Now that we’re a few years into the fourth industrial revolution, there’s a lot to be learned from other people’s experiences in this area (both the successes and failures). Even more so because we’re emerging from several years of pandemic-related disruption.

Whether you’re new to exploring industry 4.0 strategy or you’ve been working on your smart factory transformation for a while, now is a good time to take a look at what’s going on in this space.

What’s working? What’s not? And what can you do differently to ensure the success of your own industry 4.0 transformation?

Defining Industry 4.0

Firstly, let’s take a look at how industry 4.0 is currently defined by key players:

  • PWC: ‘Industry 4.0 encompasses end-to-end digitisation and data integration of the value chain.’
  • Gartner: ‘Industrie 4.0 is about driving digital value chains, thus creating more agile and market focused competencies.’
  • Deloitte: ‘The term Industry 4.0 encompasses a promise of a new industrial revolution—one that marries advanced manufacturing techniques with the Internet of Things to create smart manufacturing systems that are not only interconnected, but communicate, analyze, and use information to drive further intelligent action back in the physical world.’
  • KPMG: ‘Industry 4.0 (i4.0) is a collective term used around the world to describe the convergence of IoT-driven technologies, augmented decision making and advanced automation.’
  • EY: ‘Made possible by the emergence of digital systems, networked communications, machine learning and large-scale data analysis, it refers to the increasing integration of these technologies into business and production processes in order to make them self-sustaining and more efficient.’

There seems to be general agreement that Industry 4.0 is centered on digitization, supported by data, analytics, IoT, connectivity, more advanced technologies, automation, and AI — driving efficiency, agility, value, and better decision-making.

What does industry 4.0 look like in 2022?

Google trends chart showing searches for ‘Industry 4.0’ from 2017 to 2022.
Google trends chart showing searches for ‘Industry 4.0’ from 2017 to 2022.

Interest in Industry 4.0 has remained consistently high over the past 5 years, with Google searches peaking in late 2019. It’s safe to say that Industry 4.0 is here to stay.

Here’s some recent stats on the current state of manufacturing and smart factories:

  • Operating cost competitiveness – According to Gartner, 36% of heavy manufacturing CIOs whose enterprise had recently experienced disruption said that operating cost competitiveness had fallen behind. 
  • ROI on IT spend 36% of manufacturing enterprises realize above-average business value from IT spending in digitalization at a reasonable cost (compared with peers).
  • Job recovery – Following a sharp dip in employment during early-mid 2020, manufacturing bounced back to pre-pandemic levels in mid-2022
  • Workforce changes – 38% of executives responding to a Deloitte survey reported attracting new workers as their top priority for the production workforce in 2022, followed by retention and reskilling
  • Increasing IoT investment – 45% of manufacturing executives surveyed by Deloitte expect further operational efficiency improvements in 2022 due to investments in IoT connected machines and automated processes

7 Barriers and challenges for Industry 4.0

Technological obsolescence

There’s concern that equipment in the manufacturing industry needs to realign with the pace of innovation in the tech industry. On average, technology may reinvent itself (and need major upgrades/replacements) every 3-5 years, while manufacturers typically invest in equipment that’s designed to last decades. The risk is that expensive manufacturing components may end up obsolete after just a few years because it isn’t compatible with the latest computing technologies.

Significant tech gaps

There are also a lot of prerequisites for companies to make the switch. The implementation of all base technologies (IoT, cloud services, big data, and analytics) tends to be a barrier for many companies to fully adopt and implement Industry 4.0. In particular, big data and analytics appear to be a gap for many manufacturers.

Dissatisfaction with technology

The excitement and hype surrounding industry 4.0 may have done more harm than good due to mismatched expectations and capabilities. There’s no getting around the fact that some of the technology being used has had over 6 decades to mature, while other technology is yet to fully mature. And while early adopters may reap the benefits, they also have to deal with potentially incomplete tech solutions.

Read more about this in our article on Industry 4.0: Opportunities and risks for early adopters.

Lack of digital strategy

Although most research looks at the technology barriers to Industry 4.0, it’s important to look at other issues at play. Along with resource scarcity, the lack of a digital strategy was found to be a major barrier to implementing Industry 4.0.

Lagging administrative process innovation

Another study found that administrative process innovations (namely, work design, people management, and strategy) are also essential for Industry 4.0 initiatives. 

