Discussion – Industry 4.0 and Digital Transformations
Chris Walden, Director at Walden Phillips, and Mark Carleton, General Manager at MESTEC, sat down together to discuss what we mean by Industry 4.0, what you really need in your business when embarking on a digital transformation journey, and the difficulty of embracing changes.
What is Industry 4.0?
Chris Walden: Fundamentally it’s become a buzzword and one that gets thrown around a lot. If you asked five people what Industry 4.0 was, you wouldn’t get the same answer twice. We know it’s the fourth industrial revolution and this time there’s a lot of focus on data and data acquisition, but what would your definition of Industry 4.0 be?
Mark Carleton: It’s an umbrella term for a collection of technologies. If I had to pick one of those technologies as the principal theme, it would be the Industrial Internet of Things (IIoT), but it also covers big data, augmented reality, artificial intelligence, cloud computing, and machine learning.
CW: When it comes to Industry 4.0, I find it easier to think of it as a time period. So, you have people saying, “We’re going to “do” Industry 4.0” which I find to be a misnomer because it’s a period of time in history. The first three industrial revolutions weren’t events or pieces of technology, they were periods defined by huge advances in manufacturing.
MC: Historically you’re right, they just define periods of history. It’ll be interesting in a few decades’ time to think about our current time period in terms of that shift. I agree about Industry 4.0, I see there’s often talk of wanting to “do” Industry 4.0, as you said. People are often pushing technology for technology’s sake rather than trying to achieve a business objective with it. Just having the technology in use doesn’t mean it’s doing anything for you.
CW: Absolutely, you just spend money jumping on the bandwagon. People hear Industry 4.0 and think, “everyone else is doing it, I must do it too,” but you need to be implementing practices that actually help you. I tend to home in on open-source communication and data acquisition between shop floor technologies as the core advances in this Industry 4.0 age but the technologies you may want to embrace are going to be different from company to company. However, there are lots of things that are happening, and it can be hard to cut through that noise to discover what will genuinely help your business.
MC: You’re quite right, the technology that’s applicable to drive improvement in your small batch manufacturing plant compared to a Coca-Cola plant is very different. The problems, and therefore the solutions, are different in both cases. If you’re doing manual assembly, mass data collection is not useful. If you have a highly automated factory and the biggest problem is understanding utilisation of equipment and downtime, then mass data collection from those machines in an automated fashion is a good thing. It’s more important to look at the problem you’re trying to solve. We believe that digital solutions are applicable both where you are collecting data from people as well as where you’re collecting data from machines, and many providers overlook that and focus on the sexy part of manufacturing, such as automation and robotics. If you walk around most factories, you know that they’re not wall-to-wall with that kind of technology. They’ve got more fundamental problems. Perhaps they’re still doing quality checks on bits of paper. So, the next step there isn’t to connect up to a robot, they’re a long way away from that.
Who can adopt a ‘Digital Transformation’ strategy?
CW: This brings us nicely to talking about digital transformation. It’s important for any manufacturer to have a digital transformation strategy to achieve what they want to achieve; to identify and make sure the right technologies are adopted, so you’re not left behind. I don’t think there’s a limit on who can adopt this either – anyone can. It’s just going to look very different depending on what kind of company you are in.
MC: Absolutely. I don’t think I’ve ever come across a manufacturing organisation where digital technology isn’t going to be useful to them to solve some of the problems that they have.
CW: But it’s important that you don’t get blinded by the media version of fully automated, very expensive equipment, because there’s little point in collecting data for data’s sake if it’s just not going to help solve your problems. What’s your experience with the kinds of businesses that are keen to implement digital transformation?
MC: I’ve seen two approaches. The first is, they come to us and are aware of all these technologies and are sure they will add value. They want to put a programme in place to explore all the ways they can add value and build a platform, capability, and strategy around that. The alternative is that the leader of an organisation says, “I’ve got a real problem with labour productivity and I’m going to focus on solving that problem”. They want to know what technologies can help them solve that problem. They’ll usually have an awareness that this won’t be the last problem they’re going to need to solve, but it’s the one that’s top of their mind at the moment.
CW: Would these people be fairly tech-savvy, or not necessarily?
MC: Not necessarily tech-savvy. They’ve got to be willing to embrace technology, but they don’t need to have a background in writing code or managing IT services or anything like that.
CW: Just be somebody that says, “I understand the value of technology, its role in my organisation and I want to focus on solving this problem.”
MC: I think both smaller and larger businesses are open to this too. What characterises the most successful projects for me are the ones where there’s a degree of autonomy for the leader of that particular department. They can make decisions and push forwards.
CW: I agree, bureaucracy has the ability to hinder creativity and willingness to explore new technologies.
MC: Absolutely, and a lot of problems emerge when you’re trying to implement a completely standardised approach across every site you may have too. The problems that are faced in each of the factories are probably subtly different. If you try and standardise the use of technology across all of those factories, it can take a very long time to reach an agreement on the right technology that’s going to fit everybody. Whereas, if you give the leader of one particular factory the autonomy to say “I know my factory and I know my problem and I’m going to use the technology that will solve that problem in my factory”, then you tend to make progress much, much faster.
