John Denslinger argues Industry 4.0 is a manufacturing supernova on Earth, both for industry and the people enabling its transformation.
The fourth industrial revolution was underway long before the pandemic touched every corner of the world. Covid might have limited adoption by those companies at implementation phase, but not among those with ongoing buildouts. Interestingly, had this revolution started earlier, robust digitalisation might have negated much of the Covid impact on manufacturing and their supply chains.
If you’re not familiar with the term Industry 4.0 and its competitive implications, perhaps a history lesson is in order. Industry 1.0 applied to the era of initial mechanisation and application of steam power. Industry 2.0 saw the advent of mass production, assembly lines and electrification on a broad scale. Industry 3.0 gave rise to automation, use of computers and electronics replacing mechanics. Then we come to Industry 4.0. It is characterised by a collision of four remarkable technological advances: (1) unabridged connectivity with massive data mining supported by enormous computational power; (2) analytics and artificial intelligence; (3) human-machine interaction; and (4) ascension of concept-to-reality rapid engineering. According to a recently published McKinsey & Company assessment, Industry 4.0 ‘transforms operations in everything from production efficiency to product customisation with improvements in speed to market, service effectiveness, and new business creation’.
By any measure, this is a manufacturing supernova on Earth. Every aspect of production, procurement and design can be enhanced, if not optimised via digitalisation. That means supplier management, production, resource planning, product design, prototyping, order management, asset utilisation, quality control, employee safety, warehousing, delivery and more. But operations is just one piece. End-to-end also includes markets, customers, suppliers, raw materials, advanced technologies, financials, communication networks, energy management, environmental stewardship and real time feedback loops coupling it all.
Given the sheer size and scope of 4.0 adoption, the financial burden on companies is substantial. Then again, not investing is a likely path to non-competitiveness. There is hope and help though. One only has to look at global, national, state and even large metropolitan frenzies enticing 21st century high-tech companies to their jurisdictions. Governments everywhere are offering generous incentives recognising the significance of a digitally connected world. The accounting firm KPMG identified 17 countries pursuing advanced manufacturing facilities and cited more will follow. Each promotes an array of direct and indirect tax incentives. But study and plan carefully. There is a lot to consider. Just keep in mind, a 4.0 company is extremely attractive and has extraordinary negotiating power.
Finally, 4.0 has another significant player: the US Government. It too is throwing its mighty weight behind the 4.0 movement announcing $1B investment creating 12 hubs dedicated to researching Industry 4.0 technologies. Of specific interest is AI, quantum information systems, and 5G. The idea is to create national R&D centers for these critical industries of the future, as well as stimulate regional economic growth and prepare a next-generation workforce. It appears another $2B is earmarked by 2022 as a steadfast commitment to US future leadership.
When one thinks about the coming age of 4.0 manufacturing, productivity and efficiency improvements seem endless. It truly is manufacturing’s supernova not only for our industry but for the many people enabling its transformation.