A report from Handelsblatt takes a close look at the state of Industry 4.0 in Europe. 1,452 industrial organizations of all sizes reveal their Industry 4.0 status, results, motivations, and outlook. Read on to find out how your company stacks up. [By Matt Bulow]
Digital technologies offer manufacturers many benefits. For suppliers, the ability to connect to networked systems and processes is becoming table stakes. What does real-world production look like under the influence of this big collection of revolutionary technologies we call Industry 4.0?
Many companies have yet to make significant progress towards their goal of digital transformation. Handelsblatt surveyed a random sample of decision makers who work for European manufacturers and asked about their progress and plans.
The Status Quo of Industry 4.0
Since the dawn of Industry 4.0 some ten years ago, countless companies have been increasing productivity and lowering costs with smart manufacturing technologies. The report tells a more nuanced story in Europe, however.
- Fewer than 25% said their company has started to digitise
- Over 50% have no strategy to digitise production
- Only 10% have made good progress
So, what’s holding them back? In Europe, it’s a combination of cost, security, internal resources, and motivation.
Compatibility problems arise because smart factory technologies are not always implemented from a blank slate. Very often, manufacturers are retrofitting existing factories, systems, and equipment with digital capabilities.
Underscoring the strategic nature of Industry 4.0, top executives are the ones most frequently making final decisions on digitisation investments.
Benefits of Digitised Production Are Clear and Many
Overwhelmingly, decision-makers recognize the value of digital transformation. Especially those who work at companies that have already made significant progress.
- Only 20% see “unclear benefits” as a key problem of digitised production
- That number drops to 10% for companies who have already made significant progress
The perceived benefits involve many aspects of production. Over 70% of surveyed decision makers see the following benefits as (rather) important:
- Increased efficiency
- Lower costs
- Better quality and service
- Improved safety and security
- Competitive advantage
- Lower supply chain risk
- Higher customer satisfaction
- Opportunities to offer new products or services
- Ecological sustainability
- Shorter time to market
The Most Relevant Technologies for the Future of Industry 4.0
The following four technologies rank at the top of the lists for both future relevance and progress already achieved:
- The internet of things
- Digital platforms
- Cloud services
Blockchain, chatbots, and wearables are less significant. Smart glasses were also deemed less important, but augmented reality, mixed reality, and virtual reality have considerable importance.
The lack of significance attributed to smart glasses while augmented reality receives considerable attention by decision makers may indicate a lack of clarity with respect to use cases for these technologies. Because picking, assembly, maintenance, and expert remote support can all benefit greatly from a combination of smart glasses and augmented reality to empower frontline workers in logistics, manufacturing, and service.
Additive manufacturing, mobile robots, artificial intelligence, and big data have tremendous potential in the short and medium terms because many companies hope to implement them in the next one to two years.
Many also plan to implement autonomous driving, intelligent containers, voice and character recognition, AR/MR/VR, and collaborative robots (but have no specific schedules). We can thus expect the markets for these technologies to grow in the medium-to-long term.
How Did We Get Here? Questions the Report Answers
Many companies are speeding up their efforts to digitise production. But the Industry 4.0 situation is still very heterogeneous. There are more companies in Europe that see potential for key Industry 4.0 technologies than there are manufacturers using the internet of things, augmented reality, or artificial intelligence in their production.
How did we get here, and where are things headed? The Handelsblatt report answers important questions to help us understand the Industry 4.0 situation and outlook.
Why are some organizations hesitating?
Reasons for the lack of widespread adoption inevitably come back to the business case and available resources. Companies that lack the funds or personnel to implement digitisation projects will progress more slowly. Sometimes, companies that are dragging their feet are not yet fully aware of the significance of Industry 4.0.
Will we be able to “wait out” Industry 4.0?
Although delaying is still possible, no one can avoid digitising their production processes for long if they wish to compete in future markets. Industry 4.0 is already shaping entire production value chains and causing many companies to gravitate toward it for this reason alone.
In practical terms, this means businesses that do not digitise their production processes may be unable to be part of a value chain as a supplier, for example, because they can no longer integrate into the networked processes of other participants.
Who is digitising the fastest?
Larger companies with more than 250 employees tend to see more potential applications for the IoT, AR and AI. By digitising their production processes, many such companies are increasing productivity and efficiency while lowering costs. In turn, possessing more experience with these new technologies also leads these manufacturers to attribute greater potential for adding value to Industry 4.0.
How is Industry 4.0 changing the way people work?
Overall production processes are evolving. Around 77 percent of companies expect the digitisation of production to cause IT skills and soft skills to become more important for production workers.
Employees will increasingly work hand-in-hand with machines and robots. Presumably, we will carry out production processes less frequently and instead control and monitor them.
What do companies need so they can say “yes” to Industry 4.0 technologies?
One fifth of the surveyed companies in Europe specified clear and flexible pricing as the most important criterion when it comes to selecting a technology provider. Security and the availability of advice, support, and professional services are also seen as exceptionally important.
Conclusions: The Revolution Continues
The market for the broad array of digital manufacturing technologies known as Industry 4.0 is still expanding rapidly. As the revolution continues to gain momentum, market forces will make adoption less a question of “if” and more one of “how fast.” Because digital technologies are the only way cost-effective, sustainable production processes can be tailored to perfectly match the requirements of tomorrow’s customers.
The report includes several practical examples of European companies who are already leveraging Industry 4.0 approaches. How do you feel about the individual technologies behind Industry 4.0? Are your views different or similar to companies your size?
It’s worth examining the report more closely to find out. You’ll also learn more about what’s on the horizon for the manufacturing sector.
Research Report: Industry 4.0
How digital technology is changing companies’ production processes – by Handelsblatt Research Institute and TeamViewer.