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8 Things Manufacturers Should Know about the Fourth Industrial Revolution

Are you a laggard in Fourth Industrial Revolution? These tips from The World Economic Forum and McKinsey could help you pick up speed.

  • A majority of today’s manufacturers have some sort of Industry 4.0 or Fourth Industrial Revolution initiative underway, according to the white paper, Fourth Industrial Revolution: Beacons of Technology and Innovation in Manufacturing from The World Economic Forum in collaboration with McKinsey & Co. The principal drivers of this revolution are connectivity, intelligence, and flexible automation, according to the report.

    But while “70% of industrial organizations are either piloting Fourth Industrial Revolution technology in manufacturing or deploying these technologies at scale,” according to the paper, many initiatives are stuck in “pilot purgatory.”

    There are risks to such stagnancy. "Laggards" won’t see the near “economy-wide gains” that pioneers do, and they will face more capital expenditures, according to the report. “The increasing importance of data and interconnectivity in manufacturing changes the dynamics of technology adoption: Waiting for cheaper and better technology does not pay off, since frontrunners are expected to capture largest benefits,” reads the report.

    And such risks can expand beyond a given company. “The gap between Fourth Industrial Revolution leaders and laggards has the potential to exacerbate inequality in wealth production,” the report warns. “It can, potentially, lead to significant displacement of workers in manufacturing, make critical assets vulnerable to cyberattacks, and create a dominant market position for very few artificial intelligence providers.”

    So what can you do to avoid being a “laggard”? In the following slides we share some key points from the white paper that could help you move your company out of “pilot purgatory.”

    [Figure courtesy of MCKINSEY & CO.]

  • Educate Your Operators—Don’t Replace Them 

    The manufacturers lighting the way through the Fourth Industrial Revolution—the report refers to them as “lighthouses”—are not automating to replace operators. Instead, they are using Fourth Industrial Revolution technologies to improve quality, productivity, agility, and customization. Such initiatives require new skills from operators, so there will be a need for education and enrichment—but not elimination. Employees then become invested in further progress. “Democratized technology on the shop floor can also allow operators develop their own apps and solutions to facilitate and automate their tasks,” according to the paper.

    Such an approach also benefits business, because not everything can be automated. The report estimates that “fewer than 5% of occupations consist of activities that are 100% automatable with today’s technology, while 62% of occupations have at least 30% of automatable tasks.”

    The best course action, according to the study, is to “augment, instead of replace, the operator.”

    [Figure courtesy of MCKINSEY & CO.]

  • You May Still Be able to Utilize Existing Equipment

    Manufacturers may fear the Fourth Industrial Revolution because of the effort and cost of updating or replacing entire production lines. But the study reports that many leaders in the Fourth Industrial Revolution have been able to connect and optimize existing equipment and complement it with new models. “In contrast with the First and Third Industrial Revolutions, the Fourth Industrial Revolution will have relatively high impact with comparatively little equipment replacement,” according to the paper.

    [Image source PIXABAY]

  • Data Can Help You Make Decisions 

    The paper claims that in the Fourth Industrial Revolution, “decisions are not hypothesis-driven, but rather are based on big data.”

    The good news is that you have plenty of sources for such data. Italian company and “lighthouse” Elettrotecnica Rold Srl has been using real-time digital dashboards to monitor OEE in multiple plants. “These have provided the ability to input reasons for stoppages of faults,” according to the paper. In addition, the company is employing sensors in manufacturing, which “has allowed for digitization of any kind of production machine along with real-time collection of production data, which is used to build dynamic, interactive dashboards.”

    [Image source JAE RUE from PIXABAY]

  • You Can Collaborate with Others for Assistance

    Given government investments, research by private institutes, and progress made by pioneering lighthouses that are sharing their learnings, there is extensive support for others interested in Fourth Industrial Revolution.


  • You Do Need to Keep an Eye on Security, But You Would Need to Do that Anyway

    Cybersecurity risks exist throughout society and business, and as companies and products become increasingly connected, the risks do multiply. The good news is that lighthouses have already demonstrated that “by developing good IP and cybersecurity policies and protocols, lighthouses have managed to maintain effective security to mitigate risk while enabling collaboration,” the paper reports. These pioneers understand that “the benefits of transparency and growth opportunities far surpass the potential for competitive threats. Not only do they open their doors to close partners, but they also welcome thousands of visitors per year.”

    [Image source PIXABAY]

  • Fourth Industrial Revolution Technologies Could Lessen a Company’s Resource Use 

    The World Economic Forum and McKinsey state that manufacturers should employ Fourth Industrial Revolution technologies “to improve their energy efficiency, increase yield, and reduce waste and emissions while enhancing overall competitiveness.” The report urges such actions given claims that “the world faces a significant challenge with regard to climate change, with a recent report from the IPCC stating that emissions must be cut by 45% by 2030 to keep below 1.5°C warming.”

    But even if companies choose not to take a stance on climate change, such reductions in resource use could be sought for business reasons—they could also benefit company bottom lines.


  • Medtech Already Has a Fourth Industrial Revolution Model

    The report names several “lighthouses” that can serve as beacons for Fourth Industrial Revolution success, including medtech’s own Johnson & Johnson DePuy Synthes in Cork, Ireland. MD+DI covered J&J’s progress last year after the company shared gains at The Medtech Conference.

    [Figure courtesy of MCKINSEY & CO.]

  • And There Are Dozens More Reasons to Move Beyond Pilot Stage

    The World Economic Forum and McKinsey list dozens of positive impacts seen in Fourth Industrial Revolution use cases. Here are just a few:

    • AI-enabled quality management system has reduced customer complaints by 57%
    • Advanced analytics on deviations has led to an 80% reduction in deviations
    • Flexible automation assembly line has increased labor productivity by 30%
    • Collaborative robotics has increased labor efficiency by 25%
    • Additive manufacturing (3D printing) has increased cycle time by 60%
    • Digital thread through production process has improved productivity by 38%

    [Image of use cases courtesy of THE WORLD ECONOMIC FORUM and MCKINSEY & CO.]

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