While Industry 4.0 has been a buzzword for some time, the technology has become more affordable and effective enough in the last two to three years to make it a reality for more companies. There’s an increasingly clear ROI from technology spending, clearing a hurdle that in the past has held back many manufacturers from committing to a digital transformation.
Choosing the right tech tools and being able to afford them are not the defining problems anymore. Two similar manufacturing companies can adopt exactly the same technology and have very divergent results. The difference will lie in how ready the companies are to absorb the technology and their effectiveness in getting the most out of it.
That’s why the successful adoption of Industry 4.0 technology requires a much broader change in company culture, one that needs to be led by the C-suite and carried out by the business units.
There are four key areas that manufacturing firms need to get right in order to make the most of technology adoption.
1. Leadership. It’s not enough for company leaders to cheerlead technology from the sidelines: They need to embody the change they want to see. CEOs and the rest of the C-suite need to model the innovation in the way they do their jobs every day, setting an example in their use of tools like data analytics. In staff communications, they should be pushing for the widespread adoption of new technology and new processes and putting performance measures in place around it.
For example, an engineering-products company created a visual display that was updated daily on the shop floor with performance objectives on throughput, defects, and production costs to encourage technology adoption that included using automated guided vehicles (AVGs) and data collection (both manually input and electronic via machine interface). Quarterly bonuses for employees were based on meeting or exceeding performance objectives.
Leaders need to continuously encourage staff to innovate and reward new ideas that drive improvement and value in their operations.
2. Measurement. Technological change can’t be understood, managed, and controlled without systems in place to measure its effectiveness. Organizations need to expand how they measure performance skills and competencies to include soft skills like creativity, agility, and adaptability. Innovation must be a core value, and creative problem-solving should be encouraged and rewarded. For example, celebrate curiosity, make time for innovation, and provide resources for cross-functional collaboration. Then, reward behaviors—successes and failure —that could be tied to technology-driven improvements.
A dietary supplements manufacturing company created a monthly recognition program for being the best line among three that celebrated equipment uptime, throughput and quality. Technology adoption included predictive maintenance, visual displays and robotics. All three manufacturing lines had electronic displays of key performance indicators posted above each line. The company also offered training for improving systems and processes.
This is best done at the business unit level, where technology can be adopted with a clear budget, goals, and accountability. Each unit is responsible for meeting certain KPIs with its technology, whether that’s profitability, growth, or another relevant metric. Everyone can agree that technology is a great idea, but without ownership at the business-unit level, there’s a danger that it will remain just that.
3. Culture. Most organizations have no shortage of people with innovative ideas. But many of them are scared to give those ideas a try because they’re in company cultures where failure is frowned upon. To harness the full possibilities of technology, companies need a culture where it’s acceptable to fail. The best innovations often start out with failure before going through re-thinks and changes that make them work. Leadership can help innovators by being tolerant of setbacks, celebrating even small successes and by putting in place programs that encourage people to voice their ideas without fear.
4. People. Technology adoption demands new skills and aptitudes that some current staff may be able to learn and others not.That’s where the need for a new approach to training and hiring comes in. Training can’t be a once-a-year box-checking exercise, and it shouldn’t be solely reliant on knowledge being passed down by old hands.Training needs to be well-structured, high-quality, and continuous to keep up with the fast pace of technological change.Companies may also need to hire a new type of employee.There’s a growing need for people with more analytical skills who understand how to interpret data to spot trends and make decisions.
It would be great if manufacturers could make the leap to Industry 4.0 just by buying some powerful tech tools and switching them on. In reality, it takes a lot more work to achieve the ROI they’re seeking. But it’s work that should result in a more sustainable, efficient and profitable operation over the long-term.
Dennis Bagley is a partner and leads the technology consulting practice at Plante Moran. Doug Hockenbrocht is a partner overseeing digital transformation services at Plante Moran.
