Shortly before the COVID-19 pandemic hit, BDO was finishing up a survey of mid-size manufacturers, looking at how they were coming along with the implementation of Industry 4.0 technology. The 2020 Middle Market Industry 4.0 Benchmarking Survey resulted from BDO’s work with Rabin Research Company. The survey quizzed 100 C-level executives of manufacturers with annual revenues between $250M and $3B.
The report reveals that mid-market manufacturers are beginning to invest deeply in smart manufacturing technology. “Industry 4.0 tools used to belong to the largest manufacturers. That’s changed in the last three years,” Eskander Yavar, head of the Manufacturing practice at BDO, told Design News. “At first, the med-size manufacturers were interested mostly in education. Then they moved to use-cases, gaining some accessibility with the technology. Now the pandemic has encouraged them to adopt technology as they pivot their manufacturing to PPE. That was the great headline from COVID-19. They jumped in with the technology.”
The report from BDO show that mid-market manufacturers are increasing their investment in smart manufacturing, spurred on my the pandemic and the recession. (Image source: BDO)
The Technology Is Easier and Less Expensive
The tipping points for smart manufacturing technology among mid-market manufacturers included price reductions and easy-to-use technology. “The key drivers are the price and ease-of-use,” said Eskander. “IoT devices are accessible, and computing is widespread and shared. That’s huge. If we were still stuck in a world where computing wasn’t widely used, we wouldn’t see the expansion in the middle markets.”
Also, you no longer need a team of programmers on hand to run the technology. “You don’t need a coder to do the changes any longer,” said Eskander. “Whether it’s MES in the ERP using the machine data or any of the wrappers like analytics. You can choose a platform and the technology runs with it. In the past you were either an Oracle or Microsoft user. Now the technology providers make it agnostic.”
The Core Results of the Survey
Early Adopters’ Advantages: Manufacturers who have embraced Industry 4.0 solutions first will have a competitive advantage compared to laggards, and the oncoming recession will widen the gap.
Laying the Groundwork for Recovery: With a recession on the horizon, manufacturers will have to do more with less. Automation and analytics will help them achieve cost efficiencies beyond those of a traditional cost-cutting agenda.
Catalyzing Long-Term Transformation: Diversifying revenues was cited as manufacturers’ top long-term Industry 4.0 objective. However, for “nonessential manufacturers,” COVID-19 has fast-tracked the need to revamp revenue streams.
Supply Chain Optimization: Mitigating supply chain disruptions are among manufacturers top priorities amid COVID-19 and after two years of ongoing trade policy turbulence.
The report noted that Industry 4.0 technologies can help manufacturers increase supply chain visibility and more proactively identify risk areas to mitigate disruptions, prevent reputational damage and limit legal liabilities.
Catching Up on the Technology
The report concludes that “early adopters are better positioned to weather today’s storms, while laggards face a particularly steep uphill battle.” BDO noted that the manufacturers that have put off innovation will find themselves revamping their priorities if they make it to the other side of the current slump. Long-term success for manufacturers hinges not just on developing an Industry 4.0 strategy, but also providing excellence in execution.
Manufacturers seem to be aware of the need to ramp up. The report reveals that at the start of 2020, one-third of manufacturers were implementing Industry 4.0 strategies, up from just 5% in 2019.
Rob Spiegel has covered automation and control for 19 years, 17 of them for Design News. Other topics he has covered include supply chain technology, alternative energy, and cyber security. For 10 years, he was owner and publisher of the food magazine Chile Pepper.