The truth about Industry 4.0

In case anyone missed it, Industry 3.0 was when computers were introduced to the workplace. Industry 4.0 refers to the further digitisation of the workplace, taking in smart automation, AI, interconnectivity and integration, along with a host of other things – so much in fact that the more cynically minded may wonder how they’ll try to define Industry 5.0 in due course, as they inevitably will.

Meanwhile, back in the land of day to day reality, there are thousands of manufacturing businesses whose beating centres are predominantly dominated by Microsoft Excel, with little to no integration of a multitude of legacy, function-specific systems installed over time.

Take your typical business and we have a finance system, a separate sales order processing system, a separate forecasting ‘system’, a separate planning and scheduling system, a separate warehouse management system, separate systems for logistics management, tracking of vehicles, routing, managing driver hours, point of delivery confirmation, a separate time and attendance system, separate reporting systems, a separate CRM system…and so on.

None of these systems talk to each other. They were specified by the individual department heads, their business cases honed by others who invariably lack experience in either implementation or usage, developed by IT geeks with little to no idea about business application, and implemented by functional people mostly in isolation from their colleagues in the next department over, and grossly under resourced to either implement properly or support the system going forward. That’s reality.

Little surprise that few of these installations ever satisfied the business case they were commissioned on. Worse still, many will never have been fully commissioned because some bright spark decided 60% functionality was good enough, underestimated the amount of time required for users to UAT any software properly, resented paying so much to the IT firm in the first place, and certainly don’t like the idea of paying more to ‘get it to work properly’, or keep it relevant – such as updating product databases, adding new processes, or upgrading on prem machines.

So your modern day IT department has to deal with all this variety, from keeping old DB2 files going through to introducing the latest tech stack needed to satisfy the latest departmental upgrade, and everything in between. No wonder you have to wait an age to get anything done

– these guys are underfunded and overloaded.

Take a snapshot of any manufacturing business and 99 times from 100 you will find spreadsheets dominating the landscape. Most people understand how to build and read a spreadsheet, in contrast to being impotent in digging into and fixing a database or create a set of bespoke reports.

You want to know your OEE or productivity (not the same thing), or your service level, or your forecast volatility, or your product margin, or your budget, or frankly anything, really, and it’s a spreadsheet that will be your ‘go to’.

This is where most businesses sit right now.

Even those businesses that found a spare few million dollars lying around and invested in an integrated ERP system find themselves drowning in spreadsheets, with barely hidden rage that the millions spent still doesn’t ever seem to provide what’s needed. If lucky it meant people are forced to follow a defined process, at least, but it doesn’t provide management or control of the process, it doesn’t provide insight, it removed flexibility and agility, and by heavens, it needs constant, constant maintenance, whilst upgrades to new versions cost tens or hundreds of thousands. Further, when they signed the cheque it wasn’t made clear that the tech the system was built on would be out of date within 5 years, and the whole thing would need to be ripped out and rebuilt eventually.

Sounds familiar?

The fairly universal acknowledgement of this situation is the driver behind Industry 4.0. The reason it’s got a fairly nefarious definition encompassing so many concepts is in recognition that there isn’t a ‘one size fits all’ solution to this. It stands to reason that there isn’t a single ‘plug and play’ fix, despite what many [‘solution providers’] might claim.

You should view Industry 4.0 as more of an approach to tackle a [this] situation. Sure, it’s about capturing and harnessing data, preferably in an automated manner, but it’s also about getting all your data sets to marry up – a ‘one source of truth’, by integrating all these different systems – getting them to talk to each other, or rather pulling all the important information out, cleaning it up, lining it up so it correlates, and then making it accessible so you can make decisions based on what you see.

From where you stand it may seem like an impossible task. There’s no doubt it’s complicated. Quite apart from the technical challenges of needing to comprehend multiple software packages in each department, there’s the politics of challenging departmental fiefdoms, of building a business case for change spanning more than one function, of asking for yet more money to be spent on IT. And who should lead such a transformation? Who has the energy and drive to step outside the mouse-wheel?

Our experience suggests it’s only those stronger leaders with vision, those with a unique combination of strategic foresight and operational savvy, those that plan to be around for at least three years, that are able to make the right decisions. They recognise that they need expert help to make it happen. They recognise the business imperative. They might not care what Industry 4.0 is or isn’t defined as, but they have the foresight to identify where and how data can be leveraged for profit, and where poor information harms their business. These are the business leaders we all want to be talking to.

Richard Shipperbottom

CEO of multi-award-winning consultancy Applied Acumen Ltd [], Richard trained in all things lean at Honda where he also ran the works racing team before applying his knowhow working with some of the most respected management teams across the globe. He has run both B2C and B2B companies, and has undertaken stints for clients as Operations Director, Purchasing Director, COO, and was also a VP at HelloFresh during its 17- month reign as the world’s fastest growing company.

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