What is between your business and its I4.0 ambitions?

In 2016, the world was buzzing over the coming of the fourth industrial revolution. Powered by 5G connectivity, Industry 4.0 (I4.0) was expected to usher a new era of manufacturing, with interconnected systems making robot-run smart factories possible.

Five years later, 96% of companies in Asia-Pacific have taken steps to understand gaps and opportunities related to I4.0, according to The Fourth Industrial Revolution¹ report by Deloitte. However, actually realising use cases is easier said than done. Only 1% of companies have updated their business models in preparation for I4.0 implementations.

As exciting as the promise of I4.0 is, every new possibility is accompanied by a fresh set of challenges. Here are a few common pain points Asia-Pacific companies face when it comes to realising I4.0, and ways to solve these challenges.

The Fourth Industrial Revolution study revealed that many executives get caught up in “short-termism” and struggle to develop holistic strategies that take advantage of I4.0 technologies. Executives find it difficult enough to keep up with the rapid pace of technology, so much so that reimagining the future of their company becomes a task for another day.

Around 91% of CXOs in Asia-Pacific said they either have no formal strategies or are taking ad-hoc approaches to I4.0 implementation. Only 9% said they’ve begun developing a broader, organisation-wide strategic approach for the new technology.

Industry 4.0 is not just a trend that companies can plug and play into their operations—it’s a fundamental shift in the way an organisation functions and operates. It affects everything, including business model, talent, and even the way a company is organised.

One way leaders can develop a fuller understanding of the benefits of Industry 4.0 and realise an overarching vision is by eliminating the compartmentalisation of data through legacy systems. Many divisions within a company function in a silo, and that makes it difficult to see how Industry 4.0 can impact the organisation as a whole.

Having one data-centred platform that orchestrates information across the enterprise can bridge silos and reduce repetitive tasks. Companies need to integrate legacy systems and house their data under one roof to get a clear vision of how I4.0 can disrupt their organisation for the better.

The difficulty in keeping up with the pace of technology also makes it difficult for executives to understand the returns. According to another global survey by Deloitte², most executives acknowledge the importance of digital transformation, with 94% of respondents listing it as a “top strategic priority.” However, they don’t fully grasp how it’s important.

They tend to see digital transformation as a “defensive” investment—something intended to protect current offerings rather than fuel growth through new business models and products. They haven’t explored the other ways I4.0 could improve their operations. In fact, they’re not even sure if the endeavour will be profitable. Only 68% of respondents in the survey agreed that adopting I4.0 technologies would result in profitability.

To break away from this “defensive” mindset and explore the concrete returns of I4.0 investments, organisations can start with applying Industry 4.0 technologies to make incremental changes that go beyond improving existing processes. For example, they can expand their R&D initiatives to pilot new use-cases for I4.0 technologies specifically for uses outside of current practices.

Business discovery is essential in this respect, since companies need to be able to identify “problems” in order to discover “opportunities” for disruption. Singtel’s Centre of Digital Excellence (CODE) is a lab that helps enterprises do just that through a one-day design-thinking workshop centred around the context of creating 5G strategies. This can aid in the discovery of new, long-term opportunities specific to a business’ unique needs, and give executives a better idea of what I4.0 can do for their organisation.

Digital transformation does not occur in a silo. It will influence and shape the entire supply chain of participants. For regional enterprises that have a presence in different countries, this means communication between stakeholders across sectors and regions is vital in identifying use-cases.

But the lack of standardisation³ makes it difficult to understand how I4.0 technologies can function and be compatible across sectors and countries. Solution architecture then becomes another bugbear beyond identifying use cases.

There needs to be independent, commonly agreed international standard communication protocols, data formats, and interfaces to ensure interoperability across countries and sectors. The Infocomm Media Development Authority (IMDA), for example, proposed that 5G networks should at least meet IMDA’s regulations⁴ relevant to resilience and security, as well as best practices and technical specifications from relevant standard bodies, such as 3GPP, IETF, ETSE, and IEEE.

A study by McKinsey⁵ cites a lack of digital talent to execute I4.0 roadmaps as a key roadblock to implementation. As I4.0 strategies will open doors to new opportunities and processes, new roles will also emerge. These roles will likely require capabilities outside the CVs of traditional manufacturers, such as data-mining and machine-intelligence expertise.

The McKinsey study reveals that organisations fill 50% to 80% of new I4.0-related roles by hiring external talent. However, organisations need to balance hiring external talents for specific capabilities with capacity-building for internal talents to avoid culture disturbances and maintain employee morale.

The challenge of training talents doesn’t fall solely on companies. Governments and other stakeholders also have a role to pay in paving the way for I.40. For example, the Singapore government is setting up a manufacturing training office⁶ in Jurong Innovation District to boost the competitiveness of the country’s manufacturing sector. The government is also working with schools and training providers to design new courses to train workers and predict what skills and knowledge they’ll need to meet future industry requirements.

Need help to develop and power your I4.0 ambitions?

¹ Deloitte, The Fourth Industrial Revolution, 2020

² Deloitte, The Industry 4.0 paradox, 2018

³ Algorithmica, New challenges: Standards, needs and expectations trouble Industry 4.0, August 25 2016.

⁴ Infocomm Media Development Authority,  Policy for fifth-generation (5G) mobile networks and services in Singapore, October 17 2019.

⁵ McKinsey, Industry 4,0: Reinvigorating ASEAN Manufacturing for the Future, February 2018.

⁶ The Straits Times, New manufacturing training office to be set up in Jurong Innovation District, which has attracted $420m in investments, October 20 2020.