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Neo Factory: The State of Industry 4.0

Industry 4.0 initiatives are transforming factories in a myriad of industries, from aerospace and health care to plastics and shipping. However, why do so many Industry 4.0 initiatives at today’s factories fail to scale? Silicon UK asks what are the key challenges to deliver the promises made by Industry 4.0?

The digital transformation of manufacturing has been on-going for over a decade. As Industry 4.0 (I4.0) came into focus, a revolution in a range of manufacturing sectors was forecast. Major changes have taken place as new technologies have been implemented across many processes. However, why has I4.0 slowed?

A study by Deloitte predicted by 2025, 85% of US manufacturers would be using smart factories to deliver the majority of their competitive advantage.

However, has Industry 4.0 run into issues with scalability? PTC conclude: “Why do so many I4.0 initiatives at today’s factories fail to scale? In a word: connectivity. The biggest challenge to many of these initiatives is trying to collect data from the complex, heterogeneous environments on a typical factory floor, which might range from decades-old legacy systems to the latest PLCs. How does one connect all these disparate systems while enabling a standard system architecture that breaks down data silos?”

And McKinsey reports that 70% of companies that have piloted I4.0 components across their processes did not scale these implementations to deliver efficiency gains. What McKinsey colourfully call ‘pilot purgatory.’

Speaking to Silicon UK, Bernd Gross, CTO at Software AG explained: “The development of industry 4.0 has been inconsistent as a result of businesses being pulled in different directions. They have to balance long-term growth versus short term fixes. To re-open factories, technologies such as smart social distancing badges and remote monitoring tools were brought in to help keep operations running as smoothly as possible.

“On the other hand, many manufacturers also halted Industry 4.0 initiatives in the interest of cost savings. This meant that solutions which required significant capital expenditure, such as digital twins or the more advanced automation systems, were held back. But far from stalling industry 4.0, the pandemic built a strong case for the need to digitalise. As we continue to look forward, new technologies will ultimately help manufacturers adapt to new ways of working and build resilience in the event of any future crisis.”

With Rafi Billurcu, Partner and Head of UK Manufacturing, Infosys Consulting also commenting: “Currently, the development of Industry 4.0 may feel slowed in specific verticals, due to the economic impact of the pandemic deterring some manufacturers from investing in new technologies. Whilst the industry still has a long way to go to catch up to pre-COVID levels, it would be a mistake to hold back from industry 4.0 developments. Innovation, automation and AI are the way forward – manufacturers should be using this time to run proof of concept to figure out what works and what doesn’t. This will help operations run in a smoother, more accurate and more cost-effective way in future.”

As we enter 2021, it’s clearly critical to get all I4.0 initiatives back on track. As the business landscape recovers, those enterprises that have continued with their digital transformation will be ready to meet what is likely to be a surge in demand as commerce returns to normal levels.

Reality Check

In their report, IDC succinctly states: “Each industry is different and even the segments that make up an industry will have different priorities. It is important to identify what transformation means to your company and build a roadmap to achieve that goal.”

This appreciation of the unique aspects each manufacturer has across their process is a vital foundation onto which I4.0 will rapidly evolve. Infosys Consulting’s Rafi Billurcu continued: “2020 has been a major learning experience for the manufacturing industry, and a key takeaway from the Coronavirus outbreak is to think of these risks as inevitable. Organisations need to become more agile in terms of manufacturing and supply chains, and adoption of digital technologies such as 3D printing, blockchain and AI can definitely help ease the pain when in future, similar unanticipated events occur.

“For example, AI can help bring out automated insights in a fraction of a second about how to manage the logistics network, how to re-route the fleet and make the delivery happen. Moving forward, manufacturing organisations should prioritise the adoption of industry 4.0 developments like AI, automation and blockchain, in order to speed up time to market and reduce costs caused by slow, rigid and outdated IT ecosystems.”

Alan Prior, VP Industry Consultant, EuroNorth, Dassault Systèmes also points out that manufacturing may have been slow to realise the advantage of I4.0, but now is the time to accelerate their implementations. “We have to accept that the manufacturing sector has not led the way in adopting digital transformation. Despite having a wealth of technologies available, implementations are often seen as tactical projects, lacking the strategic transformational view and leaving the business to cope with the perennial problems of functional silos, disconnected data and inefficient processes.

