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If you’re a manufacturing SME, you’ve got a lot to gain by taking the industry 4.0 shift … and a lot to lose if you don’t!
On the positive side, the technologies to initiate a digital shift are more accessible and numerous resources are available to help.
What is 4.0?
Considered the fourth industrial revolution, 4.0 is characterized by the integration of digital technologies into manufacturing processes. The transition to 4.0 can be undertaken in phases, in line with your needs. The benefits can be derived by approaching the shift one project at a time.
Our team recently reviewed Quebec and Canadian studies on the topic, which illustrate that innovation and industry 4.0 are more essential and profitable than ever.
According to entrepreneurs consulted in connection with SITQ’s Baromètre industriel québécois 2018, manufacturers that don’t embrace this shift run the risk of disappearing in a few years. They believe that businesses have to innovate to stay competitive and meet their customers’ requirements.
A global transformation movement
A smart factory calls on real-time communication to oversee activities and react.
The internet connects the entity’s entire ecosystem—employees, systems, machines, products, customers, suppliers, etc.—allowing manufacturers to increase their efficiency, offer more personalized products and react more quickly to customer needs.
The impact on manufacturing promises to be remarkable: highly automated and flexible factories can now compete against low-cost factories in Asia. Leading-edge plants are appearing around the world, to the point that the manufacturing sector is being transformed into a high-tech sector.
According to the Baromètre industriel 2018 mentioned above, in Quebec, three quarters of manufacturing SME have integrated digital technology or plan to, primarily in the following areas:
- Real-time monitoring and control (52%);
- Equipment interconnectivity (40%);
- Robotics (34%);
- Lights-out production (29%).
Multiple benefits for companies
There is no doubt that the 4.0 shift pays. Businesses that have integrated digital technologies or plan to, report better results than those that have not adopted them or do not plan to, according to the SITQ’s Baromètre industriel 2018 and a 2017 Business Development Bank of Canada (BDC) survey of some 1,000 Canadian entrepreneurs.
The main benefits include:
- Increased productivity in 60% of cases. The main driver of productivity growth is the capacity to predict and prevent downtime and optimize equipment effectiveness and maintenance;
- Stronger increase in sales and the number of employees. Businesses that have adopted these technologies are almost twice as likely to forecast annual revenue growth of 10% or more in the next three years;
- Higher customer renewal;
- Overall product quality improvement. For example, quality control in real time helps reduce and even eliminate customer returns for products that do not meet specifications;
- Higher probability of international sales and greater capacity to innovate.
Almost half of Canadian businesses that have adopted 4.0 say they achieve operating cost savings, thanks to:
- real-time production monitoring and quality control to reduce waste and rework;
- predictive maintenance to prevent costly repairs and unplanned downtime;
- higher automation to save labour costs and improve throughput;
- the use of 3-D printers to achieve faster prototyping, reducing the cost of engineering and accelerating time to market.
Heading towards growth: The basic rules of a successful 4.0
However, there are a few basic rules to ensure a successful 4.0 shift and truly reap the benefits. They are:
1. Prepare a strategic plan
This is probably the most significant tool to give the company a vision of its development in a highly competitive environment where innovation and the digital transformation will quickly become a necessity to maintain and develop new markets.
Developing a solid 4.0 strategy is as important as acquiring and integrating new digital technologies with significant investments—that generally represent 7%-9% of a manufacturing SMEs sales.
The digital plan must be embedded in the organization’s strategic planning. Its objective will be to optimize current tools, prepare a plan for future technology acquisitions and ensure consistency and integration based on the business model.
2. Call on specialists
Entrepreneurs who have already implemented a digital transformation will tell you: calling on specialized resources to support your process is key.
Our specialists can guide your strategic planning and help you benefit from R&D tax credits and financial and other support programs, such as Investissement Québec’s Innovative Manufacturer.
3. Engage management in the process
A successful industry 4.0 initiative and digital transformation must have management’s complete support. Management must first pinpoint opportunities for achieving gains and then mobilize employee know-how to efficiently deploy the 4.0 initiative.
In its study, Prendre part à la révolution manufacturière? Du rattrapage technologique à l’industrie 4.0 chez les PME, the CEFRIO explains that management must:
- Define the vision and principles underlying the initiatives;
- Encourage, simplify and regulate digital utilization within the organization;
- Adequately support the initiatives with investments that are commensurate with the objectives and by supporting the teams in charge;
- Convince, reassure and play the role of transformation ambassador;
- Provide for the means to support collaboration, experimentation and entrepreneurship in the teams;
- Identify what expertise needs to be acquired and forge partnerships that will complete the team’s strengths and bring the organization further;
- Reinforce collaboration with customers and suppliers to make inter-entity projects and direct customer contribution to the innovation process easier;
- Keep employees informed on an ongoing basis about the organization’s position on the transformation resulting from the initiatives.
Moreover, it’s important to make managers aware of the digital shift and train them in this area, as some may not be well equipped to successfully undertake the process. For example, you could present actual digital technology integration cases.
4. Skillfully manage the labour issue
Training and recruiting employees is a major challenge for organizations undergoing a 4.0 shift.
According to the BDC, the lack of qualified employees (42%) heads the list of the biggest challenges faced by Canadian entrepreneurs when implementing digital technologies. Next were excessive costs (38%), unclear return on investment (31%) and employees’ resistance to change (31%).
The SME must examine the new skills required and the qualified staff it needs. Competencies most in demand for industry 4.0 include:
- Data management;
- Data security;
- Human-machine interaction;
- User interface design;
- Software development;
- Programming;
- The science of data and analytics.
5. Pay special attention to cybersecurity
IT security is a critical consideration in the shift to industry 4.0 given the increase in data and systems—which are generally interconnected and decentralized.
Lessons learned
In closing, here are five major lessons learned in the aeronautics industry that has extensive innovation experience:
- Be prepared to change your business model and strategies;
- Think strategically and for the long term;
- Be aware that the business environment has new technological needs;
- Manage digital projects with the same discipline as any other project;
- Remember that the digital shift is, by far, not just a technology matter.