Industry 4: answer to the key question

Two years ago, I asked the question: “Is your supply chain ready for Industry 4?” And I have just got the answer: No.

New research from Crimson & Co in collaboration with Warwick Manufacturing Group and Pinsent Masons, has revealed that despite senior leadership teams championing their preparedness for Industry 4, fundamental principles and practices have yet to reach a mature level.

It’s worth remembering that Industry 4.0, or the fourth industrial revolution, started out six years ago as a German government project on advanced manufacturing involving the use of electronics and IT to automate production. And it has been described as “nothing more and nothing less than the complete networking of the entire value chain”.

While much of the development of Industry 4.0 has been done by large corporations such as Daimler, the impact is going to be felt increasingly all the way along manufacturing supply chains over the coming years, whether it be in planning, visibility, or supplier management.

However, the Crimson study, which is based on a survey of 53 senior managers and executives, across 22 countries and 15 sectors, shows that actual readiness is quite some distance away for a lot of firms.

The report contains an Industry 4 readiness assessment tool designed to help businesses understand how prepared they are to adopt Industry 4. It assesses six core dimensions, products and services; manufacturing and operations; strategy and organisation; supply chain; business model and legal considerations.

It found that strategy and organisation has the lowest maturity of all areas in the survey with the majority of respondents operating at a beginner or intermediate level – and it highlighted an apparent lack of digital culture and skills existing across these organisations.

Further shortcomings were seen among supply chain integration processes, driven by a failure to share timely and complete demand, capacity, inventory and operational performance information with suppliers and customers.

Manufacturing and operations ranked as the second lowest dimension for organisation readiness with key findings highlighting that firms were failing to harness the power of technology and data collection.

In the business model category, it found that most firms operated at a beginner and intermediate level, highlighting that existing IT tools and data are often insufficiently developed to support quality data-driven decisions, with the majority of companies still unable to track products, or adjust scheduling decisions, in real time.

“It appears that many companies believe investment in IT and advanced technology will drive and sustain change, but the key is actually to ensure that the correct skills and culture exist to drive this transformation,” said Crimson associate director Jonathan Gibson.

Clearly there is still a lot of work to be done. Let’s hope that next time the question “Is your supply chain ready for Industry 4?” is asked, the answer is Yes.