According to a recent report from EEF the Manufacturers' Organisation the fourth Industrial Revolution is happening and happening quickly - 61% of manufacturers agree they could be using digital technologies more to boost their levels of productivity.

The digital transformation of manufacturing offers a great opportunity to first movers to build a sustainable competitive advantage. Conversely, manufacturers who do not start planning for these changes now, risk being left behind and fighting for survival.


The quote below from Audi CEO, Rupert Stadler, sums up the level of disruption to business models that are taking place.

Source:  IDC: Futurescape: Digital Transformation, 2017 Predictions

This blog is a summary of some of the major themes covered in the excellent report The 4th Industrial Revolution: a primer for manufacturers and during a recent webcast: IDC: Futurescape: Digital Transformation, 2017 Predictions. which was given by Jan van Vonno, Research Manager and Lead Analyst for the European Digital Transformation Practice at IDC and Marianne Kolding, VP of IDC's European Services Research group - highly recommended watching.

What is Digital Transformation in Manufacturing?

According to EEF, ultimately 4IR is about "enabling manufacturers to respond to modern industrial competitiveness pressures while allowing them to serve the modern customers "who increasingly expect a nimbler approach to manufacturing.  It is not just about new technologies. It is also about a change of culture and embracing new business models.

 Source:  IDC: Futurescape: Digital Transformation, 2017 Predictions

The Benefits of 4IR in Manufacturing

The benefits of 4IR technology adoption for manufacturing will be widespread, with 

• Smarter supply chains – greater coordination and real-time flow of information across supply chains and relationships allow better tracking of assets and inventory and integrated business planning and production. This unlocks new ownership and collaboration models across supply chains.
   
• Smarter production – the use of data analytics and new production techniques and technologies (such as autonomous robots, multi-purpose production lines and augmented reality) helps to improve yield and speed up production. This allows new business models to be pursued such as mass customisation.
   
• Smarter products – Rapid innovation and a faster time to market are enabled by data collected from products along with user feedback, whether direct or collected via social sentiment on the internet. This data also allows remote diagnostics and remote/predictive maintenance.

Source: The 4th Industrial Revolution (4IR): A primer for manufacturers
 

Read the full EEF report for some great real-world examples such as:

• Optimising fleet movements through greater tracking of other factors in addition to location to deliver the lowest cost
• Multi-functional robots and collaborative robots (cobots) to optimise production using sensors.
• Predictive Maintenance, Always connected products that allow predictive maintenance
   

First Mover Advantage for Manufacturers in Digital Transformation

According to the EEF report, first movers may spend more up front but will realize the benefits faster. With the pace of change increasing, the deficit between the early adopters and the laggards will continue to grow and in many instances, it will be hard for the late movers to catch up. According to EEF,

“First movers may also be able to capitalise on their advantage by displacing supply chain competitors at the global level. An additional benefit of moving first is the ability to determine the platforms that will underpin the processing and exchange of data, locking this in across your supply chain and reaping the benefits before your suppliers’ other customers dictate these platforms.”

Next Steps -  Technology, Culture Change, and New Business Models

4IR won’t just be about getting new technologies and manufacturing techniques, a cultural change is also needed within companies to enable them to take advantage and benefit from this transformation.

There are two main axes to this cultural change:

• Encouraging a Culture of Innovation: The culture to try new things with the view that it might work but not to get stuck if they don’t work, will be needed for 4IR take up. An interactive, incremental approach is recommended, taking small steps, evaluating the lessons learned and then building on that to decide what to do next. However, the EEF warns manufacturers will need to ensure they are taking many small steps simultaneously, in many areas, and learning the lessons quickly if they are to stay one step ahead.
   
• IT – from the back office to front and center:  The role of technology and the IT department within companies will become ever more important as more and more of the factory floor, processes, tasks, and products become connected. Manufacturers will increasingly need to think of themselves as digital companies, rather than viewing digital capabilities as an add-on to existing processes. Indeed, IT skills will need to step out from a single department and cross into all areas and disciplines of manufacturing. The good news for those with the right skills is that according to IDC, being "a techy"  will really help progression to C-level. 

Learn More about 4IR for Manufacturing

• The 4th Industrial Revolution (4IR): A primer for manufacturers, Nov 2016
• IDC FutureScape: Digital Transformation
• JD Edwards Digital Transformation Workshop | March 30th | Oracle Birmingham
• McKinsey: The seven decisions that matter in a digital transformation: A CEO’s guide to reinvention