Overcoming the challenges of Industry 4.0 as a small-medium manufacturer

Industry 4.0 is transforming the world of manufacturing. Many Australian manufacturers are using internet-enabled technologies and digitalisation to improve their business strategies and outcomes.

But there’s a catch: Australia’s small and medium manufacturers are being left behind.

Most early adopters of augmented reality, data analytics, sensors, artificial intelligence (AI), and other Industry 4.0-enabling technologies have been large enterprises – those with a large pool of skilled resources, big budgets and state-of-the-art factories.

However, in reality, it’s small and medium enterprises who make up the majority of manufacturers. To stay competitive and survive, it’s essential they can overcome the barriers to Industry 4.0 and use it to create efficiencies that ultimately make their business perform better.

What are the barriers?

Shifting the Mindset

Most SME manufacturers are aware of the concept Industry 4.0, but there can be a lack of understanding of why and how they should use the technologies to add value to their business.

This mostly comes down to education. Many of the resources for Industry 4.0 have been around the Big Data and huge IT infrastructures that are required. This immediately puts up a barrier for SME manufacturers.  

Even though larger organisations are better set up to invest in and integrate Industry 4.0 technology, smaller manufacturers can still take advantage of selected technologies to help accelerate the movement towards connected devices and machines.

Another challenge around mindset is the interchangeable terminology. Some bodies and equipment providers talk about the “factory of the future”, others talk about “digitalisation”, and some use “Industrial Internet of Things”.

They all mean essentially the same thing: it’s about finding ways to manufacture smarter.

What smaller manufacturers need to understand is that it’s not about doing Industry 3.0 better, but rather using technology to create entirely new processes. This will shift their business model significantly.

The Cost Factor

According to a recent report by RMIT University, the biggest barrier for SME manufacturers is cost.

RMIT University’s Dr Ben Cheng said: “The businesses we talked to mostly assumed I4.0 implementation was inherently costly and therefore only within reach of large, cashed-up corporations.”

So, it’s actually a perceived barrier – not necessarily a real barrier. And it’s easy to understand why; with mounting costs facing SME manufacturing today, the idea of investing in Industry 4.0 technologies could appear overwhelming.

However, transitioning to Industry 4.0 technologies doesn’t necessarily require a major investment. There are more affordable technologies, such as data analytics and sensors, that can return significant value when deployed strategically.

Fortunately, there has also been a sharp cost decline in technologies that enable Industry 4.0. This, coupled with a growing number of grants, make it more affordable to invest.

Another thing to consider is the cost savings small companies can get from Industry 4.0, as well as improved agility and an ability to react to manufacturing problems.

The RMIT University report suggests that, even at an entry-level, starting to transition to Industry 4.0 technologies can yield “direct bottom-line benefits and pave the way for higher returns as a business’s level of data maturity grows”.

The further an SME manufacturer travels on the journey, the greater the value generated. This could be simply seeing more data from the production line right through to systems self-diagnosis and optimising.

Skilling the Workforce

Another hurdle SME manufacturers face is not having a workforce trained or equipped with the expertise and knowledge to see the opportunities of Industry 4.0 and drive ROI.

It’s rare for manufacturing SMEs to have this capability and knowledge within their business. However, that doesn’t mean they can’t ask for help outside the business and start developing an Industry 4.0-savvy workforce. In fact, industry bodies and universities are setting up Industry 4.0 hubs specifically for this purpose.

The University of South Australia recently opened a new Industry 4.0 Testlab to support industry innovation across defence, mining, ag-tech, electronics and automotive sectors. The $2 million hub is equipped with 3D printing facilities, multiplayer virtual reality spaces for human-centred design, and an industrial-scale manufacturing demonstrator with the goal to help small-to-medium enterprises create and test new advanced technologies. It will also support workforce transformation.

How and Where to Start

Every SME manufacturer is different and has its own unique challenges. Because of that, there’s no one-size-fits-all approach to Industry 4.0.

However, there are some steps you can take to start the journey:

Do a self-assessment. Where are you today? How mature is your core production technology and IT infrastructure? Consider whether your business strategy aligns with investing in new Industry 4.0 technology – what would it mean for your business?

Focus on data analytics. If you only start with one thing now, let it be data analytics. You can unlock data to get valuable insights for operational improvement. Many older devices can be retrofitted with data technology, meaning it can be the most cost-effective move.

Start small. Get started with small-scale experimentation with technology, making sure you have a clear expectation of what you want to learn and achieve. Use this to see whether or not you want to take the next move.

Ask for help. There are lots of sources of expertise and funding. Look to the Industry 4.0 hubs at Swinburne University, University of South Australia, and the University of Wollongong. Also, stay up to date on the latest Government grants and incentives.