The Challenges of Embracing Industry 4.0
Nick Ostdick - June 01, 2017
Industry 4.0 has already arrived as a truly disruptive force in how manufacturing companies leverage competitive advantages in terms of connecting the planning and production stages of supply chain management for more lean, agile operations. Industry 4.0 has not only pushed manufacturers and suppliers to adopt more streamlined planning and production practices, but it also provides companies with more holistic, robust reporting capabilities to better serve demand planning, forecasting, and modeling platforms.
Yet, even with the host of benefits Industry 4.0 provides, there are still factions of the automotive supply chain that have been slow to embrace this new way of doing business. Whether it’s because these companies are troubled by the technical challenges of incorporating Industry 4.0 or simple a lack of understanding about the benefits Industry 4.0 offers, companies failing to subscribe to this more advanced model of supply chain management can find themselves struggling to compete in growing global marketplace.
On the other hand, companies who embrace Industry 4.0 will find themselves in prime position to leverage a number of key competitive advantages for success in the short, mid, and long-term future. But the question is: Why have so many manufacturing companies been slow to adopt Industry 4.0? What is so challenging about incorporating this new, integrated way of managing manufacturing and supply networks?
Let’s examine a few key challenges of adopting Industry 4.0 and how these challenges present significant barriers to entry.
Realizing the value of advanced analytics
We’ve discussed at length on this blog the benefits and advantages of advanced analytics in cutting the complexities of today’s global supply chain, and the adoption of Industry 4.0 is perhaps where advanced analytics proves most valuable. However, embracing advanced analytics does require a holistic rethinking of traditional supply logistics, which is why some manufacturing companies are hesitant to get on-board. Manufacturing companies are well-acquainted with legacy reporting systems, spreadsheet-based data management, and other manual data and tracking inputs, but these methods don’t allow room for connected software solutions capable of streamlining processes.
The ability to optimize production programs and processes is a critical driver for companies in maintaining high levels of productivity and efficiency, and advanced analytics gives planners and managers the data-driven insight to make informed decisions about planning strategies and planned production programs. Industry 4.0 uses advanced analytics to support the push for greater end-to-end (E2E) visibility and increased supply chain agility, both of which are key in avoiding bottlenecks and creating stability across the entire value chain.
Incorporating the Internet of Things
If we think of Industry 4.0 as the evolution of the ‘smart factory,’ then it makes sense how the Internet of Things (IOT) and its reliance on the communication between machines and systems is a key advantage of leveraging Industry 4.0. The ability of systems and solutions to work in conjunction with each other not only fosters greater productivity and accuracy, but it also provides greater visibility into a company’s overall supply situation. But as we just discussed, many manufacturing companies simply lack the technological infrastructure know-how to fully understand and realize how the IoT provides a leg-up in terms of creating cross-organizational synergy and breaking down communication and planning silos.
Where the IoT truly shows its value is making manufacturing companies more agile and responsive by becoming a core driver in creating valuable insight into a company’s demand planning, production, and inventory practices.
Deployment of cloud technology
The Industry 4.0 supply chain is a data-driven enterprise where the insights gained from this data can be actualized to streamline processes at a variety of touch points across the value chain. As a result, Industry 4.0 demands a powerful platform for storing, sorting, and retrieving massive amounts of detailed data and reporting. Enter cloud technology and its ability to house large volumes of data with multiple access points for enhanced communication and collaboration across the supply chain. However, part of the issue with cloud technology is some planners and managers still doubt the validity of cloud technology and its overall value proposition in fostering lean manufacturing principles. In addition, transferring old data to a cloud-based format can be initially costly and resource-draining for companies who then may fail to realize the long-term benefits.
With vast amounts of storage space and the capacity to view and manage data in real-time, the integration of cloud technology is not only a key advantage of embracing Industry 4.0, but it’s also an important component of the future of supply chain management.
Ditching the spreadsheet
While it may seem horribly outdated to many within the manufacturing and supply landscape, many companies still rely on the spreadsheet method to track data, monitor planning and production programs, and create overall supply chain management strategy. Because the spreadsheet model was such a fixture in how companies manage their supply networks for so long, companies continue to default to this method simply because it’s what they know - and the costs and time associated with implementing a new scheme seems too grand even though the benefits far outweigh the liabilities.
But the trouble with the spreadsheet model is quite simple: it lacks the dynamic, integrated elements necessary for global supply chain management. Data cannot be easily shared across the value chain, which makes accurate demand planning and production programs difficult to enact, and communication and collaboration throughout a manufacturing company becomes extremely difficult because a spreadsheet is an exclusive method of data storage and tracking rather than an inclusive model. Ditching the spreadsheet for a technological platform with greater reporting, tracking, and sharing power is critical for manufacturing companies operating in complex partner networks on a global stage.