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Digitalisation is one of the key drivers of Industry 4.0, as it enables businesses to enjoy efficiencies in everything from management and technology consulting to supply chain strategies and solutions. However, it is clear that there is still plenty of untapped potential.
This doesn’t mean that businesses don’t understand the potential of digitalisation. Rather, they tend to operate a patchwork of solutions, whereby they implement isolated applications for optimisation across the business. This is indicative of the gaps in Industry 4.0 delivery not being a technical issue or in the technology being deployed but at the human processes and management level.
To help businesses move beyond this, here are my three key pointers for how to deliver Industry 4.0:
Get the Foundations Right
Digitalisation through Industry 4.0 is reliant on having patience and ensuring the foundations are firmly in place. This may not sound like a particularly sexy strategy and could be a tough sell to senior executives, but its importance cannot be understated.
Foundations refer to the establishment of processes, governance, organisation and enablement of people around the functions to be digitalised. Digitising processes and functions without proper support from the organisation may yield results yet could unlock a lot more potential if thought through comprehensively.
We worked with a chemical firm that implemented a production scheduling solution, which it wanted to have AI-enabled. It had the tools implemented and even secured funding from a research and development fund. However, the business had failed to connect its solution to the demand signal, which meant it lacked the routines, processes, communication routes and responsibilities required to support the system. As a result, it ended up costing a lot of time and money, achieving some cost optimisation in production, still the business was unable to secure supply for its clients.
Processes and Production are Key to Data Quality
At face value, it’s easy to presume that digitalisation is purely a technological issue. But in reality, it is equally an organisational and process topic. For example, many businesses presume that data quality is simply a case of creating a system and entering their master data, when in fact it is more reliant on having production and workflows in place. It’s not just a question of having data, but about defining what’s the use of the data, how the data needs to be stored and how to maintain the data to keep a clean state sustainably.
With one of our Austrian industrial clients we were discussing advanced planning solutions including numerous digital applications, data analytics and AI enablement. In the end, however, the conversation kept circling back to data quality, which wasn’t in place. We ended up with a pre-project phase for cleansing and set-up of data governance processes, delaying the original project goals. This shows the importance of having processes in place before implementing such sophisticated systems across all industries.
Have the Courage to Ideate
Like all new technologies, the success of digitalisation in Industry 4.0 will rest on businesses being brave enough to take the lead on implementing use cases. To begin with, this is likely to involve isolated applications.
Rather than waiting for the next killer application provided off-the-shelf, it takes courage to start ideation and develop use cases that deliver value yourself. Those businesses that press ahead with innovation, create the solutions and integrate them into their processes and technology and will reap the benefits.
A good example of this is a business we were working with that was using data analytics for their plant data collection. To begin with, it was simply collecting data but they began bringing operators on board and getting them engaged in the project. They were then able to leverage the whole ecosystem of technology, processes and people, which soon resulted in a significant decrease in unplanned downtimes for the particular line that it was optimising.
Data Analytics Thrives While Blockchain Shows Potential
Some Industry 4.0 use cases are seeing more real-world application than others. Data analytics examples are numerous as they enable businesses, particularly on the demand side, to get a better understanding of their clients.
For example, eCommerce businesses that can get seasonality right and understand demand patterns from their data are able to increase their forecast accuracy by 20 to 30 percent, which allows them to better serve clients with exactly the goods that they need when they need them.
Data analytics and artificial intelligence deliver use cases that are already well understood. They may still hit a glass ceiling when it comes to technical feasibility, but many companies are pressing ahead because they feel comfortable with them.
We don’t yet see that to the same extent in blockchain solutions, but are exploring the technology’s potential. Many businesses are looking for ready-made killer applications, but current blockchain solutions rarely offer them in an obvious way.
These use cases typically require more parties to be involved and tend to feed into objectives around transparency, security and process automation and thus, require more patience and endurance as opposed to having a rapid impact on the financial bottom line.
That said, we are seeing some encouraging movement on this. We are currently working with a group of Austrian companies to establish a blockchain consortium for the transportation sector. The project aims to link transportation businesses with industrial companies to leverage the trust and single source of truth that blockchain can generate for documents they are sharing.
Take the Lead on Digitalisation
The fourth industrial revolution is very much upon us and those businesses that are brave enough to take the lead on delivering processes and use cases will reap the benefits. The EY and Rockwell Automation partnership is helping to provide the skills, productivity and technology that businesses need to establish themselves at the forefront of Industry 4.0.
Published March 23, 2020