Industry 4.0 Myths and Facts for Manufacturers

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It’s nearly impossible to discuss the challenges facing today’s supply chains without hearing the term Industry 4.0—and with good reason. In an Industry 4.0 system, it’s possible to improve organizational performance by connecting people, machines, sensors and devices in new ways. The more connected every touchpoint on the value chain is to every other touchpoint, the more easily production planners can track supply chain activity, generate optimal plans, and ultimately execute those plans to improve efficiency and productivity.

The concept of Industry 4.0 originated in Germany in 2011 as a holistic framework in anticipation of the rise and proliferation of new, digital manufacturing technologies and is often termed in conjunction with the idea of the smart factory. Today, this “Fourth Industrial Revolution” is a roadmap for high-tech, industrial digitalization.

But before starting on an Industry 4.0 journey, let’s debunk some common myths about this industrial evolution:

Myth: Industry 4.0 is just for large companies.

Fact: Digital transformation is possible regardless of an organization’s size. Solutions that improve efficiency, visibility and collaboration on the factory floor are being implemented in Fortune 500 companies as well as those with fewer than 100 employees. In fact, some digital solutions are specifically tailored to small and medium-sized companies. For example, a precision gear manufacturer recently adopted a detailed scheduling solution with the ability to create and evaluate planning scenarios. They now have the data and insights they need to validate and optimize production plans in terms of capabilities and constraints. Digitalization also helps them recognize bottlenecks in production at an early stage to avoid downtime.

Myth: It’s a bad idea to adopt Industry 4.0 in the middle of a pandemic.

Fact: The lingering pandemic and continued supply chain volatility are making it even more urgent for manufacturers to seek out Industry 4.0 solutions that improve efficiency and agility. Manufacturing leaders around the world are already moving to create more flexible, efficient, productive supply chains that embody the principles of Industry 4.0. A recent study of organizations that adopted digital solutions prior to the pandemic, for example, showed 94 percent of respondents reported that Industry 4.0 technologies helped them keep their operations running during the crisis. More than half said these technologies were critical to their crisis responses.

Myth: Organizations using manual processes or legacy systems can’t
benefit from Industry 4.0 technologies.

Fact: Organizations that are still building massive spreadsheets to plot potential production and logistics plans may have a longer Industry 4.0 journey, but there’s still hope. Modern-day manufacturing is all about digitization—converting existing information into a digital format. Once digitized, Industry 4.0 tools can gather data from disparate sources and put it in one place and in a consistent format for easier analysis. These benefits are further accelerated by agile planning systems, which help manufacturers to anticipate resource needs and maximize efficient use of materials, people and machines. Even organizations that have legacy technology systems can benefit from Industry 4.0 tools. Many of today’s solutions can be adapted to an organization’s own applications or existing standard software and use open interfaces to SAP and ERP.

Myth: Digitalization is prohibitively expensive.

Fact: Investing in Industry 4.0 technologies is simpler and more affordable than ever. In fact, the rapid adoption of digital tools has been triggered by the declining cost of developing, deploying, managing and maintaining these technologies. The benefits of investing in Industry 4.0 include improved productivity and efficiency, better flexibility and agility, and increased profitability—which make it worth the investment.

Industry 4.0’s impact on supply chain management is already visible today. And, the interdependence of the global economy means that it will eventually be the standard practice, rather than the exception. As supply chain managers look to the future, they should look to Industry 4.0 as a foundation.

 

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