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6 Key Issues for Manufacturers Moving to Industry 4.0

If manufacturers want to successfully transition to Industry 4.0 they must stop looking at information technology (IT) as a cost center. Instead, IT should be viewed as a “profit enabler” that addresses efficiency, asset efficiency, and operational efficiency.

Frost & Sullivan’ recent whitepaper, Manufacturing 4.0: A Playbook for Navigating the Journey to IT Modernization & Transformation, emphasizes the role sustained innovation will play in the factories of the future, while outlining six critical issues manufacturers must face. In a telephone interview with EBN, consulting manager Ram Ramasamy said manufacturing organizations need assistance understanding and navigating the most critical issues in manufacturing transformation today.

The terms Manufacturing 4.0 or Industry 4.0 are polarizing, as they are sometimes seen as buzzwords to veterans on the factory floor, while others see them as delivering a positive impact on the business. even if they are not clear as to how. Frost & Sullivan describes Manufacturing 4.0 as current trend of automation and data exchange in manufacturing technologies, including cyber-physical systems, the Internet of Things and cloud computing to create “smart factories.”

Manufacturing 4.0 has three primary drivers, according to Ramasamy: capital efficiency, asset efficiency, and operational efficiency. When it comes categorizing progress, Frost & Sullivan classifies companies into three types:

  • Non-digitizers which don’t even want to look at digitization due to lack of resources, including time and money;
  • Those who selectively dipping their toes with proof of concepts (PoCs) here and there; and
  • Finally, enterprise digitizers, who are embracing Manufacturing 4.0 with multiple PoCs and budgets ranging from $50,000 to $5 million.

 “The good news is they have realized the benefits of the PoCs,” Ramasamy said. “The honey has been tasted.”

Regardless of how advanced a company is with their Manufacturing 4.0 efforts, a major hurdle remains a lack of standards to connect islands of automation. “The industry is far from achieving it.” Ramasamy said progress is being made, however, noting that 10 years ago data wasn’t even available to those on the factory floor, but now predictive maintenance is possible so that equipment replacement is optimized based on the realities of business volume.

Frost & Sullivan’s whitepaper is inspired by its Manufacturing Leadership Council, a member-driven global business network for senior industrial executives, which has identified a set of six critical issues facing the manufacturing industry in its journey to transformation. Ramasamy said understanding these critical issues can help manufacturers align internal practices and processes as they start their journey to Manufacturing 4.0.

Frost & Sullivan's Manufacturing Leadership Council has identified a set of six critical issues facing the manufacturing industry in its journey to transformation.

Frost & Sullivan’s Manufacturing Leadership Council has identified a set of six critical issues facing the manufacturing industry in its journey to transformation.

The first critical issue is that manufacturers must understand the power of embracing new and evolving production models and technologies that allow them to digitize from the design phase and throughout the product lifecycle. Ramasamy said the vision for the factory of the future is one that ingests raw materials and feeds them in sequence through a self-healing assembly line with little human interaction on the floor. Instead, there will be 10 people in a control room monitoring. “Machines take over and work hand in hand with humans,” he said. “It’s a total collaboration between people, process and technology.”

Manufacturers will need a migration path that modernizes aging assets, connect their embedded system production technologies with smart production processes, and end-to-end digitization of manufacturing processes that includes Internet of Things (IoT) sensors. Ultimately, they will benefit from real-time traceability of quality issues, closed-loop feedback on design principles, reduced cost of poor quality (COPQ) and customer-centric innovation.

The second critical issue is the transformative technologies that will be a part of Manufacturing 4.0. In addition to IoT, Ramasamy cited analytics and 3D printing as the latter is combined with CNC to support innovations in additive manufacturing. Frost & Sullivan expects the influence of these new technologies to steer a shift from traditional operational models, such as reactive maintenance become predictive maintenance. The impact of transformative technologies on performance will also support the creation of new business models; manufacturers that previously sold tangible products will instead sell “performance as a service” in the form of committed uptime for a valve, rather than the valve itself.

Increased collaboration is the third critical issue, something that’s been taking place for some time, said Ramasamy. This includes diverse sourcing, an approach that has been necessitated by natural disasters, such as the tsunami in Japan that had tech companies struggling to source electronics components. Artificial intelligence (AI), meanwhile, is being used to source suppliers, he said, because it’s become more difficult to meet face to face. “The human comes in after the legwork is done,” Ramasamy added.

Given the recent high profile of ransomware attacks, it’s not surprising that cybersecurity in manufacturing is the fourth critical issue. Ramasamy said it creates enough fear to hold some manufacturers back from connecting the factory flow. The market is moving forward, but like maintenance, security must be more preventive than reactive.

This is where an IT partner is particularly valuable, according to Frost& Sullivan, as they can help assess a manufacturer’s present maturity level. Manufacturers should also consider creating an IT/OT Center of Excellence (CoE) so they can learn from three decades of advancements in IT security and improve manufacturing cybersecurity.

Frost & Sullivan found that organizational culture, corporate leadership and comprehension of solution ROIs were the top three restraints for manufacturing transformation.

Frost & Sullivan found that organizational culture, corporate leadership and comprehension of solution ROIs were the top three restraints for manufacturing transformation.

Next-generation leadership is as critical an issue. CEOs and the c-suite must buy into Manufacturing 4.0, rather just getting on the bandwagon because they think they need new technologies such as IoT. “Without buy-in, it’s hard to move it forward,” said Ramasamy.

Frost & Sullivan found that organizational culture, corporate leadership and comprehension of solution ROIs were the top three restraints for manufacturing transformation. Leaders must embrace new behaviors, structures, and strategies, such as future-focused leadership behaviors and mindsets. This include the emergence of creative job titles such as “chief disruptive officer,” as every manufacturer is poised to face disruption.

Finally, there’s much discussion about the end of work thanks to automation, but Ramasamy sees it as changing, not disappearing. “We still need experts. Instruments are getting smarter, and millennials will be focused on tablets with contextualized data.” He said training is picking up because of an aging workforce and the inevitable shifting of jobs to Generation Z. New competencies will be augmented by AI and machine learning. “We think there's more cross-functional skills that will be required.”

This critical issue of leadership means manufacturers must build a future-focused workforce, according to Frost & Sullivan. As competition intensifies, leadership planning and development at all levels are important, and the lack of availability of skilled and ultra-skilled resources further stresses the need for advanced planning and skill development.

Despite the hurdles ahead, Ramasamy said 2017 and beyond will see a significant uptick digitization. “It's going to go crazy,” he said. 

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