Five reasons why we struggle to leverage Industry 4.0

Congratulations. You are taking part in the Fourth Industrial Revolution (Industry 4.0) – you are making history. Although you may have heard Industry 4.0 terminology, you may be wondering what it is all about. Well, here’s a quick introduction.

The First Industrial Revolution occurred with the discovery of steam power in the late 1700s and early 1800s. This led to the mechanisation of factories, increased productivity and reduced costs – the cost of cotton yarn decreasing by 90%. The Second Industrial Revolution occurred in the early 1900s when the likes of Henry Ford utilised electricity to mass-produce cars via assembly lines. Again, this increased productivity and reduced the cost of manufacturing. The Third Industrial Revolution, in the 1970s and 1980s, was the result of advancements in computers and automation.

It is now superseded by the Fourth Revolution, fuelled by advancements in networks, the Internet of  Things (IoT) and connectivity. The promise, yet again, is to increase productivity and reduce costs by helping to manage the entire supply chain through data acquisition and by making decisions in real time – the Smart Factory concept.

Smart technology has transformed our day-to-day lives. Many of us have become so attached to our devices that we develop heart palpitations if they aren’t within arm’s reach or if we are unable to get a strong wi-fi signal – and God forbid we ever run out of battery. While it is now second nature to use apps to click-and-collect, have dinner delivered or to know what our friends are doing on the other side of the world, the same level of sophistication is not available once we leave home and enter the factory.

So here are the top five reasons why Australian manufacturing struggles to leverage Industry 4.0 technology:

1. Hype versus reality: While we may expect our factories to resemble a Hollywood movie scene (think Minority Report, Mission Impossible or the TV series CSI Cyber, with wall-to-wall 3D holographic digital display units), in reality most of our machines are still being updated from industrial revolutions two and three. Updating a case packer or a wrapping machine with a colour touchscreen that displays various machine data is not Industry 4.0. It’s progress, yes, but it is actually still an Industry 3.0 project. If it makes you feel better, I’m happy to call it a Industry 3.1 project.
2. Implementing technology as a solution looking for a problem: A recent study conducted by University of Technology Sydney (UTS) on behalf of the the Australasian Supply Chain Institute (ASCI) found that in 2018-19 our overall supply chain maturity dropped by six percentage points from 52% to 46%, despite radical advances in automation. Many businesses implement technological solutions without first trying to understand the strategic problem that requires addressing.
3. Poor problem-solving capability: While we are good at firefighting, we are not so good at structured problem-solving. If we don’t have the capability to deal with basic data, how can we deal with ‘big data’ in the Industry 4.0 world?
4. Going where we haven’t gone before: In an ideal Industry 4.0 world, our equipment would communicate with other equipment, not only within the four walls of the factory but with suppliers and customers. This requires robust IT systems that allow data transfer to occur freely with trusted sources but also to block any threats— it’s an IT security nightmare. Even if we overcome this hurdle, there is another issue: the ‘black box’ logic controller. These ‘black boxes’ are the brains and most suppliers don’t provide access to it. This makes it difficult for equipment to collaborate and communicate.
5. Missing fundamentals: The biggest gap is the lack of fundamental Operational Excellence processes, for example, data to provide useful insights, daily huddles to understand if we are winning or losing, and a process to identify real improvement opportunities. In his bestselling book Atomic Habits, author James Clear writes: ‘You do not rise to the level of your goals. You fall to the level of your systems.’ Exactly.

So, what should we do?

1. Connect critical machines to obtain basic machine data. Many solutions can be retrofitted to the oldest of machines.
2. Establish standards in production rates, waste levels, changeover times, number of employees per product etc. to understand the base level.
3. Learn structured problem-solving methodologies. I cannot stress the importance of this enough.
4. Update procurement procedures such that when buying new machines, you have the capability to connect and communicate freely with other machines.
5. First make it effective then make it efficient. This is one of my mantras. You can’t plug process gaps with technological solutions.

Solving the day-to-day chaos doesn’t improve year-on-year performance. Industry 4.0 isn’t an ‘out of box solution’ that you can purchase and implement. It is a state of maturity and a way of operating in a connected world.

Ishan Galapathy is the author of ADVANCE: 12 Essential Elements to Supercharge Productivity & Profitability (Bison Press).

www.ishangalapathy.com