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TRG in the Board Room Blog

Manufacturers adapt to Industry 4.0

Posted by Thai Pham on

We are on the verge of the Fourth Revolution of industrial manufacturing on a global scale. The First Revolution witnessed the era of mechanisation thanks to the invention of steam engine. The Second Revolution was characterised by electric-powered assembly line and mass production. The Third Revolution introduced automation and information technology into factories. And the Fourth Revolution promises to deliver full integration of latest disruptive technologies such as A.I. (Artificial Intelligence), big data, and Internet of Things.

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Manufacturing digitalisation

At the very heart of this revolution – so called Industry 4.0 - is the process of full digitalisation from design to manufacturing. For instance, Adidas aims to replace machine tools, which may take weeks to configure and prepare, with 3D printing devices or other revolutionary production technologies. Adidas’ 3D printers have already been used to make highly tailored soles from webs of fibres for customers’ exact specific dimensions.

Until very recently, companies mostly use 3D printers for making models, prototypes or experimenting. A survey by PwC and Zpryme in 2014 found that only 1% of industrial manufacturers use 3D printers in final production only, and an additional 3% use this technology for making items that are not possible using traditional methods. The future prospect of 3D-printing, however, is very strong. The CAGR (compound annual growth rate) of 3D printer sales to 2019 is expected to be 73%, reaching 5.6 million units, while the CAGR for the number of annual 3D printers purchased to 2019 is expected to be 122%. In other words, 3D-printing technology will be not only more common but also more affordable, especially for small and mid-sized companies.

The German sportswear giant also built a new fully automated factory in the southern town of Ansbach, Germany, where running shoes are made solely by robots. In the pilot phase, there will still be a dozen human workers on the ground to supervise the systems, but the ultimate goal is full automation.

Read more: A new robotic revolution in manufacturing

Data is the lifeblood of manufacturing digitalisation. The amount of data generated throughout today’s manufacturing processes – from product development to production and post-sales support – is astonishing. Still, the capabilities to utilise such data volume is not yet catching up. For instance, an oil-exploration company was able to collect more than 30,000 pieces of data from one single drilling rig. Most of that data, however, has been wasted.

Read more: Business Intelligence in Manufacturing Industry

Embracing Industry 4.0

Industry 4.0 is now gaining traction among many other manufacturers in Europe and the US. The problem, though, is how they adapt to this new concept.

In a recent study by Boston Consulting Group (BCG), while nearly 90% of US manufacturers recognise the potential of manufacturing digitalisation in driving productivity, only 28% see opportunities to use these technologies to create additional revenue streams.

This narrow perspective prevents manufacturers from achieving a more holistic approach to Industry 4.0. That is, they are adopting isolated technologies in a piecemeal manner without a clear strategy. Their implementations tend to focus on certain aspects rather than an organisation-wide initiative.

According to the survey, which collected responses from 380 US-based manufacturing executives and manager, cyber security has the highest level of implementation (65%). It is followed by:

With respect to challenges, 40% said changing the company culture is the biggest obstacle to Industry 4.0. The other main challenges are:

  • Lack of interconnected departments (20%)
  • Changing business models (15%)
  • Hiring a right skilled workforce (13%)

The BCG report concluded with the remark:

“Bold ambitions and speed are essential. A cross-functional innovation team should conduct experiments, iterate fast and rapidly scale up new solutions. Battle-tested program management techniques can keep the large-scale, multiyear effort on track.”

Learn more about this topic at: How ERP revolutionises manufacturing: problems and solutions

 Manufacturing at the speed of change

Topics: ERP platform, ERP, Enterprise Resource Planning ERP

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