Recruiting and training for new skills

Industry 4.0 requires a new skillset from your people — with requirements continually evolving with the technology. This involves recruiting people with new skills, upskilling current team members (who are already busy enough), and ensuring the next generation of graduates are properly equipped before they join the workforce. It takes time to create new courses and train undergraduates. And even then, in-demand talent is often tricky to find and hold onto, making it risky to invest in a project that relies heavily on a handful of individuals.

Complexity

The complexity to implementing Industry 4.0 is a barrier for many companies. It can be overwhelming to digitize and connect every part of your systems. You have to consider sensor data, control data, both old and new equipment, paper forms, various operational applications, office applications, data requirements, and how to keep it all secure and compliant. Any project like this involves time, costs, and disruption to existing operations — and digitizing is only the first step towards Industry 4.0.

8 Current opportunities for Industry 4.0 companies

Neon sign saying ‘Do something great’.
Image credit - Clark Tibbs

People (and outcome) focused approach

It’s clear that a technology-focused approach is not an ideal way to implement an Industry 4.0 manufacturing strategy due to the barriers we’ve discussed here. There’s an opportunity for companies to approach Industry 4.0 from a different angle: people and solutions. Start by considering what outcome you want to achieve from your Industry 4.0 implementation, who you’ll need to be part of the process, and how the changes might impact them. From there, you can explore technology that might help support your people to deliver the outcome.

Conversational

To overcome some of the barriers to Industry 4.0, some manufacturers are incorporating conversational technologies. This is an area that’s rapidly evolving and it’s likely that more operators will use voice-enabled assistants in the near future.

Event-driven

If [event] happens, this [process] must happen next < this simple instruction or workflow happens constantly in manufacturing environments. But whenever a workflow relies on operators for manual input or to remember the next step, it slows down the process and introduces the potential for human error. More manufacturers are relying on Industry 4.0 technology to automate based on events — increasingly linking different systems and processes together to eliminate manual steps. Though of course, the people must be prepared to embrace this approach and enable the technology.

Phased implementation

Manufacturers don’t need to implement every Industry 4.0 technology at once. Many companies are instead taking a phased approach to their investment and implementation, allowing them to start the process sooner.

Combining solutions to maximize value

Rather than finding the perfect all-in-one solution, manufacturers are using multiple technology solutions to solve specific problems or achieve specific goals.

This approach is why OFS chooses to partner with technology providers like The 5th Ingredient. It means customers get richer functionality specific to their business operations, without creating the data silos often associated with multiple technology platforms. 

Consider both now and the future of manufacturing

Instead of designing a solution for current problems, it’s important to also consider what solution might be required in the future. In practical terms, this might involve choosing components that are easily upgraded and scaled up, as well as platforms with flexible integration options.

Consider the impact of data security, privacy, and safety

Manufacturers are increasingly concerned about data security and privacy issues, with 82% of surveyed manufacturing executives expecting to invest more budget into cybersecurity in 2022. It’s important that any Industry 4.0 implementation comes with appropriate changes in policy and tools to control what happens to the data, how it is shared, and how it is protected from misuse and other risks. 

Stakeholder engagement approach

Once again, successful Industry 4.0 strategy comes back to people. Not just your direct team, but all the people impacted by the potential change — and those who can also influence it. This includes your operators, quality control, maintenance engineers, schedulers, drivers, IT team, fellow management, and any external partners. Consider how their job may change, how the company structure itself may be impacted, and how each group may feel about the changes. Work with each stakeholder to communicate the situation, understand their concerns, and get their input on the process. 

This will have many benefits — not only are you more likely to overcome resistance and improve adoption, but you will find that team members will have valuable ideas to contribute that make your Industry 4.0 strategy more likely to succeed.

Plus, the best use of your Industry 4.0 tech capabilities will be to empower every team member to become more effective in their role. And it’s never too early to begin engaging with and empowering your team.

What’s needed: people-first strategy

Image credit - Timothy Muza

It’s clear from the current barriers and opportunities that successful implementation of Industry 4.0 less of a focus on technology/solutions and more focus on people and strategy.

Hopefully we’ll see more research on this in the coming years. And more companies that adopt this approach in their smart factory strategy.

In the meantime, if you’re looking for an Industry 4.0 solution that’s designed to empower your people, why not try OFS? Take a look at our free 30 day trial or contact our team to discuss your specific requirements.