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The Real Industry 4.0 Challenge

April 9, 2018 • TECHNOLOGY, OPERATION, Business Process, Internet of Things, Supply Chain

By Richard Markoff and Ralf Seifert

As the manufacturing industry enters into the fourth industrial revolution or the Industry 4.0, supply chain leaders are challenged to make their enterprise processes more digitised – in order for their supply chain to become efficient, customer-focussed and agile. However, with the increasing demands and risks associated with the avalanche of technologies in the manufacturing industry, are companies truly ready for the Industry 4.0?

 

A recent survey by IMD business school1  asked supply chain leaders across Europe to select from a diverse list of 20 hot topics what would be their biggest supply chain drivers in 2020. They were also asked to rank their company’s readiness to exploit these drivers.

The top five supply chain drivers for which the implementation gap was the largest touched on Big Data, Digitalisation, Internet of Things and Artificial Intelligence, all pillars of Industry 4.0 along with automation, 3D printing and other digital innovations. These are exciting new technologies, but the survey shows that the current reality of supply chains is that, notable exceptions aside, the majority of companies are still not ready to use them.

Even as technological advances continue apace and early adopters reap the benefits of those technologies that fit their business context, executives at most companies are bewildered by the array of technologies and capabilities already available and do not always see an obvious entry point.

This is the true challenge of Industry 4.0: even as technological advances continue apace and early adopters reap the benefits of those technologies that fit their business context, executives at most companies are bewildered by the array of technologies and capabilities already available and do not always see an obvious entry point. Even after they have selected an innovation avenue, the business case is not easy to establish. And for those companies that do select an Industry 4.0 innovation justify the economic case and get to implementation, there are still unique barriers to change that must be overcome. Taken together, this is a three-part problem that companies looking to innovate through Industry 4.0 need to solve: How will companies build paths to (1) select, (2) justify and (3) leverage the functionalities available to them? Each of the challenges is worth a closer look.



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About the Authors

Richard Markoff has worked in supply chain for L’Oréal for 22 years, in Canada, the US and France, spanning the entire value chain from manufacturing to customer collaboration. He is currently a supply chain coach, consultant, researcher and lecturer.

Ralf Seifert is Professor of Technology & Operations Management at the College of Management of Technology at EPFL. He  also serves as Professor of Operations Management at IMD business school in Lausanne, Switzerland, where he directs the Digital Supply Chain Management programme.

 

References

1. https://www.imd.org/publications/articles/digital-supply-chains-do-you-risk-falling-behind/

2. https://envisiontec.com/3d-printing-industries/medical/hearing-aid/

3. https://www.stryker.com/us/en/about/news/2017/stryker_s – spine – division – receives – fda – clearance – for – 3d – printed – t.html

4. http://raps.org/Regulatory – Focus/News/2017/12/04/28975/3D – Printing – FDA – Finalizes – Guidance – for – Medical – Devices/

5. http://www.dmnews.com/dataanalytics/target-lor%C3%A9al – reap – benefits – of – good – data/article/696480/

6. https://www.reuters.com/article/us – adidas – manufacturing/adidas – to – mass – produce – 3d – printed – shoe – with – silicon – valley – start – up – idUSKBN1790F6

7. https://www.ft.com/content/585866fc-a841-11e7-ab55-27219df83c97?mhq5j=e5

8. Markoff, R. and R. W. Seifert (2017) “Supply Chain Digitalisation Management Challenges,” The European Business Review, November/December 2017. Forthcoming.

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