True Industry 4.0 Value Lies in Finding the Real Problem

Digitization and smart automation will contribute as much as 14 percent to global GDP gains by 2030, equivalent to about $15 trillion in today’s value, according to estimates from PwC. And yet only 10 percent of the world’s global manufacturing firms are Digital Champions (digitally mature organizations that have mastered digitization in technology, operations, customer solutions and people), the same report indicates.

Many companies struggle with understanding what they can achieve with Industry 4.0, how to get started and how to get the best bang for the buck. I’d say central to achieving champion-level digitization is understanding your true problem and knowing what steps to take to reach a solution.

Organization leaders wanting to get started with Industry 4.0 tend to find themselves in one of the following situations:

• “I know there’s a cool technology out there, but I wish I knew what my real problem was” (this might not be the right fit).
• “I know the problem, but I don’t know how to fix it or if it’s even fixable” (they need to know how to connect the dots).
• “I think I know the problem and I have an idea of the solution, but I don’t know how to make it happen” (finding the right partner to help can be challenging).

All three scenarios stand to benefit from the following two activities, which should be viewed as stepping stones to achieving a clear Industry 4.0 vision:

1. Current state assessment (what is your true problem and its cause)
2. Value driver assessment (how can Industry 4.0 initiatives support business drivers)

Current state assessment

The current state assessment is an in-depth review of the business’s current processes, systems, people and information flows. It should uncover strengths, weaknesses and opportunities, and benchmark them against similar businesses. Uncovering these ensures you identify the right problems to solve and have a baseline to build a digital strategy on.

Without a current state assessment, any digitization project—from the very basic, like removing paper from the operation, to a more complex solution such as bringing machine learning and optimization to automate functions—can be misdirected. It is like applying a bandage to your leg when in fact you have diabetes; though it’s visible, it’s not going to have an impact on the fundamental problem.

How to do a current state assessment: Using a proven methodology (through interviews and collection of qualitative data such as KPIs and reports), we can connect the issues and draw a flow of cause and consequence that will highlight root causes to inefficiencies. This will help define the best approach for the next phases of the project and guarantee that transformations are sustainable and effective. At this stage, ask questions and observe processes.

Most importantly, involve everyone from operations, production, supply chain and IT departments to gain a thorough end-to-end understanding of your situation. Remember, in a supply chain, everything is connected.

Value driver assessment

Following our example above, say you’ve successfully identified that diabetes is the problem. But if you’re unaware of what medicines and technologies are available, how can you treat it successfully? Some medicines might treat only the symptoms and not the cause; some might not work with others; and a few might only be suited to the short term.

For Industry 4.0 initiatives, this is where I recommend conducting a value driver assessment to help identify how to fix the root cause with the right technologies and change. At this stage, it is crucial to bring in business leaders and understand:

• Outputs from the current state assessment
• Key drivers for business (what drives the current and future business competitiveness, e.g. on-time delivery, quality guarantee, customer service)
• An Industry 4.0 digitization vision (a guiding statement of how Industry 4.0 will support said value drivers)
• Available technologies/Industry 4.0 levers

McKinsey outlines some core manufacturing business drivers: time to market, service, resources/processes, asset utilization, labor, inventories, quality and supply/demand match. For each driver, there is anywhere from three to 10 different Industry 4.0 levers you could pull to improve. For example, the Industry 4.0 levers for quality might be: digital vs. paper quality management, advanced process control, and statistical process.

To know which Industry 4.0 levers to pull, you need to know all the options, so consider doing thorough research and/or asking a technology-agnostic consult’s advice. This stage is really about connecting the dots and looking at the problem from a few different ways until you have a lightning bolt moment.

Remember: Your situation is unique

The pace at which technology is moving, paired with each business’s unique context, means no one Industry 4.0 solution is the same.

For Nukon, each project is completely unique from the strategy level, right down to the selection of software and integration required. Consider this as you use your current state assessment and value driver assessment to draw up an Industry 4.0 strategy and technology roadmap.

Getting these foundational actions done before you consider any Industry 4.0 initiative will set you up to solve the right problems, with the right solutions.

Rafael Amaral is a principal consultant at Nukon, a Sage Automation brand. Sage is a certified member of the Control System Integrators Association (CSIA). For more information about Sage, visit its profile on the Industrial Automation Exchange.