet Demand – Fuller Industries manufacturers brushes, brooms and disinfectants and has shifted its emphasis to disinfectants and sanitizers. In order for them to meet the rising demand, they needed to make significant investments in equipment and workforce, which was a big departure from their previous operations and mindset. They increased production by 10x and are now supplying hospitals with high-quality hand sanitizers. After understanding their new current state, they are now modeling scenarios for the future of sanitizer sales and the security of their supply chain.
• Adjacent Projects – Knit-Rite, a company that makes prosthetic socks for amputees, has expanded into cloth face masks and PPE. They were using the same material, and didn’t need new equipment, so it was a low risk initiative.
• Insourcing – Dentec Safety Specialists manufacturers safety solutions, including half-mask N95 respirators. Over half of the world’s masks are made in China, and early in the pandemic the country was using the masks for their citizens. Dentec obtained plans and resources to bring manufacturing of disposable N95 masks into their Kansas factory.
• Expanding Sales Channels – A central Kansas manufacturer is building an e-commerce site to create a new sales channel. With an increase in demand for decontaminant products, this manufacturer is expanding their market reach and making it easier for new clients to access their products.

Creating a strategic roadmap of adoptability with scenarios can help with costly decisions, such as making capital investments, which is always challenging, let alone amid economic uncertainty. Or, for SMMs whose revenue has slowed, which impacts cash flow, they may choose to borrow to invest in new product markets.

Proactive, Nimble Manufacturers Will Have Opportunities

Yes, it is difficult to go all-in on an investment not knowing if the demand will be sustainable. If PPE clothing is not sustainable, a manufacturer has learned how to pivot with alternative scenarios and may have other new opportunities as fabric and sewing capabilities return to the U.S.

Manufacturers continue to show resilience through the pandemic. Many see reasons for optimism as they have found ways to keep their staff employed. Now is the time to look at how they can grow. From their current experiences, manufacturers should learn, plan, adjust and evolve. In this environment, proactive manufacturers will have opportunities.

For more information about how to create a nimble, adoptable plan that will allow you to seize opportunity during these changing times, connect with your local MEP Center.

Tiffany Stovall

Tiffany Stovall is CEO of Kansas Manufacturing Solutions, part of the MEP National Network^TM. She has extensive experience working with state and local representatives and organizations, manufacturing alliance partners and key stakeholders in the Kansas manufacturing industry.

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