Preparing for Industry 4.0 implementation: why many manufacturers fail

There have been countless articles written about the benefits of Industry 4.0 implementation in manufacturing, ranging from quality improvements to increased profitability. Manufacturers around the globe have taken note and IIoT implementation uptake has skyrocketed in recent years, with IoT Analytic’s 2022 Industry 4.0 Adoption survey revealing that 72% of manufacturers reported having an Industry 4.0 strategy underway or already completed.

What is not widely reported, however, is the high failure rate experienced by manufacturers on their digital transformation journey. Michael Bucknell, Business Development Manager of TilliT, shares that numerous large-scale surveys have found that an estimated “70% of traditional ‘big-bang’ digital transformation initiatives fail.”

Bucknell attributes this largely to a lack of clear vision and goals when embarking on an implementation journey as well as a failure to adequately prepare the necessary processes.

How manufacturers can avoid these early stumbling blocks and keep from becoming another failed statistic is the focus of his presentation ‘How to Prepare for Your Industry 4.0 Digital Transformation’, at the Smart Manufacturing Conference this week.

“Fear of failure is a big reason that many local manufacturers are hesitant to begin their digital transformation journey, alongside concerns around perceived cost, the impact of disruption, the need for change management and outdated legacy thinking,” he said. “Still, the benefits of implementation far outweigh the challenges, most of which can be avoided should manufacturers know which roadblocks to look out for and take the necessary preventative measures to overcome them.”

The top 4 causes of digital transformation initiative failure and how to overcome them

1. Lack of a clear goal

Bucknell emphasises the importance of having a well-defined, overarching goal when determining a digital transformation strategy.

“Start with a clear understanding of the ‘big picture’ reason behind your Industry 4.0 initiative, such as ensuring long-term competitiveness. Then you can ensure that each step you take in the implementation process is designed to help you reach that goal,” he said.

Having a clearly defined goal and strategy for digital transformation can also give manufacturers a better idea of the costs involved in full-scale implementation, an essential consideration given that many Industry 4.0 technologies come with a significant price tag.

“No manufacturer wants to run out of money halfway through the transformation initiative, so budget accordingly. Weigh up both the cost of taking action to upscale your processes and the cost of inaction to make an informed decision,” he said.

In addition, manufacturers are encouraged to conduct thorough research and engage with industry peers and experts.

“Build a strong knowledge base by attending events like the Modern Manufacturing Expo’s Smart Manufacturing Conference, participating in best-practice peer groups, and collaborating with potential solution providers,” he added.

2. Failure to clearly map out processes before attempting to transform them

Before initiating an Industry 4.0 implementation, it’s crucial to question why and how certain processes are being executed in the present. Understanding the existing workflows and identifying areas for improvement is a necessary step here and manufacturers should avoid attempting to transform everything simultaneously.

“Industry 4.0 implementation doesn’t have to be driven top-down — middle-out is a practical approach — but it does need to be supported at all levels,” he said.

3. Shiny toy syndrome

Bucknell cautions manufacturers against falling for ‘Shiny Toy Syndrome’, which involves purchasing technologies that may not align with the actual needs of the organisation. He advises manufacturers to choose a digital transformation use case that is achievable and addressable, and that has visibility across the entire hierarchy of the business, from operators to management.

“When selecting technologies, it’s essential to opt for solutions that are scalable, allowing for a gradual expansion,” he said. “They should also be open and extendable to minimise vendor lock-in and designed with a human-centric approach to ensure user-friendliness.”

4. The human element

Unfortunately, it is often the ‘human element’ that proves to be the major stumbling block for digital transformation initiatives.

A lack of user training can hamper the adoption of new technologies and processes, leaving employees ill-equipped to leverage digital tools effectively. Manufacturers may also encounter user resistance, as employees may feel threatened by change, especially if they feel it will disrupt their routines or job security. Lastly, Australia is currently facing a skilled labour shortage, with a shrinking pool of candidates qualified to operate advanced technologies.

“Overcoming these hurdles requires robust training programs that involve users in the implementation process from the outset and an investment in workforce development to bridge the skills gap. These measures ensure that the human element becomes an asset rather than an obstacle in the digital transformation journey,” he said.

Start at the foundation

Bucknell’s final piece of advice for manufacturers that want to maximise the success of their Industry 4.0 implementation is to start small.

“Begin by transforming any non-digital data (such as paper records, whiteboards or legacy knowledge) into digital data and connecting fragmented information,” he advised. “This process is relatively simple but maximally effective as real-time visualisation of data is the foundation of any Smart Factory. Once this step is completed you can begin to consider which advanced technologies have the highest productivity and profitability gains for your plant.”

Image credit: iStock.com/gorodenkoff