As 2020 debacles fade, manufacturers explore Industry 4.0 for 2021. Resiliency, new business models, and customer-centricity are why.
As the manufacturing sector says goodbye to a 2020 full of supply disruptions, demand-side volatility and financial belt-tightening, a clearer picture of what 2021 holds for manufacturing businesses has begun to emerge.
Industry 4.0-enabled approaches figure to be front and center in that picture. Results of a post-election poll of several hundred U.S. manufacturing executives conducted by Deloitte in November 2020 found that more than three-quarters (76%) expect their companies to increase investment in digital initiatives, and to pilot and implement more Industry 4.0 technologies, in the year ahead.
Why the heavy emphasis on Industry 4.0 in 2021? Perhaps most critically, it gives companies the means to be more resilient in the face of disruption, introduce new business models, gain certainty and become more customer- and employee-centric amid what is expected to be another down year for manufacturing GDP growth. Here are four areas where we see Industry 4.0 having a particularly strong impact on manufacturing businesses in 2021 and beyond.
1. Building greater operational flexibility and resilience.
In normal times, many companies with stable models try to get by on gut feel, running the business using informal processes. But there’s no place for that in the “new normal.” Instead, the pandemic has taught organizations that data and technology will be essential to provide resilience in the face of the challenges still to come.
The truth is, disruption has created a massive opportunity for the enterprise, but taking advantage of it requires an accelerated move towards digital transformation. In the wake of this year’s crisis, businesses do not want to navigate in the dark when it comes to better decision-making.
By increasing visibility with the right data-driven technology, organizations can become more agile, flexible, and, yes, resilient, allowing them to keep pace or even leap ahead of the competition. Businesses are desperate for the “crystal ball” that can help them get there — and the stakes couldn’t be higher.
Steinbeis Papier GmbH is a family owned business and has supplied quality magazine, office, and digital printer paper for over 40 years. Its sole raw material is locally sourced recycled paper. To gain the speed and efficiency necessary for survival, Steinbeis needed to integrate data and automate production as much as possible to be able to monitor KPIs on the fly to draw insight for potential improvements.
The company employed multiple Industry 4.0 techniques to integrate 25000 sensors in its factory with its commercial systems. The platform now quickly aggregates and compresses the huge volumes of data streaming in from sensors on machines across the factory floor that now allow it to take action and intervene to address production or business process issues.
Tailored algorithms enable anomaly detection in production, quality, and multiple cross-domain KPI data. Semantic AI, including natural-language processing and deep learning, drives digital assistant functions. Machine learning algorithms help determine machine state and create sensor metadata. Additionally, the data is used for business intelligence, including anomaly analysis, spend analysis, production controlling, spare part stock optimization, and transport optimization.
2. The rise of extended business networks.
We see companies moving beyond the supply chain construct, with its inherent limitations, to a network or ecosystem construct that stretches beyond company and even industry borders to enhance resilience, agility and ultimately, value.
That can be accomplished with multi-shoring, geographic diversity and extended business networks that could include multiple tiers of suppliers, partners, asset service providers, third-party logistics entities, distributors, resellers, wholesalers, retailers and more. To function efficiently, those networks need the support of robust supply risk analysis and management tools to model and identify vulnerabilities as well as opportunities to capture value. When the various members of that supply network are connected in real time, they can make quick, sound decisions based on shared data to respond to disruptions or changing demand.
We see these kinds of cross-industry networks emerging in a wide range of manufacturing segments, as companies realize that “winning alone” is no longer possible — that the entire value chain needs to be connected, working together and sharing information. One pandemic-driven example is the recently announced Vaccine Collaboration Hub (VCH), a central digital platform on which businesses that are part of the COVID-19 vaccine production and distribution process can efficiently share data, manage vaccine distribution, and execute mass vaccination programs.
3. Integrating sustainability and decarbonization into the business DNA.
Sustainability initiatives, from decarbonization to net-zero emissions to the Circular Economy, will move even more squarely into core operational and business decision-making in 2021, becoming a driving force for innovation in the manufacturing sector. In a world where shareholders, customers and business partners are placing increasing weight on sustainability in their decisions about the companies and products with which they align and in which they invest, manufacturers must have the digital capabilities to accurately factor “green line” considerations into every aspect of their business. Industry 4.0 capabilities can enable them to measure, report and articulate the impact their operations have in areas such as carbon emissions, for example. And those that perform well in sustainability terms can leverage that as an important competitive differentiator in the marketplace.
In 2021 and beyond, we expect to see manufacturing enterprises aggressively tailoring their business models, product portfolios, operations and supply networks to be compatible with the growing sustainability sensitivities of customers, investors and, of course, regulators. To do so, they can really benefit from Industry 4.0 technologies that enable them not only to measure their own carbon footprints, but to uncover materials and processes that push the boundaries of environmental friendliness.
4. Empowering people.
“Even in the age of robotics, industrial manufacturers cannot run without skilled workers,” states a 2020 study from Oxford Economics. In that study, which is based on survey responses from 300 senior executives in the industrial manufacturing sector, 22% of industrial manufacturers cited the lack of skilled workers as a top barrier to achieving their strategic change initiatives.
Industry 4.0 capabilities are critical to overcoming that barrier, giving manufacturers and their HR departments new ways to find, evaluate and onboard digitally savvy talent — people with the skill and comfort level to work collaboratively with intelligent machines. In particular, digital workforce management tools give manufacturers total visibility into their workforce, along with the agility to quickly shift employees to where they can deliver the most value to the organization and its customers, enabling rapid onboarding and training on production workflows and processes. With end-to-end operational visibility, a manufacturer can connect workforce (re)deployment directly to production priorities.
Equipped with Industry 4.0 capabilities that enable them to be resilient, profitable and sustainable, manufacturers will be well positioned to thrive in a business landscape that looks much different today than it did a year ago.