“However, today’s economic and social changes are forcing the sector to address these issues. Since the early months of 2020, it has been clear that for a business to thrive it must overhaul the way it innovates and designs products, improve the process for sourcing components and materials and, in particular, proactively address the new challenges of distribution and logistics.”

Future smart factories

Decoding the DNA of Industry 4.0 has proven to be a challenge for some businesses who have been developing their I4.0 initiatives for several years. The bandwidth of connectivity needed to realise some of their ambitions has only just come into focus as 5G has rolled out. However, even with existing connectivity technologies, IIoT has been slow to mature in some sectors.

Kim Bybjerg, Vice President, Tata Communications says: “Manufacturing is no longer just about producing products and sending them to shop floors – it involves maintaining productivity amongst teams, accelerating growth and time to market, improving user experiences and improving process efficiencies. While some manufacturers have encountered difficulty adapting legacy systems to a single connected network, many are now finding that this can be done easily with the right investment in talent and technology. The next evolution of IoT will be to ensure that manufacturers have the right framework in place to connect all of the disparate devices on the factory floor. Connecting these devices will provide pivotal feedback which will inform the development of new products and analyse of how consumers are using them.”

And to get I4.0 back on track, Dan Farrell, Industry X Technology Lead for Accenture in the UK & Ireland advises: “Now is the time to deliver on the business expectations of Industry 4.0 and those business cases must be concrete. We have seen experimentation and proof of concepts for several years now and while there is a need to experiment in certain areas, for example when entering new geographies or facilities, proof of concepts must not be done in isolation. A well-developed business case is imperative with a hypothesis, test and learn approach to ensure that experimentation is always value-led and industrialised effectively; without these ingredients projects and the move to Industry 4.0 can easily stall.”

With Sumair Dutta, Industry Analyst and Senior Director of Global Customer Transformation at ServiceMax concluding: “According to PWCs Digital Factories 2020 report, 91% of industrial companies are investing in digital factories, yet only 6% believe that their factories are entirely digitised. Of the 91%, nearly one half have digital investments focused on stand-alone solutions with another half, indicating that the use of digital technology is wider.

“The push towards digitalisation is to create agility and customer-centricity in manufacturing and associated delivery processes. With regards to different technologies, there are varying levels of interest depending on the approach, but what is consistent is that most organisations believe that they do not have the necessary culture, skillsets, or employee readiness to truly take advantage of digital initiatives. Also, 52% of respondents in PWCs survey believe that they lack the necessary digital corporate culture and that this is a major challenge to overcome.”

As technologies such as 5G and edge computing become more widespread and readily available, factories must embrace these new services to continue on their digitisation journeys. Industry 4.0 may have slowed for a variety of reasons, but now is the time to breathe new life into these strategies and ensure your factory is fit to take advantage of the commercial opportunities that are ahead.

Silicon in Focus

Salman Chaudhary, CEO, Empiricai.

Has the development of Industry 4.0 stalled?

“Before the COVID-19 pandemic, the adoption of Industry 4.0 technologies was gaining momentum all over the world. The pandemic induced national lockdowns, affecting customer demand and disrupting global supply chains, raising employee safety concerns and causing workplace closures. It would’ve been natural to expect a slowdown in the development of Industry 4.0. Yet, the adoption of Industry 4.0 has accelerated.

“Restricted access to the workplace, skeleton staff and compliance to new safety regulations meant industrial firms had to rapidly adopt digital technologies to survive the pandemic. Industry 4.0 technologies have enabled manufacturers and factories to digitise operations, increase efficiency, and optimise processes.”

Can you point to any current innovations that illustrate how Industry 4.0 continues to develop?

“In response to the pandemic, industry implemented technologies to enable employees to remain productive with a reduced workforce, improving processes and overall output. McKinsey’s Industry 4.0 survey found that around a quarter of industry leaders are fast-tracking automation programs to stem worker shortages arising from COVID-19.

