Chief Executive, EEF the manufacturers’ organisation
While much of the future may be uncertain, one thing we can be sure about is that with the fourth industrial revolution (4IR), the future of manufacturing is digital.
Manufacturers talk about this revolution as using new technologies such as sensors, robotics and data analytics to gain insights into product use. The adoption and development of these will be crucial to improve competitiveness and to tackle the “productivity puzzle”, which is seen by economists as the most compelling issue to ensure future prosperity.
Better customer experiences, higher levels of efficiency and more highly-skilled jobs will result. The opportunity is clear, but with this, will come disruption to traditional business models, new types of supply chain engagement and the need to take employees and suppliers on the journey too.
Manufacturers are starting their 4IR journey with growth ambitions underpinned by the development of new business models, including new services. There will also be greater focus on innovation in both new products and processes, along with closer collaboration within supply chains and investment in new technologies.
That’s not to say that all companies are quickly moving ahead in these areas. The application of 4IR technologies is one area where companies are still trying to understand how best to apply to their own businesses in three distinct phases.
27% of manufacturers are in the conception phase, 39% in the evolution phase and only 4% are currently in the revolution one.
Three distinct phases for the 4IR journey
The first phase, ‘conception’, is where companies figure out what 4IR is all about, what it can offer and how it could apply to their business.
The second phase, ‘evolution’, is a period where there is some advancement on current practice. Concepts and off-the-shelf solutions can be implemented and tested, further optimising current processes and putting in place new solutions.
The third, and final, phase, ‘revolution’, is where the step change occurs in terms of how value is derived and how interaction with customers and suppliers happens.
For those at the ‘conception’ phase, optimising processes and supply chains is where some early wins will be found. The evolution of manufacturing processes and the revolution of the product and service offerings to customers will follow, but this will happen in fits and starts.
Knowledge sharing as understanding of 4IR progresses
Sharing of best practice through technology diffusion and peer learning from companies at the frontier is where a lot of improvement will take place. We are helping manufacturers navigate the complexities and challenges presented by 4IR and to seize upon the many opportunities it will afford.
According to the latest EEF 4IR fact card, 27% of manufacturers are in the conception phase, 39% are in the evolution phase and only 4% are currently in the revolution phase. Even if the numbers are lower than what we’d prefer, more and more companies are getting familiar with the 4IR concept.
The main barrier faced by those in the ‘pre-conception’ phase is the lack of adequate knowledge on how technology may help their business. Those on the first step of the ladder, the ‘conception’ phase, instead see lack of skills as the main barrier. The last group before the frontier (‘evolution’) on the contrary sees data compatibility between systems as the main hurdle to cross.
4IR, Industrial Strategy and government’s role
In addition to manufacturers adapting their own processes to meet this evolving challenge, there is a role for government policy. Industrial strategy must play a role in enabling companies to learn and adapt more quickly, not just to keep pace with competitors but to propel them to the head of the league table. Initiatives such as “Made Smarter”, led by Professor Juergen Maier of Siemens on industrial digitalisation, should help inform this.
Government must also play a role in the skills required to implement 4IR. From encouraging our young to pursue a career in engineering to upskilling the current workforce with the necessary digital skills.
Despite the political turbulence and potential uncertainty, this is a very exciting time for industry in the UK and the economic gains will be significant. UK manufacturing will always adapt, as it will to a new world, post-Brexit, and a new way of maximising value through the fourth industrial revolution.