Manufacturers that are watching the Industry 4.0 movement from the sidelines should take note: the time to transform is now. Companies of all sizes can benefit by integrating digital information from a range of sources within their manufacturing operation and supply chain ecosystem to drive improvements across their businesses.

While Industry 4.0 – also called the Fourth Industrial Revolution – has been moving into manufacturing operations for several years, many companies are discovering that the gap between action and stasis is now critical. The COVID-19 pandemic, coupled with material supply shortages, have altered the manufacturing landscape. Companies with insight into their processes and supply chain partners are rebounding more quickly.

In a 2020 survey of manufacturers by Deloitte and the Manufacturers Alliance for Productivity and Innovation, 85% of respondents indicated that smart factory initiatives are going to be a main driver of competitiveness over the next five years. Investing in an Industry 4.0 transformation will provide companies with the processes and tools necessary to take advantage of emerging opportunities.

Prioritizing Process Changes

Louis Librandi, principal of supply chain and manufacturing operations for Deloitte, describes digitalization as an ongoing cycle, known as the physical-digital-physical loop. First, information is captured in the physical world, creating a digital record of a physical manufacturing operation and supply ecosystem. Next, machines share information, driving advanced analytics of real-time data. Finally, by applying algorithms and automation, this data drives decision-making and action in the physical world.

Because Industry 4.0 emphasizes the digitalization of processes, it’s easy to think that converting your manufacturing operation into a smart factory is as simple as implementing technology solutions. However, Industry 4.0 strives to meet the broader goal of organizational transformation. Technology supports this change, but process improvements must serve as the foundation of smart factories.

This is particularly good news for small- and medium-sized manufacturers that may not be able to fund investments in leading-edge technology solutions. While digitalization of processes is central to driving the significant productivity leaps characterized by Industry 4.0, all companies can take steps to leverage the smart factory trend.

“Technology can be the change agent to start changing some of the cultural norms companies have been battling for years,” Librandi says. “The technology is always interesting, but you need to start by addressing underlying systemic issues.”

By identifying pain points in their workflow, companies can better determine where a technology investment will make the biggest impact.