Industry 4.0 is the buzz term of the moment in manufacturing. First coined by advisors to the German government in 2013, it has quickly become part of the industrial lexicon and – depending on your viewpoint – either the indicator of a shiny digital future, or the certain demise of human employment in manufacturing. Whatever your perspective though, it’s evident that the dawning of the fourth Industrial Revolution will irreversibly change the manufacturing landscape. But, since we’re only in the foothills of this particular mountain range (the first Industrial Revolution lasted a century), now is a good time to cut through the hyperbole and assess how best to prepare for the journey ahead.
A sense of scale
Given its game-changing potential, it is unsurprising that Industry 4.0 has attracted so much hype. The World Economic Forum has identified it as a “$100 trillion opportunity for both industry and society”, and even our own advisors to Government are excited by size of the figures: the Made Smarter Review asserts that “there are around 6.4 billion data-communicating objects in the world today. And by 2020, this number is forecast to explode to around 20 billion.” But, while the predicted scale of Industry 4.0 is enormous, there are two notes of caution I’d like to sound.
Firstly, before any organisation invests heavily in IDT (industrial digital technologies), I would advocate thinking carefully about how well it is using its existing assets. The temptation to join the revolution is strong, especially if you see your peers forging ahead with new digital kit, but I believe that Nigel Reaney of LMAC Consulting makes a valid point when he suggests, “Instead of jumping for the technologic solution every time we should stop and consider, have we exhausted the creativity of our workforce. Can we improve our existing processes with what we already have? Do we need to invest heavily in automation?”.
Certainly, automation can deliver significant benefits, but if there are weaknesses and wastage already in your system, this needs to be addressed before you bring in the robots, or you’ll likely just be compounding the problem.
From a Lean perspective, Industry 4.0 shares many of the same objectives of reducing waste and increasing productivity, but for manufacturers (and other organisations), there are enormous gains which can still be made from focusing on people and process, without significant investment in new automation and IDT. As KPMG reveals in its paper Beyond the Hype: separating ambition from reality in i4.0, “Our research and conversations reinforce the view that i4.0 is more about enabling business performance than it is about the technology itself.”
This brings me to my second point: don’t be afraid to start small, but in the context of thinking big. KPMG’s assertion makes perfect sense to me: “Being bold does not necessarily mean investing more money or making big bets. More often, it is about changing the way of thinking within the organization.”
Realising the potential of your people
This, I believe is the key to realising the potential of the fourth Industrial Revolution. As with Lean, Industry 4.0 is fundamentally about organisational change from a cultural and leadership perspective; the technology is just the delivery method, but the effectiveness comes from the people and the approach. McKinsey makes this connection crystal clear in its 2017 paper Industry 4.0 demystified – lean’s next level, where it says that “Industry 4.0 can be understood as digitally enabled lean”.
As with Lean, Industry 4.0 must be led by top management and needs careful planning and implementation to have a chance of success. Commitment needs to come from board level and be clearly communicated throughout the business. Worryingly though, according to McKinsey’s research, “Only 16 percent [of businesses] have a clear strategy in place, and only 24 percent have assigned clear responsibilities regarding Industry 4.0 efforts.”
This lack of preparedness is perhaps partly because effecting a company-wide cultural shift is extremely challenging, not least when many workers will be fearing for their jobs. As KPMG observes, “The hardest (yet also the most valuable) part of i4.0 adoption lies in the planning — aligning the strategies, creating the roadmap, communicating the vision, building the support and allaying the fears about cyber security and employee layoffs, to name but a few.”
In fact, far from threatening human employment, Industry 4.0 arguably presents an opportunity to upskill and enhance employee performance and engagement at all levels of an organisation. The Made Smarter Review predicts the creation of around 175,000 new manufacturing jobs alone.
Industry 4.0 has significant implications for talent management and recruitment and it’s vital to make effective use of the current workforce, invest in training, develop coaching and leadership capability, plus consider how to attract and recruit new types of employee with cutting edge digital skills. As KPMG states, “Manufacturers and observers suggest that i4.0 may be the answer to the sector’s looming talent gap as manufacturing becomes less about grease and gears and more about data and digitization. A few are already leveraging their i4.0 capabilities to draw next-generation talent and millennials into the workforce.”
Talent before tech
The Made Smarter Review identifies poor leadership as the number one barrier to the UK achieving its potential during the fourth Industrial Revolution and, from my experience, this rings true. For all the incredible technology now available to help us accelerate manufacturing growth, shortcomings in leadership continue to hamper corporate performance.
For Industry 4.0 to live up to the hype, we need to focus on the quality of our people and invest wisely in them first. For this reason, I have recently teamed up with a world class Lean consultancy to deliver a range of services aimed at enhancing performance behaviour, building coaching skills and developing problem-solving capability within our clients’ workforce. Together, I firmly believe that we can give your organisation the head start it needs to reap the rewards of Industry 4.0.
Please get in touch to find out more.