“Many technology vendors have also altered their offerings to match what industry needs in order to weather the storm. Empiricai incorporated remote monitoring and online collaboration within its Industrial Analytics product to help Process and Performance engineers monitor plant performance remotely and operate plants with minimal staff. And Empiricai leveraged Computer Vision AI and Advanced Analytics to help its customers reduce the risk of Covid-19 and keep workplaces open by monitoring social distancing, PPE compliance and occupancy levels. These initiatives have not only allowed Industrial plants to stay operational, but also accelerated the adoption of Industry 4.0 practices which will continue post-pandemic.”

Why do so many Industry 4.0 initiatives at today’s factories fail to scale?

“Industry 4.0 initiatives often don’t progress beyond the proof of concept stage. Too many organisations are stuck in evidence of concept mindset, trying to prove a concept to work technically, rather than solving a real problem or achieving a tangible business outcome. Many firms haven’t thought through what’s needed to be successful in a natural production environment.

“To get Industry 4.0 and digital AI initiatives to scale, organisations need to invest in data, teams, and culture. First and foremost, organisations need to invest in setting up the data foundation, ensuring data accessibility and quality. Next, they need to move away from siloed, functional teams to cross-functional multi-disciplinary teams consisting of business, operations, data analytics, and IT personnel to be able to solve current challenges with meaningful solutions jointly.

“Finally, organisations need to change their culture from a traditional risk-averse, engineering mindset of not proceeding till all the information was available, to be agile and willing to experiment, to fail fast, but also learn fast and get things done.”

Many technologies need to integrate to deliver the promises made for Industry 4.0. Are we still waiting for the level of integration that will give us the ecosystem that Industry 4.0 needs to thrive?

“Integration at scale is needed to realise the full potential of Industry 4.0. However, there are many areas where organisations can start to gain real value as integration initiatives ramp up within their organisations and across the industry. For example, digitising of manual processes can be done one process at a time, and very significant productivity gains can be achieved by deploying advanced analytics tools that are in prevalent use in other industries.

“Most plants are heavily censored and rich in data, but the data is only used in a reactive mode – to troubleshoot issues. Industrial plants need to start using the data more proactively – to improve performance, save energy and other production costs, optimise maintenance, prevent downtime, and maintain product quality.”

Has the digital transformation (DX) of the factory been slow to adopt DX initiatives?

“Digital transformation in factories has been slower than in many other industries. However, the current pandemic has significantly accelerated the digital transformation of factories, in many cases forcing factories to adopt DX initiatives to survive and compete.

“Many of these DX initiatives, which allow remote working and automation and digitisation of manual processes, have not only improved productivity and reduced operational costs, but are also providing data and intelligence that will be the basis for further efficiency improvements. These will get embedded in the day to day operations of a plant.”

With so many technologies that combine to deliver Industry 4.0 from AI, to edge computing, can this often deliver paralysis preventing factories from moving forward with the Industry 4.0 planning and implementation?

“Evaluating and implementing too many new technologies can be daunting and this often impedes their adoption, which in turn delays the promised value to be achieved by them. In order to prevent this, factories need to add the right technical skills within their teams and develop a culture of agility and experimentation into their organisations. Industry 4.0 and AI can provide real business value and outcomes, but to achieve that, organisations need to start working in multi-disciplinary teams which understand factory operations, data, and IT systems.”

For manufacturing transformation to become more widespread, do we need more investment and proof of concepts?

“The issue for manufacturing digital transformation is not that factories and plants are unable to begin pilots and proof of concepts, but more about progressing that transformation into their production processes. To achieve real business outcomes through Industry 4.0 transformation, factories need to invest more in their data foundations, supplementing relevant skills and training people, and in changing their organisational culture and working style.

“COVID-19 has accelerated the adoption of digital technologies in factories. They no longer have the option to delay digital transformation initiatives or to not adopt Advanced Analytics and AI. In fact, factories which embrace and leverage digital and AI technologies will become leaders in their industries. The single most important step a factory can take is to invest in systems that make data easily accessible across the organisation. Data, in all its forms, is key in securing the future.”

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