Critical Issues Roadmap to Industry 4.0: What You Need to Know

The disruptive fourth industrial revolution is focused on creating an ecosystem of innovative ways of using new and existing tools, contrary to the previous historical developments brought forward by steam power, electricity and digital machinery that were all based solely on new technologies. Industrial processes demand a high connectivity between all of their processes, which is enabled by the extensive use of internet and other technologies of Industry 4.0.

To be able to understand how Industry 4.0 became today’s buzzword, a look at its predecessors might give us a perspective on how this revolution in particular is different. The following diagram shows a timeline of the evolution of manufacturing and the industrial sector in general (Source: Deloitte).

However, despite potential benefits, this new industrial evolution has raised some issues and discussion facets that needs to be taken care of, while leading to new ways of business, technological and social interactions. The following excerpts highlight six over-arching issues including:

1)    Advanced manufacturing – Manufacturing companies, especially the smaller manufacturers, have been usually facing the challenge of high expenses, time and resources to deploy and maintain specific, extensive programming skills for automation technologies. These manufacturers need support from governments and coalitions, and knowledge in order to develop bottom-up approaches towards adopting adaptable elements, such as collaborative robots to gain optimization in production lines, without excessive downtime or expenses.

On the other hand, even when the companies try to change tunes and invest in PLC programmers and automation tools, the old-school attitude of those who run manufacturing production lines can also prevent from taking on smart technologies.

Recommendations – According to a Boston Consulting Group study, 10% to 40% of manufacturing tasks could be automated through advanced robotics in the current decade, depending on the possibility of replacing manual labor. The good news is that unions and federations across the regions, especially in Europe, North America, South Asia etc., are committing to help through investments so that the companies embrace this inevitable change.

In parallel, effective change management in the integration processes of advanced manufacturing can be achieved by ensuring that people are aligned with one vision. For starters, manufacturing companies looking to introduce digitalization or automation should not treat this as an IT object, rather this should be an agenda driven and owned by the CEO’s office.  

2)    Right knowledge and talent - PWC’s Annual Survey expressed concerns that investors, employees and the wider public may distrust the future technologies if it becomes hard to find new people with necessary digital skills to run the new systems and adapt them subsequently. Technological specialization will be a differentiating factor while any industry designs the applications of digital technologies in the industrial production chain. SMEs have traditionally and still face challenge in knowing how to manage the technological investment and adapt to new support tools, which will be key in this ecosystem of new devices and new forms of communication.

Recommendations – It should be the responsibilities of both the government and private sectors to embark on initiatives to fulfil this knowledge gap. There have been examples of Science and Technology agencies launching model factories aimed at helping SMEs, as well as consulting and vendor entities like McKinsey & Company, The Boston Consulting Group, and Siemens, promoting facilities and environment to learn about advanced manufacturing technologies and how to embark on their Industry 4.0 journeys.

3)    Smart systems - Industry 4.0 may be impossible without smart systems like sensors, but implementing this technology and training the entire network of partners, suppliers, customers, the workforce, and operational people embroils one of the most difficult challenges. Moreover, the ability of smart systems to communicate across factories and with suppliers and customers that have different systems has emerged as a major concern.

Recommendations - Industry specific data standardization would help solve this problem. With this, firms could use one interface for all their customers and suppliers. Moreover, smart technology providers need to demonstrate their technology works and it is aligned to the demands of the supply chain at each step.

4)    Security – In the process of integrating industry 4.0, the next concern is around vulnerabilities. Many surveys of IT leaders of end user enterprises have indicated that cybersecurity has become an increasing threat around the world, and industry 4.0 could worsen the risks. The companies’ manufacturing systems are exposed to vulnerabilities because in the haste of making the digital transition cost effective and efficient, they are often built on open and standardized technologies. To make matters worse, manufacturers appear unprepared to face these risks. A 2016 study by Deloitte and many other more recent surveys show that a significant number of manufacturers have not even assessed their industrial control systems for cyber risks. 

Recommendations – Manufacturers need to know their sensitive and non-sensitive data, and accordingly should decide which information may be safe for sharing, and what should be kept isolated and safe. Technology providers, on the other hand, should tell manufacturers about security features that come with their products and explain how the features work to prevent cyber-attacks.

5)    Challenges for Governments – The fourth industrial revolution may put the governments in a fix to regulate the activities of the global behemoths. Ecosystems with countries or regions will gradually push the boundaries of industrial development, and will increasingly use technology to seek greater autonomy, which will challenge the power of government and institutions. Government agencies have to generate the efficiencies of the public services, else the tech-savvy population will damage the reputations.

Recommendations – While the fourth industrial revolution puts pressure on governments and prospects on citizens to become future-savvy, governments should act as an enabler of this change by ensuring their countries have the infrastructure in place to benefit from the advantage of such transformation. The opportunities are scalable as this includes the scope for government to raise revenue through taxation.

According to studies and survey analyses by various agencies, it seems that industrial adoption of this revolution is inhibited mostly by lack of sufficient knowledge, experience and manpower to create and implement the systems to the desired smart level. Positive drivers however are reports that suggest emerging markets like India could benefit tremendously from Industry 4.0 practices, and the city of Cincinnati, Ohio has declared itself an “Industry 4.0 demonstration city” to encourage investment and innovation in the manufacturing sector there.

Regionally, while the American IT leaders and executives are confident and optimistic toward Industry 4.0, their counterparts in Asia Pacific countries, apart from exceptions of that in India, Singapore, Japan etc., are still at a position of reluctance in terms of their thinking and readiness for Industry 4.0. EMEA tends to trend closest to the global average, putting this region in a middle-of-the-road position. EMEA is right in the middle on fundamental issues, such as the outlook for Industry 4.0 society, the role of a human in this society and executive readiness to lead their companies through this change.