How to rethink manufacturing and move beyond Industry 4.0
- Posted on October 29, 2020
- Estimated reading time 4 minutes
This article was originally written by Avanade alum Martin Burden.
COVID-19 has left an indelible mark on human lives and organizations everywhere. 75% of the world’s global manufacturing output and 94% of Fortune 1,000 companies experienced supply chain disruptions due to the pandemic. Industry 4.0 has been adopted by many manufacturers, but this isn’t the end game for industrial digitalization.
We suggest that in today’s world of perpetual change, the solution is not another industrial revolution, but a transformation of products and how we make them. Referred to as Industry X.0, this transformation comprises new technologies like IoT, analytics, AI, mixed reality, and digital twins to unlock new revenue streams and work with customers, employees, and partners on a whole new level.
The pandemic has prompted many manufacturers to rethink how they operate and ask themselves “are we ready for new work styles and changing customer needs?” These manufacturers are freeing themselves from legacy siloes, ageing systems and outdated processes to re-assess how they do business and reposition themselves for the future.
Forward-thinking manufacturers are harnessing cloud, data, 5G, AI and machine learning to change the way they do business, from shoring-up their customer care and operations to building a resilient core and going to market with the right products and services.
They’re also using these technologies to improve their customer and employee experiences, adding new online systems and services that wouldn’t look out of place with a global B2C brand.
Some of the headline benefits of adopting next-gen technologies and moving beyond Industry 4.0:
- Address recent disruptions while building an operational base that is fit for the future
- Rapidly deploy targeted, template-based, modular solutions – there’s no need to replace existing investments
- Make better use of data, analytics, and business insights to improve visibility and control
- Build on secure, innovative technology, like Microsoft’s trusted infrastructure
- Move faster thanks to an adaptive, agile delivery framework
The pandemic has forced manufacturers to accelerate or bring forward their digital transformation efforts; years of progress have been packed into just 6 months. It’s reasonable to assume that IDC’s prediction – that more than half of global GDP will come from digitally transformed businesses by 2023 – will become reality even sooner. After all, the future is often closer than we think.
A two-speed manufacturing industry?
‘Industry X.0’ manufacturing organizations, armed with new digital technologies, are disrupting business models with new value propositions. Adoption rates for new tech varies across the industry, ranging from “we’re scared of the unknown” to “let’s try everything and not get left behind”. As such, we’re in danger of seeing a two-speed manufacturing sector, split between the early adopters and the less-keen holdouts.
However, we can avoid the two-speed scenario if manufacturers use the pandemic as an opportunity to shake up their strategies and speed up their digital transformation projects.
Emerging technologies are gaining pace: IDC’s numbers say that one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities by the end of 2020. Around 40% of leading brands are seeing a decline in sales due to their failure to adapt to consumer needs.
The five challenges facing manufacturers in the new world of COVID-19
Ramping up your digital transformation can help you solve these major challenges:
- Cost containment and optimization
Balancing short-term and long-term survival planning can be tough: with sales slumping, expenses continue almost unchanged. Firms need to reduce operational costs and free up capital to accelerate growth opportunities. Many have succeeded, like Henkel, which revolutionized it’s productivity with a new workplace solution. Meanwhile, Encory prioritized a modern workplace experience to attract top talent.
To combat factory closures or staff shortage due to COVID-19, closures, illness, or walkouts, you need a resilient core. Theramex incorporated intelligent operations to build its business structure and get its finance, human resources, supply chain and inventory systems up and running.
- Customer care and operations
Increasingly connected consumers require anytime, anywhere products and services. You can develop the capability to deliver new channels with an enhanced focus on customer and partner communications. One example is Heineken, which transformed its customer contact centre to give it a 360-degree view of customers across all data sources. Also see BDR Thermea’s connected services platform, which reduces customer service visits by 60%.
- New products and services
Sustainability and transparency are key focus areas as consumers increasingly demand greater greener, more ethical products. To minimize disruptions and to ensure you don’t miss opportunities, you need to rapidly respond with an altered product portfolio.
- Talent agility
The ongoing shortage of workers and the need for remote working are two major challenges facing manufacturers today. Your response? To optimize factories and production with digitally skilled workers augmented by the latest AI and automation technologies. A great example is ABB Turbocharging, which uses mixed reality to solve problems in the field.
How to shape the next phase of your manufacturing growth
In the wake of COVID-19, every business out there falls into one of the following three phases: The respond phase, the reset phase, or the renew phase. To find out more about these phases and to work out which stage your business is at, download our in-depth guide, “Rethink manufacturing for the future”.