What is the future for Industry 4.0 in the post Covid-19 paradigm?
The Covid-19 pandemic has precipitated profound changes across the globe, accelerating the shift towards digital transformation and radically impacting workflows. John Robinson - Strategic Client Advisor, Digital Supply Chain at SAP explores how the adoption of Industry 4.0 for organisations is more than a strategic imperative, it is a necessity.
The global supply chain is experiencing a level of disruption that has never been seen before. Some manufacturers have ceased production completely, many have seen greatly reduced demand and others have seen a huge increase in demand. Every manufacturer is impacted by this crisis in some way and for many this poses an existential threat.
Prior to the crisis, Industry 4.0 was an area of great interest to many manufacturers. It was an exciting subject with huge potential benefits and was seen by many as a positive and future thinking topic.
Today, many of us are focused on the here and now. Our health and the health of our family, friends and colleagues. The ability to access the food and supplies we need. Our job security. The financial impact on our employers, our clients and our partners. Beyond that we also have to consider the wider economic impact and the unknown amount of time it will take for things to return to some level of normality.
At this point in time it seems insensitive and inappropriate to discuss Industry 4.0 in the way it was discussed pre-crisis. The business drivers of Industry 4.0 pre-crisis were focused on competitive advantage, cost reduction, productivity, sustainability and innovation. The goal was to make well run businesses run better.
The focus for many manufacturers now is survival first and foremost and then beyond that, damage limitation. The immediate financial impact on manufacturers is already resulting in a huge reduction in spending and investments. Many Industry 4.0 solutions being considered or deployed fall into the category of non-essential business activities.
As someone dedicated to manufacturing and Industry 4.0 I have had to ask myself a few challenging questions:
Is Industry 4.0 even a topic manufacturers should be thinking about?
Is Industry 4.0 relevant anymore?
If it is relevant, why is it relevant and what role does it have to play moving forward?
The short answer is yes, I believe Industry 4.0 is not only as relevant as it was before, I believe it is actually far more relevant moving forward and I would like to explain why.
As of today, the priorities for most manufacturers fall into three distinct phases: Phase 1: Survival, Phase 2: Recovery, Phase 3: Business as Usual in the new post crisis paradigm.
The goal for manufacturers will be to get to Phase 3 as soon as possible at the lowest cost to the business. This is not only the financial cost but also human and brand. In defining the operating model for Phase 3 they will factor in lessons learned from the crisis and try to build a more resilient and agile business. They will be asking themselves some fundamental questions such as: Where were the weaknesses? Where did they make costly decisions and why? What would have helped?
I believe that the key finding will be that the systems and processes in place were not fit for purpose. It is too early to say for certain, but it seems clear from events unfolding before us that one of the major weaknesses is a lack of real time visibility across the business. Visibility that is essential to support critical business decisions. Typical questions being asked are:
What is the demand for products and where can we manufacture them?
What are our current raw material, WIP and finished goods inventory levels?
What is our manufacturing capacity, both in terms of human resources and asset availability?
What is our spare part inventory and where are they?
Where are our raw material shipments and what alternatives do we have?
How is our finished goods distribution network operating?
Most system architectures currently consist of a heterogeneous mix of applications and data silos. This architecture results in latency of information and a lack of a single real-time view of the business status. As soon as this architecture was tested beyond its normal operating conditions it failed, and this is why it is not fit for purpose.
If we go one level deeper than the supply chain view then manufacturing operations in particular will be exposed as a big area for improvement. This crisis has highlighted to manufacturers’ the importance of human capital and exposed systemic weaknesses due the impacts of self-isolation and social distancing.
The crisis has also resulted in production plans having to been changed on a much higher frequency as a result of changing demands, availability of raw materials, availability of key staff and availability of assets. Manufacturing has a far higher volume and frequency of ‘transaction’ than the supply chain. Manufacturing is real-time, not near real-time and disturbance has an immediate impact on the business. At the time of writing, the recovery phase is still an unknown amount of time away on the horizon.
When manufacturers do begin to move into the recovery phase, they will still be asking the same questions they are asking during the crisis highlighted above. This will undoubtedly lead to additional losses and extend the time taken to return to normal operations.
Eventually, we will reach the new normal and manufacturers will be keen to make sure this cannot happen again. Given the circumstances we find ourselves in, the question now is:
What is the role of Industry 4.0 moving forward?
My view is that from today onwards the strategic goals of Industry 4.0 should be:
Help to make sure that more companies survive
Shorten the recovery phase and help return businesses to normal operations as soon as possible
Provide the platform to develop new, more resilient businesses in the medium to long term
Industry 4.0 can achieve these goals because many of the capabilities it offers could have greatly reduced the impact of this crisis on us all. Just a few examples are:
Real-time visibility into the availability of raw materials, finished goods, WIP, people, assets and capacity
Use of Artificial Intelligence and Machine Learning to constantly reassess and re-plan activities
Robotic Process Automation to support non-value add labour intensive activities
The use of mobile technology, Augmented Reality and Virtual Reality to enable workers to perform tasks they were not trained for more easily. This could have assisted with skills shortages due to self-isolation or repurposing of manufacturing
The same technologies together with digital twins and remote support from OEM’s would improve availability of assets
The same technologies could also have enabled more remote working and virtual working to help with the issue of lockdown, self-isolation and social distancing
3D printing of spare parts that were stuck in the supply chain
Use of AGV’s, autonomous electric vehicles and drones to again reduce the reliance on people and to further assist with social distancing.
