Pandemic spurs Industry 4.0 adoption

A year ago, I wrote about a boost in middle-market manufacturing executives’ adoption of Industry 4.0 technologies. Back then, a survey from professional services firm BDO USA LLP showed 31% were implementing an Industry 4.0 strategy, up from a dismal 5% the year before. Results are now in for BDO’s 2021 Industry 4.0 Survey, again polling 100 C-suite executives at U.S. manufacturing organizations about current and planned Industry 4.0 efforts.

This survey divides manufacturers into those born – or reborn – in digital, who are implementing Industry 4.0 (24%) and legacy manufacturers (76%) that haven’t. The legacy companies that aren’t yet implementing, are in the process of developing, haven’t started developing, or don’t have plans to develop an Industry 4.0 strategy risk business failure.

Of those identified as digital manufacturers, 33% report they are thriving (profitable and growing), 54% are surviving (stable, breaking even), and 13% are struggling (unprofitable or losing market share). Compare those numbers to legacy manufacturers, where 18% are thriving, 54% are surviving, and 28% are struggling.

“The gulf in Industry 4.0 maturity and overall business performance is widening between manufacturers who embraced Industry 4.0 prior to the pandemic and those who have either just begun to implement an Industry 4.0 strategy or are still skeptical of its benefits,” the survey authors report. “Those that adopted Industry 4.0 strategies prior to the pandemic were better equipped to navigate its disruptive impacts and are now positioned to reenter growth mode ahead of their less digitally advanced peers.”

BDO’s experts warn the technology stragglers, “It is imperative that legacy manufacturers reassess their outlook about Industry 4.0 to ensure their future growth.” If those manufacturers didn’t succeed with previous Industry 4.0 initiatives, the survey authors suggest bringing in new leadership or a third party that has proven Industry 4.0 expertise. A successful pilot project may help convince doubting company management to commit to a long-term initiative.

Among the technologies enabling the digital thread, about two-thirds of manufacturers report they are currently using data analytics, cloud computing, and enterprise resource planning (ERP) software. Technologies leading the list for planned deployments are robotics/automation, artificial intelligence (AI)/machine learning, virtual/augmented reality (VR/AR), blockchain/digital ledgers, Internet of Things (IoT), and 5G. The number of manufacturers with plans to implement these digital tools ranges from 43% to 61%.

The COVID-19 pandemic accelerated use of digital tools and solutions, allowing early Industry 4.0 adopters to achieve breakaway performance. “These organizations are more agile, connected, and resilient than their less digitally advanced peers, who will be challenged to keep up,” the survey’s authors note. But manufacturers shouldn’t rest on their laurels. BDO’s experts agree: “Manufacturers that recognize that Industry 4.0 is about continuous improvement will be most successful in the long run.” – Eric