Four Industry 4.0 takeaways.
Covid-19 changed the world forever. The pandemic shock will likely (and hopefully) be the most disruptive period we will experience in our lifetimes. And the manufacturing sector is one the hardest hit (See exhibit 1). Nearly 60% manufacturing enterprise executives expect Covid-19 to have a bigger impact than the 2008 financial crisis and over 60% feel that their organizational survival is on the line.
Almost overnight, manufacturers need to dramatically increase their supply chain resilience, predict and manage the volatile customer demands, rethink the product portfolio, and revisit the operational playbook while dealing with a recessionary economy in order to survive and potentially thrive in the post-pandemic era. The Fourth Industrial Revolution, aka Industry 4.0 is no longer a vision for the future. It is an absolute necessity to survive and there is no time to waste.
Against the backdrop of Covid-19 and its impact on the manufacturing sector, HFS Research and LTTS conducted detailed conversations with five (5) senior enterprise leaders across manufacturing segments to capture their outlook for the industry, the shift in business priorities that are shaping the future of Industry 4.0, and the initiatives that are underway to increase the manufacturing agility and resilience.
Exhibit 1. Manufacturing is one the hardest hit sectors in the aftermath of the pandemic shock
How do you think your organization is going to fare post-COVID? Relative confidence in survival industry
Do you expect COVID-19 to have a bigger or smaller impact on markets than the 2008 downturn? % Manufacturing respondents
Much bigger Bigger About the same Smaller
Overall, how do you think your organization is going to fare post-COVID? % Manufacturing respondents
Our survival is on the line We will survive, but at a smaller size and scale No major change, business as usual We will thrive, increase our market
Sample: 400 executives across global 2000 enterprises Source: HFS Research, 2020
1. The scope of Industry 4.0 has evolved from the shopfloor to the supply chain from the inception of the concept
2. Survival is on the line and emerging technologies are the silver lining
3. Integrated solutions will replace siloed implementations
4. Ecosystem partners will play bigger role in talent management
Leaders in manufacturing companies are now adopting a strategic view on the Return on Investment (ROI) measurement, customer centricity, and governance for Industry 4.0 initiatives. As manufacturing operations excellence is tightly coupled with the overall supply chain, enterprises are leveraging Industry 4.0 levers for supply chain improvement. Overall, enterprises are relooking at both the fundamentals (how they embrace the new way of working, how quickly the workforce can learn new technologies, etc.) and outlook (how to define and measure RoI, maximizing benefits leveraging the ecosystem) for Industry 4.0 initiatives. COVID-19 has made the leaders in the companies realize the value of enhancing the customer experience and employee experience through the adoption of digital technologies. This, by itself, will positively impact the overall value chain, thus creating more opportunities to serve the customers.
In the wake of the pandemic shock, cloudification has increased multi-fold to helps organizations with flexibility and agility by allowing to scale the computing power and configure the storage capacity, thus enabling elastic operations. Due to the pandemic breakout, automation will start playing a bigger role in ensuring touchless maintenance processes and help in improving the employee experience while accomplishing certain tasks. AI-driven autonomous manufacturing and smart analytics has also accelerated across multiple manufacturing operations. Seamless, secure, and compliant access to data across the industrial systems wherein appropriate algorithms can be applied to derive actionable insights. Getting the master data management right is very important before a company plans to apply other technologies such as ML and AI. Interactive AR/VR technologies are transforming the user experiences across the manufacturing lifecycle. The interconnected nature of operations, the adoption of digital technologies and the remote working conditions due to the COVID-19 have resulted in increased cybersecurity investments. Digital twins are gaining traction across industrial verticals. Digital twins can be built of almost everything regardless of its size – from single components and assets (rotors, turbines, pipelines, etc.) to complex processes and environments (production lines, manufacturing plants, wind farms, etc.).
As technology is a critical enabler for the Industry 4.0 initiatives, leaders mentioned how they are leveraging technologies to fulfil the transformation goals. Besides defining the transformation roadmap and governance, we have observed several technology initiatives across enterprises related to cloud, cybersecurity, data management, AI and smart analytics, digital PLM, and digital twins to accelerate the overall transformation. Companies are at the inflection point to scale their siloed solutions and proof of concepts. The leaders whom we spoke to, shared the view that it is high time that companies focus on scaling the Industry 4.0 initiatives and industrializing the solutions across geographies and business functions to derive full value. This will also help the companies gain competitive advantage. Last but not the least, the leaders shared the view that technology transformation programs cannot stand on their own as they need to be aligned with the overall business transformation program.
The massive capability development for Industry 4.0 has forced enterprises to build a robust partner ecosystem. The manufacturing business landscape varies widely across industries and enterprises, there is a massive need for customization of the standard software and solutions. As the scope of technologies and domain intricacies increases in Industry 4.0 initiatives, manufacturers need a robust partner ecosystem throughout the journey. This partnership can be both open innovation like Open Manufacturing Platform and technology partners like cloud providers, industrial automation players, as well engineering service providers like LTTS.
Digital manufacturing driven by Industry 4.0 will accelerate given the business disruption caused by COVID-19. Speed will drive competitive advantage and overall industrial value chain will transform as more and more new use cases surface and technologies get adopted for not just the operational excellence, but for business growth. This is time to actually do what we always knew we had to do.
