Middle Market Manufacturers Need to Catch up on Industry 4.0

Middle Market Manufacturers Need to Catch up on Industry 4.0

The window of opportunity for 4.0 is closing fast and manufacturers who don’t invest in 2019 risk falling behind the curve.

While 99% of middle market manufacturing executives are moderately familiar with Industry 4.0, only 5% are currently implementing these strategies, according to a study by BDO

A little more than half (54%) are in the process of developing these strategies and 25% are planning to do it but haven’t yet got started.

“Over time, Industry 4.0 will radically transform how manufacturers derive and deliver value,” said Eskander Yavar, national leader of BDO’s Management & Technology Advisory Services. “But the window of opportunity is closing fast. Manufacturers who don’t invest in 2019 risk falling behind the curve. The middle market is no exception.”

Findings from the survey include:

  1. Business model diversification tops Industry 4.0 goals

Middle market manufacturers know that Industry 4.0 has the potential to transform their business. As they look beyond their immediate needs and toward tomorrow’s digital future, most (71%) are prioritizing business model diversification above all else; which suggests a fundamental shift in customer demand that can’t be met by the traditional manufacturing toolset. Improving operational efficiencies and increasing market penetration tie as the second most-cited goals, at 67% each.

  1. The biggest barrier to implementation is poor communication

Successful Industry 4.0 adoption requires collaboration between functional areas of the business that have historically operated in silos, like information technology and operations technology. Two in three executives view poor communication as the biggest barrier to successful Industry 4.0 implementation. Rounding out respondents’ top five implementation barriers is interoperability with legacy technology (64%), lack of skills or insufficient training (63%), lack of leadership and vision (60%), and underinvestment (54%).

  1. Industry outsiders pose the greatest threat

Even without manufacturing roots, a technology upstart has the potential to disrupt manufacturing, whether through hyper-customization or transforming the economics of production. As a result, middle-market manufacturers are most (69%) concerned that failure to adequately invest in Industry 4.0 will lead to encroachment from non-traditional competitors.

  1. The digital thread is more theory than reality

In an idealized Industry 4.0 world, supply chains become the digital thread—integrated value chains with end-to-end traceability and transparency, enabled by the constant, bi-directional flow of information. Most middle-market manufacturers, however, aren’t there yet. While just 7% of respondents say their data is totally siloed, pointing to increased information sharing internally, only 6% claim they have transparency across the entire value chain.

  1. Industry 4.0 is creating jobs

While 63% of middle market manufacturers plan to leverage third-party outsourcing solutions to support Industry 4.0 enablement, more than half (57%) plan to hire new talent. To close knowledge gaps within their existing talent pools, 60% are implementing training to upskill current employees.

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