The widespread adoption of digital technology in manufacturing is bringing about a revolution that commentators have named Industry 4.0. Robots are replacing humans and smart devices are using data to take production decisions, moving manufacturing ever closer towards 100% automation. With individual customization now possible even with large scale production runs, this revolution is promising to take both customer satisfaction and operational excellence to the next level.
Manufacturers first began using computers to automate the production process and resource planning back in the 1970s. Then in the 1990s, enterprise resource planning (ERP) systems started making automated strategic planning possible. By 2000 the annual worldwide licensing and maintenance revenue for ERP systems had reached USD 21.5 billion and was growing at a compound annual growth rate (CAGR) of 13.1%. While the advent of ERP was responsible for many manufacturing success stories, there are lots of tales of misfortune out there too.
Nike spent $400 million dollars updating their supply chain system and ERP implementation. They were surprised when this project resulted in a 20% dip in their stock, $100 million in lost revenue and a myriad of class action lawsuits. And HP’s North American division’s move to a single centralised ERP system ended up costing the company $160 million in backlogged orders and lost revenue – more than five times the estimated cost of the project.
Now as we enter the Industry 4.0 revolution, companies like GE and Siemens have declared it a core part of their strategy. Bosch is set to implement smart manufacturing at all its plants in India and Europe. The German government has even allocated €200 million of funding as part of its high tech strategy action plan for 2020. With so much energy behind the adoption of the latest manufacturing automation technology, there are certainly great gains to be had.
However it’s important to learn from the failures of the past and to take a more conscious approach to implementation. In the age of smart manufacturing, advanced technology is easily available, for a price, but the real challenge is maximising the benefits.
Many of our clients have shared stories with us of disproportionately low returns on their investment in technology. The missing link is usually a comprehensive approach to change management – a must for any major change within an organisation to go smoothly. Our methodology ensures the streamlined running of each change management programme and makes sure the benefits are sustainable. Technology alone won’t improve your business’ performance. However, after working with us, our clients consistently experience real improvements in capacity and operating performance.
Are you looking to realise the value from your investments in data and technology? We’ll be more than happy to share our experience with you.