LMAC Insight

Industry 4.0 — Show me the money

There’s an image that industry 4.0 technologies cost a lot of money. SME manufacturers typically like short term ROI. So, we have a challenge.

The new generation of technophiles preaching the positives of a cyber future face a thankless task. I’ve watched young and incredibly intelligent engineers deliver compelling visions of the future to industry leaders only to be met with indifference and skepticism.

“What is wrong with these people?” the engineers must be thinking to themselves. “I’m painting them a picture of a better future and they’re determined to cling to the past.”

For the engineers and the technophiles, it’s very simple. Businesses that invest in the future will win; those that don’t will lose. I agree with this notion but I also know things are a lot more complicated in the real business world.

Good leaders ask lots of questions. They want to know: ‘How will this technology communicate with our ageing ERP system?’, ‘How does this image of a smart factory-fit with my brownfield site?’ and most importantly, ‘Where will the money come from to pay for it?’

Business leaders are time-poor individuals trying to serve two masters. They have to balance the expectations of their board of directors with the demands and needs of their employees. As a ‘recovering’ engineer and an industry leader, I’ve lived in both worlds.

I know from experience that just as accountants crave facts and figures, and IT experts live in a world of 1’s and 0’s, engineers like shiny new things. In their pursuit of the ‘new thing’ however, they rarely consider the priorities of their CEO. With any new technology, a CEO wants to know two things:

  • How will it contribute to the overall productivity strategy?
  • How soon will I get a return on my investment?

My secret to getting major CapEx decisions over the line is to focus on those two key issues while making myself personally accountable for the outcome.

The stumbling block many organisations face is a board that keeps tight control of the purse strings. Boards have become wary of large investments that fail to materialise on the bottom line. They see it as their duty to protect the shareholders from such exuberant follies. Most would prefer to ‘slash and burn’ rather than ‘speculate to accumulate’. The knock-on effect is the leadership team stop asking for investment beyond the minimum needed to keep the lights on.

So how do we break this cycle and move forward? After all, we all know deep down that technology is vital for our business to survive and thrive. The answer is to start small, get some easy wins on the board and then look to scale up. Convincing a company to invest in a ‘smart factory’ is a daunting task but starting with smaller ‘smart’ goals and taking it step-by-step is the way to go.

If you want help taking that first step on your Industry 4.0 journey, then please contact us. We’ll show you where to start and how you can achieve a rapid return on investment.

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Complete the questions below to test your data maturity.

Over the next two years, which three of the 14 key performance indicators do you most want to improve on as a business?

Make a note of these before you carry on reading.

The key 14 performance indicator categories:

Productivity

  • Asset & equipment efficiency
  • Inventory efficiency
  • Materials efficiency
  • Utilities efficiency
  • Workforce efficiency

Flexibility

  • Planning & scheduling effectiveness
  • Production flexibility
  • Workforce flexibility

Speed

  • Time to market
  • Time to delivery

Quality

  • Product quality
  • Process quality
  • Safety
  • Security

Now ask yourself – what is your current performance against these three KPIs? Can you tell me how you performed in the last hour, yesterday or last week?

If you can’t answer this question for all three because you aren’t measuring the data, then the next step is clear. Figure out what data you need to enable you to measure it, and decide how you are going to collect that data.

If you can answer it historically; last week or last month – ask yourself, is this retrospective view sufficient for me to really make improvements?

If you can answer it for all three up to the minute, then it is quite possible that shopfloor intelligence isn’t a number one priority for you. Look out for parts 2 and 3 of this blog series for some more insights into how you can make the data work for you.