Goutam Das, Senior Editor, Business Today
Around the time Klaus Schwab, the founder of the World Economic Forum, was handing over his book, The Fourth Industrial Revolution, to those attending the Forum in January this year, a team from consulting firm PwC was probing senior executives from industrial products companies in 26 countries. Is Industry 4.0 a future trend?
Turns out, it is not - even in India. Manufacturing companies are warming up to the idea of connected machines. While Industry 3.0 simply was about the automation of isolated machines, Industry 4.0 "concentrates on the end-to-end digitisation of all physical assets and their integration into digital ecosystems with value chain partners". Essentially, the new paradigm is about the integration of advanced automation, cloud computing, sensors, 3D printing, computer powered processes, intelligent algorithms, and Internet of things (IoT).
The PwC report, 'Industry 4.0 - Building The Digital Enterprise', throws up some interesting facts. India (27 per cent), currently, is slightly behind the global average (33 per cent) in terms of the level of digitisation. Indian companies, still, are thinking products and not services - they "seem to believe that they will benefit more from digitising their product portfolio or introducing newer digital products. In contrast, global counterparts think that enhancing digital services to customers will be more beneficial."
On the positive side, the survey found intent to invest more. About 39 per cent of the Indian companies surveyed plan to invest more than 8 per cent of their annual revenues in digital programmes in the next five years. That's because manufacturers have realised there are both top line and bottom line gains to be had: More than 80 per cent of the respondents in India expect a greater than 10 per cent gains in efficiency; more than 60 per cent expect over 10 per cent reduction in costs from operations and an over 10 per cent improvement in additional revenue in the next five years.
"Some of these cost savings can be achieved by implementing smart manufacturing initiatives such as integrated planning and scheduling for manufacturing," the report states. "Such systems combine data from within the enterprise - from sensors all the way through to enterprise resource planning (ERP) systems - with information from horizontal value chain partners, like inventory levels or changes in customer demand. Integrated shop floor planning improves asset utilisation and product throughput time. Another example is predictive maintenance of key assets, which uses predictive algorithms to optimise repair and maintenance schedules and to improve asset uptime."
Of course, Indian firms have steep challenges. Industry 4.0 is a lot about analytics and even though India, over the last many years, have become a destination for outsourced analytics for companies in North America and Europe, Indian industrial houses haven't utilised the expertise available locally. The report says that most companies "either rely on the selective, ad hoc data analytics capabilities of individual employees or have no significant data analytics capabilities at all". Only 17 per cent of the respondents in India rated their maturity in data analytics as advanced.
Other challenges identified by the report include lack of a clear digital operations vision from the leadership, fostering a strong digital culture, and operational disruption from cyber security breaches.
That's a lot of work before a company can be truly Industry 4.0 complaint.