According to Sprinting to Value in Industry 4.0, a new research report by The Boston Consulting Group, U.S. manufacturers recognize the potential of Industry 4.0 (so-called smart-factory technology) to create value, but they have yet to fully appreciate the scope and magnitude of the opportunity or find the path to success.
According to the report, nearly 90% of manufacturing leaders regard adopting new digital industrial technologies as a way to improve productivity, but only about one in four see opportunities to use these advances to build new revenue streams.
Many are pursuing isolated initiatives scattered throughout their companies, without a clear vision and coordination from the top.
Value Beyond Cost Savings
The stakes are high, as the value created by Industry 4.0 vastly exceeds the low-single-digit cost savings that many manufacturers are currently pursuing.
"In an era of stagnating productivity, Industry 4.0 stands out as a means of generating significant productivity gains," says Justin rose, a BCG partner and a coauthor of the report.
"The real value is achieved when manufacturers maximize the impact of these advances by combining them in a comprehensive program."
Conflicting Signals Early in the Race
To gain insights about the status of Industry 4.0 adoption by U.S. manufacturers and the challenges they face, BCG surveyed 380 U.S.-based manufacturing executives and managers at companies representing a wide range of sizes in various industries.
The survey found conflicting signals:
- Industry 4.0 is a priority, but not yet and imperative. Overall, 53% of respondents said that adopting Industry 4.0 is a priority. Respondents in cost-sensitive industries, such as semiconductors, electronics, oil, and gas, are most eager to move forward: 80% said that Industry 4.0 is a priority. Even so, most respondents in the full sample do not regard Industry 4.0 as a competitive threat tho their organization.
- Value is expected to result from productivity and cost improvements, but less so from revenue growth. Among the respondents, 89% see an opportunity to use Industry 4.0 to improve manufacturing productivity. They expect to capture the greatest value from reducing manufacturing costs (47%), improving product quality (43%), and operations agility (42%). But fewer see opportunities to generate increased revenue (28%) or develop a new revenue model (13%).
- Implementation is underway, but the pace is uneven across technologies. Respondents indicated the highest levels of implementation for cybersecurity (65%), big data and anlalytics (54%), and cloud computing (53%). They indicated the lowest levels of implementation for additive manufacturing (34%), advanced robotics (32%), and augmented reality (28%).
- Obstacles are evident, but solutions are elusive. Respondents cited defining a strategy as the biggest challenge in initiating efforts to adopt Industry 4.0, followed closely by rethinking their organization and processes. With respect to implementing Industry 4.0 across the organization, 40% of respondents cited changing the culture as the biggest challenge. Many respondents consider finding the right talent, internally or externally, to be a constraint. Indeed, regardless of company size, respondents cited hiring talent and acquiring new capabilities as the most critical enablers for Industry 4.0 adoption.
Get Hands-On Experience
"Providing hands-on experience is essential for helping managers understand the state of the art in industry 4.0 and innovative ways they can apply these technologies in their plants," says Tom Milon, a BCG principal and coauthor of the report.
To support companies in accelerating their digital transformation, BCG has launched its Innovation Centers for Operations, a network of model factories in France, Germany, and the U.S.
"The ICOs include real production lines and visionary technology demonstrations, allowing for a unique client experience," says Milon.
Supported by an array of academic and technological partners, the centers showcase the impact of new technologies on these production lines, offering immersion, experimentation, and training to ICO visitors on all topics related to Industry 4.0.