CW: I’ve definitely seen that challenge with finding the delicate balance between the drive for standardisation while being aware of the subtle differences between factories that require their own, tailored solutions. You need to be clear on what you need to improve and know you can still head towards those successes using common toolkits across the business. But also trusting those leaders to know the intricacies of their particular factory or department is important for success.
What have been your biggest challenges helping businesses benefit from the so-called fourth industrial revolution?
CW: We find it to be engagement and buy-in from the people who are going to be the actual end-users of any equipment. The ‘data-inputters’. The directors or supervisors are initiating the change, but there isn’t the same enthusiasm from those on the shop floor, despite them having valuable insights on the problems and potential solutions because they’re the ones using the equipment on a day-to-day basis. At the end of the day, if the operator on the shop floor doesn’t want the project to work, then it won’t work.
MC: I once heard a manager say to his staff, to try and get them to buy into these changes, “we don’t want to be a minimum wage employer, so we can’t be a minimum productivity environment.” They needed to deploy tools to allow them to raise productivity, to then pass those benefits onto the staff and company. Deploying the new technology is only a technical success. You can collect all the data and all the insights you want, but if nobody makes a different decision, the business isn’t going to be any more profitable.
CW: Exactly, you want people to be trained up, to engage, and to understand what they’re doing and why. If the people on the other end of the technology aren’t embracing the systems, then nothing is going to change. That’s absolutely critical. So, involvement at all levels is necessary, not just putting that technical solution in.
MC: The digital transformation may be needing less and less effort to implement than it did 20 years ago when you’d have been installing complex system after complex system. Now it’s all technically far more straightforward. But as the technical challenges have reduced, the change management piece is now a bigger part of the challenge.
What would your advice be to businesses considering a digital transformation? How can they ensure they’re ready to embrace this?
MC: The most successful projects are where people approach us with a problem to solve. Visionary leaders have a view in their mind of what manufacturing utopia looks like. They want data on demand from customers, forward notifications of raw material arrivals from suppliers, and real-time visibility of inventory. It may be miles away, but that’s where they know they’re headed. And they start in that direction, one step at a time. That’s the structure for success, to blend the vision of what utopia looks like with a first step that solves an explicit current problem.
CW: And make sure you solve that first problem in such a way that it’s not a first step to a dead end. It’s the first step on a journey to exactly where you want to be. It’s about laying that groundwork of an infrastructure to help you build and solve future issues, whatever they may be.
MC: You might be able to solve one issue today with a particular solution, but it might not take you toward that utopian view.
CW: Absolutely, we’ve all seen it happen with quick solutions, whereas making a sacrifice to take extra time and a bit of extra expense to solve that first problem well is best in the long term. Take a long-term view rather than a short-term view.
CW: If you could pick a couple of golden nuggets of advice for any business considering a digital transformation journey – what would they be?
MC: The first thing is making sure they have a utopia in mind as a strategy, picking a current objective, that’s probably a slightly shorter-term objective, and clearly communicating that objective to the people. Then, understanding that technology isn’t going to solve that problem on its own, but it’s going to require a change to the way people make decisions. You can’t just drop in an MES or an ERP and think it’s going to change your world. It doesn’t change the way people behave in your business, and you’ve got to be prepared to embrace that and communicate that clearly. People will always find change difficult, but they want to know you’re heading toward a better end goal.
CW: So, culture and skill sets on the ground are important.
MC: The problems are not normally technological ones now. I think that’s part of coming back to the whole theme of this conversation. What Industry 4.0, as an umbrella, has done is give us technologies that are easier to use, easier to consume, and less costly. But the change management piece is now a bigger part of the focus. And that’s why people like you are needed, your reason to be is to coach that change management.
CW: It’s a very valid point. A big point of this fourth industrial revolution is that technological barriers are far diminished compared to what they used to be.
MC: Just to quantify that, when I started in this role, 13 years ago, you would need to install databases, web servers, and software at a cost of tens if not hundreds of thousands of pounds upfront before you could even train a single user. Today, you subscribe, open a browser, with no upfront costs and you’re there. But you can deliver all of that and still not know how to use the data to drive change in your business. So, you need to have a view of utopia and focus on a current objective, while making sure you remember that the technology itself isn’t going to solve the problem on its own. Then it needs to be wrapped around a change management process.
Is there a particular success you’ve had with one of your customers that you’re particularly proud of?
MC: One notable success was with a very small manufacturer with around 20 employees on the shop floor, who were making wiring assemblies. They needed to improve their labour productivity. When people think about improving labour productivity, they often think about making people work faster. We’ve got lots of evidence to demonstrate that the key limit to labour productivity is not normally the speed with which people work, but the things that limit that work, such as having the right raw materials or the right tools. Our experience says that if you measure that for the first time, you’ll start at roughly 55% utilisation. So, people are using just over half their paid hours on productive work. Understanding the causes of those losses and eliminating them can have dramatic improvements in labour productivity. The company I’m referring to is now well up into the 90%-plus utilisation bracket.
Bio…
Walden Phillips are consultants and implementers for manufacturing businesses. They work collaboratively with manufacturers to install new production equipment, collect and present vital data and improve processes. Find out more at www.waldenphillips.com or speak to us using enquiries@waldenphillips.com
