The pandemic exposed a major weakness of the global economy: the inefficiency of manufacturing supply chains, from the well-documented shortages of protective equipment and ventilators to the run on certain consumer goods to the fitful rollout of COVID-19 vaccines.
In the $2.3 trillion U.S. manufacturing sector, executives have long believed that the solution to these challenges is Industry 4.0—a term that refers to the application of advanced digital technologies and analytics for everything from predictive maintenance of production robots to the use of digital twins.
Industry 4.0 strategies helped keep nearly all manufacturing firms running during the pandemic, according to a McKinsey survey. Enterprises have invested heavily in digital transformation initiatives ($6.8 trillion globally in 2020, according to IDC), retooling factories with digital platforms and intelligent machines.
With the help of technologies like 5G, IoT, and machine learning, modern factories can move production closer to their customers and create shorter, more reliable, on-demand supply chains.
But to make that leap, I see two core priorities:
- Manufacturers need to develop digital platforms that automate assembly-line workflows and predictive maintenance, avoiding downtime by allowing managers to anticipate and resolve problems before they occur.
- To realize the benefits of digitally powered operations, companies must turn their talent strategy from focusing on hiring people to turn wrenches or operate drill presses to recruiting full-fledged knowledge workers comfortable operating in a digital world.
Predictive factory ops
Stripping factory operations of inefficiency and waste has been a management obsession ever since Frederick Taylor conducted time and motion studies as a steel-plant foreman in the 1880s. Today’s “lean” manufacturing techniques and models all derive from the same philosophy. Digital technology and Industry 4.0, however, present new opportunities.
Manufacturers today have the ability to digitize production workflows and apply machine learning to prevent breakdowns. A few years ago, when one Heineken plant in Poland ran into equipment failures, the company used machine learning tools operating on the ServiceNow platform to pinpoint the cause and generate a step-by-step punch list to resolve the issue.
It’s become a self-learning system that scales. The tools alert brewery workers to an array of real-time production glitches; they also share the data and knowledge (and punch lists) with workers at other plants. Since digitizing brewery operations in Poland, Heineken has implemented the same changes to more than 100 plants worldwide.
The system improved productivity without sacrificing jobs in the process. That’s one glimpse at the promise of Industry 4.0.
Closing the skills gap
The most critical piece still missing from Industry 4.0 isn’t a technology, it’s human talent. Even before the pandemic, 87% of manufacturing executives said they were facing critical job-skills gaps, or expected to face them soon. Factory employment in the U.S. remains 4% below pre-pandemic levels, but even so, more than 500,000 manufacturing jobs remain unfilled, according to the U.S. Bureau of Labor Statistics.
Factories of the future need workers with new technical skills, new digital tools to apply them to, and even new soft skills. The recruiting challenge is no longer finding candidates with the right tradeskill but rather identifying those who also have the right knowledge- and skill-sets to solve a different array of problems.
The most critical piece still missing from Industry 4.0 isn’t a technology, it’s human talent.
That will require a substantive rethink of how companies recruit, train, and reskill factory workers. In the past, manufacturing jobs revolved around long-established trade skills. But nowadays, factory employees are more likely to be knowledge workers who monitor digital dashboards and deploy robots and other advanced tools. Large companies will need to team up with community colleges and other partners to design job programs that align with Industry 4.0 priorities.
So much of the discussion of Industry 4.0 has focused on technology, and the work that can be accomplished with advanced robots working side-by-side with humans, or the insights derived from AI-powered analytics. Not enough attention has been given to the human factor. Without workers with the knowledge, problem-solving ability, and digital skills, manufacturers won’t be able to realize the potential of digitizing their factories.