April 2019 | News | Takeaways

5 Insights to Industry 4.0

Tags: Supply Chain Management, Logistics, Supply Chain

Nearly all middle market manufacturing executives are at least moderately familiar with Industry 4.0, according to BDO's Middle Market Industry 4.0 Benchmarking Survey. But while more than half (54%) have either developed or are in the process of developing an Industry 4.0 strategy, only 5% are currently implementing one. Another 25% plan to develop an Industry 4.0 strategy, but have yet to get started.

Additional findings:

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. This suggests a fundamental shift in customer demand that the traditional manufacturing toolset can't meet. Improving operational efficiencies and increasing market penetration tie as the second most-cited goals, at 67% each.

2. 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, such as 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 are interoperability with legacy technology (64%), lack of skills or insufficient training (63%), lack of leadership and vision (60%), and underinvestment (54%).

3. 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 concerned (69%) that failure to adequately invest in Industry 4.0 will lead to encroachment from non-traditional competitors.

4. 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.

5. 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.