Industry 4.0 – Are you ready?

Photo: ©Alexander Limbach/Adobe Stock

The results are in. Plant’s Survey of Industry 4.0 capabilities and outlook for 2023 clearly indicates that Canada’s manufacturers are on the road to transforming their businesses by adopting digital and other advanced technologies. They know the stakes are high. However, there are also some worrying signs that many companies may not yet be ready to take full advantage of the technologies they are looking to deploy. Indeed, they may be putting their businesses at risk by not paying as much attention as they should to what is needed to translate their investments in technology into real and sustainable performance improvements.

Here’s what the survey tells me. More manufacturers are in the process of adopting digital technologies to connect information and production systems on the plant floor and back office, across facilities, with suppliers and customers. They are doing so primarily to improve productivity and operating efficiencies, provide greater visibility into production processes, track materials and shop floor assets, and enhance maintenance and equipment operating efficiencies. Also, they are seeing benefits by way of increased throughput, decreased downtime, and better product quality.
More manufacturers are planning to increase investments in robotics and automation, artificial intelligence, cloud computing and data analytics solutions. Again, production efficiencies are the main motivator for investment.

There are still some major challenges that stand in the way of greater tech adoption. No surprise that skill shortages top the list. Difficulties integrating digital technology with legacy systems, overcoming resistance to change, keeping up with the pace of technological change, finding funds with which to invest, and making the financial case for investment are other real impediments to tech adoption.
There aren’t too many surprises. The challenges are just about the same as they have been over the past five years. The real story is in what does not seem to be very important for
many manufacturers.

The first thing that stands out is that while efficiency improvements are the most important objective for technology investments, relatively few companies connect those investments to creating value for customers. You may be tired of me saying this, but how can any company identify waste – the costs that should be cut – without knowing what processes are critical for creating customer value?

I see too many companies investing in AI or automation or data collection and analytics technologies without a clear idea of where in there processes these great ‘solutions’ should be deployed to deliver bottom line benefits. Greater inefficiencies naturally result. Sometimes stranded assets – automated equipment standing idle because downstream processes aren’t equipped to handle higher throughput. Instead of reducing costs, ill-placed investments rapidly become a money pit. They impact the bottom line, unfortunately in the wrong way.

Another observation is that too many companies see digital and advanced technologies simply as a replacement for exiting ways of doing things. That’s a money-losing proposition as well. Unless manufacturers use data to create new business opportunities, new ways of providing value for customers, and new sources of services-based revenue, the only thing they will be able to accomplish in the best of circumstances is to become an efficient producer of commodity products with prices continuing to fall in the face of competition. The business of manufacturing is no longer one of just getting the product out the door. It must be one of providing solutions for customers and for their customers’ customers.

The lack of skilled talent is a major constraint on improving manufacturing performance. It’s a good reminder that technology isn’t enough on its own to get better productivity results and no guarantee of business success. Advanced technologies are powerful tools. However, it takes people to figure out how to use them productively, to operate and maintain them, come up with customized solutions in the first place, and to lead and manage a business successfully. With a quarter of Canada’s manufacturing workforce retiring by 2030 and fewer young people looking for jobs in the sector, the challenge is only going to go from serious to acute.

There’s another very concerning set of survey results and they’re related to cybersecurity. One-third of manufacturers say they aren’t concerned about cyberthreats. That’s a mistake. Many may not be aware they have already been hacked. According to one of the world’s largest insurance underwriters, manufacturing is the sector most under threat of cyberattack, attacks are increasing, and the severity of threat – losses suffered by manufacturers – is increasing even more rapidly. Manufacturers are under threat from attacks on their information systems, from attacks on their suppliers and their customers, and most insidious of all, from attacks on the smart products and equipment they use or produce.

Among the manufacturers that do perceive the danger of cyberthreats, 20 per cent say they are confident they have done enough to shield their business. Don’t believe it. Cyberattacks are becoming more and more sophisticated. When companies report that they are investing in technologies or software programs to protect themselves, beware. Over 90 per cent of cyberbreaches come because of human error. Cybersecurity training for employees is vitally important.

It’s a real concern when fewer than half of manufacturers have a cybersecurity strategy, only one-third have a cyberbreach response plan, and less than a quarter have crisis management procedures let alone a business continuity plan in place. At a time when manufacturing and manufacturing supply chains are more interconnected and more interdependent than ever before, a cyberattack that shuts down a supplier, a customer, a production system, a CPU in a smart product can have devastating effects.

I don’t want to put a downer on the outlook for Industry 4.0 in Canadian manufacturing, there’s a lot to be optimistic about. However, we’re talking about serious constraints on business growth. If there’s one thing that Plant’s survey says loud and clear to me, it’s that investments in technology won’t be enough to sustain and grow Canada’s manufacturing economy. It takes much more than that. And far-sighted manufacturing leadership above all.
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Jayson Myers, the CEO of Next Generation Manufacturing Canada, an award-winning business economist and advisor to private and public sector leaders. E-mail jayson.myers@ngen.ca. Visit www.ngen.ca.