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Shift to Industry 4.0: Separate Myth from Reality

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Over time, strong growth periods have always been characterized by major revolutions, particularly in the manufacturing industry.

Whether it’s called manufacturing 4.0, industry 4.0, digital transformation or smart manufacturing, the most recent industrial revolution provides Quebec businesses with a multitude of opportunities… until 5.0 makes its appearance. Industry 4.0 is not an end in and of itself, it’s an evolution to increase competitiveness and maintain added value in the marketplace.

Considered to be the fourth industrial revolution, following mechanization, mass production in the 19th century and production automation in the 20th century, industry 4.0 integrates digital technologies into the manufacturing process.

Undertaking the digital shift can provide numerous benefits to businesses, from improved process agility and data usage to cost reductions. It may even become a necessity to remain competitive and maintain business relationships with clients.

Entrepreneurs who want to undertake this shift are often hindered from doing so because of myths or concerns they’ve heard that impact how they perceive such a project. Here are some of them.

Myth no. 1: integrating 4.0 is an intimidating task

What you hear:
Many of the entrepreneurs we meet tell us they’re uncertain about undertaking the digital shift because, in their minds, it’s a colossal task. Despite its advantages, the process seems arduous because of the major changes involved, the significant investments in time and money required in the short term and because the overall transformation process is misunderstood.

What you should know:
The biggest mistake you can make in a digital shift is wanting to do it all at once, as this often leads to failure. The transformation must be carefully prepared, with each step progressively planned. Conducting an in-depth analysis of the company with an industry 4.0 audit and reviewing the objectives provide a clearer understanding of the projects to be implemented in an industry 4.0 transformation.

This analysis will also help define a project hierarchy to capitalize on the results and impact of each step and ensure greater control by spreading costs over time. This action plan will maximize the return on the investments in the medium term.

What you should do:

Our experts can assist all types of businesses (transport, services, manufacturing, etc.) in their digital transformation and they are now accredited by the Ministère de l’Économie et de l’innovation (MEI) as part of the program Audit industrie 4.0. Investissement Québec acts as the agent for this program and grants are available for businesses for all industries, including cooperatives and social economy enterprises, to enable them to begin the process and to benefit from the support of accredited experts.

Myth no.2: Industry 4.0 only applies to technology

What you hear:
While the foundation of the fourth industrial revolution may be the connectivity of data and objects, technology is not the only consideration in such a transformation.

What you should know:
The digital shift impacts a business’s entire value chain progressively and has major repercussions on many factors:

  • Service delivery and product manufacturing processes;
  • Cross-border tax;
  • Commodity taxes;
  • Client and supplier relationship
  • Innovation and technological
    development financing;
  • Performance indicators;
  • Business financing;
  • Business processes;
  • Skill sets required;
  • Etc.

What you should do:
As with any industrial transformation, the digital transformation must be part of a strategically thought-out corporate project and rigorous deployment and monitoring process. Industry 4.0 applies to management, tax and financing as well as technology.

Myth no. 3: Industry 4.0 involves artificial intelligence

What you hear:
In recent months, industry 4.0 and artificial intelligence (AI) have been talked about in various media and may even be mistaken for each other. On a scale of maturity, AI is the highest use of data within an organization that serves to automate decisions and processes, among others.

What you should know:
It’s important to understand that you don’t necessarily need to use AI to reap the benefits of industry 4.0. There are various ways to exploit data, depending on operating maturity, that will provide significant added value. These include:

  • Descriptive analysis: observing what has happened;
  • Diagnostic analysis: understanding what has happened;
  • Predictive analysis: predicting what will happen.

What you should do:
An analysis of your data will help determine the value to be derived from applying these data to optimize your activities.

Myth no. 4: The 4.0 revolution is the answer to labour shortage

What you hear:
Some business owners undertake this process in the belief that automating certain processes will provide the same results with fewer resources and help resolve the labour shortage problem.

What you should know:
Automation will certainly change processes and procedures and may lead to some job cuts. However, it will not make jobs per se disappear—rather, it will change the nature of the work. Tomorrow’s worker will have a different profile. New positions will be created and new skills developed. Businesses will have a number of challenges to meet. The organizational structure will have to be reviewed to reflect new needs and employees trained so they can grow in their roles. Considering that people often resist change, an additional challenge will be to properly manage the shift to industry 4.0 so that key employees at the heart of the transformation are engaged and stay on.

What you should do:
Despite these challenges, industry 4.0 creates jobs with considerable added value to be performed by more competent employees. You need to take the time to assess the project’s repercussions for employees and manage the change proactively.

In short, sooner or later, you’ll need to look into the repercussions of industry 4.0 on your industry and business. How you undertake the process is up to you.

The experts at Raymond Chabot Grant Thornton can provide support for various aspects: reviewing your business processes, selecting an enterprise resource planning (ERP) system or using advanced analytics for your data, so that you can undertake the industry 4.0 shift while optimizing resource engagement and the return on invested capital.

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