Industry 4.0: How firms have to relook at readiness, responsibility to stay competitive post-pandemic
December 7, 2020 1:36 PM
Multiple market surveys gave an outlook of double-digit growth for IoT, a key component of Industry 4.0.
As the pandemic has progressed, there has been a renewed look at digital initiatives across the value chain and a re-prioritisation to succeed in what is now called as the next normal.
2020 has proved to be a transformational year in more ways than one. As we entered 2020, Industry 4.0 was already thought to be on the cusp of becoming mainstream for businesses to remain competitive. Multiple market surveys gave an outlook of double-digit growth for IoT, a key component of Industry 4.0. At a conference which I attended on Industry 4.0 earlier in the year, many speakers stressed how this was India’s time for becoming a major player in manufacturing on the global stage and how Industry 4.0 was a key enabler.
A few weeks later, COVID-19 hit us and exposed how vulnerable and unprepared organisations were to face a global calamity. The lockdowns which resulted due to the pandemic created disruptions across the value chain – changes in buying patterns, volatility in demand, disruptions in logistics, production challenges due to lack of raw material and manpower, supply disruptions due to suppliers located in containment zones and hotspots to name a few. Work from home became the new norm but there were initial challenges in providing access – especially to sensitive data, as well as identifying and adopting new means of collaboration.
Over the last few months, organisations have responded commendably to these challenges. The immediate focus to support safe working and social distancing and use of collaboration tools to ensure people connect helped organisations respond to the lockdown and maintain continuity of operations. Many organisations showed renewed interest in sensors, connected operations, control towers and analytics to be able to virtually collect and analyse data and provide insights to help diagnose and solve problems across the value chain.
As the pandemic has progressed, there has been a renewed look at digital initiatives across the value chain and a re-prioritisation to succeed in what is now called as the next normal. Organisations are refining their digital strategy and including elements of Business Continuity and Resilience in their digital journeys. Organisations are beginning to identify new business models backed by Industry 4.0 to recover from the pandemic and get back to pre-COVID performance. Brick and mortar companies are evaluating digital marketing and e-commerce solutions to reach customers. There is added focus on creating the right infrastructure to support virtual ways of working and decision making. Cloud transformation is gathering pace to enable flexibility, ease of access while focusing on elements of data security, privacy and overall cost.
We are at the crossroads in the Industry 4.0 revolution. On one hand is the need for organizations to make sure they are ready to survive similar and probably greater challenges and remain competitive in the future. The question is no longer if we need to invest in Industry 4.0 but how to ensure that right technologies are being leveraged. The pace of adoption of Industry 4.0 is expected to increase exponentially. It is expected that organisations will opt for solutions which have low payback and deliver quick benefits.
Cash flows and availability of funds will play their role in the prioritization of Industry 4.0 initiatives that are picked up for implementation. Investment on solutions that have longer payback may continue to be taken up slowly. However, one thing is clear – the era of being very interested in Industry 4.0 but doing little on the ground has changed forever. The pandemic has also shown that organisations also have a responsibility to their stakeholders – making sure that customers continue to get the best quality products at the right price on time, ensuring that suppliers and business partners are operationally and financially supported so that there are no disruptions in raw material supply and operations and finally shareholders and society at large through robust growth and business performance.
Keeping employees safe and engaged and ensuring their well-being has emerged as a key outcome of the pandemic. Organisations will have to work to build the capability of employees to understand and use Industry 4.0 elements to solve problems and enable organisations to remain competitive. It is clear that organisations who work on both aspects simultaneously will emerge ahead of the game.
Shridhar Kamath is Partner at Deloitte India. Views expressed are the author’s personal.