24 MiMfg Magazine September / October 2022
How to Approach Industry 4.0 if You ’ re Still Grappling With 3.0
By Mike Gluhanich and Kathleen Dobrovic • Huron
Industry 4.0 goes a step beyond the automation themes of 3.0 to focus on artificial intelligence and predictive analytics . According to Fortune Business Insights , the Industry 4.0 market is expected to increase from $ 116 billion in 2021 to $ 337 billion in 2028 . Imagine predictive maintenance systems capable of automatically analyzing internal and external data to avoid downtime events . Or automated schedule loading that responds to data in real-time and optimizes a production and procurement plan . Industry 4.0 has the potential to transform the landscape of middle-market manufacturing as we know it , but also drive a wedge between organizations that leaned into 3.0 investments and those that did not .
We have identified three tactics that work in tandem to help manufacturing companies in the race for technology-enabled market share . The investments take the form of reflection , analysis , and strategic planning — not just financial .
1 . Focus on processes and strategy first .
Failing to focus on processes and strategy before implementing new technologies is a common misstep in manufacturing firms . The most innovative companies are leading with strategy , enabled and accelerated by technology , rather than relying on an investment in technology to reveal or confirm a strategy .
A clear strategy , enabled by robust and efficient processes , lays a stable foundation for technological upgrades . Even the most advanced technology in the world cannot ( yet ) improve the operational or financial performance of fundamentally flawed processes or eliminate the need for human intelligence in developing and communicating corporate strategy .
2 . Make change management a priority .
As with any major change , the introduction of new technologies can be jarring for employees . Yet , the intended impact of technology investments cannot be achieved without enterprise-wide adoption . To that end , prioritizing change management is critical . Involving key stakeholders from the beginning helps them understand the role they play in the business ’ s success or failure and , importantly , how their role will change with new technology . This goes a long way toward fostering engagement , empowerment ,
Get More ! Read the extended version of this article , including questions manufacturing leaders can use to determine their approach to their Industry 3.0 / 4.0 investment , on the MMA Blog at mimfg . org . and a sense of inclusion in the organization . This shift also requires an intentional upskilling and / or re-skilling program that helps employees build the skills they need to thrive in this new environment .
3 . Align investments with core strategies .
Large companies that tend to be early adopters of new technology generally have greater access to capital and a longer time horizon for realizing investment returns , often making investments driven by economies of scale .
On the other hand , smaller companies , in many cases , are focused on shorter-term planning cycles ; have more limited access to capital ; and cannot rely on volume to achieve investment targets . Often , the natural inclination for these manufacturers is to invest in equipment , software , or other technology that will generate the quickest payback , even if the relevant time horizon for the investment is relatively short .
In these organizations , leaders should focus on technology investments using a strategic time period and supported by strategic goals , not just tactical objectives . They should also ensure these investments align with the most fundamental strategies of the business , so unanticipated disruptions or external factors do not diminish the benefits of the investments . 6
Mike Gluhanich is a managing director at Huron , a global professional services firm . He has over 20 years of experience providing leadership , guidance and insight to manufacturing companies facing challenges due to growth , strategic transition , or financial distress . He may be reached at mgluhanich @ hcg . com .
Kathleen Dobrovic is a senior director at Huron , a global professional services firm . She has more than 15 years of experience leading and developing finance teams within the automotive manufacturing industry , ranging from corporate financial planning and analysis groups to business units . She may be reached at kdobrovic @ hcg . com .
The original version of this article appears on the Huron website .