Investing in Industry 4.0

Aerospace Manufacturing & Design (AM&D): What do you consider the most important Industry 4.0 (I4.0) technologies?

Maurice Liddell (ML): That depends on the digital maturity of the manufacturer deploying them. Less digitally mature manufacturers will get the most benefits from investing in core information technology (IT). Manufacturers with greater digital maturity can take advantage of more advanced I4.0 technology, tailored to their business goals. For example, for advanced manufacturers prioritizing improving the customer experience, investments in ecommerce sites, chatbots, and customer self-service solutions will yield the greatest results.

One I4.0 concept that permeates all organizations regardless of maturity is the digital thread – a communication framework for sharing information among stakeholders across the entire supply chain. The end-to-end visibility it offers allows participants to spot disruption and demand in real time. All companies should be investing in technology to create digital threads in their own organizations, including enterprise resource planning (ERP), blockchain (distributed ledger technology), and third-party logistics.

AM&D: How can I4.0 technologies help manufacturers compensate for supply chain disruptions or cyberattacks?

ML: A major advantage is they offer enhanced visibility into disparate department functions and data. The digital thread allows manufacturers to identify and react to disruptions the instant they happen. Going a step further – artificial intelligence (AI) allows prediction and response to disruption before it happens. Integrating machine learning (ML) allows predictive capabilities to become smarter through time, leading to more precise, accurate outcomes. As a result, manufacturers can use resources more strategically and allot less time to managing risk.

AM&D: What are the risks of not investing in I4.0 technologies?

ML: Minimizing investments in I4.0 technologies makes manufacturers more susceptible to disruption, resulting in longer lead times in getting products to customers. Through time, the damage to key customer relationships will be irreparable.

ML: A supply chain management ERP system can automatically plan workflow when orders are received and schedule jobs effectively. Supervisors receive real-time updates on progress and resources that help them plan delivery dates. ERP keeps production consistent with demand for timely replenishment and lean inventory.

AM&D: Can improvements be quantified?

ML: According to BDO’s 2021 Industry 4.0 Survey, manufacturers that invested in I4.0 were 15% more likely to be thriving compared to manufacturers who weren’t investing in I4.0. They were also 15% less likely to be struggling.

AM&D: How should manufacturers prioritize I4.0 investments?

ML: Some manufacturers may be tempted to implement point solutions without first identifying a clear vision of how the technology will improve business operations, grounded in a financial model and concrete key performance indicators (KPIs). I4.0 investments must be tied to a business strategy and corresponding roadmap to reap the biggest rewards. There’s no one answer – manufacturers must prioritize differently based on their operating model, financial capital, current digital maturity, priority business goals, and more. Instead of focusing on a specific technology, start by identifying business goals and the strategy to pursue to achieve them. Then, choose the technologies that will provide the greatest support in reaching those goals.

AM&D: What are the biggest I4.0 trends?

ML: Based on the survey, we expect to see significant investment growth in AI and ML, Internet of Things (IoT), robotic process automation, blockchain, virtual/augmented reality (VR/AR), and 5G to improve supply chain and customer experience. These technologies will help address:

• Supply chain management
• Customer order cycle time
• Total delivered cost
• Performance to plan
• New product introductions
• Inventory turnover
• Customer service
• Customer experience
• Creation of new products, services
• Quality control
• Product enhancements
• Cost management
• Customization
• Delivery time

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