Manufacturers not matching transformational pace of digital tech

Posted on 4 Jan 2019 by The Manufacturer

A new report says manufacturers need to deal with Industry 4.0 technologies by showing boldness and strategic thinking, pursue value and performance first instead of technology, and recognise Industry 4.0's opportunities.

Industry 4.0 depositphotos
Industry 4.0 technologies are radically transforming manufacturing – image courtesy of depositphotos.

The next phase in the digitisation of the manufacturing sector is being driven by four major disruptions; the rise in data volumes, computer power and connectivity; the emergence of analytics and business intelligence; new forms of human-machine interaction; and improvements in transferring digital instructions to the physical world.

This will all revolutionise manufacturing. It has the potential to drastically improve manufacturing productivity. New products such as autonomous vehicles and robotics will become mainstream and the growth of the additive manufacturing sector will accelerate.

This change is inevitable. Having said that, a successful Industry 4.0 transformation is not.

So says KPMG in a new report on Industry 4.0. The accountancy behemoth warn that too few manufacturers are adopting Industry 4.0 technologies like Internet of Things. It also says that too few are adequately planning for the disruption these technologies will bring.

The report warns that if the current trends on adopting Industry 4.0 technologies in the manufacturing sector continue, manufacturers are likely to be overtaken by their current competitors as well as new market entrants.

It says: “Few manufacturers have developed holistic end-to-end inter-connectivity – our definition of the highest level of I4.0 maturity – among today’s breakthrough I4.0 tools and technologies.”

KPMG also say too many manufacturers lack the knowledge and vision to take full advantage of I4.0 technologies, while too few CEOs and C-suite leaders are willing to make the audacious moves to adopt I4.0 across their business. Instead, many are too concerned with pursuing short-term profit.

Even when manufacturers do adopt the technology, they lack the long-term strategic thinking to successfully utilise the technology. It recommends CEOs, C-suite leaders and companies ask themselves why they are pursuing change.

The integration of every aspect of a company’s value chain that is currently siloed, whether its product design, marketplace delivery or customer experience, must be done in order to ensure companies realise new levels of value.

Mun-Gu Park, KPMG Korea’s I4.0 country leader, states: “Our message to the vast majority of businesses is simple but urgent — you cannot buy your way to I4.0 maturity. Driving true and sustained value from I4.0 demands the integration of automation, data, advanced analytics, manufacturing and products, in a way that unleashes unique new competitive advantages.”

The report outlines six critical enablers that need to be well-employed to ensure a successful Industry 4.0 transformation: customer experience; operational excellence; governance and risk management; technology and systems; strategy and business model, and people.

It concludes with a message to business leaders; the transformations brought by I4.0 will rewrite the rules of success. Therefore, timely strategies are necessary.

Too much focus on the business at hand is “keeping leaders from looking around the corner at the future they can create.” A lack of knowledge and vision persist concerning I4.0’s potential must be overcome and the opportunities brought forth by rapidly advancing technology must be recognised.

It writes: “Embrace ‘ownership’ of this historic I4.0 journey. Understand that you are at the threshold of unprecedented opportunities and new threats to success and survival — in the digital economy.”

Reporting by Harry Wise