Before fretting about whether you need to invest in AI or predictive analytics, elevate the discussion: assess where your business is on the continuum of Industry 4.0 implementation readiness.
Do you have the foundational elements in place to start monetizing your data or driving dynamic forecasting? If not, that doesn’t mean it’s time to throw in the towel. It’s imperative to understand that every company can make advancements, but you can’t run before you walk.
Change doesn’t occur in a vacuum, nor does it happen overnight. For the middle market, the road to Industry 4.0 is less one of digital transformation than it is of intentional digital maturity linked to business value, where disruptive technology is one small part of broader systemic change.
Define your vision
Once you know where you are today, you can define where you want to be tomorrow, next year and five years down the line.
Change is unpredictable and rarely linear. While setting a strategic vision can point you in the right direction, any milestones you set that are contingent on the success of prior achievements may need to shift or change entirely based on empirical feedback. As the external digital environment evolves, so may your desired outcomes. Continuous Industry 4.0 strategy refinement is prudent and even necessary.
Instead of focusing on specific features or tools, define your vision and set KPIs based on value to the business. Prioritize Industry 4.0 investments based on where you see the biggest gaps and greatest opportunities.
A significant catalyst to Industry 4.0 adoption is the consumer technology-driven evolution of customer behaviors and expectations. The best enterprise technology innovations are those that are developed to solve existing customer challenges or provide your business with a competitive advantage to better serve them. Technology that is “bleeding edge” but doesn’t deliver value to the customer — or its benefits come at the cost of something else the customer values — won’t truly move the needle. Rather than retrofitting technology to the customer, the customer can help your leaders set value priorities.
Set up your pilot
Iterative, incremental innovation in small pilots enables faster decision-making and implementation.
Think of each pilot as an experimental sandbox, where the goal is to learn quickly and apply those learnings to the next experiment and/or scale the solution. Your Industry 4.0 plan needs to have built-in flexibility to respond and adapt to real feedback and results. Once you have discovered something that works well, you must be prepared to absorb, integrate and expand on these successes without the traditional organizational friction — bureaucracy, politics and change aversion — that’s common in established businesses.
Engage external stakeholders
Your organization’s Industry 4.0 initiative likely will create ripple effects across the value chain and require external process and technology changes.
For example, if you want to improve demand forecasting through predictive analytics, do you have access to the data you need from your top 100 customers and are their platforms compatible with your systems? Can your information systems communicate with your suppliers’? Equally important, can your customers’ information systems communicate effectively with you?
Sharing sensitive data to an external network is easier said than done. Doing so requires a fundamental shift in relationships between suppliers and customers, and raises new questions about data privacy and information security.
When planning your Industry 4.0 evolution, view your key suppliers as an extension of your own organization. You may even want to consider inviting these external parties to planning conversations. Collaborative planning with key customers and suppliers early on in your Industry 4.0 journey will help accelerate solution implementation and lay the groundwork for secure co-creation of value.
Prepare your people
Too often, organizations embark on a digital initiative but forget about the human element.
Even as processes become automated and artificial intelligence takes over data-driven decision-making, change still needs to start with people. Technology for the sake of technology is a wasted investment; you need your employees to understand why they need to leave the status quo behind, believe in the strategic vision and feel engaged in the process. Most importantly, they need to understand what’s expected of them and have the resources, training and development to get to the new destination.
In some ways, Industry 4.0 is less about revolutionary technology than it is about a philosophy of continuous improvement, and that mindset is integral to success, bearing in mind that the journey is more like a marathon than a 100-meter dash. The hardest piece of this transition may be fostering a corporate culture that embraces constant experimentation and learning — one in which short-term mistakes and failures are expected and accepted in the pursuit of long-term innovation and value creation.
Rick Schreiber is partner and national leader of BDO USA’s manufacturing and distribution practice.