The future for industry 4.0 in manufacturing
John Robinson, Strategic Client Advisor, Digital Supply Chain, SAP provides his point of view on the future of industry 4.0 in manufacturing.
The global supply chain has experienced a level of disruption that has never been seen before. Every manufacturer is impacted by the crisis in some way and for many of them it poses an existential threat.
Prior to 2020, Industry 4.0 was an area of great interest to many manufacturers. It was an exciting subject with huge potential benefits and was seen by many as a positive and future thinking topic.
For the past few months, many of us have been focussed on the here and now. Our health and the health of our family, friends and colleagues. The ability to access the food and supplies we need. Our job security. The financial impact on our employers, our clients and our partners. Beyond that we also have to consider the wider economic impact and the unknown amount of time it will take for things to return to some level of normality.
The business drivers of Industry 4.0 pre crisis were focussed on competitive advantage, cost reduction, productivity, sustainability and innovation. The goal was to make well run businesses run better.
The focus for many manufacturers now is survival first and foremost and then beyond that, damage limitation.
The immediate financial impact on manufacturers has already resulted in a huge reduction in spending and investments. Many Industry 4.0 solutions being considered or deployed have fallen into the category of non-essential business activities.
As someone dedicated to manufacturing and Industry 4.0 I have had to ask myself a few challenging questions: Is Industry 4.0 even a topic manufacturers should be thinking about? Is Industry 4.0 relevant anymore? If it is relevant, why is it relevant and what role does it have to play moving forward?
The short answer is yes, I believe Industry 4.0 is not only as relevant as it was before, I believe it is actually far more relevant moving forward. As of today, the priorities for most manufacturers fall into three distinct phases: Phase 1, Survival; Phase 2, Recovery and Phase 3, Business as Usual in the new post crisis paradigm.
The goal for manufacturers will be to get to Phase 3 as soon as possible at the lowest cost to the business. This is not only the financial cost but also human and brand. In defining the operating model for Phase 3 they will factor in lessons learned from the crisis and try to build a more resilient and agile business. They will be asking themselves some fundamental questions such as: Where were the weaknesses? Where did they make costly decisions and why? What would have helped?
I believe that the key finding will be that the systems and processes in place were not fit for purpose. It seems clear that one of the major weaknesses has been a lack of real time visibility across the business. Visibility that is essential to support critical business decisions. Typical questions being asked are: What is the demand for products and where can we manufacture them? What are our current raw material, WIP and finished goods inventory levels? What is our manufacturing capacity, both in terms of human resources and asset availability? What is our spare part inventory and where are they? Where are our raw material shipments and what alternatives do we have? How is our finished goods distribution network operating?
Most system architectures currently consist of a heterogenous mix of applications and data silos. This architecture results in latency of information and a lack of a single real-time view of the business status. As soon as this architecture was tested beyond its normal operating conditions it failed.
If we go one level deeper than the supply chain view then manufacturing operations in particular will be exposed as a big area for improvement. This crisis has highlighted to manufacturers’ the importance of human capital and exposed systemic weaknesses due the impacts of self-isolation and social distancing.
The crisis has also resulted in production plans having to been changed on a much higher frequency as a result of changing demands, availability of raw materials, availability of key staff and availability of assets. Manufacturing has a far higher volume and frequency of ‘transaction’ than the supply chain. Manufacturing is real-time, not near real-time and disturbance has an immediate impact on the business.
As manufacturers now begin to move into the recovery phase, they will still be asking the same questions they have been asking during the crisis. This will undoubtedly lead to additional losses and extend the time taken to return to normal operations.
Eventually, we will reach the new normal and manufacturers will be keen to make sure this cannot happen again. Given the circumstances we currently find ourselves in, the question now is: What is the role of Industry 4.0 moving forward?
My view is that from today onwards the strategic goals of Industry 4.0 should be:
Help to make sure that more companies survive
Shorten the recovery phase and help return businesses to normal operations as soon as possible
Provide the platform to develop new, more resilient businesses in the medium to long term
Industry 4.0 can achieve these goals because many of the capabilities it offers could have greatly reduced the impact of this crisis on us all. Just a few examples are: real-time visibility into the availability of raw materials, finished goods, WIP, people, assets and capacity; use of Artificial Intelligence and Machine Learning to constantly reassess and re-plan activities; Robotic Process Automation to support nonvalue add labour intensive activities; the use of mobile technology, Augmented Reality and Virtual Reality to enable workers to perform tasks they were not trained for more easily. This could have assisted with skills shortages due to self-isolation or repurposing of manufacturing. The same technologies together with digital twins and remote support from OEM’s would improve availability of assets. The same technologies could also have enabled more remote working and virtual working to help with the issue of lockdown, self-isolation and social distancing. 3D printing of spare parts that were stuck in the supply chain and also use of AGV’s, autonomous electric vehicles and drones to again reduce the reliance on people and to further assist with social distancing.
Many of these technologies and solutions were seen as a nice to have. Many were waiting to ‘cross the chasm’ into mainstream adoption. Rather than retreating away from them, I believe we should be thinking about how we can use these technologies now and in the future. Multiple examples are already emerging such as 3D printing of PPE and Augmented Reality and Cloud based solutions being used to repurpose manufacturing.
Beyond the immediate crisis, we need to be thinking how these technologies can be used to help us recover more quickly? Given the predicted economic impacts, we have a collective responsibility not to make the situation worse during the recovery. We should be looking to innovate and eliminate waste wherever possible.
Longer term we should be looking to see how technology can help us to develop more resilient and robust businesses that are better equipped to deal with disruption in the future.
There is one other critical factor in navigating our way out of this. I have felt for a very long time that the key to successful digital transformation in manufacturing was not technology but collaboration.
We need to break down the traditional silos both within organisations and in the external supplier ecosystem. I don’t think this has ever been truer than it is today and the fact that I can see it happening in so many different areas gives me a lot of hope that we can recover and build more resilient and sustainable businesses in the future.
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