Manufacturers look to Industry 4.0 to restore ops post-Covid


McKinsey and Co Kenneth Koh

PETALING JAYA: Manufacturers are looking to Industry 4.0 technologies to restore their operations as they ride out the current pandemic and build their capabilities to deal with future crises.

McKinsey & Company expert associate partner Kenneth Koh noted that the acceleration in adoption of digital technologies would be ever more evident in the manufacturing sector.

“Industry leaders are indeed leveraging Industry 4.0 solutions.

“In a recent McKinsey survey of manufacturers in Asia, 39% have implemented a nerve-centre, or control-tower, approach to increase end-to-end supply-chain transparency, and around a quarter are fast-tracking automation programmes to stem worker shortages arising from Covid-19, ” he said.

The survey also found that 93% of companies plan to focus on resilience of their supply chain and 90% plan to invest in talent for digitisation.

Industry 4.0, which includes connectivity, advanced analytics, automation and advanced-manufacturing technologies, was gaining momentum before Covid-19. This has helped companies transform their operations in terms of production efficiency, product customisation, improvements in speed to market, service effectiveness and new-business model creation.

However, Koh said the upswing in technology adoption could be asymmetric because of two opposing forces: the need to develop resilience and agility to deal with the crisis, against the constraints imposed by cash preservation.

“Before the outbreak of Covid-19, there was widespread excitement on Industry 4.0, with 90% of respondents in McKinsey’s annual Industry 4.0 survey saying that they were convinced of the technologies’ value and a majority of them were including Industry 4.0 as a critical part of their operational-improvement planning.

“But the pandemic has caused some companies to freeze their Industry 4.0 initiatives to preserve cash, even as certain leaders have accelerated their adoption, particularly to support business continuity such as automated planning, digital performance management, digital remote work and automation to reduce human-to-human interaction.

“Consequently, as more businesses emerge from the crisis, the case for further digitisation at scale will likely be stronger than ever, ” he explained.

Nonetheless, the ability for manufacturers to transform their operations at scale have proven to be rather difficult. According to McKinsey’s research, about 70% of such initiatives fail to achieve their stated objectives.

“Our most recent survey of Industry 4.0 sentiment, conducted in late 2019, found that after starting their Industry 4.0 journeys, most companies remained stuck in a pilot trap. Only 44% were conducting site-wide implementation, and only 38% were looking at horizontal integration beyond the four walls of the factory, ” he added.

But as organisations begin to restart their operations, there is an opportunity for them to re-imagine a future with digitised, resilient operations.

Koh encouraged companies to start on their industry 4.0 journey in a small way and then scale quickly.

If they commit to Industry 4.0 transformation in line with their business environment and their strategic objectives, and execute it using a triple transformation approach across business strategy, technology solutions and organisational culture, they could ultimately succeed at Industry 4.0.

Koh will elaborate on how manufacturers can integrate new technologies into their operations at the upcoming #digitalXdata 2020 live virtual conference, which is aimed at helping companies solve business challenges and uncover growth opportunities by redesigning a data-driven digital future.

He will also be moderating the Manufacturing Industry Panel Session during the live virtual conference with panellists Fusionex programme director Raymond Lee, Mega Fortris (M) group chief operating officer Karin White and Siemens Malaysia president and CEO Adam Yee.

The event will showcase market outlook and forecast for 2021 and beyond in the areas of technology, digital and analytics. There will be eight main tracks, namely, smart city, retail, people, financial, drone, reach, green and manufacturing.

The four-day programme will also be powered by panel discussions on Designing Society 5.0, Gearing Towards Business 2021, Re-Engineering Security in the Next Normal and Empowering Future-Ready Youth.

#digitalXdata 2020 is organised by Star Media Group Bhd with Fusionex as Exabyte Partner and Boston Consulting Group, Ernst & Young, Frost & Sullivan, Ipsos, Kantar, McKinsey and PwC as Knowledge Partners.

The live virtual conference will be held on Dec 1-4 over Cisco Webex.

Registration is free. For more information, visit bit.ly/digitalxdata2020

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