Taking a strategic approach to Industry 4.0
Author : Neil Lewin, Senior Consultant at Festo Training & Consulting
17 January 2018
Everyone is talking about Industry 4.0. Where robotics and automation meet software, big data and analytics. However, knowing it’s coming is very different to understanding its place within an organisation. When does Industry 4.0 provide genuine value and efficiency? Can the same efficiency be achieved through other methods, such as lean management or simply better processes?
Festo Training and Consulting train leaders and managers to prepare for the future. It helps them answer the big questions. Is it better to take a top down, or a bottom up approach to evaluating the business and its processes? How can the two be combined and what are the key elements to consider when implementing new technologies?
It is already evident that Industry 4.0 will not bring guaranteed success. For every company where automation is introduced effectively we see another where new equipment lies gathering dust in a corner. A considered and strategic business model will mean the difference between failure and success.
Developing new business models
Those of us who work in manufacturing and engineering are no strangers to change. We are continually seeking new ways to reduce waste, simplify processes and improve productivity. To become a lean mean manufacturing machine. It is these advances that have made Industry 4.0 possible.
While lean manufacturing provides a firm foundation to build on, Industry 4.0 brings with it a revolution in connectivity. As a result, Industry 4.0 is as much an organisational revolution as it is a technological one. It’s about how technologies communicate and work with each other, and how organisations and their people adapt to make the most of these opportunities. There is an increasing dominance and reliance on technology to produce far reaching efficiencies but these will only be successful if business models keep up with the fast pace of change.
Put simply, a business model describes the benefits delivered by an organisation in the form of its products and/or services and the customers receiving them (Bieger and Reinhold 2011). A good business model will look at who the target customers are, what they are offered (the value proposition), how that offer is fulfilled (the value chain), and how the organisation generates revenue.
If we link business models to Industry 4.0, there are four main approaches a company can take to develop their business model and meet the changing needs of Industry 4.0:
1. Supplement and optimise your existing business model by introducing elements of Industry 4.0. A specific example might be using radio-frequency identification (RFID) and global positioning systems (GPS) to achieve real time delivery status.
2. Transfer previously developed and established business models to your own industry and company. For example, transferring the car sharing principle to industrial products or facilities. With car ownership becoming more expensive and cities becoming more congested, there is an international push to make the car sharing model work. The same can be applied in industry and manufacturing. With the cost of developing new machinery, and the increase in productivity, capacity might become available which other manufacturers could benefit from.
3. Develop a new business model using a combination of existing business models, or business models that will be applied in the future. For instance, with Industry 4.0 there will be a lot more data available on machine performance. Instead of having a traditional rota of maintenance – or a reactive approach to maintenance – analysing machine data allows the team to pre-empt necessary maintenance activity and ensure availability.
4. Create a completely new and ‘disruptive’ business model that incorporates all the dimensions of increased interconnectivity, computer capacity and new technologies.
Condition monitoring in the mining sector provides a good example of how the third approach has worked, bringing together new technologies that constantly ‘talk’ to each other to dramatically increase efficiencies. Hydraulic excavators contain multiple different pumps. Previously, in the case of a fault, it could take a long time to procure a new pump. In the worst case, a customer order had to be received before a new pump could be produced. As a result, the down times of excavators were unacceptably long.
Neil Lewin, Senior Consultant at Festo Training & Consulting
Now each pump is designed as a smart pump which sends operational data to the user or the producer. In the case of deviations, such as over-heating or excessive energy consumption/vibration, a new pump is ordered before the old one fails. Down times have been significantly reduced.
Similarly in agriculture, optimum harvests were rarely achieved due to the multiple variables involved – weather, market prices for seed, fertiliser specification and amount, soil conditions etc. Now detailed information around all these factors is fed into, and out of, a data platform involving partners from different industries including machinery producers, insurance providers and software companies. The results are impressive and have led to greater efficiencies and less waste in the food supply chain.
Be prepared for the future
Many of the technologies being described as key elements of Industry 4.0 are not new. RFID tags have been used in retail since the early 1970s. The first 3D printing system was invented in 1983. And augmented reality systems first appeared as long ago as the 1960s. The difference now is that we can connect these technologies.
From shop-floor production to the training and development of staff, there are many areas that require joined-up thinking if Industry 4.0 is going to provide the type of analysis and data that is genuinely meaningful. But for companies to truly make the most of the opportunities presented by Industry 4.0, they must have solid strategic foundations in place – starting with the business plan.
www.festo-didactic.co.uk/I40
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